Gordon McKay

The legacy maker

Gordon McKay, son of a cotton manufacturer, was born in Pittsfield, Massachusetts, a small town in the Berkshires, in 1821, and died in Newport, Rhode Island, in 1903.

Appropriately, McKay (who would become known for revolutionizing the shoe industry) picked himself up by his own bootstraps. When he was 12, his father died suddenly and young McKay went almost straight to work, learning civil engineering by apprenticing in a machine shop.

Around 1844 McKay built his own shop in Pittsfield that employed over 100 men. The business later became known as McKay and Hoadley; his partner was J. C. Hoadley, who would become known for creating portable steam engines. In 1852, the duo moved to the mill town of Lawrence, Massachusetts, where McKay eventually became the treasurer of the Lawrence Machine Shop.

The company, named after the town honoring the industrious Lawrence brothers, indirectly linked McKay to Abbott Lawrence of the Lawrence School, which had been founded five years earlier.

A 1856 catalog for McKay’s shop boasted patents for a variety of gears, pulleys, hangers, pedestals, and practical tables. The next transition for the shop to the United Shoe Machinery Company would also involve patents— but it was McKay’s entrepreneurial, not simply engineering, know-how that would make him famous and fabulously wealthy.

That same year, Lyman Reed Blake built an ingenious, yet not entirely practical, sewing machine that could sew the uppers of shoes to the soles. The painstaking and slow process had previously been done by hand. After hearing of the device,

McKay bought the technology with cash and a share of the future profits. Blake received an initial patent in 1858 that he then sold to McKay; the two men worked together to further improve the device.

As a result McKay secured a crucial patent to the improved ready-for-sale version of the sewing machine in 1862. Blake, perhaps more of a tinkerer than a grand thinker, would end up working for McKay for the next 12 years, installing the machines.

Royalties Per Foot

McKay polished up his sewing machine as the American Civil War was entering its second bloody year. Despite the unfortunate circumstances, McKay sensed opportunity: All foot soldiers rely on one eponymous item of clothing—a good pair of boots.

McKay created a new company to manufacture his shoe-sewing machines with hopes of meeting the Union troops’ growing needs. That seemed pragmatic and potentially profitable, at least for the war’s duration.

To secure his future, McKay took a more radical step by engineering a brilliant business strategy that would do more than outlive the war—it would help change the way people thought about technology. It was a product as much as a process and could be sold like, well, a pair of shoes.

Rather than selling the capital-intensive machines to manufacturers, McKay leased them to an initial 60 firms. He asked for a fee (a royalty) on each pair of shoes made and sold using his machine. Although now a commonplace strategy in merchandizing everything from chain restaurants to software, the idea of securing a royalty on future sales, especially for a technological process, was novel at the time.

Moreover, the low start-up costs encouraged even wary manufacturers to buy his new sewing machines. As the machines became market-tested and met with approval by the initial group of manufacturers, more companies began using them to make shoes.

With every pair of shoes made and sold, McKay pocketed more and more profit (up to $500,000 a year at the peak in 1876, the equivalent of an astounding $10 million in today’s currency). With continued improvements and tweaks in his device, in the coming decades McKay gained royalties on 177 million pairs of shoes.

By 1895, 120 million pairs of shoes a year, the equivalent of half of U.S. production, were created with the McKay machine and technology. To achieve such astounding sales, McKay implemented another strategy that had little to do with technical prowess.

In order to ward off competition, McKay in 1878 formed a consortium called the McKay Sewing Association, essentially creating a monopoly that required commissions to be paid on all shoes made in the United States using his methods.

In 1882, perhaps weary on his feet, McKay sold the association and related patents to Stanley Manufacturing. Appropriately, Stanley would use the McKay name, utilizing another modern business practice (brand recognition) to sell an invention that would soon make shoe leather less necessary.

Even with a trusted name in place, their McKay Steam Engine automobile did not win the day.

Endings and New Beginnings

McKay’s involvement with Harvard, as in the case of fellow benefactor Abbott Lawrence, began with a friendship.

Like Lawrence, McKay was not a graduate of Harvard nor even of high school but was a self-taught engineer and self-made businessman. The entrepreneur became close friends with Harvard geology professor Nathaniel Southgate Shaler, who later became dean of the Lawrence School in 1891. In 1893, Mc-Kay placed an initial $4 million in trust for Harvard.

Once again, as in the case of Abbott Lawrence, who gave a gift shortly after the Corporation and Overseers decided to create a new scientific school without secure funding or a full plan in hand, the timing of McKay’s gift was perfect.

During the late 19th and early 20th centuries, MIT and Harvard nearly waltzed down the aisle (or, more precisely, across the Charles River)—not once, but several times.

Talk of a potential merger between the two institutions began as early as 1863, when Massachusetts Governor John Albion Andrew suggested what he thought of as a more perfect union between the fledging upstart and the well-established University at Cambridge, as Harvard was often referred to in official documents. MIT’s founder William Barton Rogers, however, convinced him otherwise.

The proposal of a “merger” began anew in the latter decades of the 19th century as the Lawrence Scientific School at Harvard began to fade, partly due to the rise of similar institutions at Yale and,of course, the launch of Boston Tech (as MIT was known at the time), located then in Boston’s Back Bay.

As student enrollments in engineering and applied sciences declined, an independent Harvard school became increasingly incongruous and an intellectual eyesore for Harvard President Charles W. Eliot, who served from 1869 to 1909. Eliot, a master administrator who moved Harvard from a small college with loosely affiliated schools to a national university, initially floated the idea of a merger with MIT in 1870 and then again in 1897.  Neither offer was well-received, in particular by alumni of both institutions, and were tabled. 

In 1903, when the McKay gift intended for the Lawrence School was first announced, the prospect of integrating the institutions, or at the very least implementing a formal collaboration, heated up once more.

With the promise of secure funding in place, the boards of Harvard and MIT fully approved two potential merger plans in the next ten years (1904–5 and 1913–4), despite vocal opposition by many alumni and faculty. In both cases, while the “to merge or not to merge” battle was fought in the quads, the issue was ultimately settled by the courts.

In the first case, the courts would not allow MIT to sell its Back Bay lands. Administrators intended to use the proceeds of this sale to build a new campus on Harvard property. Eliot took the ruling as an opportunity to abolish his albatross, the Lawrence Scientific School.

In the second case, the court ruled that the plan by Harvard and MIT’s boards to divide the McKay endowment between the two institutions and unite the Harvard and MIT facilities “violated the intention of the gift.” (See sidebar for a summary of the terms.)

Moreover, Harvard had to maintain an engineering school to secure the money (the full principal of $16 million would not arrive until 1949 due to life trusts). Thus, the two institutions would not be joined and, by the smack of a gavel outside the ivied halls, engineering and applied sciences would remain a part of Harvard.