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Wall Street History
https://www.gofundme.com/s3h2w8
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02/04/2005
Albert Lasker, Part I
I was perusing the December 1954 issue of American Heritage
magazine (don’t laugh it was recently reissued for subscribers)
and I came across the story of Albert Davis Lasker; according to
the piece the “father of modern advertising.” Born in Germany,
1880, Lasker died on May 30, 1952, and it turns out he made no
speeches and wrote virtually nothing for publication. But over
seven months in 1949 and 1950 he allowed two individuals, one
a professor, to interview him, thus leaving an extensive history.
Hopefully you’ll find it as fascinating as I did as over the next
few weeks we’ll take a look at this man’s life .a classic
American tale.
Shortly after Lasker’s birth the family settled in Galveston, TX,
where he graduated from high school in 1896. He commenced
working immediately after and having started the high school
magazine (one of just 20 or so at the time in the country), Lasker
gravitated to the Galveston newspaper business.
“(But) my father had a dread of my becoming a newspaperman,
because in those days (and this is no exaggeration) almost every
newspaperman was a heavy drinker. It went with the line .I
was very devoted to my father, and he proposed instead that I go
to a firm in what he considered a kindred field – Lord & Thomas
in Chicago, an advertising agency
“He wrote to Lord & Thomas, and they wrote back that they
would give me a three months trial. Then they would see
whether they could keep me on.”
Albert, though, didn’t think he’d last and, frankly, he was
looking forward to just having a good time in a big city; sort of a
semi-vacation. L&T gave him only $10 a week when he had
been earning double and triple that amount and after eight weeks
on the job he got involved in a crap game and lost several
hundred dollars. Lasker:
“Then I had to think, and think fast, so I went to Mr. Thomas,
who was a very sympathetic man and I told him what I’d done.
I had never before sold anything to anybody, but I did a
salesmanship job that day. I talked Mr. Thomas into advancing
me $500 – which was a fortune in those days. He went with me,
and we settled with the gambler. I had to stay with Lord &
Thomas to work out the $500. I never got back to reporting.”
Albert decided to learn all he could about the advertising
industry. Back around 1900 he estimates there were ten to
fourteen agencies in all the United States with the total generated
no more than $15 million collectively. Lord & Thomas did the
advertising for Armour and Anheuser-Busch, the latter one of the
biggest advertisers in America even then, and overall L&T
booked about $800,000 with profits of $28,000. At these levels
the agency was still one of the three largest along with J. Walter
Thompson and N.W. Ayer.
The first $1,000,000 account, incidentally, was with Ayer by way
of the National Biscuit Company, an operation that came about
through the combination of hundreds of local cracker factories.
Ayer thought up the national ad campaign – U-Needa-Biscuit –
and because it was nationwide they could charge that much.
But most of the early advertising was for patent medicine.
Bankers were leery of the ad industry back then, seeing it as a
“gambling device.” Lasker adds, “They would loan the same
people large sums of money to build plants of brick and mortar –
the product of which they might not be able to sell – but there
was a violent prejudice generally among bankers against firms
which advertised.”
Meanwhile, in Battle Creek, Michigan, a Doctor Kellogg “had
worked out a diet treatment .Out of grain, he made substitute
foods.” People came from all around to try out his diets.
One of Kellogg’s patients was C.W. Post. Post found that
Kellogg’s foods cured his ailments and he decided that they
should be made available to the general public, at a profit of
course.
So Post stayed in Battle Creek after he had taken his treatments
and started a small plant to make his own brands; the first being
Postum and Grape Nuts. Postum was a coffee substitute; Grape
Nuts was a breakfast cereal to be served cold. From the
beginning he was successful.
But Dr. Kellogg never forgave Post. Lasker:
“Kellogg felt that Post was a plagiarist, but from a small
beginning Post built the great institution from which later grew
the General Foods Corporation. Kellogg subsequently relented
as to offering his goods to the public through advertising and
proceeded to manufacture for general consumption. Some years
later he originated Corn Flakes.”
By 1902 there was a boom in cereal foods – comparable, Lasker
would say, to a real estate boom. People came from around the
country to start food factories in Battle Creek. Brokerage firms
sold stocks in these companies. Lasker:
“When I went to Battle Creek for Lord & Thomas, the
atmosphere was the same as in the oil towns. Food company
stocks soared in price with each passing hour and of course in the
end most of the money invested was lost. When it was all over,
only Post and Kellogg remained. The rest disappeared.”
Meanwhile, Lasker couldn’t see how he was going to earn the
$500 he owed Mr. Thomas. But about that time the fellow who
handled Indiana, Ohio, and Michigan at the agency quit. Lasker
figures the guy made about $3,500 a year and Albert proceeded
to sell Thomas on the idea of giving the territory to him while
Thomas looked for a trained recruit. Lasker said he’d accept the
same $10 a week he was currently earning and Thomas bit,
making Lasker an advertising solicitor. Lasker:
“I had three assets – energy, dedication, and luck. I was a
success from the first – from the time I was nineteen .
“The first town I covered, after Mr. Thomas gave me a territory,
was Battle Creek. There was a prospect there who was going to
spend $3,000 a big account .
“I was lucky. I was full of energy and determination. I was a
young boy – and that intrigued people. The first day I was out
I was awarded this order of $3,000 which my predecessor
could have landed any time before. He was a fine man, but he
wasn’t a ‘closer.’
“I went out on the road and got these accounts largely as a result
of the good work done by my predecessor (and) by the end of six
months I had $40, $50, $60,000 worth of business. Any man
who handled $150,000 worth of business at that time was quite a
figure in the line. If he received for the firm ten percent
commission on the accounts he landed that meant he was
brining in $15,000. The expenses of the firm were not very
great .
“I wanted to find out what advertising was. I had the reporter’s
instinct that never left me. I kept asking, ‘What is advertising?
What is advertising?’ I couldn’t find out. After a bit I
concluded, ‘Advertising must be created to look like reading
matter. Post had made this type of advertising pay, and the
patent medicine people had made it pay.’”
Lord & Thomas only paid Lasker extra for new business he
brought in, not the existing line left by his predecessor, so Albert
got creative. For instance he took an existing $3,000 a month
account with a Louisville company that made an “ear drum – a
small device to be inserted in the ear to aid hearing” and turned it
into a $20,000 a month account by convincing the company it
could increases sales manifold if it adopted Post’s efforts.
Lasker hired a friend from his newspaper days to write ad copy
and it didn’t cost Lord & Thomas a dime.
Lasker married in 1902 at the age of 22. He had paid his debt to
Lord & Thomas and was making $3,000 a year.
Following is a story any salesman can appreciate involving
Rheinstrom Brothers of Cincinnati; makers of liqueurs. Word
had it that they were prepared to spend $10,000, a large sum for a
new advertiser, and Charles Austin Bates, a big name in the ad
industry, supposedly had the inside track. Lasker heard it was to
be settled in two days.
“It cost nothing to go there and so I went .
“I had learned they would start work at 8:00 AM. Everybody
worked from eight to six, six days a week in those days.
“In those days you could always spot the head of the firm if you
came early in the morning.
“In any private firm (even those run by intensely rich people)
whomever you saw open the mail was the head of the firm .
“I went to Rheinstrom’s straight from the train. At 8:00 I
entered. There was a man standing at a little raised desk opening
the mail, and I knew that must be Mr. Abe Rheinstrom, the head
of the firm.
“He grunted at me and said, ‘What do you want?’
“This greeting was frightening in itself, but I handed him my
card and said I was with Lord & Thomas, that I had heard they
were going to advertise, and that my firm had sent me down to
solicit them.
“He said, ‘How dare your firm send a young boy like you down
– disturbing me in my most important work of the day, early in
the morning? Get out!’
“There I was. I had induced my firm to send me, and I couldn’t
even get an interview. I looked foolish.
“I knew a good deal about the habits of the German population
of that time .Every German went home for lunch. You could
always bet on that. You could also bet that after lunch he took a
nap. I knew that, so I went back and sat in the lobby of the hotel
until about 2:00, when I decided to take a chance to see whether
Mr. Rheinstrom was up from his nap.
“I called him at his home; he chanced to answer the phone and I
spoke so fast that he couldn’t stop me .Quick as I could, I said,
‘I’m-the-young-man-you-kicked-out-of-your-office-this-
morning-I-came-down-from-Lord-&-Thomas-If-I-go-home-
without-seeing-you-I’m-liable-to-lose-my-position-What-
difference-does-it-make-to-you-just-to-give-me-a-few-minutes-
Maybe-it’s-the-turning-point-in-the-career-of-a-young-man-It-
may-be-the-making-or-breaking-of-me-Can’t-I-come-down-to-
see-you-for-a-few-minutes?’
"He said, ‘Yes.’ I went, and he turned me over to his brother who
was to look after the advertising. That was about 3:00. At 6:00,
his brother said that he was going to give Lord & Thomas the
business. He sent a telegram to Charles Austin Bates, saying that
he wasn’t going to give him the business – that he was going to
give it to us.”
We’ll continue our story next week, Feb. 11 Schlitz, Puffed
Rice and American Tobacco among other tales.
Brian Trumbore
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