7.10. OGDEN SAVES McCORMICK’S FACTORY AND BECOMES AN EQUAL PARTNER

Cyrus McCormick returned to Chicago on June 1, 1848, after spending the spring in Washington defending his patents, to find a very impressive factory along the bank of the north branch in which his partner Charles Gray was busy at work with his part of the bargain, producing the 500 machines for the imminent harvest. A few days later, Ogden began to lay his tracks to the west. McCormick’s factory had already become the rave of Chicago, best described by the Chicago Weekly Democrat:

“This is truly a mechanical age, and probably nothing so distinctively marks the civilization of the present day as the state of perfection to which machinery is being brought… These remarks were suggested by a visit yesterday to the Reaping Machine Factory of Messrs. McCormick and Gray. It is situated on the north side of the river near the piers; and is a well finished brick building, 100 feet by 30 or over and three stories high. Attached to the main building is a building containing the steam engine, lathes for turning iron, and also a building containing six forges. There are 33 hands employed in the factory, ten of whom are blacksmiths.

The steam engine [10 hp.] particularly attracted our attention… This engine drives some fourteen or fifteen machines; viz. a planing machine, two circular saws, a tenent saw, a lathe for turning handles for rakes, pitch forks, etc.; also two lathes for turning iron, a gage’s patent die, two morticing machines and two grind stones. Machines are being set up for various other uses in several branches of carpenter’s work. The smithy contains 10 forges in all… We understand the proprietors design enlargening this portion of the establishment as it is at present too contracted for the wants of the factory.”

All was not, however, what it at first appeared to be upon McCormick’s arrival. Gray was supposed to have mailed McCormick monthly financial statements, who upon receiving these was to have forwarded any necessary additional cash needed to help Gray with the manufacturing. McCormick apparently had received no communications whatsoever from his partner and had assumed that the $2500 in patent fees that Gray had still owed him from the 1847 season had been sufficient to cover any additional costs incurred by Gray during McCormick’s absence. Meanwhile, Gray apparently had second thoughts about his involvement in such a large business undertaking, especially as the early winter of 1847-8 had progressed in a markedly disadvantageous way for the promise of the upcoming wheat season. Fearing a potential financial debacle if the harvest proved to be a bust, Gray had approached Ogden in January in “great need of capital” to continue the fledgling operation, misrepresenting the situation by stating that McCormick was not holding up his part of the contract by forwarding the necessary funds already expended by Gray in the construction of the factory. Instead of securing a loan sufficient to continue the operation, however, Gray apparently chose to hedge his bet by reducing his potential liability from a poor harvest by selling half of his interest in the company to Ogden for $7000 (netting a $6,000 profit), without ever consulting McCormick.

As McCormick arrived in Chicago in June 1848, he not only had a new factory, but also a new partner, although as he stepped off the boat, he was apparently unaware of this fact. Even as production of the reapers continued apace into the summer in order to meet demand, both Gray and McCormick lined up their arguments in anticipation of legal action. At the end of the very successful season (McCormick had netted over $30,000 from the Chicago operation alone), the two partners agreed on September 25, 1848, to submit their differences to arbitration, and assigned to Ogden the responsibility of collecting the outstanding debts. On the same day, Gray also shed himself of McCormick’s iron will by selling his remaining quarter interest in the factory to Ogden, who now owned half of the reaper operation.