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©1998,1999 Phil Hyde, The Timesizing Wire, Box 622, Cambridge MA 02140 USA (617) 623-8080

Mergers and Acquisitions (M&As)
in the Roaring '20s and the 1990s

They made companies "efficient" by cutting employees = their own markets
(Timesizing builds efficiency without harming the workforce and consumer base)

There are many parallels today with the 1920s and early 30s when people were gradually (not all at once!) realizing there was a problem. One quantifiable similarity is the number of corporate mergers and acquisitions.

Here is the 1920s' wave of M&As in US mining and manufacturing that preceded the Great Depression, picked up from the bottom line of a chart on p. 173 of the wonderful Jobs, Machines and Capitalism (Macmillan: New York, 1932) by Arthur Dahlberg, the major expositor of worktime economics in the early 1930s. Dahlberg cites Table XI, Mergers and Acquisitions in Manufacturing and Mining, by Quarters, 1919-1928 by the Committee on Recent Economic Changes of the President's Conference on Unemployment (Herbert Hoover, Chairman), including the reports of a special staff of the National Bureau of Economic Research; Recent Economic Changes (McGraw-Hill: New York, 1929), p. 184. We extend Dahlberg's data to World War II (updating his figure for 1928) from the Statistical Abstract of the United States, 1957, p. 501.

US Mergers and Acquisitions in Manufacturing and Mining: 1919-1940
1919'20 '21'22'23'24'25 '26'27'281929'30 '31'32'33'34'35 '36'37'38'39'40
438760 487309311368554 85687010581245799 464203120101130 12612411087140

Note that mergers declined once the Depression started, presumably because there weren't enough suitable firms left to maintain the pace. Click here for the rest of this data series from various years of the Statistical Abstract.

Here's the recent period, showing bumps at the beginning of the recessions of the early and late '80s and the "mother of all buildups" starting in '94...

U.S. Mergers and Acquisitions in Manufacturing and Mining: 1979-1996
1979'80'81'82'83'84'85'86'87'88'89'90'91'92'93'94'95 '96
5191560232922982395224317192497247929703752 4239344635023722438349815639

The following table of worldwide M&As for all industries has data for an additional two years and shows the recent mega-buildup continuing (source, Securities Data Co. via The Economist 1/09/99 p.22 graph) -

World Mergers and Acquisitions in All Industries: 1990-1998
Year_in_90s199019911992199319941995199619971998
# deals11,30016,10015,70016,80019,30022,70023,90024,50026,200
Val.in US$b5004004005006009001,1001,6002,500

Skeptics might say this phenomenon has occurred only in heavy industry, which has been declining for years, and not in the service sector. However, aside from the fact that service jobs are low-pay and low-benefits and more often part-time than in heavy industry, click here for merger and acquisition news in the flagship of the services sector, banking and here for non-banking M&As with service companies flagged.

Note that M&As tend to be followed by downsizing the workforce, which often has overlapping functions after the merger. "When a dozen store and factory fronts in an industry came to represent the same financial interests it was, of course, advisable for the controlling directors to wipe out the labor energy used in competitive distribution - energy which was now to them pure waste." (Dahlberg, 174)

Bottom line - The Great Depression did not start overnight on Oct. 29, 1929 when the stock markets crashed and top executives and the media began to wake up. It was building all through the "Roaring Twenties," all through the happytalk about reaching a "permanent plateau of prosperity," all through the years the media was amplifying whispers of good news and muffling screams of bad news.
The Great Depression was building throughout the 1920s in the form of downsizing the workforce and concentrating the national income in the top brackets where it wasn't needed for immediate spending.

Timesizing, on the other hand, makes the economy more efficient by reducing work (i.e., work time; i.e., the work week) rather than the work force and the consumer base. Timesizing maintains the workforce and the consumer base by flexibly sharing the diminshing work on the fly as it gets co-opted by machines, robots and computers. Click here for more information on Timesizing.


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