Builders of Wooden Railway Cars ... and some of other stuff

The Streetcar Builders Consolidation

On 2 May 1905, the following article appeared in the New York Times

Syndicate with $50,000,000 Capital Being Formed

BOSTON, May 1. — A movement to merge the companies engaged in the manufacture of street railway cars of the entire country is in progress. Options have been secured on properties, including that of the Laconia Car Company of this city and Laconia, N.H.

Among the concerns interested are the J.G. Brill Company of Philadelphia, the St. Louis Car Company, the Wason Manufacturing Company of Springfield, Mass.; the Bradley Car Company of Worchester, Mass., and the Jewett Car Company of Newark, Ohio. A capital of about $50,000,000 is proposed.

According to men identified with streetcar manufacturing interests in this State, profits have not been large in the past half dozen years, owing to keen competition, although the demand for cars has been the greatest ever known.

An article that same day in the Boston Daily added the information that —

o the total volume of streetcar-building business was estimated to be between $12 million and $15 million annually.
o due to extensive competition, profit margins were too small for the smaller companies to survive.
o Stephenson, American and Kuhlman had all failed within the last few years.
o Osgood Bradley had gone into liquidation and Laconia had to be reorganized.
o one benefit claimed for consolidation would be larger profits.
o another benefit of consolidation would be savings in freight rates by having plants in all sections of the country.
o the railways would benefit through prompt shipment and the pooling of patents.

Quizzed the day before, G.C. Kuhlman of the G.C. Kuhlman Car Company said he was not aware of any merger, while G. Martin Brill of the J.G. Brill Company denied his company had any interest in such a movement. George Kobusch of the St. Louis Car Company confirmed something was pending but would not discuss it, while John E. Bradley of the Osgood Bradley Company said he was in no position to make a statement. {422}

Three weeks later, a dispatch from St. Louis said, “the deal . . . has been practically closed.” It indicated that George J. Kobusch of the St. Louis Car Company—largest of the companies involved—had been “prominent in [the] negotiations,” which had been principally carried on through James Stewart of the St. Louis firm of James Stewart & Company. He was said to be “in the East closing the final details of the deal, and it was through him that options on the various car manufacturing plants in the leading cities were obtained.” These options would expire 1 July, but had a possible six-month extension. “The central organization will have control of the combined plants, practically purchasing the various plants, the present owners and management in many instances retaining an interest in the stock of the consolidated companies.” The Newark Advocate version of this dispatch named the 15 companies checked with an “a” in the table below (though not necessarily by the exact same name). The New York Times version named the 15 companies checked with an “n”. {412}

Apparently the “deal” did not go through on July 1st, as on the 20th another newspaper {413} reported receiving a dispatch from New York announcing the progress of the “mammoth trust.” This report said there were 17 “concerns” in the combine, but double counted two of them. [The firms it named are marked with a “c” in the following table.] The report also suggested that “the contractor of international note,” J.C. Stewart, “engineered the deal and will be president of the holding company controlling the business and output of these seventeen concerns.”

The Washington Post reported a dispatch from New York dated July 28th saying a company is “now being formed.” [Emphasis added.] {415} This dispatch indicated the capital would be $43,000,000, consisting of $15,500,000 of 6% cumulative preferred stock and $27,500,000 of common stock. Supplementing the stock would be an issue of bonds in the amount of $13,000,000 secured by a first mortgage and collateral trust sinking fund bearing 5%, $11,0000,000 to be issued at formation of the company and $2,000,000 reserved for future requirements. The dispatch also named 19 participating companies, including three not named on any previous list (the Easy Access Door Company, the Journal Bearing Company, and the Wilson Manufacturing Company, although the last may be a confusion with the Wason Manufacturing Company.)

A New York Times article of that same date said specifically the combination “has been formed.” [Emphasis added.] It noted that Kean, Van Cortland & Company were the syndicate managers of the merger. Also that William T. Van Brundt, president of the Furnaceville Iron Company, the St. Joseph & Grand Island Railway Company, and the Sinnemahoning Iron & Coal Company [all Harriman properties] “is also interested in the deal.” This article said the Capital would be $54,500,000, divided among $15,500,000 of preferred stock, $27,500,000 of common stock, and $11,500,000 in bonds. It also claimed to have heard that Barney & Smith was included in the combine.

An article in the Chicago Daily Tribune for July 30th, based on an interview with John J. Cummings, president of the Chicago Car Company (Cummings Chicago Car Company in the table below), had both additional information and corrected information.

o Cummings asserted the purpose of the “consolidation” was to reduce operating expenses and “ruinous freight rates,” rather than to boost prices.
o An updated list of participating companies, 14 in all, is given. These are checked “t” in the table below. [Note that Jewett, Niles and Stephenson have apparently dropped out.]
o Financial information was brought up to date: capital would now be a total of $54,000,000, consisting of $11,000,000 in 5% bonds, $15,500,000 in preferred stock and $27,500,000 in common stock. Underwriting was being handled by Kuhn, Loeb & Company, Martin Brill, T.J. Dolan, Thomas F. Ryan, E.H. Harriman, George Kobusch, “and others.”
o Officers had yet to be elected, but Cummings expected either W.G. Van Brunt or J.C. Stewart to be elected president. Van Brunt was described as “Harriman’s man,” managing some of his railroad properties. [James C. Stewart, you may recall, was a “contractor of international note,” friend of George Kobusch of the St. Louis Car Company, and reportedly “engineered the deal.”] Cummings expected to be elected vice-president.
o Finally, Cummings estimated the combine would control 95% of the streetcar business in the United States.

For the next four months there was a dearth of news concerning the combine. But then comes another dispatch, this one from Cleveland, dated December 2nd, indicating that the combine “originated in the offices of Thomas Ryan of Philadelphia and George Kobush [sic] of St. Louis,” was about to be completed in Cincinnati, and that Randal Morgan of Philadelphia was “to figure in bringing the deal to a successful end.” Henry C. Ebert of Pittsburg was “said to have been selected as the head of the new combine,” and would “make Cincinnati his headquarters.” This report suggested the plan had been the brainchild of George Kobusch of the St. Louis Car Company, who had “laid the matter” before Mr. Ryan, a member of the Natural Gas Improvement syndicate. It also noted the “underwriting has all been arranged for and the delay was caused by the fact that the syndicate had a number of other large deals under way which it was desired to get cleaned up.” {414}

Then . . . deafening silence: we can find nothing further about the great $50 million merger in any newspaper archive available to us. What happened?

Reading between the lines, (and above and below as well) it appears that after much planning, politicking and maneuvering, someone awoke to the reality that such a consolidation would simply not be allowed to happen. President Theodore Roosevelt had begun in late 1901 to speak out against the “real, grave evils” in the rapidly spreading trusts, and in 1902 had instructed his Attorney General to file suit against J. Pierpont Morgan’s Northern Securities firm. As recently as January of 1905, his administration had slaughtered the so-called “beef trust” when the Supreme Court held for the government in Swift & Co. v. the United States. The idea of a “streetcar trust” made up of virtually all the major streetcar builders was 1890s thinking, and no doubt died once cooler heads read the direction of the country under Teddy Roosevelt. Good thing, too, because the next year (1906) the trust-busters would take on Standard Oil, and in 1911, after exhausting all legal avenues, Standard Oil would be held by the Supreme Court to be an unlawful monopoly.

Interesting facts:

o Initially the “combine” seems to have been structured as a holding company that would acquire the several participating firms. Toward the end it took on the appearance of a single company.
o George Kobusch of the St. Louis Car Company is given credit for conceiving the idea. [Read Young and Provenzo’s History of the St. Louis Car Company to get a good idea of the mind of George Kobusch.]
o Early on James C. Stewart, a St. Louis contractor, is given credit for facilitating Kobusch’s conception. Later it is Thomas Ryan of Philadelphia. And in the end it is Randal Morgan of Philadelphia, who is completing the deal in Cincinnati !
o Early on James C. Stewart is “expected” to head the combine, then W.G. Van Brunt, and finally Henry C. Ebert of Pittsburg.
o Newspapers were notoriously inaccurate in their reporting of companies involved (see analysis below).

Companies Named by Newspapers

Company Newspaper Code Co. Location
American Car Company
(Subsidiary of Brill)
a n c w t St. Louis, MO
Osgood Bradley Company a n   w t Newburyport, MA
J.G. Brill Company a n c w t Philadelphia, PA
Elizabeth, NJ
Cleveland, OH
Cincinnati Car Company a n c w t Cincinnati, OH
Easy Access Door Company #       w    
Jewett Car Company a   c w   Newark, OH
Newark Car Company
(Apparently a confusion with Jewett)
  n       Newark, NJ
J.M. Jones’ Sons Company a n c w t Troy, NY
Journal Bearing Company       w    
G.C. Kuhlman Car Company
(Subsidiary of Brill)
a   c w t Cleveland, OH
Cleveland Car Company   n      
Laclede Car Company
(Subsidiary of St. Louis Car Co.)
    c w t St. Louis, MO
Laconia Car Company a n c w t Laconia, NH
McGuire Manufacturing Company a n     t Chicago, IL
Cummings Chicago Car Company         t Chicago, IL
Paris, IL
(John J.) Cummings Car Company   n c w  
McGuire-Cummings Car Company a   c w   Paris, IL
Niles Car Manufacturing Company a n   w   Niles, OH
Peckham Manufacturing Company
(Successor to Peckham Motor Truck & Wheel Company)
      w t Kingston, NY
Beckham Manufacturing Company
(Apparently a confusion with Peckham)
a n c    
St. Louis Car Company a n c w t St. Louis, MO
St. Louis Malleable Casting Company     c w t St. Louis, MO
John Stephenson Car Company
(Subsidiary of Brill)
a n c w   Elizabeth, NJ
Wason Manufacturing Company a n c   t Springfield, MA
Wilson Manufacturing Company
(Possibly a confusion with Wason)
TOTAL 15 15 15 19 14  

(a) = June 23 Newark Advocate
(n) = June 23 New York Times
(c) = July 20 Cambridge Jeffersonian
(w) = July 28 Washington Post
(t) = July 30
Chicago Tribune

#  If you have knowledge of this company, would you share it with us?

20 April 2006

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