Akron Industries Join Combines
AKRON & SUMMIT COUNTY
Summit County Historical Society,
Akron, Ohio c. 1950 p 266-270
Industries Join Combines
industrialists were certain they had solved the problem of
ruthless competition which had bedeviled them for several years.
Joining with competitors, they had formed associations, or trusts,
or cartels—whatever one might choose to call them—to control
production, fix prices and assure themselves of profits. Congress
had passed the Sherman Anti-trust Act in 1890 but no one believed
it would be enforced.
difficult to determine which local industry started the
"association" ball rolling. Quite probably it was the cereal
Schumacher's tight hold on the oatmeal business of the nation had
started to slip during the 1880s. He was still the oatmeal king
but there were many aspiring princes who sought his throne.
Competition was tough—and getting tougher.
Ravenna there was a hustling young firm called the Quaker Mills,
owned by James H. Andrews and Henry P. Crowell, which was getting
an ever larger slice of the oatmeal business. Out in Cedar Rapids,
Iowa, there was an even more formidable rival, the North Star
Oatmeal Mill, headed by John and Robert Stuart and George Douglas.
strong competitors right in Akron. The largest was the Akron
Milling Company, headed by Albert Allen—an outgrowth of the
Commins & Allen flour mills. This concern had just finished a fine
plant near the Old Stone Mill at the foot of Mill Street and was
becoming well established in the cereal business.
active rival was the Hower Company, organized in 1880 by John H.
Hower and his three sons, Harvey Y., M. Otis and Charles H. These
men had purchased the old Turner Mill at Canal and Cherry,
installed new machinery and started an aggressive sales campaign.
William H. Perrin,
a careful historian, gave the Hower Mills credit for first
manufacturing rolled oats, or rolled avena as it was then called,
"avena" being the Spanish word for oats. Other historians, equally
dependable, said Schumacher sold rolled oats before the Howers
started in business. Probably no one can say for certain who first
made this now most popular form of oat cereal. All that is known
definitely is that after 1880 rolled oats and oatmeal became
mid-1880s both cereals were being manufactured by a dozen concerns
throughout the country. Prices had been cut in half and more price
wars were in the offing. Clearly the time was ripe for organizing
an association and remedying the situation.
Schumacher, a lone wolf and self-admittedly a "stubborn Dutchman,"
sat back and refused to become involved in any business-pooling
deal, any association which could tell him how to run his
business. He was the king and if others did not like what he was
doing, they could manufacture something else.
Schumacher had one trait, just as pronounced as his stubbornness,
which old timers say forced him ultimately to fall in line. That
was his frugality.
had no objection to donating large sums of money to temperance
movements and churches but in other money matters he was
parsimonious. He nursed his nickels even when he needed
clothes—clothes which members of his family insisted he had to
For years he
wore no extra outer clothing in winter except a heavy woolen shawl
which he draped over his head and shoulders. There came a time
when his sons Adolph and Louis became convinced their wealthy
father should cast aside this Old World garment and buy an
overcoat. But Schumacher paid no heed—overcoats were too
their father could not resist good bargains, the sons worked out a
plan. Stopping in at Jacob Koch's, one of the town's leading
clothiers, they made a deal with him. The next time Koch saw
Schumacher pass his store, he was to call him in, show him a fine
overcoat, tell him it had been ordered by a man who had paid half
down and then left town, and offer the coat to the oatmeal king at
a greatly reduced price. The sons told Koch they would pay the
worked. Schumacher got a splendid $70 coat for only $20—as his
sons had figured, he couldn't resist a bargain.
On his way
home, Schumacher passed Carl Bonstedt's Grocery. Bonstedt saw him,
admired the coat, and told Schumacher it looked as though it had
cost a small fortune. The proud owner chuckled and said it had
cost him only $20. Coveting the garment, Bonstedt offered to buy
it for $40. After some haggling, Schumacher sold it for $45.
the sons learned the painful story. Then they had to pay Koch the
difference between the sale price of the coat and what Schumacher
had paid Koch for it—$50. They made no further efforts to wean
their father away from his outmoded shawl.
frugality caused him serious trouble in the late winter of
1885-86. Because he so disliked parting with money he rarely
bought insurance for his mills. As a result, he suffered a
Saturday morning, March 6, 1886, five hours before daybreak, dust
exploded in a grain drying house among his group of buildings at
Broadway and Mill. Within a few minutes the entire structure was
in flames. Chief B. F. Manderbaugh and his force of twelve city
firemen soon arrived but their efforts to control the fire were
spread to the towering Jumbo Mill and then other buildings
started blazing. A general alarm was sounded and volunteer
firemen began streaming in from all directions. But the fire
increased in fury. Flames shot high in the sky, lit up the entire
town and were visible from miles away. A great crowd gathered to
witness the awesome spectacle.
sent to other cities for assistance. Kent sent down a fire engine
and a force of men on a special train and so did Cleveland. Both
reinforcements arrived about 7 o'clock in the morning. But the
fire had gained such headway that nothing could stop it. All that
day it raged, and all that night and all the second day.
flames finally died down, almost all of Schumacher's fine
establishment lay in smoldering ruins. Only his Empire Mill and
new office, on the southeast corner of Mill and Broadway, remained
loss was reported to be $600,000.
He was still
a wealthy man. Besides the Empire Mill, he owned the Cascade Mill
at North Street and many other properties. He also had a fortune
in mortgages and stocks and bonds. But he had relatively little
cash money, by no means enough to rebuild his destroyed plants.
say that Schumacher borrowed the money he needed from Cleveland
financiers – men who were interested in the formation of an
association or trust which would control the entire cereal
industry but which could not be formed without Schumacher's
participation. Their quid pro quo in the financing deal, it is
related, was his cooperation.
Be that as
it may, Schumacher got the 'financing he sought and, just about
the time his plants were rebuilt, a pooling company was organized
with Schumacher as a member "to control production of its members
and the price at which oatmeal could be sold."
financing arrangement provided for the merging of Schumacher's
interests with those of the Akron Milling Company in a new
$2,000,000 corporation. Ferdinand Schumacher became president;
Albert Allen and Louis Schumacher, vice-presidents; F. Adolph
Schumacher, secretary, and Hugo Schumacher, treasurer. How much
stock was owned by the oatmeal king was not reported.
Schumacher mills were rebuilt, they became connected physically as
well as financially with the mills formerly owned by the Akron
Milling Company at the foot of Mill Street.
mills at that time had no railroad facilities. Incoming shipments
of grain had to be carted down to them by horse and wagon. This
handicap was eliminated when new buildings were constructed on
Broadway. Five large iron pipes, ranging in diameter from seven to
ten inches, were laid from the Broadway structures under city
streets down to the lower mill. Helped along by air pressure
provided by a blower system, grain was thereafter carried down the
hill from Broadway. The pipes are still in use today.
simultaneously with the completion of the new mills, the
Consolidated Oatmeal Company was incorporated in Illinois—on May
4, 1887. The Schumacher mills, along with twelve other oatmeal
concerns, were listed as members. Fixed prices were established
and each mill was allotted a specified portion of the total
business. The Schumacher mills were allotted 22 per cent. The
Quaker Mills at Ravenna and the North Star Mills at Cedar Rapids
each got 13 per cent. The share of the Hower Company, one of the
smaller producers, was 4.42 per cent.
association was viciously condemned by Eastern "antitrust"
newspapers. They branded it as another brazen attempt to rob the
public. But the newspapers were unduly concerned—the Consolidated
collapsed within a year. Its members had boosted prices to make
big profits possible and by so doing defeated their own ends.
companies sprang up all over the country. They undersold the
combine and still made money. Soon it became apparent that the
Consolidated's production-pooling scheme was impractical.
behind the Consolidated then decided to emulate Standard Oil,
Diamond Match and other successful trusts and organize a giant
company with sufficient resources to buy out competitors—or freeze
them out by introducing new production methods, decreasing costs
and underselling them. So the American Cereal Company, predecessor
of Quaker Oats, was incorporated, first in West Virginia on
December 28, 1888, and then in Ohio, on June 1, 1891.
among the concerns which were merged in the new company were the
Schumacher and Hower mills in Akron, the Quaker Mills in Ravenna,
and the North Star Mills in Cedar Rapids. The Hower Mills and the
Quaker Mills were closed, along with several other plants which
Schumacher headed the new company, which established its main
office in Chicago. Other key men were Andrews and Crowell, of the
Quaker Mills, and Robert Stuart, of the mills in Cedar Rapids.
Andrews was made superintendent of the Akron mills. All capable
men, they soon brought order out of chaos and the American Cereal
made money from the start. Within a year it practically controlled
the oatmeal business of the country.