Dividends, Efficiency, or Safety? Governance Choices at Corn Products Refining

Abstract

At Corn Products Refining (CPR), stockholders so disagreed with one another that they threatened to undermine the merger itself. Its predecessor, Corn Products (1902–1906), nearly failed, and so might have CPR. For several years, from its organization in 1906 to perhaps 1915, CPR’s owners weighed paying dividends against funding factories. Because paying dividends chanced syphoning off sums needed for plants, this might cause facilities to deteriorate and workers to face threats like factory fires that often set off explosions. CPR President E. T. Bedford managed this test and strove to upgrade facilities, which, by design or not, helped improve safety. His efforts almost came to naught given CPR’s anticompetitive tactics, yet the court’s antitrust decision—although highly critical—inadvertently gave the merger the chance to enhance profits and safety.