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Harvesters and High Finance: Formation of the International Harvester Company

Published online by Cambridge University Press:  24 July 2012

Helen M. Kramer
Helen M. Kramer
Affiliation:
Lecturer in Economics, Brooklyn College
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Abstract

Through an analysis of the formation of the International Harvester Company in 1902, Professor Kramer presents a suggestive case-study in businessmen's motivations toward merger.

Type
Research Article
Information
Business History Review , Volume 38 , Issue 3 , Autumn 1964 , pp. 283 - 301
Copyright
Copyright © The President and Fellows of Harvard College 1964

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References

1 Wisconsin State Historical Society. McCormick Collection. Special Report File. Reminiscences by Members of the Harvester Club of Southern California, 1930. C. M. Fullerton, p. 4. Also McCormick Harvesting Machine Co. A. E. Mayer 1900, Letter from A. E. Mayer to H. F. McCormick, August 18, 1900, which discusses a meeting of the harvester manufacturers where an attempt was made to set binder prices at $95 cash, $100 on time.

2 C. H. McCormick II Papers. McCormick Harvesting Machine Co. Finances and Financial Statements, Estimates, Etc. 1879–1902.

3 McCormick Collection. American Harvester Co. 1889–1901 AM-DE, Deering William & Co. History of Company, p. 5.

4 N. F. McCormick Papers: McCormick Harv. Mach. Co. G. L. Keith 1891, Letter from G. L. Keith to N. F. McC, May 16, 1891; McC. Harv. Mach. Co. H. F. McCormick 1897, Letter from H. F. McC. to N. F. McC, July 13, 1897. McCormick Harv. Mach. Co. Letters Sent Out, Jan. 19, 1897-Apr. 25, 1898, p. 404.

5 American Harvester Co. Virginia Roderick Notes. N. F. McC. to S. R. McC, Nov. 28, 1890.

6 McCormick, Cyrus, The Century of the Reaper (Boston, 1931), p. 108.Google Scholar

7 McC. Harv. Machine Co. Letters Sent Out, Jan. 19, 1897-Apr. 25, 1898, pp 54, 288, 404, 710; Dec. 12, 1900-May 1, 1901, p 142; May 1-Oct. 30, 1902, p. 41.

8 U.S. Department of Commerce and Labor, Bureau of Corporations, The International Harvester Co. (Washington, 1913), p. 68.Google Scholar

9 Ibid.

10 C. H. McCormick II Papers. McC. Harv. Mach. Co. Finances.

11 Federal Trade Commission-Securities Exchange Commission, Quarterly Financial Report for Manufacturing Corporations, 3rd Quarter, 1962, p. 13.

12 There is convincing evidence that merger negotiations were not prompted by a decline in the rate of profit that year, but rather by the long depression continuing from the 1880's, The margin of net earnings over sales increased from 22.35 per cent in 1896 to 28.45 per cent in 1897, and the profit rate on net assets from 10.45 to 13.20 per cent. (C. H. McCormick II Papers, loc. cit.) E. K. Butler, General Manager of the McCormick Co., reported to N. F. McCormick that, “We have in the midst of the hard times, had our most prosperous year of the company's existence.” (McC. Harv. Mach. Co. E. K. Butler 1897, October 6, 1897.)

13 C. H. McCormick II Papers. C. H. McC. Jan.-Sept. 1897, July 23, 1897.

14 N. F. McCormick Papers. McC. Harv. Mach. Co. C. H. McC. 1897, Letter from C. H. McC. to H. McC., July, 1897.

15 Ibid. Letter from C. H. McC. to N. F. McC., Sept. 28, 1897.

16 C. H. McCormick II Papers. McC. Harv. Mach. Co. Financial Statements, Estimates, Etc. 1879–1902.

17 Ibid. McC. Harv Mach. Co. Finances. Cash Statements, Bank Loans, Bills Payable, Estimates, Etc. 1900–1901.

18 McCormick, Century of the Reaper, p. 112.

19 Ibid., p. 110.

20 Ibid.

21 C. H. McCormick II Papers. McC. Hare. Mach. Co. Finances.

22 International Harvester Co., loc. cit., p. 63.

23 Additional evidence that the rate of profit was falling is the statement given by S. McCormick and C. Bentley to Perkins, dated June 27, 1902, that in 1901 the McCormick Company's net profit on sales was approximately 22 per cent. (U.S. vs. International Harvester Co., et al., U.S. Dist. Ct., Minn., No. 624, 1912. Government Exhibit 286, vol. IV, p. 358.) The Company's rate of profit on sales was 25.28 per cent in 1891, 22.35 per cent in 1896, 28.45 per cent in 1897, 32.55 per cent in 1898, and 29.88 per cent in 1899. (C. H. McCormick II Papers. McC. Harv. Mach. Co. Finances.)

24 Harvester World, vol. 27 (July, 1936), p. 34. However, Mr. McCormick's papers indicate that a dividend of $1,500,000 was paid in 1899. (C. H. McCormick II Papers, McC. Harv. Mach. Co. Finances.)

25 McCormick Harv. Mach. Co. C. H. McCormick 1900, May 29, 1900.

26 McCormick Collection, Combination File, undated report (June, 1902).

27 Ibid., McC. Harv. Machine Co. 1901. Conference at Palmer House, May 22 and 27, 1901.

28 N. F. McCormick Papers. McC. Harv. Mach. Co. Cyrus Bentley 1901, Letter from C. Bentley to C. H. McC., July 18, 1901.

29 Combination File, undated report (June, 1902).

30 Ibid., McC. Harv. Mach. Co., undated memorandum, S. McC. (1901 or 1902).

31 Richardson, James D. (ed.), A Compilation of the Messages and Papers of the Presidents (20 vols., New York, n.d.), vol. XIII, p. 6647.Google Scholar

32 Thorelli, Hans B., The Federal Antitrust Policy (London, 1954), pp. 421, 428.Google Scholar

33 Garraty, John A., Right-Hand Man: The Life of George W. Perkins (New York, 1960), p. 110.Google Scholar

34 Combination File, Memorandum of Interview at the Office of Mr. Francis Stetson, June 12, 1902.

35 Garraty, Right-Hand Man, p. 130.

36 Ibid., p. 126.

37 Combination File, Memorandum by S. McCormick of Conference at the Waldorf-Astoria Hotel, June 14, 1902.

38 Ibid., Memorandum of Interview with G. W. Perkins, June 16, 1902.

39 Ibid.

40 Ibid., Interview with G. Perkins, June 17, 1902.

41 Ibid., Letter from John D. Rockefeller, Jr., to Harold McCormick, June 23, 1902.

42 Ibid., C. Bentley Memorandum of Conference with William N. Cromwell, July 8, 1902.

43 Columbia University Libraries, Dept. of Special Collections. George W. Perkins Papers. G. W. P. to J. P. Morgan, July 11, 1902. (Cited hereafter as G. W. P.)

44 Combination File, Memorandum of Interview at the Office of Mr. Francis Stetson, June 12, 1902.

45 Ibid., Memorandum of Interview with Mr. Perkins, 5:30 P.M., July 14, 1902.

46 Ibid., Memorandum of Interview with Mr. Perkins, 8:30 A.M., July 14, 1902.

47 Ibid.

48 Ibid., Memorandum of Interview with Mr. Perkins, July 16, 1902.

49 G.W.P., G.W.P. to J.P.M., August 10, 1902.

50 International Harvester Co., loc. cit., pp. 356, 357.

51 Combination File, Memorandum of Conference, July 8, 1902.

52 International Harvester Co., loc. cit., p. 81.

53 Garraty, Right-Hand Man, p. 127.

54 Who Was Who in America, 1897–1942 (Chicago, 1942), p. 1298.

55 Combination File, International Harvester Co. 1903, January 10, 1903.

56 G.W.P., Cable, G.W.P. to J.P.M., July 26, 1902 and Letter, July 30, 1902.

57 International Harvester Co., loc. cit., pp. 81–82.

58 Combination File, International Harvester Co. 1902, C. H. McC. to G.W.P., Nov. 22, 1902.

59 International Harvester Co., loc. cit., p. 86 and U.S. vs. I.H. Co. et al., Defendants' Brief, p. 13.

60 G.W.P., Cable, G.W.P. to J.P.M., July 26, 1902: “Referring to the $10,000,000 which we may subscribe, J. D. Rockefeller … has been personally in close touch with all negotiations and he has sent me word that he wants very much to have our entire $10,000,000 subscription and that, in no event, does he want us to give him less than $5,000,000. I suggest that we let him have $5,000,000 or $6,000,000, keeping the remainder for ourselves, Ream, [Marshall] Field, Gary and others whom we cannot overlook in a business of this kind.”

61 International Harvester Co., loc. cit., p. 125.

62 Ibid., p. xvii.

63 Ibid., p. 2.

64 Combination File, Telegram, C. H. McC. to McC. Harv. Mach. Co., August 13, 1902.

65 International Harvester Co., loc. cit., p. 63.

66 Ibid., pp. 148, 268.

67 G.W.P., Undated memorandum, 1902.

68 International Harvester Co., loc. cit., p. 272.

69 Ibid., p. 250.

70 Ibid., p. 243.

71 Ibid., p. 249.

72 Combination File, International Harvester Co., C. H. McC. to G.W.P., Nov. 22, 1902.

73 Ibid., S. McC. Memorandum, January 10, 1903.