The urge to merge
The 50 largest industrial companies in the world are managing to get by though their total profits have declined. You know how it is, a billion here and a billion there and before long you are talking about real money. Fortune magazine has just come out with its annual list of the world's 50 and 500 largest industrial corporations.
Of the former it reports that they have suffered their worst year since the poll started in 1974 -- total profits declined by $2.3 billion over the year. Even so, Exxon, the world's largest company, had overall net income of $5.567 billion and total sales of $108.107 billion. That's a bigger income than some nations.
In the list of 50 last year du Pont rose from number 38 to number 16. It did this by acquiring Conoco which had ranked 25th in 1980. It was the largest merger in history. The editors comment that next year US Steel may be the big gainer since its acquisition of Marathon Oil should give it a lift like du Pont's this year.
These giant consolidations used to scare us. What has happened? Attorney General William French Smith observed soothingly last year, ''Bigness in business is not necessarily bad.'' It is different from the old approach of Louis B. Brandeis, who once said that corporate monopoly was ''the root of many evils: it offends laws human and divine.'' Iconoclastic Kenneth Galbraith, however, likes to argue that there are a lot of similarities between American corporations and communist monopolies. They develop the same type of executives, he argues in one of his procovative commentaries.
America's dealing with corporate bigness goes through cycles while meanwhile the concentration itself seems to just move ahead. The new Fortune list says the five largest industrial companies on earth are Exxon, the Royal Dutch Shell Group, Mobil, General Motors, and Texaco -- all but one of them American, all but one of them oil companies.
Sen. Edward M. Kennedy figured some years ago that in 1955 the top 500 industrial companies controlled 65 percent of all manufacturing and mining assets in the United States. Ten years later it was 73 percent. He declared two years ago that ''less than 3 percent of all industrial firms now control over 80 percent of all industrial assets.'' He asserted that the ''merger wave is growing not receding.''
President Reagan is pushing a campaign to contain big government and curtail its size, but one hears little of moves to control big corporations. The recent tendency has been to study them as a social and economic phenomena in which concentration is almost inevitable.
The interconnection of these corporations is brought out by Edward S. Herman in his book ''Corporate Control, Corporate Power'' (Cambridge University Press 1981). They seem as mixed as a bowl of spaghetti. Here is an old-fashioned warning in the March/April issue of Challenge magazine by Walter Adams, past president of Michigan State University. His title is, ''Mega-Mergers Spell Danger.'' He notes that US Steel snapped up Marathon Oil right out from the jaws of Mobil (already the third largest industrial company in the nation).
In 1912 all three presidential candidates, Taft, Teddy Roosevelt, and Wilson, warned against ''trusts.'' Have we accepted them?
Walter Adams argues that American industry is becoming ingrown and lazy from lack of domestic competition and is losing preeminence. It is due in part, he argues, to the ''current merger mania.'' He wouldn't permit mergers by any of the ''Fortune 500'' unless they could make affirmative showing of more jobs, greater efficiency, and technological progress.
