The First 100 Years
of a Lake Superior-born Business

3M Founders
by Hugh E. Bishop

Got a bit of paint peeling? Pull on some gloves lined with Thinsulate Insulation and run out to buy sandpaper to smooth it. Wanna let your kids know where you’re going? Stick a Post-it note on the fridge. May as well get a roll of masking tape, too, since you’ll be painting the sanded area. Oops, that $10 bill is torn. Never mind, an inch of Scotch Tape will mend it.

One, two, three, four, five … just like that you’ve contributed to the success of an international business that started 100 years ago on the shores of Lake Superior.

3M, also known as Minnesota Mining and Manufacturing Company, began its life in June 1902 in the modest Two Harbors office building that now houses, appropriately, the 3M Museum. The museum, run by the Lake County Historical Society, follows not only the dramatic success of 3M, but the nearly disastrous start of a company founded on mistaken information, sunk into heavy debt, then rebuilt by innovation and creativity into an international player that posted sales exceeding $16.07 billion in 2001 from operations in more than 60 countries and 32 states.

3M Museum

This downtown Two Harbors, Minnesota, office building was where John Dwan created the paperwork that created 3M. It’s now the 3M Museum and exhibits explain the company’s present and its past, as started by the company pioneers at the start of the story. Across this story is the evolution of the 3M logo from 1906 to the present. COURTESY 3M

On the eve of 3M’s centennial, the company doesn’t shy from the rocky road of its earliest years. Although its headquarters long ago moved south to St. Paul, 3M has been generous in keeping its Lake Superior history alive through support of the Two Harbors-based museum.
“3M is proud of our past and we look forward to the future,” says Cynthia Kleven, manager of community affairs for the company. “As we mark a century of innovation in 2002, it’s important to preserve the past and to use our past success as a springboard to our future. The 3M Museum is an important part of that process.”

In the early 20th century, few economic soothsayers would have predicted a 21st century survival of 3M. Its early history – multiple stumbles corrected by its founders’ unabashed “can-do” tenacity – offers a welcome happy ending and story moral for businesses facing challenges in our current economy. Success did not come easily or quickly for 3M. The fortitude to withstand near disaster accounts in some measure for the creative drive that now has the company marketing 50,000 different products to customers in 200 countries.

3M logos

Things seemed bright in June 1902, when Two Harbors attorney John Dwan drew up articles of incorporation and added his $1,000 to that of other charter board members, meat market owner Hermon Cable, Dr. J. Danley Budd, the city’s leading physician, and Duluth and Iron Range Railroad executives William McGonagle and Henry Bryan.

The new company’s goal was to mine and process a mineral called corundum at Crystal Bay near the Baptism River. (This accounts for the “mining” in the name of a company known primarily for technology.) Corundum was in demand as the premier abrasive for grinding wheels, sandpaper and other items to polish, shape, sharpen and decorate items produced by America’s increasingly industrialized economy. This new source of corundum was greeted jubilantly; the only other North American source was in Ontario.

3M Crystal Bay Plant3M began life as a mine along Lake Superior’s shore. This Crystal Bay structure no longer exists. COURTESY 3M

“The material (corundum) is there and its worth has been proven. The market is adequate for all that can be produced,” a local newspaper enthused when 3M made its first one-ton shipment the winter of 1903-04. That would be its only shipment of the mineral.

The problem – one that surfaced after the company had incurred a large start-up debt – was that the corundum was not there on Lake Superior’s Minnesota north shore. What was there was anorthosite, useless as an abrasive. So within a couple of years of its founding, 3M had tons of mineral for sale, no customers and was all but bankrupt

By the end of 1904, even before the discovery that its “corundum” was not corundum, the indebted company faced a grim future. 3M’s stock – these days hovering at $111 a share on the New York Stock Exchange – back then earned a “barroom exchange” of two shares for a shot of rotgut whiskey. Early 3M investor Edgar B. Ober of St. Paul contacted Lucius P. Ordway, co-owner of a large St. Paul plumbing supply company, for financial help. Ordway agreed to obtain 60 percent of the company by advancing $14,000 for debt payment, financing a plant to make sandpaper and supplying working capital. He, like the others, believed the Crystal Bay mineral was corundum.

3M logos

With Ordway’s backing, the company emerged. An expert was hired to run the sandpaper plant located in an abandoned Duluth flour mill. Imported garnet and emery were used as abrasives. One year later, orders averaged $2,500 per month. But expenses were $9,000 a month.
Once orders came in, the plant switched to the Crystal Bay “corundum” for its sandpaper. A weak abrasive wasn’t the only problem. Humidity at Duluth’s waterfront led to uneven drying of the adhesive that bonded abrasive to backing. Quality control was nearly impossible. Inferior sandpaper resulted in a marketplace disaster as customers demanded that the company make good. Finally, everyone in the company agreed that its “corundum” was worthless.

No one considered giving up. By 1909, as quality improved with imported abrasives, sales reached $192,000. In 1910 Ordway moved the plant to St. Paul to better track the company that then owed him $250,000.

That move and the 1909 death of Hermon Cable dimmed John Dwan’s dream of maintaining a 3M presence in Two Harbors, although his office remained the official boardroom until 1916. Thus, northeastern Minnesota lost 3M, but would remain important. Dwan and Budd kept active in the company for years and, as importantly, two young Duluth business school graduates – William L. McKnight and A.G. Bush – had been hired at the Duluth operation. They became key figures in the company’s long growth and prosperity and again offer examples to follow.
Sidebar - Northern Know-how

Hired as an assistant bookkeeper, McKnight was a 3M sales manager by age 24 and adopted a policy of meeting with workers who used sandpaper, rather than front office buyers. Sales increased dramatically. When McKnight was promoted to general manager, he named Bush as his replacement in the Chicago sales office.

By listening to product users and adapting to their needs, McKnight and Bush increased sales. Each devoted decades to 3M and by the mid-1950s were icons in business. McKnight became company president and board chairman and is credited with fostering the company’s innovative spirit. You probably know of the foundations created by McKnight and Bush that bear their names and grant millions of dollars each year to philanthropies.

3M TerritoryFocusing on industrial uses, the company discovered a promising market in the booming auto industry. Finishing cars was time consuming and frustrating. By again listening to product users, 3M developed an artificial aluminum oxide abrasive cloth – Three-M-Ite – in 1916 that earned it a reputation for the best metalworking abrasive products. In the early 1920s its “Wetordry” sandpaper revolutionized auto finishing. Wet sanding gave better control of the finish, prolonged the life of the sandpaper and eliminated much of the lead-based paint dust that threatened workers’ health. It proved to be an early, successful retail product.

3M logos

Relationship with the automotive industry spurred development of pressure-sensitive Scotch brand tapes in the mid-1920s and launched 3M into the business stratosphere. Masking tape for auto painting led the way, but not before a dissatisfied early customer told a 3M salesman, “Take this tape back to your stingy Scotch bosses and tell them to put more adhesive on it.”

His use of the derogatory “Scotch” struck the fancy of company officers; they stuck it on the product line. The brand name fostered the universally recognized tartan plaid packaging. The brand expanded explosively in the 1930s after introduction of Scotch cellophane tape. Eventually hundreds of tape products were developed. The line keeps growing, as do dozens of product lines marketed by 3M.
Sidebar - Taking Stock

In its 100th year, 3M leads in some products for health care, electrical, electronics and communications, consumer and offices, and it participates in industrial, transportation, graphics, safety and specialty material markets.

Despite the worthless mineral deposits in Lake and Cook counties on the shores of Lake Superior, the land remained as an asset on company books for years. Finally, with no use for it, a 40-acre parcel of Crystal Bay “mine land” was sold for an early resort at Illgen City. In 1947, another 40 acres was donated for Baptism State Park, now part of Tettegouche State Park. The remainder was deeded to The Nature Conservancy, which contributed the property to further expansion of Tettegouche State Park. Property at Carlton Peak became part of Temperance River State Park in Cook County.

3M logos

Thus ended Lake Superior’s business connection with one of the most innovative companies in the world – although the hard-scrabble beginnings on the lake’s shores may have laid a strong foundation for the company to grow beyond adversity.

End of Story

A Peek at 3M’s Past

3M Museum SignPlans for 3M’s Lake Superior centennial began two years ago when the company joined the Lake County Historical Society to update and renovate the 3M Museum on Waterfront Drive and Second Avenue in Two Harbors where the company was born.
Freshening the museum, some of John Dwan’s original furniture now replicates the law office where 3M was incorporated in 1902. 3M helped the museum to assemble period documents, exhibits of an array of innovative products, interactive displays and historic artifacts as a step in celebrating a program that the company calls “A Century of Innovation.”
Lake County Historical Society acquired the building in 1991. It was listed on the National Register of Historic Places in 1992, the year that it was dedicated as a museum.
“3M has been very generous in granting well over $100,000 for renovation work to make the museum an important historical resource,” says Rachelle Maloney, the society’s executive director. “We were pleased to be able to work with them to capture the company’s past, its ties to Lake County and its success through the last century.”
Two Harbors celebrates the town’s “Heritage Days” on July 11 through 14. A specific schedule can be found on the Lake Superior Magazine calendar of events at www.lakesuperior.com or by contacting the historical society at 218-834-4898.
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