When the Great Miami River flooded Dayton Ohio in March 1913, John Patterson wired The New York Times:

“Situation here desperate. All people, except on outskirts, imprisoned by water. They have had no food, no drinking water, no light, no heat for two days.”

As the floodwaters rose, Patterson converted the National Cash Register factory. It would now mass produce rowboats to reach and rescue the stranded residents.

A community leader at his eulogy had this to say:

Patterson “turned the force of men that he had trained into making cash registers into making boats, one a minute, and then sent them into the waters to feed the marooned population, and to take out to safety the sick and the aged, turning his great factory into a hospital and a refuge.”

The following is Methods of Prosperity newsletter number 46. It was originally deployed May 2, 2024. As of January 9, 2025, original subscribers have received up to issue number 82: Sam Zell (continued).

Part 46.

John Henry Patterson.

Founder of National Cash Register (NCR).

Father of Modern Sales.

Methods of Prosperity newsletter is intended to share ideas and build relationships. To become a billionaire, one must first be conditioned to think like a billionaire. To that agenda, this newsletter studies remarkable people in history who demonstrated what to do (and what not to do). Your feedback is welcome. For more information about the author, please visit seanallenfenn.com/faq.

TL;DR

A flood devastated Dayton, Ohio in 1913. John Patterson was founder of National Cash Register (NCR). He transformed his factory into a makeshift hospital and refuge. NCR workers produced rowboats in the facility. They rescued residents of Ohio from the flood. James Ritty invented the product which NCR was famous for. Frustrated with employee theft at his saloon, he created a device to track sales. Which Patterson and his brother Frank acquired and improved. This led to NCR’s establishment in 1884. NCR innovated the cash register with additions like a paper roll and electric motor. Patterson also pioneered modern sales techniques. This included a detailed sales script. He developed comprehensive training and welfare programs for employees. Patterson and other executives later faced legal challenges. They faced a conviction under the Sherman Antitrust Act in 1912. Patterson’s efforts during the Dayton flood influenced public opinion. The court overturned charges on appeal.

Key Lessons:

• Go hard with your selling techniques and sales training.

• Your resources can help save lives and livelihoods.

• Discover inefficiencies such as preventing loss.

• Get out of a bad business and into a good one.

• Surf’s up, catch a wave (metaphorically).

• You don’t have to reinvent the wheel.

• Haters will come after you.

• Take care of your people.

• Cut costs.

We’re improving quality of life at scale for hard working families.

Inveresta Holdings LLC is seeking capital partners, brokers, and motivated sellers. You’re invited to secure your place on our waitlist now. You’ll receive details about our investment strategy. This is not an offer, solicitation of an offer, to buy or sell securities. Past performance is not an indication of future results. Investing involves risk and may result in partial or total loss. Prospective investors should carefully consider investment objectives, risks, charges and expenses, and should consult with a tax or legal adviser before making any investment decision.

Last week on Methods of Prosperity: 

Bill Gross launched GoTo [.com] in 1998. It was a pioneering search site. GoTo introduced pay-per-click (PPC) advertising by auctioning search results to the highest bidder. Yahoo acquired and renamed it Overture. Overture laid the groundwork for the now-standard PPC advertising model. Larry Page and Sergey Brin appointed Eric Schmidt as CEO. Google evolved PPC further with AdWords in 2002. They enhanced it by considering both bid prices and clickthrough rates. Google introduced the “quality score” for ad relevance. This innovation propelled Google ahead of Overture. Google attracted major partnerships. This led to Yahoo’s failed attempt to acquire Google for $3 billion. Google’s strategic advancements continued. Google acquired Android in 2005. Which allowed it to enter the mobile market. This move challenged Apple’s iPhone and advertising revenue. Google’s smart acquisitions included Motorola Mobility for its patent portfolio. Which solidified its market position. Meanwhile, Verizon acquired Yahoo for $4.83 billion in 2016. That price was less than what Yahoo could have acquired Google for when they had the chance. Larry Page and Sergey Brin have become some of the richest individuals in the world. Parent company Alphabet achieving a market cap of $2.32 trillion to $2.34 trillion.

Do you know about my livestream podcast? It’s called Hidden Secrets Revealed Live (HSRL), and I record it live on 𝕏 every Wednesday. 

James Jacob Ritty was the owner of a popular saloon in Dayton, Ohio. His business boomed, but profits dropped. This frustrated him. He needed to solve a problem. He discovered that his bartenders were skimming money from the cash drawer. To address this issue, Ritty created a crude prototype cash register. It could count sales on a face resembling a clock, so that no one could get away with stealing anymore. Ritty’s original cash register prototype served one purpose. Tracking sales to prevent employee theft, as there was still no secure way to store the money itself.

James Ritty sold his invention. A group of investors founded the National Manufacturing Company. This was in Dayton, Ohio, 1879. They bought Ritty’s invention. They established the company to manufacture and sell the first mechanical cash register.

At the time, cash registers were expensive (around $50) and there was little demand for the device. However, John Henry Patterson believed the product would sell. Once shopkeepers recognized its value in preventing employee theft.

John Henry Patterson bought the company and patents in 1884. He and his brother, Frank Jefferson Patterson, renamed the firm. They called it the National Cash Register Company (NCR). They iterated on Ritty’s original design and enhanced it, adding a paper roll. With the help of Charles F. Kettering, they added an electric motor.

“The Cash register was one of the great contributions to civilization. It’s a wonderful story. John Henry Patterson was a small retail merchant who didn’t make any money. One day, somebody sold him a crude cash register, which he put into his retail operation. And it instantly changed from losing money to earning a profit, because it made it so much harder for the employees to steal. But Patterson, having the kind of mind that he did, didn’t think – Oh, good for my retail business – he thought, I’m going into the cash register business. And of course, he created National Cash Register.”

Those words are from Charlie Munger. He gave them during a talk. It was to a class at the University of Southern California, Marshall School of Business on April 14, 1994. “Surfing” is the term he used. It refers to a model in which a business catches the wave of early adoption. They “surf the wave” of a rising technological trajectory.

“And he surfed. He got the best distribution system, the best collection of patents, and the best everything. He was a fanatic about everything important as the technology developed.”

In 2003, Charlie Munger gave another talk mentioning Patterson. To the students of the University of California Santa Barbara Economics Department.

“The cash register did more for human morality than the congregational church. It was a really powerful phenomenon to make an economics system work better. Just as in reverse, a system that can be easily defrauded ruins a civilization.”

“A system that’s very hard to defraud, like a cash register based system,” Munger continues, “helps the economic performance of a civilization by reducing vice.”

Patterson formed NCR into one of the first modern American companies. He introduced new, aggressive sales methods and business techniques.

The following excerpt is from Harvard Business School. Which quotes Walter A. Friedman’s article for Business History Review. It describes the “Primer,” which is the N.C.R. sales script. Which gave instructions not only on what salesmen should say, but also what they were to do while saying it.

“John H. Patterson created an intricate system of management to monitor and train company salesmen. He gave them scripts to memorize and assigned them territory to cover. He held conventions and thematic sales contests, and pressured salesmen to rid their regions of competition. Patterson sought to create a method of sales management that encompassed all aspects of selling, from the calculation of quotas and commission rates to the motivation of discouraged salesmen.”

“The Primer divided a sale into four steps: approach, proposition, demonstration, and close. In the approach, the salesman made no mention of the cash register. Instead, he explained that he wanted to help the businessman find ways to increase profit—that he wanted, in effect, to act as a consultant. In the proposition, the salesman described the register for the first time and explained how it would prevent theft and give an accurate account of the day's receipts. The goal of this stage was to schedule a demonstration of the machine in a nearby hotel where the salesman had set up a display, or, if convenient, in the local N.C.R. branch office. In the demonstration, the salesmen carefully led the customer up to the point of a purchase. When the moment seemed right, he attempted to close. This was the toughest part of the sale. The Primer offered a number of techniques, including the following:

After you have made your proposition clear and feel sure that the merchant realizes the value of the register, do not ask for an order, take for granted that he will buy. Say to him "Mr. Blank, what color shall I make it?" or "How soon do you want delivery?" ... Take out your order blank, fill it out, and handing him your pen say, "Just sign where I have made the cross."

If he objects, find out why, answer his objections and again prepare him for signature.... Make the merchant feel that he is buying because of his own good judgement ... find out the real reason why and your chances are that that is the very reason why he should buy.... Concentrate your whole force on one good strong point, appeal to judgement, get him to acknowledge that what you say is true, then hand the pen to him in a matter-of-fact way and keep on with what you were saying. This makes signing the logical and obvious thing to do.”

Patterson established the first sales training school in 1893. He introduced a comprehensive social welfare program for his factory workers. The company set out to not only improve their product. They improved the condition where they made their product. The estimated total value of NCR’s benefits package was around $7,800 per employee. It included health insurance benefits and retirement benefits. It included on-site amenities like cafeterias, shuttle services, and childcare facilities. The company gave workers the first “daylight factory”. They built the walls out of eighty percent glass (according to a company promotional film).

By 1911 it had sold one million machines and grown to almost 6,000 employees. Patterson’s methods enabled the company to fight off bankruptcy. With rigorous legal attacks combined. He was able to buy-out over 80 of NCR’s early competitors, and achieve control of 95% of the U.S. market. The next year the company was not so lucky.

The year was 1912. The US Government found his company guilty of violating the Sherman Antitrust Act. The court convicted Patterson, Edward Deeds, Thomas Watson. They also convicted 25 other NCR executives and managers. The court found them guilty of illegal anti-competitive sales practices. They served one year of imprisonment. Their convictions were unpopular with the public. This was due to the efforts of Patterson and Watson to help those affected by the Dayton, Ohio, floods of 1913. Efforts to have them pardoned by President Woodrow Wilson were unsuccessful. A judge overturned their convictions on appeal in 1915. It was on the grounds that important defense evidence wasn’t admitted.

In conclusion, it’s wild to imagine how much money a company loses to internal theft. Especially without the cash register. The world is full of makers and takers. It’s likely that there are, in fact, less makers and more takers. There will always be people who will steal from you. The invention of the cash register was one of the greatest inventions in commerce. The Patterson brothers recognized it in 1884 and went all-in. By 1888, NCR was a multinational company.

NCR was a dominant and influential player in the cash register business for many decades. In 1926, NCR went public. AT&T acquired NCR in 1991, and renamed it AT&T Global Information Solutions. When AT&T restructured in 1997, NCR was re-established as a separate public company. They spun off a separate data warehousing business, NCR Teradata, in 2007. In 2023, they split NCR Corporation into two independent public companies. NCR Voyix (digital commerce) and NCR Atleos (ATM business).

Stay tuned for next week. We’ll explore a retailer that has had a long-standing business relationship with NCR. Dating back to at least 1996, this retailer entered into a “million dollar contract”. Instead, they’re deploying their own machines today.

I like you,

– Sean Allen Fenn

PS: You don’t have to follow me on 𝕏, but you can partner with me to bring about serious advancement for each other.

Now you can join our SelfActualizer community. Learn more here.