When Henry Parsons Crowell first entered the oatmeal business in 1882, few took him seriously. He knew nothing about the milling process, and his newly purchased mill in north-central Ohio was in laughable condition. Other millers considered Crowell a fool, and by the business logic of an antebellum economy, he was. But he could have cared less. Crowell was part of a phalanx of forward-looking businessmen that considered physical equipment secondary to a business’s intangible assets. It was a calculus that transformed the face of business over the next thirty years.
The oatmeal market suffered under the weight of too many competitors, with prices often falling below production costs. Crowell saw the solution in the mill’s overlooked Quaker trademark. And so, at a time when most consumers shoveled their oatmeal from open barrels, Crowell’s product appeared on shelves in sealed, two-pound boxes. Richly illustrated advertisements saturated local, then national, print media. Both package and ad featured the iconic Quaker, always smiling jovially and holding a scroll on which was written the single word “Pure.”
By 1891 Crowell had absorbed most of his competitors, but even his unparalleled success did not convince some of his more reluctant partners. By their older, more-traditional producer orientation, his promotional techniques were a half step away from outright chicanery. But as long as he sat atop the company’s rigid corporate structure, these opinions could not stop the sprawling nationwide operation from marching in tandem with his designs. In 1901 the permanency of his plan was marked by a newly organized corporation, the Quaker Oats Company. Crowell not only had dragged his own industry into the modern era, but he also was among the early pioneers that demonstrated these techniques could be applied to practically any consumer good. Through the trifecta of trademark, package, and promotion, a consumer society was born.
Crowell’s second major life project began before the ink was dry on Quaker Oats’s incorporation papers. And like his initial business investment, Crowell saw potential where others did not. The Moody Bible Institute was in crisis, hemorrhaging both money and goodwill. But it, too, had a key intangible asset: it was founded by Dwight L. Moody. Crowell became president and quickly incorporated his business ideas into this religious work without a second thought; Moody already had made borrowing such concepts unremarkable. But the business strategies themselves were new and thus would transform the purpose of Moody’s institution even as Crowell stayed true to the founder’s business spirit.
Henry Parsons Crowell was born in Cleveland, Ohio, in 1855. His father, Henry Luther, a successful shoe merchant and devout Presbyterian, died of consumption when his son was only nine. The Crowell family was well-to-do. Unlike most dying fathers, the elder Crowell was greatly concerned that Henry and his two brothers “might be ruined by his prosperity” without his guidance. Henry attended the Greylock Institute, an elite boarding school in Massachusetts that prepared young men for business careers or an Ivy League education. He had plans to attend Yale and would have been classmates with Reuben Torrey, but at seventeen, he showed signs of his father’s consumptive lungs and returned to Cleveland to work the family business. Crowell now took a new interest in religion, especially after hearing Moody, who was not yet famous, give a Bible reading in a Cleveland church. He was taken by Moody’s approach to the Bible and never forgot the revivalist’s encouragement “to dream great things for God.” Moody’s unparalleled success confirmed that “God didn’t need his men educated, or brilliant, or anything else,” only “a man,” and Crowell determined to be one of them. He could not preach, but already he was confident he “could make money and help support the labors of men like Moody.” “If you will allow me to make money to be used in Your service,” he prayed to God, “you will have the glory.”
After encountering Moody, Crowell’s reading of the Bible became radically personal and individualized. A passage from Job, “He shall deliver thee in six troubles: yea, in seven there shall no evil touch thee,” became God’s personal promise to heal his lungs in seven years and then bring him success. Crowell had a simple confidence in the absolute reliability of this promise, but unlike Torrey, he did not care how God worked. His healing might well come by medical professionals and wealth by business acumen. Thus, when his doctor gave orders to spend the next seven years in the open air, it was like the voice of God. Crowell followed this medical advice to the letter, traveling extensively and continuing a life outdoors even though he felt fully healed a year early. Upon returning home, he married his true love, Lillie Wick, in 1882. But when she died in 1885 before their first child was yet two, God’s promise that “no evil will touch thee” must have seemed exceedingly narrow. His experience of a second tragic death inoculated him from any theology that equated sickness with sinfulness or promised absolute health to the faithful.
Crowell’s seven-year sojourn, which spanned the continent, provided him with a sense of the national market and shaped his approach to business. After four years of leisurely travel on both coasts, he turned to work. He made handsome profits on a farm in Fargo and horse breeding in South Dakota. In both cases, he narrowly averted natural disasters and realized his profits only by the resale of the businesses. It foreshadowed a career in which he profited more by extracting wealth from farmers than his own agricultural productivity. As he saw it, “I would rather get into a business where if I made a mistake, I could correct it.” Weather and crops could not be tamed. Crowell’s demand for control was reflected in every enterprise that followed. Though his demeanor was quiet, prepossessing, and deliberate, he refused to compromise as long as he was convinced it was the “best” course of action. But he could just as stubbornly insist on abandoning projects or approaches when he concluded they had failed. He was, according to his biographer, a “Breakfast Table Autocrat”—a title Crowell seemed rather fond of. And it was clearly displayed when he entered a new line of work with the proceeds from his second farm sale: the Quaker oat mill in Ravenna, Ohio.
Oat milling was a young industry in the 1880s. Though oats were used widely in farm-animal troughs, they were largely absent the breakfast table. The influx of German immigrants, who did eat oatmeal, led to the country’s first oat mill midcentury and a niche market that grew with the population. One among them, a former grocer named Ferdinand Schumacher, largely created the industry. He was the largest producer when Crowell purchased the Ravenna mill. Schumacher embodied an older business ideology, focused on productive capacity, efficiency, thrift, and bulk sales. It had made him a wealthy man.
Crowell turned traditional business logic on its head. He bought the oat mill primarily for its two intellectual assets. The more conventional asset was an innovative processing patent to cut oats with blades, which was shared only by Schumacher. It produced a higher quality product with less waste, giving Crowell an advantage over most of his competitors. His business partner, the engineering and milling savant James H. Andrews, relentlessly improved designs. Following pioneers like Andrew Carnegie though still against conventional wisdom, Crowell also discarded existing equipment, regardless of condition, whenever doing so sufficiently increased efficiency. His second asset, the Quaker trademark, was the primary draw and the foundation of his unconventional strategy. Only a handful of other companies were selling branded products, packaged for retail sales and supported by aggressive marketing campaigns.
The validation of Crowell’s methods came with astounding rapidity. Within five years, his mill was the third-largest producer in the country, and within the decade, his $25,000 investment was worth half a million dollars, a twentyfold increase. But Crowell suffered with everyone else under the crippling crisis of overproduction. He spearheaded an early attempt to control supply through a type of cooperative corporation. Leading producers, still independent, bought shares in a shell company designed to coordinate production levels, share profits, and buy up competitors. But by the late 1880s, it was falling apart as members fudged on their obligations and enterprising capitalists built new mills merely to extract money from the association. It was already unviable when the Sherman Antitrust Act outlawed such combinations in 1890.
Success required control, Crowell concluded, and his next effort to tame the market in 1891 operated under that premise. A new corporation, the American Cereal Company, was formed by Crowell and five competitors. Its plan of operation, authored by Crowell, focused first on exerting autocratic control over all member mills through a single management structure. It forbade any entangling agreements with other competitors that might impede its complete corporate autonomy. Crowell’s plan also specified creating a reputation of unsurpassed quality. A diversification policy was designed to create stability against fluctuations in supply and demand for particular cereals and economic conditions in particular geographic locations, and to find uses for by-products or other unmet secondary businesses. Finally, it proposed aggressive marketing designed to “create a demand for cereals where none existed” using a “single trade name” under which all of its business would be done. Crowell became the managing shareholder of the largest oatmeal producer in the country. Whatever his other competitors thought of him, he could no longer be ignored.
Crowell’s ideas were so counterintuitive to a producer orientation focused on minimizing costs that even profitability could not justify it. By the traditional logic, the company would be even more profitable if it stopped “wasting” money on expensive new machinery and frivolous advertising. Schumacher was Crowell’s most reluctant partner, joining the company only under duress, when he lost his new, uninsured mill to a catastrophic fire. A traditional proprietor, he reportedly “found it almost impossible to delegate authority and responsibility to subordinate hands,” even choosing to handwrite his business correspondence rather than use a secretary. To the insult of losing control of his business were added what he thought were injurious promotional budgets that topped $500,000 by 1896.
Unswayed by Schumacher’s protests, Crowell and a group of young executives pushed ahead, moving the company headquarters to Chicago, the agricultural commodity capital of the world, in 1898. But shortly after the move, Schumacher fomented a shareholder revolt with other conservatives and ousted Crowell from management. Crowell remained a major shareholder and thus able to comfortably support his daughter and new wife, Susan Coleman, a Vassar-educated teacher. But it was a stinging professional setback that left him literally with nothing to do.
As in earlier times of trial, Crowell focused on his faith. Living in the wealthy Gold Coast neighborhood adjacent to the Bible Institute, he met William Newell, the school’s associate superintendent and a leading dispensational advocate. At Henry and Susan’s invitation, Newell conducted a weekly Bible study on the Epistle to the Romans with a small group of their friends. Crowell was thoroughly taken by his dispensational system and abandoned his naïve plain reading. Under Newell’s influence, he also came to believe that he now had a responsibility to judge proper belief and practice using the tools of dispensationalism. Thus, while he once had been “friendly toward anything which affirmed itself ‘Christian,’” now he would refuse to blindly follow a minister’s views. Newell also introduced him to a new theological standard related especially to how the Bible was interpreted and a personal relationship to God. After this, Crowell became what his biographer called a “business-priest,” seeing business as more than “his way of making a living.” It had become “his altar where he serves the King.”
Crowell’s newly invigorated faith changed neither his hardball business tactics, which he used to regain control of the American Cereal Company a year later, nor his novel business practices, which he immediately reinstituted once he returned to the helm. Schumacher ultimately admitted defeat, selling his shares and retiring. After this, Crowell’s policies were enshrined as the unfaltering rule at the newly reorganized Quaker Oats Company. His charitable giving was generous, as he had promised God, often equaling about 65 percent of his income. But his faith was congenial to fully enjoying what remained. He owned multiple palatial estates, shuttled a corps of servants across the country with the family, and hosted elegant dinners. He was still the president of Quaker Oats, but as it now required less of his time, he was ready to tithe not only his finances but also his business acumen.
- Day, Breakfast Table Autocrat, 35-59, quote on 59.↩
- Ibid., 63-65, 80.↩
- Ibid., 113-17.↩
- Day, Breakfast Table Autocrat, 69-81, quote on 80.↩
- Ibid., 5-6.↩
- Marquette, Brands, Trademarks, and Good Will, 10-25.↩
- Thornton, “History of Quaker Oats,” 83.↩
- The policy is reprinted in Day, Breakfast Table Autocrat, 124.↩
- Thornton, “History of Quaker Oats,” 33.↩
- Marquette, Brands, Trademarks, and Good Will, 68.↩
- Day, Breakfast Table Autocrat, 160-61.↩