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Management Relations in a Multinational Enterprise: The Case of Canadian Industries Limited, 1928–1948*

Published online by Cambridge University Press:  11 June 2012

Graham D. Taylor
Graham D. Taylor
Affiliation:
Associate Professor of History, Dalhousie University
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Abstract

Historians of modern, multinational, diversified industrial economies have learned that to deduce rigid, authoritarian control of subsidiaries, especially those in foreign countries, from the fact of over-all corporate ownership from afar, often leads to very inaccurate conclusions. The case of Canadian Industries, Ltd., a diversified Canadian chemical company jointly owned by the American and British giants, Du Pont and Imperial Chemical Industries, Ltd., reveals that a remarkable degree of independence was retained by the Canadian subsidiary even in such globally important policy matters as diversification, entry into new geographic areas, transfer of technology, and inter-company pricing of materials. Transnational ownership of industrial facilities, in short, produced advantages that were shared by both headquarters and local enterprises, leaving most of the anti-multinational movement to be explained as simpleminded nationalism.

Type
Research Article
Information
Business History Review , Volume 55 , Issue 3 , Autumn 1981 , pp. 337 - 358
Copyright
Copyright © The President and Fellows of Harvard College 1981

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References

1 Dominion of Canada, House of Commons, Debates, 1944 Session, vol. II, pp. 1763–1769.

2 Statement by Wendell Berge, Assistant Attorney General, U.S. Department of Justice, Wash., D.C., January 10, 1944, in Jasper Crane Papers, Box 1036, Records of E.I. du Pont de Nemours Co., series II, part 2. Eleutherian Mills Historical Library, Greenville, Del. Hereafter referred to as Crane Papers.

3 United States vs. Imperial Chemical Industries, E.I. du Pont de Nemours Co., Inc., et al., 100 Federal Supplement 504, 557–564 (1951).

4 Few critical studies of multinational enterprise have dealt specifically with issues of internal management relations in detail, but see Barnet, Richard J. and Müller, Ronald E., Global Reach: The Power of the Multinational Corporations (New York 1974), 42–44Google Scholar, and Levitt, Kari, Silent Surrender: The Multinational Corporation in Canada (Toronto, 1970), 83–89Google Scholar, for representative comments. Detailed studies of the internal management of multinational companies in recent years include Stopford, J.M. and Wells, L.T. Jr.Managing the Multinational Enterprise: Organization of the Firm and Ownership (New York, 1972)Google Scholar; and Brooke, M.Z. and Remmers, H.L., The Strategy of Multinational Enterprise: Organization and Finance (London, 1970).Google Scholar See also Safarian, A.E., Foreign Ownership of Canadian Industry (Toronto, 1973), 50–70.Google Scholar

5 See Haber, L.F., The Chemical Industry, 1900–1930 (London, 1971), 9–33, 135–149, 173–183, 291–318Google Scholar, on the commercial and technological development of the chemical industry in this period. On the tradition of international cartels in chemicals, see Stocking, G.W. and Watkins, M.W., Cartels in Action: Case Studies in International Business Diplomacy (New York, 1946), 418–429.Google Scholar

6 “Canadian Industries Ltd. and Predecessor and Associated Companies,” in Accession 1460, Box 32, Records of E.I. du Pont de Nemours Co., series II, part 2. See also Reader, W.J., Imperial Chemical Industries: A History, vol. I (London, 1970), 196, 211–212.Google Scholar

7 Marshall, Herbert, Southard, Frank, and Taylor, Kenneth, Canadian-American Industry: A Study in International Investment (New Haven, 1936), 82–84Google Scholar; Chandler, A.D. Jrand Salsbury, Stephen, Pierre S. Du Pont and the Making of the Modern Corporation (New York, 1971), 477, 567–568Google Scholar; Reader, W.J., Imperial Chemical Industries: A History, vol. II (London, 1974), 212–213.Google Scholar

8 Stocking and Watkins, Cartels 438–450; Chandler and Salsbury, Pierre S. Du Pont, 570–571; Reader, Imperial Chemical, vol. II, 13–21.

9 United States vs. Imperial Chemical Industries, E.I. du Pont de Nemours Co., Inc., et al., trial records, Govt. Exhibit 15, A.T. 4134; Govt. Exhibit 18, A.T. 4138; Govt. Exhibit 21, A.T. 2570-A; Govt. Exhibit 24, A.T. 4206. Hereafter referred to as U.S. v. I.C.I. Records. The trial transcript and records were deposited by the Du Pont corporation at Eleutherian Mills Historical Library.

10 Reader, Imperial Chemical, vol. II, 212.

11 “Canadian Industries Ltd. and Predecessor and Associated Companies.”

12 Transcript of meeting, Montreal, September 16, 1932. U.S. v. I.C.I. Records, Govt. Exhibit 816, A.T. 4337; testimony of H. Greville-Smith, vice president, Canadian Industries Ltd., May 17, 1950. U.S. v. I.C.I. trial transcript, 2078–2079.

13 Canadian Industries Ltd., Annual Reports, 1928, 1943.

14 Minutes of meeting at Nobel House, London, April 29, 1924. U.S. v. I.C.I. Records, Govt. Exhibit 48, AT. 4379.

15 Notes on discussion at Walter Carpenter's house, October 3, 1940. Crane Papers, Box 1043.

16 Jasper Crane, Du Pont foreign relations committee, to Walter S. Carpenter, Jr., president, Du Pont, March 2, 1942; Carpenter to Sir Harry McGowan, chairman, Imperial Chemical Industries Ltd., May 15, 1942. Crane Papers, Box 1034.

17 McGowan of Nobel had observed of the Canadian directors of C.I.L.'s predecessor company that “‘they should clearly understand that their nomination comes from Nobel's,’” Reader, Imperial Chemical, vol. I, 211.

18 In 1934–36, the C.I.L. management committee, which included the president and vice president, Purvis and Huggett, and the heads of the four groups of divisions, consisted of four men from I.C.I. and its subsidiaries, and two from Du Pont. Canadian Industries Ltd., Annual Report, 1935.

19 Reader, Imperial Chemical, vol. II, 212–213; Dictionary of National Biography, 1941–1950 (London, 1959), 700–702.

20 George Huggett, vice president, C.I.L., to J. Thompson Brown, executive committee, Du Porit, November 14, 1939. Crane Papers, Box 1034; testimony of Wendell R. Swint, foreign relations committee, DuPont, June 6, 1950. U.S. v. I.C.I, trial transcript, 2992.

21 William Richter, Du Pont Fabrics and Finishes Dept. to Jasper Crane, foreign relations committee, Du Pont, November 24, 1930. Crane Papers, Box 1034.

22 Reader, vol. II, 214; minutes of meeting, Wilmington, Del., October 19, 1937. U.S. v. I.C.I. Records, Govt. Exhibit 881, A.T. 3748-A.

23 Arthur B. Purvis, president, C.I.L., to Sir Harry McGowan, October 15, 1928; minutes of meeting, New York, October 23, 1928. U.S. v. I.C.I. Records, Govt. Exhibit 772, ICI(L); Govt. Exhibit 774, ICI(L). Chandler and Salsbury, Pierre S. Du Pont, 569.

24 Memorandum on C.I.L. and Arthur B. Purvis. October–November, 1939. Crane Papers, Box 1034.

25 Memorandum regarding Practices and Procedures to be followed with respect to Export Sales, C.I.L. Foreign Relations Committee, February 23, 1948. U.S. v. I.C.I. Records, Defense Exhibit D–673, C.I.L.; Agreement between I.C.I and C.I.L., August 19, 1948. U.S. v. I.C.I. Records, Defense Exhibit D–743, ICI. These agreements were part of a general restructuring of relations between Du Pont and I.C.I. ending all cross-licensing arrangements and the system of exclusive regional licenses except in certain fields. The final consent decree in the case of U.S. v. I.C.I. et al. in 1952 eliminated these arrangements as well. See Reader, Imperial Chemical, vol. II, 437–441.

26 Memornadum: Dividend Policy of Canadian Industries Ltd., April 30, 1941. Crane Papers, Box 1034; U.S. v. I.C.I. Records, Defense Exhibit D–664, CIL. It should be noted that a substantial part of the capital for establishment of Defense Industries Ltd. was provided by the Canadian government.

27 John K. Jenney, assistant director, Foreign Trade Development Division, Du Pont, to Du Pont foreign relations committee, n.d. (1941), Crane Papers, Box 1034. Ironically, I.C.I. had first raised this possibility in 1935, but had been persuaded by Du Pont to endorse the stock bonus program as preferable to cash bonuses. Minutes of meeting, London, June 17, 1935. U.S. v. I.C.I. Records, Govt. Exhibit 846, A.T. 3085–A.

28 Minutes of meeting, Montreal, October 2, 1928. U.S. v. I.C.I. Records, Govt. Exhibit 173, ICI(L); minutes of meeting, Wilmington, Del., October 12, 1928. U.S. v. I.C.I. Records, Govt. Exhibit 174, A.T. 3646.

29 Minutes, Du Pont foreign relations committee meeting, October 6, 1928. U.S. v, I.C.I., Govt. Exhibit 190, A.T. 3641; minutes of meeting, Montreal, December 4, 1930. Crane Papers, Box 1034.

30 Robert Salmon, C.I.L. chemicals group, to Jasper Crane, February 27, 1931; Crane to Purvis, March 6, 1931; Purvis to Crane, March 19, 1931; L.W. Haslett, C.I.L. cellulose group to Crane, April 27, 1931. Crane Papers, Box 1034. I.C.I. held shares in Allied Chemical through an investment by one of its predecessor companies, Brunner, Mond, in Solvay Process Co., which merged with four other firms in 1920 to form Allied. In 1928, I.C.I. sold most of its Allied shares to the French chemical company, Solvay et Cie., but retained a small amount, equal to less than 1 per cent of Allied's issued capital. Despite this participation, relations between I.C.I. and Allied were never very cordial. The initial steps that led to the establishment of I.C.I. in 1926 were the result of a breakdown in merger negotiations between Brunner, Mond, and Allied. See Reader, Imperial Chemical, vol. II, 15, 35–37, 49–50.

31 H.J. Mitchell to Lammot du Pont, June 11, 1934. Crane Papers, Box 1039.

32 Sir Harry McGowan to Lammot du Pont, June 11, 1934. Crane Papers, Box 1039.

33 W.R. Swint, foreign relations committee, Du Pont to Lammot du Pont, July 10, 1934. Crane Papers, Box 1034; G.W. White, president, I.C.I. (New York) to L.J. Greenwood, foreign relations department, I.C.I., February 28, 1936. U.S. v. I.C.I. Records, Govt. Exhibit 853, ICI (L); Arthur B. Purvis to Lammot Du Pont, September 15, 1936. U.S. v. I.C.I. Records, Govt. Exhibit 858, ICI(L).

34 Agreement between Imperial Chemical Industries, Ltd., E.I. du Pont de Nemours and Co., Canadian Industries Ltd., December 1, 1936. U.S. v. I.C.I. Records, Govt. Exhibit 868, A.T. 1701.

35 F.A. Wardenburg, Du Pont Ammonia Dept., to Jasper Crane, January 25, 1938. Crane Papers, Box 1037; W.R. Swint, foreign relations committee to M.G. Tate, I.C.I. (New York), November 28, 1938. Crane Papers, Box 1034; Minutes of meeting, Wilmington, Del., October 19, 1937. U.S. v. I.C.I. Records, Govt. Exhibit 881, A.T. 3748–A.

36 E.J. Barnsley, I.C.I. (New York) to Lord Melchett, October 13, 1939. U.S. v. I.C.I. Records, Govt. Exhibit 715, ICI(L).

37 W.R. Swint to George Huggett, president, C.I.L., November 21, 1945; J.H. Wadsworth, I.C.I. Foreign Relations Department, to Huggett, December 11, 1945. U.S. v. I.C.I. Records, Defense Exhibits D–665, D–668, ICI(L); Testimony of Herbert H. Lank, vice president, C.I.L., May 18, 1950. U.S. v. I.C.I, trial transcript, 2122.

38 Testimony of Walter S. Carpenter, Jr., June 8, 1950. U.S. v. I.C.I. trial transcript, 3218.

39 Lammot du Pont to executive committee, Du Pont, June 29, 1927. U.S. v. I.C.I. Records, Defense Exhibit D–755, DP; Walter S. Carpenter, Jr. to Du Pont departments, July 1, 1927. U.S. v. I.C.I. Records, Govt. Exhibit 177, ICI(L).

40 Walter S. Carpenter, Jr., to Lammot du Pont, August 18, 1927; Carpenter to Arthur H. Purvis, August 4, 1927; Purvis to Carpenter, October 25, 1927. U.S. v. I.C.I. Records, Defense Exhibits D–770, D–772, D–773, DP. See also Reader, Imperial Chemical, vol. II, 216.

41 John K. Jenney to W.R. Swint, March 8, 1932. Crane Papers, Box 1034.

42 G.W. White, president, I.C.I. (New York), to H. Greville-Smith, cellulose group, C.I.L., August 11, 1932. U.S. v. I.C.I., Defense Exhibit D–852, ICI.

43 H. Greville-Smith, memorandum: Isobutanol Prices to C.I.L., July 13, 1936; R. W. McClelland, DuPont Ammonia Dept. to Jasper Crane, July 22, 1936; Greville-Smith to Crane, August 4, 1936; Crane to Greville-Smith, August 7, 1936; Greville-Smith to Crane, January 27, 1938. Crane Papers, Box 1034.

44 J.K. Jenney to W.R. Swint; Data on C.I.L. Purchases from Major Stockholders, January 8, 1940. Crane Papers, Box 1034; U.S. v. I.C.I. Records, Defense Exhibit D–792, CIL, schedules A–1, A–2; testimony of H. Greville-Smith, May 17, 1950. U.S. v. I.C.I. trial transcript, 2035–2036.

45 W.R. Swint to George Huggett, November 21, 1945. U.S. v. I.C.I. Retords, Defense Exhibit D–782, DP.

46 Reader, Imperial Chemical, vol. II, 416–417.

47 See Chandler, Alfred D. Jr,Strategy and Structure: Chapters in the History of Industrial Enterprise (Cambridge, Mass., 1962), 104–111Google Scholar, on Du Pont's decentralization. In the case of I.C.I., decentralization was enhanced by the fact that the two major elements of the company were drawn from quite different industrial and cultural backgrounds. See Reader, Imperial Chemical, vol. II, 71–74.