Cargill: Trading the World's Grain
David O. Wentzell - Retired Cargill Employee
Published September 1, 1992 | September 1992 issue
University Press of New England
This well-documented historical narrative features five influential
members of the William Wallace Cargill and John H. MacMillan families,
two prominent pioneer families with roots firmly planted in the Ninth
Federal Reserve District. It is woven around their involvement in the
ownership and development of Cargill Inc., a truly unique
family-owned, worldwide enterprise based in Minnetonka, Minn.
Interest in knowing more about Cargill has been mounting over the years as its success and scope of business activities has grown. Secrecy and public reserve come naturally from its core original grain business; industry practice fosters close guarding of market knowledge and information. Thus, years of conditioning perpetuated a reluctance to respond to inquiries or to spontaneously give information, which has added to public interest.
Authorized by the Cargill and Macmillan families, this book opens the Cargill mystique and has unquestioned integrity. The author, Wayne G. Broehl Jr., is a leading business historian and Kimbal Professor of Science and Administration Emeritus, retired, Amos Tuck School of Business Administration, Dartmouth College.
He had full access to all family and business records, as well as unrestrained access to all active and retired employees. He had complete editorial control, using hundreds of direct quotes in thoroughly depicting the integrity, perseverance, leadership, loyalty and other qualities it took by all family members and employees to create the modern Cargill.
Cargill's 1865 grain merchandising birth occurred when founder William Wallace Cargill established a single, country grain elevator in Conover, Iowa. Cargill's 19th century growth centered around development of two large "line" elevators originating in La Crosse, Wis., and Minneapolis, Minn.
Building, buying, trading, partner-shipping their way, W.W. Cargill and his brothers followed the railroads bustling, hurly-burly westward-moving frontier, establishing elevators through Minnesota, North and South Dakota and on into the broad expanse of eastern Montana, competitively spearheading agricultural growth throughout the region's productive virgin farmland.
WW Cargill was one of the leading successful "prairie entrepreneurs" of his time. Typically, he was short on control and long on ideas, with strong risk-taking tendencies. By the early 20th century he had extensive holdings and investments in a wide range of businesses.
The Cargill and Macmillan families were neighbors and friends in La Crosse, Wis., and in 1895 John H. Macmillan married W.W.'s daughter, Edna. Thus the early family connections were established.
After stints in the banking business and a failed Texas grain business, John joined WW Cargill. He held various positions, leading to management of Cargill's grain business. Their management styles were complete opposites: freewheeling Cargill vs. the conservative, organized Macmillan.
In spite of their differences, they developed a very close and warm business relationship. WW came to trust John's judgment and leaned heavily on him for advice and counsel.
John MacMillan's impeccable reputation and conservative style were crucial assets at the time of WW's untimely death without a will in 1909. He was called upon by all heirs to settle WW's overextended, precariously tangled affairs. His organized and logical approach satisfied creditors and literally saved the grain business from liquidation. This experience would be a dominant reminding influence in John Macmillan's management of the Cargill grain business throughout his career.
Wartime thrust Macmillan into a prominent industry role, helping the government manage the nation's food logistics. Wartime also shaped the development of his son, John H. Macmillan Jr.
A graduate of Yale, John Jr. joined Cargill in the early 1920s after serving as a major in the expeditionary force to France. He was deeply impressed with the military management system and consistently embraced the centralized military control principles as part of his management philosophy.
John Jr. had many of the entrepreneurial characteristics of his grandfather. His original thinking and brilliant mind impressed John Sr., and with John Sr.'s conservative counsel and guidance, John Jr. quickly assumed a leadership role and replaced his father when he retired.
The 40 years from 1920 to 1960 saw many changes in the grain industry worldwide. Early in the period, Midwest regional firms, including Cargill, expanded eastward. The leading world tradersall non-AmericanContinental, Bunge-Born, Dreyfus and others, moved west into the heartland of the Midwest, challenging grain origination encroachment. John Jr. saw this challenge and determined to fight back.
By investing 98 percent or more of cash flow in facilities and trading offices, by developing people for key positionsboth within and outside the United Satesand by determined competitiveness and superior organization, John Jr. met the challenge and Cargill joined the ranks as one of the elite world traders, as well as a diversified, multinational agribusiness firm.
Along the way John Jr.'s leadership and ambitious vision provided operational excitement and many innovations. Some of his ideas worked, many did not. Among the winners were his endless belt theory, his theoretical hedge system, his revolutionary terminal elevator design and his knowledgeable fascination with weather forecasting.
In addition, John Jr.'s suspicious confrontations with the Chicago Board of Trade were legendary. He fought hard for his principles and never accepted losing the famous 1930s corn case that resulted in Cargill's expulsion from the Board of Trade. Even though invited back many times, Cargill did not return to the Board of Trade as a member until after John Jr.'s death.
Austen Cargill, youngest son of WW Cargill, and Cargill Macmillan, John Jr.'s younger brother, both held very responsible positions with the company and key roles on the board of directors. John Jr. held both in high regard and they used this influence at times to temper some of John Jr.'s more aggressive ideasmostly by persuasion, but sometimes through a bit of hardball.
Responsibility for the country elevators was one of Austen Cargill's favorite assignments. During the deepest part of the 1930s Depression, many independently owned elevators were going broke. Rather than exploit their vulnerable positions, Austen devised the "leased line" plan. The plan guaranteed the owner against loss and split the profits. As a result of this plan, many Midwest families are better off financially today.
Building specially designed towboats and barges was one of John Jr.'s innovations. During World War II the Navy asked Cargill to bid on, and the company was awarded, a contract to build 10,000-ton plus ocean cargo ships at an interior location. After much study, a location on the Minnesota River near Savage, Minn., (later to be called Port Cargill) was chosen. This was a momentous undertaking and Cargill Macmillan successfully managed this innovative project. There were plenty of startled people watching these big ships being towed to the Gulf through locks and the tight spots on the inland waterways.
During the approximate first 100 years, this 1,032-page, comprehensive and detailed book covers three menWW Cargill, John H. Macmillan Sr. and John H. Macmillan Jr.each led Cargill Inc. through critical family and business crises about the same number of years. They laid the groundwork for the futuretouched upon briefly in this bookand what a future it has been. In 1992 Cargill was number one in Forbes and Fortune lists of private companies.
In the 1990s business ethics are much talked about. So it is interesting and appropriate to conclude with an excerpt from a 1923 message by John Sr. written to a new employee on how business should always be conducted: "That we do not permit any sharp practices of any character and that our word is just as good as our bond. We want to be absolutely fair always and while we do not mean by that that we expect to be imposed upon, yet, it always pays to be absolutely just under all circumstances." It was Cargill policy then, and it is the same today.