Gotham_ A History of New York City to 1898 - Edwin G. Burrows [829]
Between 1890 and 1893 half a hundred companies converted to the corporate holding company form. Some were old trusts, forced into reformatting by the Sherman Act: when the Sugar Trust was declared illegal in 1889 and ordered dissolved, Root recommended the Havemeyers try incorporation, and within a few years the new American Sugar Refining Company controlled nearly 98 percent of the national output. Some of the new corporations were “Morganized” railroads, formed when J. P. Morgan and other New York City investment bankers reassembled bankrupt competitors into viable corporate entities, set up their headquarters in Manhattan, and pocketed million-dollar fees and directorships for their trouble. Some were metropolitan wholesale merchants—like H. B. Claflin’s—who had discovered the virtues of the corporate form.
Some of the new corporations were industrial concerns, like the American Tobacco Company (1890), a newcomer to New York. In the mid-1880s James Buchanan Duke, a North Carolina chewing tobacco manufacturer, switched to cigarette production. Duke relocated his operations to Manhattan—the largest urban tobacco market in the nation and an industry center since Pierre Lorillard had opened his snuff factory on Chatham Street back in 1760. Backed by lines of credit from New York financial houses, Duke opened a massive factory at First Avenue and 38th Street, using cheap female labor and fifteen of the new Bonsack machines capable of producing 120,000 cigarettes a day. By 1889 he was rolling over eight hundred million cigarettes annually. The following year Duke subsumed his five leading competitors into his giant new ATC corporation (and a few years later P. Lorillard Company as well).
The financial community rapidly thawed its frosty attitude toward “industrials.” Bankers and brokers had long considered manufacturing operations too small or too unstable to warrant investment. Through the 1880s the New York Stock Exchange had refused to list industrials, with the single exception of the Pullman Palace Car Company. Now funds flowed to newly merged companies. By 1897 eighty-six industrial corporations, each capitalized for over a million dollars, had been formed and financed, most of them on Wall Street. Mining and petroleum stocks traded in unprecedented numbers. Foreigners plunged in too and by the early 1890s had sunk roughly three billion dollars into U.S. firms, up 50 percent since 1883. Poor’s, Moody’s, and Dun’s began publishing analyses of the new corporations, and many began filing annual reports with the Exchange.
It seemed, finally, that a stable future was coming into being, one in which incorporation would replace competition, antagonistic companies would be consolidated, and their oversight operations would be centralized—in New York City, emerging capital of an emerging corporate economy.
ASSOCIATES AND AGENTS
In the 1880s and 1890s many industrial and railroad magnates relocated themselves—as well as their corporations—to Manhattan. Cleveland’s John D. Rockefeller joined his brother William in 1884. Collis P. Huntington came in from California; the Armours arrived from Chicago; Andrew Carnegie shifted from Pittsburgh. They and their companies were drawn, chiefly, by the gravitational pull of money. They wanted direct access to the great investment banks and their connections to vast pools of domestic and foreign capital. New York was host to virtually all the leading firms: Drexel, Morgan (which in 1895 became J. P. Morgan and Company); August Belmont and Company (run after his death in 1890 by his son August Junior);