Financial History Issue 130 (Summer 2019) | Page 20

by gender and years of service, with the women who did much of the office work earning less than the men who worked the production lines. From levels of 52–57 cents per hour (approximately $25–30 per hour today), the men saw their pay sliced by 7.5 cents per hour across all pay grades —a stunning 14.3% cut for the lowest pay grade. From levels of 29–34 cents per hour, pay for women was cut by three cents—a slightly lower percentage—from this lower pay rate. The decline in com- pany and worker outlook in just 15 short months must have been sobering. These financial difficulties were occur- ring just as the company was preparing to introduce its first new and improved product. Company leaders had been working with an inventor in Pennsylva- nia named Francis Okie, who had sent them an odd letter many months before expressing interest in buying samples of their granules. Subsequent conversa- tions revealed that Okie had developed a waterproof coating to anchor the granules. Sandpaper manufacturers near Okie in Pennsylvania were willing to allow him to use their production lines to make small experimental runs, but they refused to sell him large quantities of their granules to expand his production. Okie wrote the only other sandpaper manufacturer he could identify, little 3M Company way out west in St. Paul. 3M employees knew well that use of the company’s sandpaper sent dust airborne, dust that was hardly a salutary addition to the workplace. A waterproof sandpaper held out the possibility of sanding in water, which would allow users to wash away the dust rather than sending it into the air. They immediately agreed to work with Okie, and Okie sent five-gallon pails of his chemical coating from Pennsylvania to St. Paul. Batch quality varied in a matter that frustrated all involved, and Okie eventually moved to St. Paul to be closer to the production process. May 1921 saw the first sales of this new product—called WETORDRY™—to Max- well (now Fiat Chrysler) and Buick Motors. Automobile makers and automobile body repairmen soon developed the technique of running water over the area being sanded— “wet sanding”—with WETORDRY sand- paper, which washed away the dust and prevented it from accumulating around the granules on the paper. The 3M shipping room in St. Paul, Minnesota, circa 1920. The deflationary depression that clouded the introduction of WETORDRY, with all its distress and slashed wages, was sharp and sudden—and short. Interest rates were lowered and business activ- ity bottomed in mid-year 1921, although consumer prices continued downward. Prices declined a little further in 1922, but GNP jumped 6.6% from 1921 levels, and the rebound in business activity trumped the decline in prices. Leveraged measure- ments of economic activity jumped even higher: The earnings of the Dow Indus- trial companies increased by over 300% in 1922 from the depressed levels of the year before, and the number of busi- nesses reporting 1922 profits in excess of $100,000 increased 66% from their num- bers in 1921. One of those companies was Minnesota Mining and Manufacturing. Sales snapped back. The WETORDRY product helped bring the yearly sales total to over $2 mil- lion in 1923, with profits for the year greater than those inflation-fueled levels of 1919. The 1920s would roar on. The 3M Com- pany created a research laboratory in 1924, initially to monitor the quality of their new waterproof coating and sandpa- per. The following year, their researchers 18    FINANCIAL HISTORY  |  Summer 2019  | www.MoAF.org branched out to develop and introduce masking tape, the first version of what the company later called Scotch™ tape, an adhesive in place of the base coating applied to a paper backing that permit- ted auto workers to quickly mask off and control paint areas to create “two-tone” automobiles. In 1930, they introduced a cellophane tape—popular now for gift wrapping (Magic™ tape)—by substituting a water-resistant film to support the adhe- sive, their first of thousands of consumer products. It was a tremendous decade of growth for the company: Minnesota Min- ing and Manufacturing increased sales over five-fold during the period 1921–1930, and by the end of the decade the company name wasn’t quite so presumptuous. These variations on the general method used to make the original sandpaper prod- uct were possible because the company weathered the financial storm that was 1920–1921. Faced with the financial difficul- ties of that wicked, seemingly bottomless depression and deflation, 3M had the flex- ibility to quickly adjust its labor expenses in line with demand and general prices. The early months of the downturn that began eight years later, in 1929, were actu- ally much less severe than the downturn