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Stress and Struggle inside International Harvester

Published online by Cambridge University Press:  28 July 2020

SALLY H. CLARKE
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Abstract

At International Harvester, a 1902 merger, the defining feature was discord. A J. P. Morgan financier by the name of George W. Perkins and a formal agreement initiated changes to mitigate stress and struggle. Existing research dates improvement to 1906. This paper extends the analysis and documents that, among changes, entrepreneur William Deering and his children parted with some holdings, helping to diminish tensions. Meanwhile, the McCormicks agreed to a stock dividend.  This action helped mellow strife and augment their power. How did discord affect efficiency? The conventional answer centers on management along with expansion abroad, but that analysis is enhanced through study of seven brands and their local factories, pricing, and an antitrust consent decree. When a voting trust ran out its clock in 1912, conflict at International Harvester was receding. The firm’s record suggests various governance formats could yield efficiency and profitability.

Keywords

corporate governanceUS 20thowner conflictmergersefficiency
Type
Article
Information
Enterprise & Society , Volume 22 , Issue 3 , September 2021 , pp. 663 - 695
Copyright
© The Author 2020. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved.

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References

References

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Lamoreaux, Naomi R. “Partnerships, Corporations, and the Limits on Contractual Freedom in U.S. History: An Essay in Economics, Law, and Culture.” In Constructing Corporate America: History, Politics, Culture, edited by Lipartito, Kenneth and Sicilia, David B., 29–65. New York: Oxford University Press, 2004.CrossRefGoogle Scholar
Lamoreaux, Naomi R., Raff, Daniel M. G., and Temin, Peter. “Beyond Markets and Hierarchies: Toward a New Synthesis of American Business History.” American Historical Review 108, no. 2 (April 2003): 404–433.CrossRefGoogle Scholar
Lamoreaux, Naomi R., and Rosenthal, Jean-Laurent. “Corporate Governance and the Plight of Minority Shareholders in the United States before the Great Depression.” In Corruption and Reform: Lessons from America’s Economic History, edited by Glaeser, Edward L. and Goldin, Claudia, 125–152. Chicago: University of Chicago Press, 2006.Google Scholar
Lipartito, Kenneth, and Morii, Yumiko. “Rethinking the Separation of Ownership from Management in American History.” Seattle University Law Review 33 (2010): 1025–1063.Google Scholar
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International Harvester Company Legal and Patent Records, 1901–1947, Part 1: Original Collection, 1907–1922, McCormick Collection Mss. 3Z (Mss. 3Z). Wisconsin Historical Society, Division of Library, Archives, and Museum Collections, Madison, Wisc. (WHS).Google Scholar
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Lamoreaux, Naomi R. “Rethinking the Corporation: Contestable Control, the Theory of the Firm, and the Importance of Historical Perspective.” Keynote address at the Society for Institutional and Organizational Economics, June 22, 2018.Google Scholar
Lamoreaux, Naomi R., and Sawyer, Laura Philips. “Voting Trusts and Antitrust: Rethinking the Role of Shareholder Rights and Private Litigation in Public Regulation, 1880s–1930s.” Harvard Business School Working Paper 19–109, Harvard University, Cambridge, MA, 2019.Google Scholar
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United States of America, Petitioner v. International Harvester Company et al., Defendants in the District Court of the United States for the District of Minnesota (US v. IHC): Government’s Exhibits and Rebuttal (Government’s Exhibits), [1913], volume 4, Hathitrust.org. https://hdl.handle.net/2027/coo1.ark:/13960/t6qz2tj6c.Google Scholar
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U.S. Bureau of Corporations. The International Harvester Co. Washington: U.S. Government Printing Office, 1913.Google Scholar
Baskin, Jonathan Barron, and Miranti, Paul J. Jr. A History of Corporate Finance. New York: Cambridge University Press, 1997.CrossRefGoogle Scholar
Berle, Adolf A. Jr., and Means, Gardiner C.. The Modern Corporation and Private Property. New York: Macmillan Company, 1932.Google Scholar
Carosso, Vincent P., with Carosso, Rose C.. The Morgans: Private International Bankers, 1854–1913. Cambridge: Harvard University Press, 1987.Google Scholar
Carstensen, Fred V. American Enterprise in Foreign Markets: Studies of Singer and International Harvester in Imperial Russia. Chapel Hill: University of North Carolina Press, 1984.Google Scholar
Chandler, Alfred D. Jr. The Visible Hand: The Managerial Revolution in American Business. Cambridge: Belknap Press of Harvard University Press, 1977.Google Scholar
Cushing, Harry A. Voting Trusts: A Chapter in Modern Corporate History. New York: Macmillan Company, 1927.Google Scholar
Garraty, John A. Right-Hand Man: The Life of George W. Perkins. New York: Harper & Brothers, 1957. Reprint, New York: Harper & Brothers, 1960. Citations are to the 1960 reprint.Google Scholar
Gross, James A. Broken Promise: The Subversion of U.S. Labor Relations Policy, 1947–1994. Philadelphia: Temple University Press, 1995.Google Scholar
Hounshell, David A. From the American System to Mass Production, 1800–1932: The Development of Manufacturing Technology in the United States. Baltimore: Johns Hopkins University Press, 1984.Google Scholar
Hutchinson, William T. Cyrus Hall McCormick: Harvest, 1856–1884. New York: D. Appleton-Century Company, 1935.Google Scholar
Jones, Geoffrey. Renewing Unilever: Transformation and Tradition. Oxford: Oxford University Press, 2005.Google Scholar
Laird, Pamela Walker. Advertising Progress: American Business and the Rise of Consumer Marketing. Baltimore: Johns Hopkins University Press, 1998.Google Scholar
Lamoreaux, Naomi R. The Great Merger Movement in American Business, 1895–1904. New York: Cambridge University Press, 1985.CrossRefGoogle Scholar
Leavitt, John Anton. The Voting Trust: A Device for Corporate Control. New York: Columbia University Press, 1941.CrossRefGoogle Scholar
Marsh, Barbara. A Corporate Tragedy: The Agony of International Harvester Company. Garden City, NY: Doubleday & Company, Inc., 1985.Google Scholar
McCormick, Cyrus. The Century of the Reaper. Boston: Houghton Mifflin Company, 1931.Google Scholar
Ozanne, Robert. A Century of Labor-Management Relations at McCormick and International Harvester. Madison: University of Wisconsin Press, 1967.Google Scholar
Ozanne, Robert. Wages in Practice and Theory: McCormick and International Harvester, 1860–1960. Madison: University of Wisconsin Press, 1968.Google Scholar
Previts, Gary John, and Merino, Barbara Dubis. A History of Accountancy in the United States. Columbus: Ohio State University Press, 1998.Google Scholar
Schumpeter, Joseph A. Capitalism, Socialism and Democracy. 3rd ed. New York: Harper & Row, 1950. First published 1942.Google Scholar
Weber, Max. The Theory of Social and Economic Organization. Translated by Henderson, A. M. and Parsons, Talcott, with an Introduction by Parsons, Talcott. New York: Free Press, 1947.Google Scholar
White, Richard. Railroaded: The Transcontinentals and the Making of Modern America. New York: W. W. Norton & Company, 2011.Google Scholar
Whitney, Simon N. Antitrust Policies: American Experience in Twenty Industries. New York: The Twentieth Century Fund, 1958.Google Scholar
Winder, Gordon M. The American Reaper: Harvesting Networks and Technology, 1830–1910. Burlington, VT: Ashgate Publishing, 2012; New York: Routledge, 2016. Citations are to the Routledge edition.CrossRefGoogle Scholar
Carstensen, Fred V. “‘… a dishonest man is at least prudent.’ George, W. Perkins and the International Harvester Steel Properties.” Business and Economic History 9 (1980): 87–102.Google Scholar
Carstensen, Fred V. “International Harvester and Its Competitors.” In International Banking, 1870–1914, edited by Cameron, Rondo and Bovykin, V. I., 499–516. New York: Oxford University Press, 1991.Google Scholar
Cheffins, Brian R. “Mergers and Corporate Ownership Structure: The United States and Germany at the Turn of the 20th Century.” American Journal of Comparative Law 51, no. 3 (Summer 2003): 473–503.CrossRefGoogle Scholar
De Long, J. Bradford. “Did J. P. Morgan’s Men Add Value? An Economist’s Perspective on Financial Capitalism.” In Inside the Business Enterprise: Historical Perspectives on the Use of Information, edited by Temin, Peter, 205–236; Sabel, Charles F., “Comment,” 236–249. Chicago: University of Chicago Press, 1991.Google Scholar
Grady, Lee. “McCormick’s Reaper at 100: Marketing the Machines That Revolutionized World Agriculture.” Wisconsin Magazine of History 84, no. 3 (Spring 2001): 10–21.Google Scholar
Guinnane, Timothy W., Harris, Ron, and Lamoreaux, Naomi R.. “Contractual Freedom and Corporate Governance in Britain in the Late Nineteenth and Early Twentieth Centuries.” Business History Review 91, no. 2 (Summer 2017): 227–277.CrossRefGoogle Scholar
Hannah, Leslie. “The ‘Divorce’ of Ownership from Control from 1900 Onwards: Re-calibrating Imagined Global Trends.” Business History 49, no. 4 (July 2007): 404–438.CrossRefGoogle Scholar
Herrigel, Gary. “Corporate Governance.” In The Oxford Handbook of Business History, edited by Jones, Geoffrey and Zeitlin, Jonathan, 470–497. New York: Oxford University Press, 2007.Google Scholar
Kramer, Helen M. “Harvesters and High Finance: Formation of the International Harvester Company.” Business History Review 38, no. 3 (Autumn 1964): 283–301.CrossRefGoogle Scholar
Lamoreaux, Naomi R. “Partnerships, Corporations, and the Limits on Contractual Freedom in U.S. History: An Essay in Economics, Law, and Culture.” In Constructing Corporate America: History, Politics, Culture, edited by Lipartito, Kenneth and Sicilia, David B., 29–65. New York: Oxford University Press, 2004.CrossRefGoogle Scholar
Lamoreaux, Naomi R., Raff, Daniel M. G., and Temin, Peter. “Beyond Markets and Hierarchies: Toward a New Synthesis of American Business History.” American Historical Review 108, no. 2 (April 2003): 404–433.CrossRefGoogle Scholar
Lamoreaux, Naomi R., and Rosenthal, Jean-Laurent. “Corporate Governance and the Plight of Minority Shareholders in the United States before the Great Depression.” In Corruption and Reform: Lessons from America’s Economic History, edited by Glaeser, Edward L. and Goldin, Claudia, 125–152. Chicago: University of Chicago Press, 2006.Google Scholar
Lipartito, Kenneth, and Morii, Yumiko. “Rethinking the Separation of Ownership from Management in American History.” Seattle University Law Review 33 (2010): 1025–1063.Google Scholar
McCraw, Thomas K. “In Retrospect: Berle and Means.” Reviews in American History 18, no. 4 (December 1990): 578–596.CrossRefGoogle Scholar
Ott, Daniel. “Producing a Past: McCormick Harvester and Producer Populists in the 1890s.” Agricultural History 88, no. 1 (Winter 2014): 87–119.CrossRefGoogle Scholar
McCormick, Cyrus Hall Jr. Correspondence, 1870–1936, McCormick Collection Mss. 1C (Mss. 1C). Wisconsin Historical Society, Division of Library, Archives, and Museum Collections, Madison (WHS).Google Scholar
McCormick, Cyrus Hall Jr., 1859–1936, Subject File, 1840–1942, McCormick Collection Mss. 2C (Mss. 2C). Wisconsin Historical Society, Division of Library, Archives, and Museum Collections, Madison (WHS).Google Scholar
International Harvester Company, Annual Reports, various years, at the Wisconsin Historical Society (WHS) website. http://content.wisconsinhistory.org/cdm/search/collection/ihc/searchterm/annual%20report/field/title/mode/exact/conn/and/order/title.Google Scholar
International Harvester Company Corporate Archives Central File (documented series), 1819–1998, McCormick Collection Mss. 6Z (Mss. 6Z). Wisconsin Historical Society, Division of Library, Archives, and Museum Collections, Madison (WHS).Google Scholar
International Harvester Company Legal and Patent Records, 1901–1947, Part 1: Original Collection, 1907–1922, McCormick Collection Mss. 3Z (Mss. 3Z). Wisconsin Historical Society, Division of Library, Archives, and Museum Collections, Madison, Wisc. (WHS).Google Scholar
McCormick Estates Records, 1841–1969, McCormick Collection Mss. M, Series I: McCormick Harvesting Machine Company Records, 1841–1934 (Mss. M, Series I). Wisconsin Historical Society, Division of Library, Archives, and Museum Collections, Madison (WHS).Google Scholar
Perkins, George W. Sr. Papers, 1871–1920, Mss. #0990, University Archives. Rare Book & Manuscript Library, Columbia University, New York.Google Scholar
Wisconsin Historical Society, Division of Library, Archives, and Museum Collections, Madison (WHS).Google Scholar
Federal Trade Commission. Report of the Federal Trade Commission on the Causes of High Prices of Farm Implements, May 4, 1920. Washington: U.S. Government Printing Office, 1920.Google Scholar
Federal Trade Commission. Report on the Agricultural Implement and Machinery Industry. 75th Cong., 3d Sess., House Document No. 702. Washington: U.S. Government Printing Office, 1938.Google Scholar
Lamoreaux, Naomi R. “Rethinking the Corporation: Contestable Control, the Theory of the Firm, and the Importance of Historical Perspective.” Keynote address at the Society for Institutional and Organizational Economics, June 22, 2018.Google Scholar
Lamoreaux, Naomi R., and Sawyer, Laura Philips. “Voting Trusts and Antitrust: Rethinking the Role of Shareholder Rights and Private Litigation in Public Regulation, 1880s–1930s.” Harvard Business School Working Paper 19–109, Harvard University, Cambridge, MA, 2019.Google Scholar
“M’Cormick Interests Retain Control of Harvester Stock.” The Wall Street Journal, November 17, 1910, 5. ProQuest Historical Newspapers: The Wall Street Journal.Google Scholar
United States v. International Harvester Company et al., 274 U.S. 693 (1927).Google Scholar
United States of America, Petitioner v. International Harvester Company et al., Defendants in the District Court of the United States for the District of Minnesota (US v. IHC): Government’s Exhibits and Rebuttal (Government’s Exhibits), [1913], volume 4, Hathitrust.org. https://hdl.handle.net/2027/coo1.ark:/13960/t6qz2tj6c.Google Scholar
United States of America , Petitioner v. International Harvester Company et al. Defendants in the District Court of the United States for the District of Minnesota (US v. IHC): Testimony of Witnesses for the Defendants [1913], volume 14, Hathitrust.org. https://hdl.handle.net/2027/coo1.ark:/13960/t6d234k3q.Google Scholar
U.S. Bureau of Corporations. The International Harvester Co. Washington: U.S. Government Printing Office, 1913.Google Scholar