I am not keen on guns, but I do like a good business story. The Winchester: The Gun That Built an American Dynasty (Yale University Press, 2016) documents the rise and fall of the Winchester Repeating Arms Company of New Haven, Connecticut.
Winchester, who remembered being “always hungry and always cold” as a child, was apprenticed to a carpenter at the age of 14 and soon excelled at church building. But, after only a few years, he abandoned carpentry and opened a men’s clothing store in Baltimore.
Ten years later he sold his business and turned his attention to the design and manufacture of men’s dress shirts.
He was granted a patent for a shirt with a curved seam to “avoid a pull on the neckband.”
He left Baltimore for New Haven and, with a partner from New York, formed a company to make men’s shirts. Initially, seamstresses did piece work by hand at home. With the invention of the sewing machine in 1852, however, the manufacture of shirts moved to the company factory, which produced 40,000 dozen shirts a year.
By the time Oliver Winchester was 45, he was looking for investment opportunities. He bought shares of New Haven’s Volcanic Arms Company, formed by Horace Smith and Daniel B. Wesson, later known for the Smith & Wesson revolver, and became the company’s first president. Unfortunately, the company, which made inferior firearms that used the repeating action, soon became insolvent.
Undaunted, Oliver bought up the company’s inventory and persuaded its shareholders to join him in a new venture, the New Haven Arms Company. The company tried to sell its 16-shot Henry repeating rifle to the Union army, to no avail. The company was also plagued with production problems and quality control. Still, between 1862 and 1865 the company sold more than 10,000 rifles.
When Oliver was in Europe drumming up business, the disgruntled inventor of the rifle the New Haven Arms Company was selling, Benjamin Tyler Henry, tried to change the name of the company to the Henry Repeating Rifle Company.
In response, Oliver cabled his bankers to call in all the mortgages and liens he and his son held against the New Haven Arms Company, thereby threatening it with bankruptcy.
And on July 1, 1865 he signed the articles of association to establish the Winchester Arms Company, with a view to developing an improved version of the rifle he had been selling. And thus was born the Winchester rifle, “the gun that won the West.” (It was also the gun used to massacre the U.S. Army at Little Bighorn and a gun that foreign armies used with devastating effect.)
Oliver Winchester died at the age of 70, in 1880. Although he had envisaged his son Wirt succeeding him, Wirt died of tuberculosis the following year. The job therefore fell to Tom Bennett, husband of Oliver Winchester’s daughter. Bennett was a shrewd businessman, “either outsmarting or vacuuming up his opponents.”
He continued to pursue international markets, selling to the Ottoman Empire, China, Haiti, and Morocco. And the Winchester gained even more fame in the United States when Buffalo Bill pronounced “your improved Winchester the boss” and when Annie Oakley used a Winchester in her sharp shooting act.
More than a million of the Model 1892 repeater rifles were sold, and over seven million of the Model 1894.
By the start of 1913, however, as a prewar recession was taking hold in the U.S., Winchester’s gun business was slowing down. It took some huge orders from the British military to buoy the fortunes of the company.
But these orders, as well as eventual orders from other countries, also took their toll.
The company needed to expand, and management, under the short-lived leadership of Tom Bennett’s frail son Win, had to turn to New York banks for financing.
Winchester – WWI
The war contracts with the Allies were supposed to be quite profitable, but with “the extraordinary rise in costs resulting from the increase in labor rates and the rising price of raw materials, coupled with the fixed price contracts negotiated with the Allies” the company made practically nothing.
Once the United States entered the war, the future of the company looked brighter. But a profiteering tax, which took 80% of the company’s profits over 8%, left the company still in debt and “quite poor.” It had more production capacity than it could use and more debts than it could pay.
Enter Louis K. Liggett, who persuaded management that Winchester should manufacture hardware and sporting goods and sell them through dealerships. The company would use the Winchester brand to sell razors, ice skates, washing machines, and metal household goods, as well as guns—an idea that was a total disaster.
By 1931, “the famous name of Winchester, which had ‘meant defense to those in peril, succor to those in need, vengeance to the wronged, health and sustenance to those far from civilization, pleasure and happiness to the sportsman, creative joy to those who, generation after generation, have devoted themselves to designing and making epoch-making firearms’ went quietly and humiliatingly into receivership.”
Its “tattered remnants” were purchased for $8.1 million.
Winchester: The Gun That Built an American Dynasty