Larry Schweikart teaches history at the University of Dayton.
No image in the 1990s captured the apparent weaknesses of the capitalist system more than that of mid-level managers “downsized” out of their jobs. Here were successful executives with well-paying jobs and solid retirement prospects suddenly told that they had no place in the company and that they had to go.
Corporations, cognizant that the news would be portrayed negatively (jobs lost and lives ruined rather than new jobs created and customers served), attempted to “spin” the reports by creating such terms as “downsizing” and, more insultingly, “right-sizing.” As the companies expected, newspapers reported each new announcement of corporate cutbacks with almost gleeful tones, to the point of running news about the layoffs in headlines with the most dramatic language. The New York Times, for example, in March 1996 ran a seven-part series called “The Downsizing of America,” in which it called laid-off employees “casualties” of “the battlefields of business.” Companies did not merely release individuals—often with generous terms or mutually agreed-on severance packages; instead they “chopped” or “slashed” their workforces, throwing people “onto the street.” One headline trumpeted that Sears “kills” catalog sales, and jobs were routinely described as being “cut,” with the phrase “drastic cuts” used frequently to describe a company’s attempt to remain competitive. A figure of 43 million lost jobs since 1979 was reported widely, but the most popular single villain, AT&T, received some of the most critical press when it announced that it would eliminate between 36,000 and 40,000 positions in an effort to stay afloat. Newsweek, though, probably won the sleazy journalism award by portraying several CEOs on its cover with the title, “Corporate Killers.”
Part of the enthusiasm for the news accounts involved the “victims”—in this case, employees whose productivity no longer matched their cost—because the pink-slipped were overwhelmingly mid-level managers and white-collar executives who had (seemingly) been spared the severe retrenchments during the 1970s and 1980s in the steel, auto, and electronics industries. At that time, the blue-collar workforce had taken it on the chin, and the media had dutifully covered those developments with appropriately somber and glum commentaries. After all (the newsroom reasoning went), the blue-collar guys actually worked for a living and thus were deserving of sympathy. But the corporate types? Served ‘em right. Now they knew how the line workers felt.
By the second and third wave of white-collar layoffs, however, even the media started to show compassion, relating tales of breadwinners turned out on a moment’s notice and of fathers unable to care for their children. The Times, for example, opened its series with the story of Steven Holyhausen, who went from a $52,000-a-year banker to a $12,000 position as a tourist information officer.
Certainly at no point did much discussion about the actual economics of the equation arise. Seldom did a story begin: “Today, AT&T announced that it would no longer pay 9,000 mid-level managers three times the average American’s income for doing a job less efficiently than the Japanese or the Germans.” Nor did most stories mention that in the 16 years that the nation lost 43 million jobs, industry created 70 million new jobs; or that since 1982 the number of Americans working increased by 32 percent; or that the competitors of AT&T all added more than 185,000 new positions since 1978. Although reporters portrayed the Steven Holyhausens as typical, seldom, if ever, were reporters able to follow any sizeable sample of workers for any substantial length of time after they were fired to determine what happened to them after their downsizing. After all, they had other stories to write. Had they done so, the Times reporters might have found that the real evidence painted a much different picture from the one they sketched.
Early reports, especially from Silicon Valley, suggested that the unemployed did not stay that way for long and that most found work within a year at comparable, if not better, salaries. The 11 semiconductor companies that formed the Sematech chip consortium had 17,000 open positions that they could not fill in 1996, while T. J. Rodgers, the CEO of Cypress Semiconductor, found that when he tried to hire those laid off from AT&T, yet another competitor, Cirrus Logic, had beaten him to the punch. But the media, having drained one sympathy well dry, already had moved on to other topics, leaving the public with the notion that “once fired, always fired,” ignoring a study by Princeton economist Henry Farber, who found that the percentage of people holding their jobs for ten years or more had not changed between 1973 and 1993.
The truly astounding fact, though, is that almost every worker at one point or another has been fired or nearly fired; few workers are so diligent and successful in every undertaking as to be immune from a pink slip. Actor Sylvester Stallone, discussing with talk show host Charlie Rose his pre-Rocky employment in a number of positions, observed that he didn’t provide value for consumers in any profession other than acting. In writing a book on entrepreneurship in American history, I was struck by how many successful businessmen and women had been fired, or had failed—not once, but often repeatedly—to the point that they were written off for dead, only to make their most important contributions to society. (These sections I have called “Tales from the Crypt.”) Well-known American businessmen, from P. T. Barnum to C. W. Post, from Henry Ford to Famous Amos, all experienced bankruptcy, some more than once. Being fired or broke, it turns out, was not only common, it often provided the critical stimulus people needed to achieve greatness.
The Pony Express
Since the concern with unemployed workers and their ability to find new jobs has not interested many scholars until the post-World War II era, the follow-up records on early businesses are somewhat murky. Nevertheless, some rather clear case studies exist to suggest that it is not just a lucky few who survive downsizing, but the large majority, and that many quickly exceed their previous levels of income and standard of living. One such case study is of the Pony Express. Created in January 1860, the Pony Express was the brainchild of William Russell, who had taken advantage of the Postmaster General’s dissatisfaction with the existing mail service to organize a company based on the traditions of the Mongol riders in China. He envisioned horsemen covering a 1,966-mile trail from St. Joseph, Missouri, to Sacramento, California, establishing small outposts along the way where riders could change horses and get food and water.
Prior to 1860, mail from the east coast to California, more than 2,000 miles from the nearest major city, had to go by packet steamer to the isthmus of Panama, from which it was transported overland, then again loaded on a steamer for San Francisco. The journey, while several thousand miles shorter than the six-month trip around Cape Horn, still took more than six weeks under good conditions and could take months if it encountered bad weather or disruptions in Panama. Overland routes to California existed, to be sure, but the two principal routes from Missouri—the Oregon Trial and the Santa Fe Trail—both had severe drawbacks, including terrain and Indians. Making decent speed on the journey led to a number of extraordinary projects, including a joint effort in the 1850s by the U.S. Navy and Army to import dromedary camels to cross the deserts of the southwest with mail. The camels proved ill-adapted to the harsh, rocky soil of the American west, and they tended to frighten mules and horses.
Eventually, two mail routes to California developed. The Butterfield (or Ox-Bow) Route ran from St. Louis through Arkansas, Texas, New Mexico, and Arizona, where it split into two trails heading to Los Angeles or San Francisco. Naturally, that route had the support of the slave states. John Butterfield received the contract for the southern route, which he serviced by constructing a small fleet of stagecoaches that carried eight to 14 people and a large mail trunk. But the fastest stagecoach could make the round trip in 50 days, give or take “turnaround time.” Even in the best of conditions, the trip was dangerous, with Kiowa, Comanche, and Apache threatening every coach.
A second route, the so-called Central Route, ran much further north (and thus was strongly supported by the free-soil groups) and was shorter, but also was closed for several months of the year because of snow. The original concept in 1851 was to have mule pack trains carrying mailbags leave Sacramento for Salt Lake City. There they were to meet up with a second company that had carried the mail from Salt Lake City to Independence, Missouri. The first mail runs from Sacramento, however, met with disaster ranging from Indian attacks to freezing to death. Nevertheless, Major George Chorpenning, who had received the Sacramento-Salt Lake mail contract, almost single-handedly kept the deliveries going, broadening the pack trains to include heavy wagons protected by armed escorts, which, in turn, drove up prices. In 1859, mail trains were still expensive and slow, burdened with an escort that slowed them down.
Other communications mediums were not yet mature. The telegraph, designed by Samuel F. B. Morse in the 1830s, did not impress anyone enough to obtain strong capital backing until 1843, when Morse and Charles Jackson built a short telegraph line. At that point, perhaps the best thing that could have happened to the telegraph did: the government backed out. Morse and his partners, clueless as to how to market the new technology they owned, sold licenses to the telegraph machinery to private competitors (including Henry Wells in Buffalo). In 1855 Hiram Sibley, who held most of the patents in the west, merged his company with that of Ezra Cornell to form the Western Union Telegraph Company and continued expanding the telegraph lines westward.
Until the telegraph linked the coasts, however, the delays associated with the packet liners and the slow pace of overland travel meant that any urgent message to or from California could not be delivered, well . . . urgently. Demand rose further when silver and gold were discovered in Colorado in 1859, causing a boom in the overland freight business. Several independent companies competed for that lucrative market, but none more effectively than the firm of Majors, Russell, & Company, a Leavenworth and Atchison outfitting business. That company, and its subsequent incarnation as Russell, Majors, and Waddell, handled thousands of tons of goods shipped to the west, employing over 6,000 men to handle the more than 75,000 oxen in the company’s stables.
William Russell had a diverse background, moving from Vermont to Missouri as a teen. In Lexington, Missouri, he started a small shop that specialized in items needed for the fur trade and over time he graduated to engaging in real-estate transactions. During the Mexican War, he shipped military supplies to Santa Fe, becoming so wealthy through those contracts that he could start his own insurance company and open a college for women. In 1851, he joined a freighting firm in which he made the acquaintance of future business partners Alexander Majors and William B. Waddell.
Although he apparently never went across the Great Plains himself, Russell was a natural promoter who immediately perceived opportunities. It made him the perfect partner for Majors, who had worked oxen and supervised bull-whackers all his life. Majors had lived on the trail, riding the routes personally each year to inspect the conditions of the animals and men. A staunch Presbyterian (Russell was a practicing Baptist), Majors demanded of his employees that they sign a pledge promising not to use profanity, get drunk, gamble, or treat animals badly. That pledge soon gained Majors a reputation for integrity that brought him business no advertising could produce. He provided balance to the bureaucratic genius of Russell, who, after organizing the operations, went east to represent the company in the major urban areas.
Division of Labor
Russell and Majors benefited from the talents of yet a third partner, William B. Waddell, a Virginian who had moved several times before settling in Lexington. Waddell also had been a merchant tailoring his business to settlers moving to the plains, and like Russell he eventually founded an insurance company as a spinoff of his freight firm. In January 1855 Waddell merged with Majors and Russell, forming a substantial freight operation. A natural division of labor ensued: while Russell operated best in the high-brow, polished environs of the eastern seaboard and Majors belonged in the saddle heading west, Waddell worked well in the middle, handling the local finances and the office work in Missouri and Kansas.
It was Russell who remained the visionary of the group. He saw the potential for competing with Butterfield over the Central Route, using mule-driven coaches traveling from Leavenworth through Denver, then on to Salt Lake City and California. But Russell really had his eye on the mail contract, which he acquired with his partners when they bought the bankrupt J. M. Hockaday & Company in 1859. The new company name, submitted to the Kansas Territorial Legislature, was the Central Overland California & Pike’s Peak Express Company. In Russell’s mind, the business had one immediate objective: prove it was superior to Butterfield’s stages. “I was compelled,” he later wrote, “to build a world-wide reputation, even at considerable expense.”
Defeating the Butterfield stagecoach line would require achieving faster mail delivery than the Central Route coaches and wagons yet had attained. Ironically, few people want to credit Russell with the idea for the Pony Express that he founded. Yet Secretary of War John B. Floyd recalled that Russell mentioned the idea of having relays of single fast riders carry mail as early as 1858. At any rate, in 1859 Russell and John Scudder had corresponded regarding a plan to carry mail from Sacramento to St. Joseph, Missouri, in 12 days. Perhaps more significant, Russell committed to running a mail express from St. Joseph to Sacramento before he had guarantees that he would not be competing with Chorpenning, whose contract remained in force until May 1860.
Actual organization of the Express was complicated by the interlocking activities of the various Russell, Majors, and Waddell companies. In January 1860, the founders created the Central Overland California & Pike’s Peak Express Company for the specific purpose of competing with the Butterfield Overland Mail Company. Three months later, the owners had signed a contract to establish a headquarters in St. Joseph, and to start a line of stagecoaches running from that city to Denver on a weekly basis. They also announced their intention to run a “Pony Express” from Wathena, Kansas, to Sacramento, California, as soon as the railroad lines reached Wathena. St. Joseph citizens gave the company several lots in town and furnished a building for the Express, in essence paving the way for the Central Overland California & Pike’s Peak Express Company to engage in railway express. Technically, however, the freight firm of Russell, Majors, and Waddell financed the Pony Express, establishing stations, purchasing supplies, and acquiring horses and riders.
Attracting capable horsemen who were willing to risk death daily might have seemed daunting, but the Pony Express published ads that almost dared riders to join: “Wanted—young, skinny, wiry fellows, not over 18. Must be expert riders, willing to risk death daily. Orphans preferred. Wages $25 a week.” Riders were expected to cover a route between two stations, resting every 75 to 100 miles at a “home station,” then start back. The round trip required a rider to change his horse six to eight times. As suggested by the schedule for the first run, a rider was expected to make Fort Kearny, Nebraska, in 34 hours; and the mail would reach San Francisco after a total riding time of 240 hours. No excuse was tolerated, and the company motto was “The Mail Must Go Through.”
Consequently, the company had to choose its riders well, as they constituted the lifeblood of the operation. Division supervisors actually selected the riders for their regions. Obviously, horsemanship was essential, and a slight build was preferred. Younger riders received the nod over older ones, while Majors and Russell insisted that the boys have good moral character. Each received a Bible after signing Majors’s required oath. Almost all hailed from Missouri, Kansas, or Nebraska and had lived on the plains their entire lives. A few had even driven stagecoaches. The Utah regions predominantly drew Mormon riders, who had a special advantage of being associated with Brigham Young’s congenial treatment of his Utah, Ute, and Shoshone neighbors for many years. For risking their lives and suffering from saddle sores, the riders received $50 a month, plus room and board—a high salary for the period. Russell himself only took home $150 a month, and a division supervisor, $90. Initially, riders carried rifles and a small horn to announce their coming at each station, but they soon abandoned the rifles (as either redundant or inconvenient, as well as heavy) and the horns as unnecessary. A station manager could hear the approaching horses and riders.
If the riders were the blood of the system, the five division superintendents were the brains. Each of the superintendents knew the territory well—some having worked for railroads or stage companies—and 119 separate stations were established over the 1,966-mile route. (At the time, that represented one of the longest overland roads in the world and was clearly surpassed only by Butterfield’s southern route.) Superintendents had only 65 days to hire riders, purchase horses and supplies, and stock their stations. While that constituted a challenge for some, many found that they could “piggyback” Pony Express outposts on existing stage or railroad facilities. A single station’s region, such as that running from Carson City, Nevada, to Sacramento, could employ 20 men as riders or packers, require over 200 horses and mules, and use hundreds of saddles and blankets. The Express purchased 500 of the best horses in the west for the actual delivery runs, with each horse costing between $150 and $200. A horse had to average just over 12 miles per hour on the road, which posed a challenge for even the finest horses in the country, but relay stations ensured that horses were well rested between their runs. Those purchasing the horses put a premium on speed, because out-riding Indians offered a much better chance of survival than out-fighting them.
Each outfitted horse bore a special Pony Express saddle with a mail pouch called a mochila, which resembled a large blanket with two large covered pouches on each side. The mochila had holes for the saddle horn and cantle; it was slipped over the saddle and held in place by the rider: a station master could sweep it off and throw it on a new mount in a matter of seconds. Indeed, the process of switching horses and pulling the mochila off as the rider swung his leg over the tired mount, then hopped onto the fresh horse became so intricate that most riders never touched the ground; and toward the end of the Express’s days, a mochila could make the run from St. Joseph to Sacramento and never cease moving.
On April 3, 1860, a brief celebration was held in St. Joseph, and at least ten riders, nominated to take the first mail pouch out, met to learn that Johnson William Richardson would be the first Pony Express rider. He chafed at the delays caused by the speeches and celebrations, having already been indoctrinated with the notion that “The Mail Must Go Through.” At 7:15 in the morning, Richardson took to the saddle, and the Pony Express started its operations. Meanwhile, later that day, James Randall initiated the western end of the Express, leaving San Francisco with a mail pouch. His journey was much different from Richardson’s, for his first act was to ride to the waterfront to take the mail to the steamer Antelope, which delivered it to Sacramento. There another rider in true Pony Express fashion hustled off for Placerville, which he made in four hours—ahead of schedule. East of Salt Lake City, eastbound and westbound riders crossed on Sunday, April 8, 1860, technically confirming Russell’s vision of a mail route covered by swift horsemen. On April 13, church bells and cheering crowds met . . . Johnson William Richardson, who made his return run to St. Joseph with the 85 letters sent ten days earlier from San Francisco. After that, it was all routine.
When the final riders crossed in October 1861, the company had “held the spotlight of public interest and acclaim,” having made 300 runs each way and covered a total of 616,000 miles carrying almost 35,000 pieces of mail. But suddenly telegraph wires linked the coasts and the Express was made obsolete instantaneously. Although the transcontinental railroad wouldn’t provide a way to deliver physical pieces of correspondence rapidly for nearly another decade, the telegraph essentially killed the Pony Express. Dozens of riders awoke to find themselves out of work, unneeded as mail carriers. Yet the total number of jobs in the economy created by the new delivery systems grew exponentially, as workers had to place poles, string wire, run the telegraph offices, lay track, design and build telegraphs and locomotives, and serve as engineers and conductors on trains.
The Pony Express represented a classic example of a business made obsolete by technology. The losses in a single line of work—Pony Express riders—represented a 100 percent downsizing. But were they helpless victims turned out by a greedy corporation? Hardly. Raymond and Mary Settle have traced the history of most of the Pony Express riders in their masterful group biography, Saddles and Spurs. The Settles discovered that the riders’ stories are inspiring as much for what they accomplished after they were laid off from their riding exploits. Don Rising, for example, carried dispatches at the battlefield for the Union Army in the Civil War, gaining promotions to assistant wagon master. He eventually moved to New Mexico, where he started a mercantile and hotel business. Harry Roff became an insurance salesman who received promotion after promotion to become the Pacific manager of the Home Insurance Company. William Page, Elijah Maxfield, “Happy Tom” Ranahan, Robert “Pony Bob” Haslam, and many others stayed in the general occupation of driving stages or scouting; others (including John Frye, who, along with Johnson Richardson, was one of the first to ride the circuit) found work on ranches and in rodeos and circuses; still others, such as Martin Hogan, found themselves in demand by the railroads. Of the numerous riders that the Settles had information about, all found employment at levels above that provided by the Pony Express—with one exception, a hermit who retreated to a wilderness location. In short, the death of the Pony Express did not make a pauper out of anyone, and the downsizing that occurred only reflected the lower costs of faster transmission of information in other ways.
Meanwhile, gigantic new businesses, employing far larger numbers of people, arose to take their place. Western Union, the most successful of the new telegraph companies, emerged from the Civil War as a colossus—the largest nonrailroad corporation in America, with a $40 million capitalization. It controlled virtually all the telegraphy in the nation, but also engaged in the production of electrical equipment and had scores of electricians and mechanics working in its labs. As for physical freight, Wells Fargo stepped into the void with its famous stagecoach lines. The new rivals to the Pony Express had it beat, either in terms of speed (Western Union) or delivery capacity (Wells Fargo). As exciting as was the image of a lone, daring Pony Express rider desperately lashing his horse to deliver the mail on time compared to the dullness of the relentless click of the telegraph or the steady, almost painful bounce of the stagecoach on its iron springs, the plain fact was that dull and steady also meant reliability, lower cost, and higher efficiency.
Certainly a difference of perceptions separated the “downsized” workers of the 1800s and the 1990s; reporters, viewing events from a late twentieth-century prism, might assume that someone who loses a job will become a member of a permanent “underclass,” though the evidence does not generally support such an argument. A more plausible criticism—but one that also stems somewhat from a misperception—is that Americans have come to expect a single lifetime career. In fact, studies have shown that many, if not most, American workers have several careers during their lives, and more important, the majority of younger workers fully expect such to be the case. History provides voices for those who choose to listen. Based on the experience of the Pony Express, they are the voices of success and triumph.
- 1. Louis Uchitelle and N. B. Kleinfeld, “On the Battlefields of Business, Millions of Casualties,” New York Times, March 3, 1996.
- 2. James K. Glassman, “Far From Doomsday,” Washington Post, March 5, 1996.
- 3. Farber’s work is discussed in “Is America’s Economy Really Failing?” The American Enterprise, July/August 1996, pp. 26-31.
- 4. Quoted in Raymond W. Settle and Mary Settle, Saddles and Spurs: The Poney Express Saga (Lincoln, Neb,: University of Nebraska Press, 1955), p. 32.