A hundred years ago
The headlong consolidation of so many industries of the past ten years has a precedent. In fact, a similar scramble to market domination by a few companies happened a hundred years ago. At that time, business was synonymous with manufacturing, while today's consolidation is in an even wider spectrum of companies, but the parallels are instructive.
I quote from the introduction to a book called The Great Merger Movement in American Business, 1805-1904 (Cambridge University Press, 1985), by Naomi Lamoreaux:
Between 1895 and 1904 a great wave of mergers swept through the manufacturing sector. Nothing like it had ever been seen before, or has been seen since. Although subsequent waves of mergers have occurred, they have typically involved the acquisition of one or more small firms by a large competitor or, more recently, by a firm in a completely different industry. By contrast, the turn-of-the-century mergers, the predominant process was horizontal consolidation-the simultaneous merger of many or all competitors into a single, grand enterprise.
Of course, things are different. From "single, grand enterprises" (monopolies), we are now seeing a few competitors (oligopolies). But the parallels between 1895-1904 and 1995-2004 are striking. How long-lasting were the rollups?
Some mergers led to short-lived domination (American Linseed, American Writing Paper, United States Bobbin & Shuttle). These companies were soon or later done out of business because of disruptions in their industries. On the other hand, a number of the firms Lamoureaux traces are, or have been dominant now or in recent memory: Eastman Kodak, U.S. Steel, International Paper, DuPont, and Pittsburgh Plate Glass (now PPG Corp.). Other companies of the time now form key parts of oligopolies: American Chicle (now owned by Cadbury Schweppes), Otis Elevator (part of United Technologies), National Biscuit Company (now part of Altria), Union Bag & Paper (now part of International Paper).
The history of Continental Tobacco shows both of these consolidation waves at work. It was merged into American Tobacco (1901) to make Consolidated Tobacco, later renamed American Tobacco again. American Tobacco, which ended up owning over 90% of the domestic market, was broken up by the US government into five companies (1929). These companies were American Tobacco, Liggett & Myers, BAT, Lorillard, and R.J. Reynolds, each of which got some of the old company's brands. The new American Tobacco eventually became American Brands. American Brands was sold to BAT in 1994. Now BAT is acquiring R.J. Reynolds, so there will be only two big tobacco companies standing.
