[ Pobierz całość w formacie PDF ]
.Producing preciselythe same product, the East Coast and West Coast branches of the industrysharply contrasted with each other in several respects.The East Coastbranch spawned a monopoly that eventually controlled virtually the entirecountry s production including the West Coast, while the West Coastbranch was organized in a sequence of oligopolies.The East Coast branchconfined itself entirely to refining with occasional, typically unsuccessful,forays into the control of the raw product, while the West Coast branchhad, from its beginning, been vertically integrated, first with Hawaiian canesugar and later with domestic beet sugar.The East Coast branch formedone of the first publicly traded corporations with strong ties to finance cap-ital, one of the first large industrials listed on the New York Stock Ex-change, while the West Coast branch remained privately held with closeties to agricultural interests, until the dominant East Coast company asser-tively gained partial control.Finally, government played a central role inthe life of both sectors, but in a very different way.From the 1880s to the1920s, the eastern Sugar Trust and its corporate successor contended withstate and federal governments over antitrust law, which very muchinfluenced what they did and how they were organized.They also fre-quently had to contend with the government s policing function, facingcharges of bribing public officials, cheating customs agencies, and otherP R E L U D E T O A R E V O L U T I O N 205TABLE 7.3Economic Characteristics of the Cane Sugar Industry, 1880, 1900Capital Average Capital / CapitalYear Establishments (000) Estab.(000) Productivity Intensity1880 Cane Sugar 49 $27,433 $559.9 1.84 9.54IndustryStandard deviations -0.25 0.63 7.64 1.71 2.84from the mean ofall industries1900 Cane Sugar 657 $184,033 $280.1 1.30 26.60IndustryStandard deviations -0.01 1.96 0.36 -0.05 4.31from the mean ofall industriesSource: U.S.Bureau of the Census 1914, 697.forms of corruption, although these problems were less consequential fortheir basic operation and organization.They were concerned about tariffson raw and refined sugar, but more as another cost of production, not as amatter of life or death as with the West Coast branch, which depended onthe tariff for its livelihood.The federal tariff and bounties, not antitrustlaws or corruption charges, were the most immediate object of the westernbranch s relation to government.Looking back at the economic characteristics of the sugar industry in1880, efficiency theory and power theory would agree that it fit the profileof an industry likely to become dominated by large corporations.11 Asshown in Table 7.3, the sugar industry was large, productive, capital in-tense, and had few firms.12 Observers inclined toward efficiency theorywould point out that the average establishment was capitalized at morethan a half-million dollars, suggesting substantial economies of scale, andthat its capital intensity was nearly three standard deviations above.In1880, cane sugar was produced in very large plants, with the average estab-lishment costing more than a half-million dollars when manufacturing as awhole operated in establishments less than a tenth of that.The averageworker produced $1,841 of value, double all manufacturing.The capitalintensity for the industry was $9.54 capital for every dollar in wages, aboutthree times the average industry.Those working from a power perspectivewould emphasize that the small number of establishments might enhancesocial interaction among the manufacturers.However, the change between1880 and 1900 would challenge any perspective that explains the industry sorganization in terms of its economic characteristics.In those two decadesthe industry grew tremendously, expanding the capital invested by nearlyseven times.It was still a very large industry in the aggregate, and the aver-age firm was still greater than most industries, but its productivity had206 C H A P T E R S E V E Nfallen below the mean for all industries.Thus for the industry as a whole,the large scale did not translate into economies of scale, at least as measuredby productivity.My account follows a historical more than a functionallogic.The East Coast branch was characterized by a small cohesive groupof owners with a history of tight governance and strong leadership, whosenetwork connections gave them access to the corporate institutional systemand its largess of finance capital.The West Coast branch was also led by asmall cohesive group, whose members were tied more closely with westerncapital and the Mormon church than with eastern capital.It was the easternbranch where the large publicly traded corporation was founded.Once theindustry concentrated and organized in corporations, the institutionalizedeconomic power reproduced the structure.Contrary to the assumptions ofefficiency theory, the power of the market was not sufficient to erode thepower of the organization.This hypothesis is borne out by examining thecane and beet sugar branches.Chandler cites sugar refining as one of the new industries in which theeconomies of scale and high productivity inherent in continuous-processingtechnology fostered economic concentration and, after horizontal mergersfailed to sustain monopoly power, vertical integration, which underlaylong-term oligopoly.Technology and markets are again seen as the drivingforces of change [ Pobierz całość w formacie PDF ]