The Urge to merge and the American Cotton Oil Company

In this article, I review some explanations for the Great Merger Movement (1895–1904) in the United States and confront these using the particularities of one of the prominent companies figuring in this movement: the American Cotton Oil Company. Subsequently, I argue that the literature on the Great Merger Movement by the commentators of the last 50 years may be complemented with an explanation that includes the dynamics of vertical integration, stressing patents and trademarks as protective measures in the transition of the company. As the American Cotton Oil Company case illustrates, the merger process can be explained, at least partially, as a defensive strategy through the centralization of management and the possibility of introducing cost-effective measures. This article emphasizes that accounting practices of the day and the valuation of goodwill, in particular, largely explain the success of the merger.