”Cargill: Trading the World`s Grain,” by Wayne G. Broehl Jr., University Press of New England, 1,032 pages, $35
Take the money and run could well be the motto of second and third generations who come into control of family-owned businesses. Remarkably, it has taken 127 years and five generations for the urge to cash in to strike the owners of America`s largest privately held corporation.
Cargill Inc., with annual sales of $54 billion, is still owned by the two families that built the business, the Cargills and the MacMillans. Prodded by younger family members, few of whom can be found in the executive ranks, Cargill is setting up an employee stock ownership plan that will buy anywhere from 10 to 30 percent of the country`s largest grain merchandiser, second-largest beef packer and eighth-largest steel company.
Can a public stock offering be far behind? The company denies it in snowball-in-hell terms and, indeed, had rejected such advice in the early 1960s, when Cargill was led for a few years by non-family management following the death of John H. MacMillan Jr., third-generation chief executive.
Cargill`s first century, from its founding as a small grain firm in Conover, Iowa, in 1865, is chronicled in a massive new book by Dartmouth College business historian Wayne G. Broehl Jr.
The most rewarding parts of the book deal with the management styles, personal views and family and corporate confrontations of the three protagonists-the founder, the son-in-law and the grandson. The era of each roughly coincides with the growth of Cargill first as a regional grain elevator firm, then as a grain and shipping concern on the national scene and finally into the big leagues as a major player in the high-stakes, secretive international grain trade.
As detailed by Broehl, founder William W. Cargill was a frontier capitalist and something of a plunger. While building, from La Crosse, Wis., a grain empire in the upper Midwest with the help of his brothers, Cargill wasn`t averse to risking money in diverse ventures, many of which turned sour. When Cargill died in 1909, his affairs were in a shambles, creditors were demanding payment and heirs split on what direction to take. To the rescue came Cargill`s son-in-law, John H. MacMillan Sr., then in charge of grain operations in Minneapolis.
John Sr. was the opposite of Cargill. He was a believer in firm control, accountability and sound investment. He devised plans that paid off creditors, shed unproductive assets, improved income and tidied up a messy family ownership situation.
While the conservative John Sr. remained in control through the 1920s, his son, the abrasive John Jr., gradually assumed power, becoming general manager in 1932. With him, Broehl arrives at the central character in this corporate drama.
John Jr. was an innovator and a risk taker like his grandfather. Some of his ideas, such as an all-wood barge, didn`t hold water, or rather took on too much. But others would lead to the company`s biggest growth period, particularly after World War II. An uncle, Austen Cargill, and younger brother, Cargill MacMillan, shared top executive positions in the company and helped restrain some of John Jr.`s enthusiasms.
Junior was hardly the ideal boss. He suffered bouts of illness and depression. He was stubborn and unyielding in disputes. He couldn`t understand why some executives were lured to other companies for higher pay.
And he was a snob and elitist. He believed the best management talent would be recruited from the Ivy League (although graduates of Yale, his own college, were rated low).
The overwhelming majority of Minnesota farm boys, he thought, ”should never go to the university. The four years are . . . worse than wasted because the only result has been to introduce these boys to a standard of living which is higher than they possibly can maintain in later life.”
His most famous dispute, which brought Cargill to national attention, was a pitched battle with the Chicago Board of Trade. That fight featured a clash with another strong-willed antagonist, Daniel A. Rice, legendary floor trader. In August 1937, Cargill held large positions in the September corn futures contract and feared Rice was leading a ”bear raid” to drive down prices. Both Rice and Cargill scoured the countryside buying corn, with Cargill buyers usually outbidding Rice agents.
The business conduct committee ”jawboned” Cargill, which refused to sell at what it considered too low a price. The exchange then stopped trading in the contract and mandated a settlement price.
After investigations charging Cargill with price manipulation, the company was expelled March 25, 1938. MacMillan then brought manipulation charges against the CBOT before the Commodity Exchange Authority (predecessor to the Commodity Futures Trading Commission), which, after lengthy hearings, exonerated the exchange.
Despite friendly overtures from the exchange, Cargill did not resume CBOT membership until 1962, after MacMillan`s death.
The book, richly illustrated with period pictures and newspaper cartoons, is a detailed history and biography that skillfully shows Cargill`s role in the broader context of the boom-and-bust American farm economy. Though finely crafted, it at times detours onto barren ground. The reader, however, can skim over the obscure business deals, grain elevator specifications and ship and barge design problems and concentrate on the family maneuvers.
