Lincoln Electric: A History

Published by EH.NET (July 1, 2000)

Virginia P. Dawson, Lincoln Electric: A History. Cleveland: The Lincoln

Electric Company, 1999. 162 pp. $12.50 (hardback), ISBN: 0-937392-00-6; $8.50

(paperback), 0-9937392-01-4.

Reviewed for EH.NET by Daniel Nelson, Department of History, Emeritus,

University of Akron.

In the history of corporate resource management, small liberal firms have

played a role disproportionate to their size and economic influence. Not

surprisingly, their histories have many similarities. Typically a

strong-willed, ideologically committed owner or chief executive imposed his

values on the firm; a highly profitable product or service permitted the

company to be generous to its employees; and company managers were active in

public affairs. The Dennison Manufacturing Company was probably the most famous

example, but a half dozen others, such as Leeds & Northrup and Columbia

Conserve, were almost as well known during their heyday, the first half of the

twentieth century. Lincoln Electric of Cleveland, an innovative manufacturer of

electric motors and arc-welding equipment, has until now received less

attention. Virginia P. Dawson’s illuminating company history pinpoints the

sources of Lincoln’s pioneering policies as well as one major reason why the

Lincoln story has remained obscure. Whereas Henry S. Dennison and most

like-minded executives of his era were liberals outside as well as inside the

plant, James Finney Lincoln, the dominant figure at Lincoln Electric from the

1910’s to the 1960’s, was as deeply reactionary in his public life as his

wealthy Cleveland contemporaries were.

Dawson’s account, which was subsidized by the company, is ostensibly a company

biography, a story of executive leadership in a successful enterprise

illustrated with attractive photos from the company’s archives. Yet Dawson

manages to transcend her genre. She provides welcome context for both her major

themes–Lincoln’s role in the emerging arc-welding industry and the company’s

commitment to “incentive management” and innovative personnel policies. Her

task was not easy. She found few internal records and had to piece together

most of the story from a variety of fugitive sources. As a result she is unable

to provide adequate documentation for many critical points, including the

company’s enviable record of low-cost, high quality production.

Lincoln Electric was the product of two remarkable brothers, John C. and James

F. Lincoln. John, the company founder, was an inventor and visionary who had

little interest in day-to-day management. John was also initially attracted to

social uplift and the single tax in particular. Inspired by Cleveland’s great

mayor and single-taxer, Tom Johnson, John resolved to devote his life to

reform, turning Lincoln Electric over to his younger brother in 1913. Though he

had little impact as an agitator, his new calling was not without consolations.

In the 1920’s and 1930’s, John became fabulously wealthy as–of all things–a

real estate speculator, with ever-greater holdings in Cleveland and Arizona.

Besides noting the irony of John’s strange career, Dawson does not pursue this

chapter of the Lincoln story.

In the meantime, James was building Lincoln Electric into a successful

manufacturing firm. A former Ohio State football star who viewed his company as

an extension of his college team, with himself as coach, cheerleader, and

chaplain, James continued to excel. Surrounding himself with creative engineers

and handpicked workers, he kept the organization focused on two overriding

goals: the promotion of the Lincoln approach to arc welding and the efficient

production of arc-welding machinery and supplies. To motivate employees, he

introduced an Advisory Board in 1914, a series of benefit programs

characteristic of welfare capitalism in the following years, and most

importantly, a generous bonus program in 1934. Together these measures became

the foundation of “incentive management.”

The Advisory Board was an early company union with elected employee

representatives. Its function was to appraise James of real or potential

grievances and to provide links between him and rank-and-file employees–both

important functions of successful company unions. But the Board was not to be

confused with participatory or democratic management. Employees were encouraged

to speak their minds, but, as Dawson notes, “Lincoln’s formidable presence

alone seemed to discourage brash questions” (p. 36). Employees who worked hard,

followed orders, and identified with the company and its goals could expect

substantial–sometimes enormous- bonuses. In the 1950’s, Lincoln added a

guarantee against layoffs. Together, at least as far as Dawson has been able to

discern, these policies were highly effective. Incentive management permitted

Lincoln to take full advantage of the growing acceptance of arc welding in

construction and manufacturing.

James was also a devout Presbyterian who saw his management system as an

expression of his obligation to other human beings. But unlike most liberal

employers of his era–and this is the most perplexing feature of his

behavior–he was unable to generalize from his experiences to society at large.

Thus, in the 1930’s he succumbed to the influence of fellow employers and

became a vigorous critic of New Deal labor and social policies, though those

policies could be interpreted as extensions of his efforts at Lincoln. His

first foreign investments grew out of his conviction that government had

destroyed the American economy. (At precisely this time, of course, John

Lincoln was making millions from the recovery in land prices.) James became

active in reactionary business groups and generally made a fool of himself with

intemperate attacks on the Roosevelt administration.

In the 1950’s and 1960’s, Lincoln became increasingly rigid and doctrinaire,

hostile to innovation and change, though no less influential. His refusal to

consider new products or spend money on R & D drove out his most ambitious and

enterprising associates, and his unwillingness to retire frustrated others. At

his death in l965 he was succeeded by William Irrgang, his right-hand man, who

was equally hostile to change. Irrgang’s retirement in l985 finally brought new

perspectives to the company. A poorly managed effort to catch up with

competitors through overseas expansion precipitated a major crisis in the early

1990’s and led to the introduction of the first outside managers and more

conventional corporate policies. Wary of stepping on too many corporate toes,

Dawson deals only briefly with these events.

Despite its brevity and gaps, Lincoln Electric: A History is a valuable

company biography. Apart from its fascinating treatment of the rise of arc

welding, it helps to document the activities of the minority of employers who

emphasized the carrot over the stick in enlisting employee dedication and

energy. Lincoln Electric must be included in the top echelon of small, socially

innovative industrial firms.

Daniel Nelson is Professor Emeritus of History at the University of Akron. He

is the author of Managers and Workers: Origins of the New Factory System in

the United States, 1880-1920 (1995), Farm and Factory: Workers in the

Midwest, 1880-1990 (1995), and Shifting Fortunes: The Rise and Decline of

American Labor, from the 1820s to the Present (1997).