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Coping with Competition: Cooperation and Collusion in the US Stove Industry, c.1870–1930

Published online by Cambridge University Press:  28 February 2013

Abstract

This article examines the attempts of several generations of manufacturers of cooking and heating appliances to manage competition in their very unconcentrated industry. They started with overt price-fixing, which soon failed, then moved on to a variety of more effective techniques—particularly joint regulation with the aid of a strong craft union, and the adoption of uniform cost-accounting and price-setting systems. The article illuminates the numerous ways in which a trade association could make cartel-like behavior work in an industry whose structural characteristics were apparently unfavorable and also the importance of state intervention to shaping and eventually limiting this strategy.

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Articles
Copyright
Copyright © The President and Fellows of Harvard College 2012

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References

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3 The inquiry cost $69,000, about $4.4 million at current prices, using the nominal GDP per capita method: USFTC Annual Reports, 1923–1925, Administrative Division, “Detailed Statement of Costs,” 1923, 23; 1924, 7; 1925, 6.

4 Sources underpinning its 187-page report are in Records of the Federal Trade Commission, Economic Division, Economic Investigations Files 1915–1938, RG122, National Archives and Records Administration, College Park, Md. (hereafter, National Archives). Key materials, including interviews with the National Association of Stove Manufacturers' secretary and documents from his office, are in Box 2337 (hereafter, FTC Investigative File).

5 USFTC, Household Stoves, 45 (industry divisions), 89 (stand-alone firms), 5253 (scale diseconomies)Google Scholar. According to the industry's own count, in 1922 there were about 240 solidfuel and gas appliance makers, the constituency among which its trade associations recruited: “Lists of Stove Manufacturers” [1922], FTC Investigative File, National Archives.

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7 Ibid., 10–16.

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15 Giles Filley to Marcus Filley (his older brother, a stove maker in Troy, New York) and others, 18 Dec. 1871, Box 1, “Targets” folder, Filley Papers, New York State Library, Albany, NY (hereafter, NYSL).

16 Ibid.

17 Albert Lyman (New York) to Marcus Filley, 30 Jan. 1872, Box 15, Folder A, Filley Papers, NYSL.

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32 Jewett, , NASM Proceedings 3 (Feb. 1874): 56Google Scholar; Rathbone, , NASM Proceedings 7 (Jan. 1878): 28Google Scholar. Aron, Cindy S., Working at Play: A History of Vacations in the United States (New York, 1999), 66Google Scholar, for this new sort of “convention-vacation.”

33 Kahn, Lazard, NASM Proceedings 34 (May 1905): 164–68, 174Google Scholar.

34 Grossman, Jonathan, “Co-Operative Foundries,” New York History 24 (1943): 196210, at 206Google Scholar, and William Sylvis: Pioneer of American Labor (New York, 1945), ch. 9Google Scholar.

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38 Big Strikes on Hand: The Illinois Iron Molders Demand More Wages,” New York Times, 10 Apr. 1887, 10Google Scholar; The Molders' Strike: Indications that the Manufacturers Will Win,” New York Times, 30 Apr. 1887, 1Google Scholar.

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49 Smyser's, and Cribben's, Henry accounts of this meeting are in NASM Proceedings 20 (May 1891): 121–22, 129–32,Google Scholar and NASM Proceedings 32 (May 1903): 4748Google Scholar, reviewing a dozen years' repeatedly unsuccessful consolidation attempts.

50 These produced the Pittsburg Stove & Range Co. and the American Stove Co., a combination of Chicago and St. Louis firms and the most likely original for the fictional Consolidated Stove & Range Co. of North America, the evil protagonist in the only novel about the stove industry, Updegraff's, RobertCaptains in Conflict: The Story of the Struggle of a Business Generation (Chicago, 1927)Google Scholar.

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56 Metcalfe, , NASM Proceedings 15 (Feb. 1886): 98118Google Scholar; he had just published The Cost of Manufactures and the Administration of Workshops, Public and Private (New York, 1885)Google Scholar, and went on to use the stove industry data supplied to him, probably by Perry, in his celebrated American Society of Mechanical Engineers address “The Shop Order System of Accounts,” reprinted as 333–43 of the 3rd (1894) edition.

57 NASM Proceedings 20 (May 1891): 108–13, quotation 109Google Scholar.

58 NASM Proceedings 24 (May 1895): 7377Google Scholar.

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75 McCraw, Thomas K. and Reinhardt, Forrest, “Losing to Win: US Steel's Pricing, Investment Decisions, and Market Share, 1901–1938,” Journal of Economic History 49 (1989): 593619CrossRefGoogle Scholar. The NASM's decline in the 1920s was neither fatal nor final. The industry's pursuit of “fair competition” resumed in June 1933, when its successor organization, the Institute of Cooking and Heating Appliance Manufacturers, took advantage of the National Industrial Recovery Act in order to rebuild itself and enshrine sixty years' experience of what it took to make price and nonprice competition tolerable in a body of rules with statutory backing—see National Recovery Administration, Code of Fair Competition for the Cooking and Heating Appliance Manufacturing Industry [Approved Code No. 236] (Washington, DC, 1934), esp. 258–60Google Scholar.