At the turn of the twentieth century, American business went through a dramatic wave of mergers and consolidations that influenced the business landscape as a whole and the development of advertising in particular at a critical period in its history. Advertising practitioners at the time perceived these “trust” mergers as a significant threat to their interests. Their concerned responses led to a concentrated airing of views by both advertising and publishing executives regarding advertising’s then-emerging role in industry. These diverse defenses and formulations, articulated and debated in reaction to the perceived crisis, helped accelerate the development of advertising as a cohesive business specialization with shared sets of views about its already-evolving functions and roles.
Because of their relevance to advertising as it was then developing, these mergers received extensive coverage both in news and opinion pieces in the major advertising-trade publications at the time. This study examines in detail the coverage of these mergers over a five-year period (1898-1902) in five major advertising-trade publications to evaluate how this concentration of American industry at that time influenced advertising’s development.
During the years between 1895 and 1904, there was an intensive period of “trust” consolidations widely acknowledged as having had a significant impact in reshaping American industry as a whole (Chandler 1977; Lamoreaux 1988; Livermore 1935; Nelson 1959; Thorelli 1955). This period, called variously America’s “First Merger Wave” or “The Trust Period” or the “Consolidation Era” or the “Combination Movement” (Andreano 1965, 15) dramatically reduced the number of separate companies across many business sectors. During this period, 1,800 firms merged into only 157 remaining consolidated corporations across a wide spectrum of American industries (Lamoreaux 1988, 2). The activity was most highly concentrated between 1898 and 1902. According to Nelson (1937, 34), “Five of these years, 1898-1902, saw a burst of merger activity never exceeded in importance in our history, with 1,028 firms disappearing into mergers in 1899 alone.”
These 1895-1904 “trust” consolidations directly affected the then-emerging advertising trade by decreasing the number of advertisers within any industry which, in turn, reshaped the competitive landscape. Many competing firms across a wide range of industrial sectors combined into one large firm with an overwhelmingly dominant market share position. According to Lamoreaux’s (1988, 3-4) analysis of resultant market shares, there were 42 consolidated corporations that had more than a 70 percent share of market, 30 consolidated firms controlling 40 to 70 percent share of their market, and 21 others in which the combination had a substantial share although less than 40 percent.
Advertising practitioners at the time reacted with alarm. Frank Presbrey, who owned an advertising agency during that period and later wrote a history of advertising, explains the nature of this threat as follows (1929, 437): “There was a fear that the ‘trusts’ which were then forming in numbers, and providing one of the principal topics of the day, would kill advertising. The thought was that wide control by a single interest would eliminate competition and set up a belief that advertising was unnecessary.”
The corporate consolidations did have an immediate general effect on reducing advertising spending, with one estimate gauging that advertising expenditures declined by somewhere between $9 million and $13 million just in the first six months of 1899 (Printers’ Ink 1938, 89). This was roughly a 10 percent drop in advertising expenditures, based on estimates of total magazine and newspaper revenue reported in 1900 in the U.S. Census of Manufactures (Borden 1942, 48).
The panic expressed by advertising practitioners, however, was relatively short-lived. “In 1899, the trust managers were complacent, the advertising trade enshrouded in despair,” reported Printers’ Ink. But, it added, “By the end of 1900 those in the advertising business had shed all signs of apprehension about the future and the trusts were examining the subject of salesmanship in an entirely new light” (Printers’ Ink 1938, 92). In part this is explained by the leveling off of the consolidations, with merger activity having peaked in 1899 (Lamoreaux 1988, 2).
In addition to the extent...