The Issue: Business Concentration in the 1950s and 1960s
Ironically, a vast merger movement followed the enactment of the Celler-Kefauver Act in 1950. This Third Great Merger Movement, exceeding the previous two, began with a disappearance of 235 formerly independent firms in 1951, and steadily increased until 1968, when a staggering total of 2,442 corporations disappeared into mergers during that year alone (Table 1.1). Another indication of the enormity of this merger wave was the disappearance of 1,261 large firms, defined as those with assets of $10 million or more. 1 The number of large firms acquired grew from nine in 1951 to 99 in 1966, then jumped dramatically to 167 in 1967 and to 201 in 1968. The transfer of assets accompanying these acquisitions averaged well over $1 billion through 1960, averaged $3 billion from 1961 through 1966, and reached almost $13 billion in 1968 (Table 2.1). Especially significant is that 46 percent of these large firms, representing 64 percent of their total assets, were acquired by the 200 largest industrial corporations, thus increasing the degree of concentration in the American economy. Indeed, by the end of 1968, the 200 largest industrial corporations controlled over 60 percent of the total assets held by all manufacturing companies in the United States, an amount equal to that held by the 1,000 largest in 1941 when the TNEC warned of the growing concentration of economic power (Table 2.2). 2 It is not surprising that academicians, small businessmen, members of Congress, and the antitrust agencies viewed with alarm this accelerating concentration of economic power.
This great merger wave took place during a period of prosperity marked by a rapidly expanding economy, easy money, and a buoyant stock market. As in the mini-wave of the 1940s, over half of the mergers took place in the machinery, chemical, food, transportation equipment, and textile industries. Once again, investment bankers and financial consultants were active, but to a greater extent than in previous movements, corporate management initiated merger activity, and