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Rookwood Pottery was founded by Maria Longworth Nichols (later Mrs. Bellamy Storer, Jr.) in 1880, forming the business in Cincinnati, Ohio in an old abandoned schoolhouse bought for her by her father which she named Rookwood after the family country estate. She was one of a group of talented society women in Cincinnati, Ohio, who painted blank china as a hobby and which prompted her to go into business, and she learned under Benn Pitman of the Cincinnati School of Design. Nichols first conceived the idea of establishing her own pottery at the Philadelphia Centennial Exhibition of 1876, and she was fascinated by the sophisticated European pottery and exotic ceramics of Japan and China on display in the pavilions. From the beginning, Rookwood was a haven for talented and artistic women who loved their work of decorating pottery. However, Rookwood quickly grew into a well respected business, one of the first in America to be owned and operated by a woman. The quality of the craftsmanship, artistry, and innovative glazes were widely recognized and loved, and the distinctive green and gold of early Rookwood glazes came naturally from the effect of the Ohio clay.

She emphasized that her pottery's production would be artistic rather than commercial, and she hired artists who were accomplished easel painters and sculptors in their own right. The first artist she hired was Henry Farny who was well known for his American Indian subjects, and 1881 she hired the 19 year old Albert Robert Valentien who shared her admiration for the Japanese aesthetic. In 1883, William Watts Taylor became the general business manager of Rookwood Pottery, and under his leadership it began its climb to the top. Taylor encouraged innovation in all aspects, and he hired a top chemist to develop unique glazes never before seen. From the beginning, Rookwood has been prized by collectors due to the detailed and accurate markings which reflect style, model number, artist, date of manufacture. Taylor brought in many more top artists including Kataro Shirayamadani, who was one of Rookwood's best known artists from 1890 until he died in 1948 at age 93. Maria Longworth Nichols had long hoped to hire a Japanese artist, and in 1887 she persuaded Shirayamadani to come to Cincinnati from his job in Boston. A new factory was built in 1891 to accomodate the growing number of resident artists and craftsmen, now numbering over 60. Almost all of Rookwood pottery is marked, most with the famous flame mark dating the individual pieces and the marks of famous artists such as Katoro Shirayamadani, Schmidt, Matthew Andrew Daly, Artus Van Briggle, Sarah Sax, Grace Young, Sarah Coyne, Laura Ann Fry, Edward Timothy Hurley, Sarah Alice Toohey, Lorinda Epply, Elizabeth Barrett, and more.

Many new glazes and decorating methods were developed by the chemists at Rookwood, and early in its history they established a relationship with Edwin Atlee Barber, a pioneering ceramics scholar who became curator and later director at the Pennsylvania Museum and School of Industrial Arts. Barber had first refusal on the artist-signed ceramics that Rookwood was exhibiting at the many international expositions popular in the late 19th and early 20th century. Rookwood's glaze innovation attracted attention right from the start, including the very early Standard glaze, a deep yellow, orange and red over dark brown with a high gloss. Although often applied to works in a flower or leaf motif, the Standard glaze was also typically used for Rookwood's American Indians and portraits which today command very high prices. Matte glaze is a flat textured glaze usually painted on soft colored clays, and Sea Green is a blue green glaze painted on soft blue, yellow and red often applied to fish or floral scenes. Vellum glaze is a type of matte glaze, often pale blue, put over lightly colored clay, and this finish proved particularly beautiful when used for landscapes. The Iris glaze, often painted in a floral motif, is a glossy white glaze covering gray, pink, soft blue and yellow. The famous Rookwood R-P monogram was first used in 1886, and a flame was added around the symbol each year thereafter. There are also typically clay or body marks indicating which color or type of clay the piece was made of. "P" stands for soft porcelain, begun in 1914. Shape numbers and size letters correspond to the many shapes used over the years. "S" identified a special piece, while "Z" required a matte glaze. Vellum glaze was marked with a "V" while trial pieces were marked "T". Imperfect pieces were incised with an "X" and sold for a reduced price.

Maria Longworth Nichols soon married and maintained less interest in the business, leaving the operation in the hands of Taylor who ran the business until 1913 when he passed away. Rookwood was sold in stores such as Tiffany, Ovington and other large department stores in major cities across the country. To diversify, Rookwood began producing commercial architectural pieces about 1902 which soon began to appear in buildings across the country. Rookwood tiles became quite well known through their use in major hotels, train terminals, Grand Central Station and several subway station stops in New York City. By the 1920s, Rookwood had grown dramatically into a thriving concern employing over 225 workers, and thousands of visitors came to the factory each year. Rookwood has always been expensive and remains so today, and while there was some mass production they always maintained a strong, individualistic artistic tradition. The Great Depression was a disaster for Rookwood and most other makers of luxury goods as the population could no longer afford such items. As the country climbed out of depression, cheaper clones of Rookwood tiles and vases began to appear, further weakening the financial condition of the company. In 1941, Rookwood Pottery filed for bankruptcy. A succession of subsequent owners could never recapture the glory years of Rookwood, and production ceased completely in 1960. The original molds were purchased first by a clock company in Mississippi and subsequently by a dentist in Michigan in 1983 who made very limited quantities of tiles each year.

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