Despite this tremendous national setback, the effects of which were to last into 1875 before recovery began, Merrill and Houston continued to be profitable although to a lesser degree than in 1871 and 1872. The business prospered until the fall of 1873. Then, it just hung on through a "dull" winter and a "dull" year in 1874. Nevertheless, the total net profit for the two years from April 1, 1873 to April 1, 1875 was a little over $18,000. (10)

It was during such slack times that S. T. Merrill's reputation, based on his purported personal wealth of up to $100,000 and his civic efforts for Beloit, began to be of great value to the company. Good credit, great confidence, and general goodwill were all personal assets that S. T. Merrill could transfer to the company even though he was not an officer in 1874. (11) Bankers and private lenders loaned to Merrill and Houston simply because they knew S. T. Merrill was a major stockholder, and they thought he would make the loans good, if necessary. (12)

Despite the many problems for industry and labor that were a part of the Panic of 1873 and its aftermath, technological progress in industry was rapid during the 1870s. Unfortunately for Merrill and Houston this technological progress would ultimately cause its most profitable product, the Houston Water Wheel, to become obsolescent by the latter years of the decade. 

 

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