George Walbridge Perkins (1862-1920) was a well-known and oft-criticized figure in American business during the early twentieth century. He spent many years in the insurance business, where he established a network of company agents that became the industry standard. Perkins also instituted one of the first-ever pension plans for employees at New York Life Insurance Company. He later worked with Wall Street powerhouse J. P. Morgan, where he supervised the consolidation of smaller firms into some of the biggest names in American industry.
George Walbridge Perkins
Perkins was born in Chicago on January 31, 1862, into a family whose roots in America dated back to the 1631 arrival of one John Perkins to New England. His father had been involved in several business enterprises, but was also an active Presbyterian who worked as an occasional prison missionary. At the time of his first son's birth, the elder Perkins was serving as head of Chicago's home for juvenile delinquents. The family lived on the grounds of the facility, as they did when Perkins Sr. became warden of the state prison at Joliet. However, by 1872, Perkins's father decided that his four children should be raised in a more wholesome environment, and took a managerial post at the Chicago office of the New York Life Insurance Company. Not long afterward, his wife, Sarah Mills Perkins died in childbirth, leaving George Perkins the oldest of four moth-erless children.
Educated at home until the age of ten, Perkins was a rambunctious child and his father did not harbor much ambition for him. He finished school at the age of fifteen, and became an office boy for his father. Two years later he became an official employee of the New York Life Insurance Company at a salary of $25 a month. In 1880, the family moved to Cleveland when the elder Perkins was made manager of all New York Life policy solicitors on Ohio. As a courtesy to his father's years with the company, Perkins was allowed to succeed him in the job when his parent died in 1886. However, he was soon shunted to Indiana when a more experienced manager coveted the Ohio region. Perkins asked for a leave of absence, and headed to Wichita and Denver, which were both experiencing a massive real-estate boom. He began selling large policies there, and, with these in hand, he asked the company president to be made head of all Rocky Mountain territory. His offer was refused. Perkins returned to Denver and opened an office instead, and continued to sell New York Life policies; soon his total had exceeded $2 million. Finally, he was named inspector of agencies in several new western states, with a territory stretching from Idaho to New Mexico. He held this position from 1888 to 1892.
Named Vice President
Perkins was not so tenacious in his personal life. He was engaged more than once, and his formidable stepmother thwarted each one. Finally she relented and agreed that he should marry his first fiancee, Evelyn Ball, whose family lived in Cleveland. The couple was wed in August of 1889, and settled in Chicago, where he took offices in the Rookery Building. In the early 1890s, Perkins rose within the ranks during a period of distress, involving an executive in charge of South and Central American business. The man was accused of embezzlement, and the company was besieged in the press. Its solvency was called into question. The scandal grew to such proportions that New York Life's longtime president resigned. From Chicago Perkins acted swiftly to reassure policyholders and sales agents alike. He created weekly Bulletins that went out to agents, and worked to reverse the tide of negative newspaper stories. So effective were his tactics that, when an outsider was named to the presidency, it was done with the agreement that Perkins would be named third vice president for agency matters.
In his new post, Perkins received a salary of $20,000, with a bonus of $100,000 for having taken on additional duties in his previous position. He and his family, which included a daughter by then, moved to Riverdale-on-the-Hudson outside of New York City. The house enjoyed a fine view of the Palisades, as the cliffs of the Hudson River were known. Perkins would later play an important role in their preservation. From his new Manhattan office, Perkins continued to write the company Bulletins himself. They announced sales contests and bonus prizes to top sellers, and offered encouragement and tips on closing the sale. A typical Bulletin contained such exhortations as one from January 11, 1896: "Excuse me from the man who comes in and says: 'Mr. Perkins, I am going to write $120,000 in 1896,' and let me shake hands with the man who says: 'Mr. Perkins, I am going to write $10,000 of good, straight business in the month of June."'
Established Agency System
In 1892, New York Life was the last among its competitors, Mutual Benefit Life Insurance Company and Equitable Life Assurance Society. By the end of the century, however, it had advanced to first place. This remarkable change came from Perkins's revolutionary new plan for the company to deal directly with agents itself. Prior to this, the company hired territory agents like his father. They, in turn, paid solicitors to sell insurance policies. Much of this was done on a part-time basis, and the solicitors were not paid very much anyway. Their loyalties were with the territory managers, not the company. Fraudulent practices sometimes occurred as managers moved from place to place.
Perkins began eliminating the general agents by not renewing their contracts with the company. Instead, he contracted directly with the sales agents. This created the agency system, which became the standard in the insurance industry and was still in place a century later. It gave New York Life far more control over its sales force, but competitors still tried to woo the best away. To create a deeper sense of loyalty, Perkins instituted what he called the "NYLIC" system, its letters being an acronym for the company name. It promised agents that after five years with the company and having sold $25,000 worth of policies, they would advance to the next level and would receive monthly bonuses on their sales. The bonuses increased every five years. After 20 years, an agent might retire and simply live from his bonuses. Somewhat controversially, the NYLIC Association required that its members work as full-time sales agents, which Perkins believed would elevate the job to a more professional status.
Headhunted by Morgan
Perkins advanced to the post of first vice president and began traveling aboard to conduct company business. He personally negotiated with Sergei Witte, finance minister to the Russian czar, to loan Russia money. This deal attracted the attention of Wall Street. By this time Perkins was already on friendly terms with New York's governor, Theodore Roosevelt. In 1900 the conservation-minded state executive named Perkins as chair of the Palisades Interstate Park Commission. The cliffs were eroding because the rock was being quarried for roads, but Perkins and other Riverdale residents had long complained that the blasting was noisome. The commission set about raising private funds to buy out the quarrying contracts. With this in mind, Perkins went to the office of J.P. Morgan to ask for a donation. Instead, Morgan-considered one of the most powerful men in the country at the time-offered Perkins a job.
Perkins initially declined, because of the loyalty he felt toward New York Life. But a promise to increase his salary tenfold, plus the prestige of a partnership in the most influential private banking house on Wall Street was too great a lure. He joined the firm in early 1901. During his years there, Perkins handled much of the press for Morgan, who had received much bad publicity over the fantastic profits it earned in the relatively unregulated financial industry of the day. It financed railroads, mining operations, and manufacturing on a massive scale. The rewards it reaped were correspondingly handsome. Editorial cartoonists caricatured Morgan's stout personage as "the Money Trust." Other jibes called into question Perkins's remaining ties to New York Life. One cartoon depicted an enormous Morgan holding Perkins by the legs as he dived into a well marked "N. Y. Life Policy Holders' Dough."
Historic Employee Stock Plan
Perkins was given responsibility for organizing a new conglomerate created by the consolidation of five separate farm-machinery companies, International Harvester Corporation. He also oversaw the set-up of the International Mercantile Marine Company and the Northern Securities Company. The year that Perkins became a partner coincided with the Morgan firm's creation of the United States Steel Corporation, the first billion-dollar company in history. For it Perkins devised an employee-benefit plan in which annual offerings of preferred stock would be made to workers on advantageous terms. The strategy was the first of its kind. However, Perkins' motives were far from altruistic. Through it U.S. Steel hoped to avoid problems with organized labor by keeping its employees loyal to the company and thus personally benefiting when it did well. By World War I, some 40,000 workers owned stock, but they only qualified for the bonus dividends if they demonstrated "a proper interest in [the] welfare and progress" of U.S. Steel.
Perkins became embroiled in the growing tide of public sentiment against big business when he came under government investigation for his ties with New York Life. The press vilified him as an egomaniac for taking credit for New York Life's success. His actions as one of the company's executives were also called into question, including a $48,000 donation to the Republican Party. Policyholders were outraged. Perkins and the other executives were denounced. Some states even revoked New York Life's license. Perkins was forced to resign as a vice president at New York Life, but remained on its board of trustees.
Leader in Progressive Politics
Perkins left J. P. Morgan in 1910 to devote his time to other interests. He was a well-known public figure by then, and began lecturing on the topic of modernizing American business. He advocated cooperation, not competition. Perkins argued that properly regulated large corporations, such as U.S. Steel and International Harvester, were more efficient enterprises than a multitude of smaller firms competing against one another. He also espoused retirement pensions and stock-option for workers. In 1912, Perkins entered politics formally when he was named head of the national executive committee of the Progressive Party. It was created in time for that year's presidential elections, when Republicans split between Roosevelt and William H. Taft. The Progressives called for women's suffrage, among other reforms. However, Roosevelt's four million votes failed to win him election.
During the First World War, Perkins served as chair of a joint state and municipal food supply commission. His son, George III, enlisted in the U.S. Army and was sent overseas after graduating from Princeton. Perkins doted on his daughter-in-law, who was expecting a child when her husband left. When she contracted a fever, her family called Perkins for help. The war had made most medical professionals scarce, but Perkins found a doctor and hurried to the town of Princeton, where he remained by her side as her condition worsened. Both she and the child died, and Perkins was forced to cable his son with the sad news. Never an introspective man, the tragedy triggered questions about his own life, and whether perhaps he had neglected spiritual matters in favor of business concerns. At the time of death on June 18, 1920, he was a member of 40 philanthropic societies. He was felled by a heart attack that occurred during a stay at a sanatorium in Stamford, Connecticut.
Dictionary of American Biography, Base Set, American Council of Learned Societies, 1928-1936.
Garaty, John A., Right-Hand Man: The Life of George W. Perkins, Harper and Brothers, 1957.