AMAZING GRACE: The W.R. Grace Corporation
NACLA
2 Introduction An article in Fortune once noted that to many people in Latin America "Grace & the United States of America-and more." For over a century of operations in Latin America, the W.R....
...4. J. Peter Grace, Jr., W. R. Grace (1832-1904) and the Enterprises He Created (New York: Newcomen Society, 1963), 12...
...Grace had considered three options for diversification: the petroleum, electronics and chemical industries...
...The Evolution," 13...
...But J. Peter Grace, with characteristic humility, plays down his own role in this transformation...
...firms in Peru...
...It also severely restricted the development of a dynamic industrial bourgeoisie within the country...
...government figures...
...And the 25 per cent quota of Peruvian nationals employed by Grace was extremely low, when compared to a 56 percent average for the top 12 U.S...
...Although only one tenth of U.S...
...Moreover, many Latin American countries were demanding control over these key sectors of their economy...
...economic interests in Latin America, but there was little doubt that the Rockefellers were, and are, dominant...
...Food companies, oil companies, tire companies and others were actively looking for a share of' the market to complement their main operations...
...The following article will discuss Grace's links with the banks and its other sources of capital at greater length...
...and its repercussions on the company's global structure, requires an examination of the factors leading to the military government's attack on foreign capital and Grace, as a case in point...
...Even though the venture offered the West coast of South America its first experience of passenger air transport, Panagra created a bundle of potential difue to regulations and an operating agreement m, Grace could not operate the Miami-Panama the journey to Lima and other points south...
...These bonds were to be reinvested in a new industrial project in a joint venture with the Peruvian government...
...7, October 1975...
...William Grace arrived in Peru in 1850 when he was 18 years old...
...In the first place, the investments helped initiate and then consolidate the denationalization of a heretofore Peruvian industry...
...foreign policy...
...The import and merchandizing branches of the Grace empire were repeatedly exposed to substantial losses due to currency devaluations...
...capitalism...
...The new Industrial Law, for example, while restricting profit remittances abroad, granted ample tax incentives to companies willing to reinvest their profits in Peruvian industry...
...Working hand-in-hand, U.S...
...Although J.Peter snorts that the GraceCorporation is not a conglomerate ("Whatever the hell that is"), operations in 45 states and 38 countries and an enormous list of sub- sidiaries surely marks W. R. Grace as one of the more company-hungry corporations around...
...words, was no longer "a logical fit with our newer activities and future plans...
...THE CHEMICAL INDUSTRY-AN ALCHEMIST'S DREAM Chemicals were a product of the technological revolution of the 19th century but their industrial application was minimal until the early 1 9 0 0's when the degree of capitalist development and accumulation could nurture the heavy16 investment needs of the industry...
...This is clear in the case of Grace and his sugar plantations in Peru...
...The Gonzlez Amendment to the Foreign Assistance Act of 1973 directed U.S...
...interests required a change in the form of Puerto Rico's colonial status...
...non-liquid local currency bonds be considered effective means of compensation since they cannot be transferred to realize U.S...
...Particularly at the start, the Grace shipping network was shaped by the British-U.S...
...6 7 AIFLD operates on three principles...
...T tng 28...
...Petrochemicals in Puerto Riceo-A Background Status Report, published by the EDA, March 1975...
...By 1945, while still not full-fledged members of the U.S...
...frequent currency devaluations and rising food imports...
...It has no oil and natural gas reserves...
...Conversion of natural gas into ethylene and then into polyethylene represents a 28 fold upgrading of the raw material stock...
...conglomerate with sales of $3.4 billion in 1974...
...The merchant house structure was the organizational form most suited to the needs of commercial capitalism as it developed prior to and during the nineteenth century...
...The company even provided bicycles at low cost to its employees in order to cut the costs of maintaining a transportation service...
...The green and white Grace flag fluttered in breezes from Shanghai and Hankow to Santiago, from La Paz to Vladisvostok...
...The issue of a canal became critical during the Cuban-Spanish-American6 War of 1898 as it took U.S...
...The second stage of imperialism, then, is characterized by foreign control of the basic productive resources of countries at a lower stage of development...
...By digging a canal through Central America, U.S...
...after which the government would purchase the company's interest on request...
...18...
...hegemony within the capitalist world in the face of the deepening crisis in the U.S...
...Needless to say, the economy as a whole sutlered the consequences: a growing balance of payments deficit, the stagnation of indigenous industrial growth...
...But in the short run, this strategy gave the capitalists a period of grace...
...Both of these options had their drawbacks...
...2 6 Grace entered the Peruvian textile industry in 1903 by purchasing a one-third interest in the Inca Cotton Mill Co., Ltd...
...In 1960 William Keeler...
...8 Grace was not only one of the most visible and visibly exploitative of U.S...
...The ships then put in at Callao for supplies before they headed off for Europe around Cape Horn...
...Many areas of investment such as textiles, paint production and the retail trade were coming up against increased international competition...
...4 0 This capital/labor ratio is not expected to change as current expansion is still concentrated in the capital intensive in- termediate stage and the chemicals are shipped to the United States for processing into consumer items and industrial goods...
...Income from its agrichemical division jumped from $6.9 million in 1970 to $87 million in 1975 and irom 10 percent to 45 percciii (4 the comtlpany's total income...
...Skouras, a Greek shipping tycoon, merged the new purchase with his Mediterranean-oriented Prudential Lines to form the Prudential-Grace Lines, Inc., whose ships continue to operate the routes between the10 United States, Latin America and Europe...
...32 *Grace sold almost all its textile interests in Chile to the Yarur family in the 1960's...
...east coast capitalists had no competitive edge on British shipping to the Pacific ports of Latin America, since ships from both countries had to make the time-consuming trip around Cape Horn...
...Although Prime Minister Williams survived this first real opposition to his rule, he took steps to bolster his image by promising to nationalize part of foreign-owned companies...
...Grace's thrust into Chile was exceedingly rapid, particularly in the 1930's...
...omplaining that "there just isn't room today for a small bank," J. Peter sold Grace's 80 percent share of the bank to Marine Midland Trust of New York in 1965 for $36 million worth of Marine Midland stock and Grace was given a directorship in Marine Midland...
...The Merchant Homuse and the Three Graces In 1865 doctors told William Grace that he had a short The Story of W R. Grace and Co...
...Structures which were adequate for a certain level of capitalist development were distinctly unsuited for a higher level, and so either changed or disappeared...
...Although Grace pulled out of many Latin American countries where it had been extensively active for over one-hundred years, its strategic impact in the area increased...
...We can point to three important phases in this process...
...Chemistry, in fact, is a great yeasty force at the center of the economy, creating new industries and recreating old ones, and working changes on all sides...
...Of the first, J. Peter Grace had to concede that "the oils were too big a club to crash...
...An evaluation of Grace's confrontation with the Velasco regime and how it compared with the experiences of other U.S...
...and Leland Hamilton Jenks...
...the Argentine super-grain dealer, also hold 35 percent of out- standing shares of the Banco Internacional between them.9 guano-based beginnings...
...In testimony before the House Agriculture Committee, J.P...
...Grace underwent an organizational restructuring at the turn of the century...
...set the stage for a sharp, prolonged conflict with the "Peruvian Revolution...
...Its most profitable investments are closely tied to the present strategies of U.S...
...imperialism...
...By this time however, competition from other companies interested in Trinidad's resources had softened Grace's position on sharing the benefits with the Williams regime...
...First, divide the working class by attempting to create a unionized...
...A White House official admitted that U.S...
...and Canadian markets...
...The first encouraged more U.S...
...Grace employs only 250 workers...
...By the end of the century, the capital accumulation was significant enough for the U.S...
...hegemony was increasing...
...This alliance not only distorted the economy and brutally exploited the Peruvian working class...
...The reasons are really quite complex for Grace was not alone in this move...
...In the first stage, "core facilities" of petrochemical complexes process the raw materials obtained from petroleum and natural gas refining into some dozen "olefins" and "aromatics," the feedstocks for the intermediate stage...
...Your new management (which the unioo praises so highly) has a consistent record of excellent employee relations throughout the United States...
...The Carey, Peerless and Pitcairn families (all with prior investments in the petroleum and chemical industries) joined with the First Boston Corporation and later with the First National City Bank of New York to form Corco in the early 1950s...
...corporations to increase their profits, by reducing real wages and eliminating expensive pollution controls...
...Harold Blakemore...
...Federal Reserve Bank of Chicago, "Fertilizer Outlook," Business Conditions, May 1975, pp...
...Within this phase, it now seems that capital is abandoning investments in labor-intensive industries in order to concentrate in capitalintensive industries, although this trend is not fully consolidated...
...3 7 The foundation for this rapid growth was laid at the inception of "Operation Bootstrap...
...In Europe, panicky holders of Peruvian bonds quickly formed national committees to insure the honoring of their debts...
...Lawrence Seaway in order to ship goods to Venezuela...
...As the company expanded, Peru remained the center of its hemispheric operations...
...By the time Grace moved into the agrichemical industry...
...Firstly, the true nature of the military's reforms was not evident trom the start...
...National Catholic Reporter (September 1969), 1. 76...
...Financial Oligarchy (Moscow: Progress Publishers, 1969), p. 11...
...As described in the tax returns of the Grace Foundation, the Citizens Committee was supposed to educate the public about Cuban affairs...
...in countries that show the greatest inclination to adopt measures to improve the investment climate, and withhold aid from others until satisfactory performance has been demonstrated...
...The following March, the Peruvian government delegated a commission to evaluate Grace's offer and to report its findings to Peruvian negotiators within 120 days...
...capital into countries of the Third World greatly accelerated...
...As late as the 1950's and early '60's, the company was still expanding its operations in certain sectors of the economy and making new investments in others...
...The company rejected the government's proposal and threatened to pull out...
...By the end of the period, Peru's aggregate national debt surpassed 42 million pounds sterling...
...To maintain their position in the world market and circumvent the oil quota restrictions, Grace along with other U.S...
...Leaflet distributed by W. R Grace & Co...
...reserves of cheap natural gas were exhausted and the increasing supply of inexpensive Middle Eastern oil was improving the competitive position of companies in Europe...
...In the sixties, longshoremen struck the Lines in Venezuela and the United States...
...Supplied with Trinidad's cheap natural gas...
...The next link on Grace's chain of investments to be atfected was its industrial interests...
...1973...
...Bollinger, The Rise of United States Influence, 41...
...Mining is the only area of investment where Grace still maintains an interest in Peru today...
...They were the roots of Grace's trans- formation into a huge petrochemical conglomerate and will continue to be the guiding forces behind its future growth...
...Thus, the company that was to become a hated symbol of foreign penetration and relentless exploitation, throughout Latin America, reaped its first and fastest profits in Peru...
...GRACE DIVESTS IN PERU 1967 Sold its 50 percent Interest in Panagra to Braniff Airlines...
...Puerto Rico was ideally located to serve U.S., Central and South American markets...
...It placed maximum limits on privately owned land, encouraged the formation of peasant cooperatives to assume control over expropriated lands and put water resources under state jurisdiction...
...which, by 1920, had offices in Liverpool, London, Manchester and Cardiff...
...79 "I he need to expand drives the capitalist to "increase the mass of human beings exploited by him" 80 in order to continually amass greater amounts of capital...
...Both set up state corporations to administer this sell-out: the Economic Development Administration (EDA) in Puerto Rico in 1950 and the Industrial Development Corporation (IDC) in Trinidad in 1959...
...Central to the commission's conclusions was a new agricultural policy which would give U.S...
...J. Peter could find little fault with these principles...
...Thus, while pushing company-controlled unions in Latin America, Grace was simultaneously trying to prevent unionization in the United States...
...Up to one hundred ships at a time would anchor off the Chincha Islands, Peru's major source of guano lying some 100 miles south of Callao, awaiting their cargoes of the valuable fertilizer...
...company...
...But since the late 1950's U.S...
...agricultural products the following year...
...The Grace Bank specialized in two areas: trust services, both corporate and individual, and a foreign division which concentrated on transactions in Latin America...
...While most U.S...
...4 2 Thus by urging restraint in the bedroom instead of the boardroom does Corco absolve itself of responsibility for pollution...
...highly profitable or selling them when cash is needed...
...To compound the problem of the industry many oil corporations were taking advantage of their special quotas to invest in petrochemicals where the margin of profit was higher than in their own oil business...
...New York Times, November 17, 1963...
...But the W. R. Grace company was not the only one to break into the chemical industry...
...In 1951 Felix Larkin, the general counsel for the Defense Department under James Forrestal, was hired away by Grace's Washington representative to join the company staff...
...From the mid-fifties to mid-sixties, Grace showed an impressive track record in chemicals, absorbing 23 companies with a total of 277 manufacturing plants throughout the world.16 The three most important acquisitions were Hatco Chemical Company (1959), DuBois Chemical Company and Dearborn Chemical Company (1965...
...First, it sought to strengthen the capitalist sector in Latin America, strongly tied to U.S...
...Through the EDA and the IDC the governments offered 100 percent tax exemption for extended periods of time (10 years in Trinidad, 10 to 17 years in Puerto Rico...
...chemical firms were looking for a way out of the problems they were facing domestically...
...NACLA...
...BOOTSTRAP BY-PRODUCTS: UNEMPLOYMENT, MIGRATION AND POLLUTION "Operation Bootstrap" was heralded as the solution to Puerto Rico's unemployment problem...
...Thus, Grace was dramatically rebuilt, from the family-controlled firm bringing in $150 million in sales in 1945, into the 44th largest U.S...
...We were better off than most of the other fertilizer makers" vice-president George Blackwood stated in 1969, "largely because of our big Trinidad ammonia plant's low production costs, our worldwide tanker distribution system and our East coast terminals...
...Above all, we have to act together as Americans defending our interests abroad...
...Finally, he pushed Grace into Chile, establishing a company in the port city of Valparaiso.5 A third brother, John, left Ireland for San Francisco to form J. W. Grace and Co., which supplied his brothers' firms with lumber and other products from the West Coast of the United States...
...GRACE AIRMOLO PRODUCTS * AREA CODE 710e *a.411e 330...
...The Pitcairns brought in Pittsburgh Plate Glass, the Peerlesses joined with Peerless Chemicals, Inc...
...Wall Street Journal, April 2, 1975...
...The American Institute for Free Labor Development (AIFLD) sought to undercut the workers' response to the Alliance by attempting to control and modify the level of class struggle in Latin America...
...grain companies, see "U.S...
...As a result of its new chemical ventures Grace was brought to the forefront of U.S...
...England's hegemony over international commerce was a direct product of its virtual monopoly over advanced industry...
...some of which may be detrimental to some U.S...
...In his program, J. Peter bemoaned the slum conditions in which many Latin Americans lived and argued for decent housing for all...
...Falling profits and the threat of nationalization menaced the company's very survival...
...Yepes del Castillo, Peru: 1220-1920, 218...
...While the U.S...
...Mechanized textile production has been historically linked to the development of capitalism in most in- dustrialized countries...
...183 and 192, as quoted in Alfred E. Kahn, "The Chemical Industry," in Walter Adams (ed...
...corporations that added degree of security in a continent which is prone to nationalization sprees...
...But there was doubt about what this meant for Grace as the nature of these new investments was fundamentally different from what characterized most of Grace's traditional holdings...
...Like a theme song for underdeveloped countries, U.S...
...In no way can these long-term, non-transferable...
...Intermediate companies multiply these basic elements into hundreds of chemicals which are used in the processing stage...
...In those countries, textile production flourished under protective tariff barriers, serving as a base for capital accumulation and further industrial expansion...
...But with the industry hitting rock bottom worldwide, Grace was not about to give up its trump card and jeopardize its survival in agrichemicals...
...6. Fortune, August 1963...
...corporations...
...In the area of Grace's industrial holdings...
...capital to maintain a foothold in Peru became apparent...
...companies in Peru had arrived at sonic kind of accord w ith the Peruvian government, the stalemate in bilateral discussions experienced by Grace was by no means unique...
...also made some new investments in Latin America...
...From the 1971-72 levels, synthetic ammonia prices soared 1000 percent by 1975, phosphate chemicals followed with an 800 percent rise and phosphate rock jumped 470 percent...
...Until recently it had a rather unhappy history in the acquisition of natural gas and oil resources...
...As the United States had run out of cheap natural gas, aggressive expansion was imperative, not only to guarantee the raw materials necessary for U.S...
...was nearing the close of its second major period...
...Lenin described this trend in his study of imperialism: As banking develops and becomes concentrated in a small number of establishments...
...In this fashion, Grace has nibbled on pickle and chocolate syrup factories, devoured restaurants and book wholesalers and invested in a number of real estate firms...
...But, as Grace rebuilt its leadership, serious consideration had to be given to one essential factor that would determine the company's future possibilities for expansion: access to an expanded capital base...
...But even the strongest committee, the London-based Committee of Peruvian Bondholders, found it could not draw blood from a stone, and Peru was stone broke...
...By 1935 the Grace fleet consisted of 23 ships ferrying merchandise, passengers and mail between the United States and Latin America...
...U.S A. 17...
...Latin America had lost much of its allure for one U.S...
...20, 1973 23...
...The historical role of W.R...
...finance capital which will wage the battle against liberation in Puerto Rico...
...New York Times, March 31, 1964...
...Foreign Policy and Peru (University of Texas at Austin 1971), Chapters 4, 7,14...
...And, secondly, investments in mechanized textile production had important repercussions on class development in Peru, spreading capitalist relations of production in the country while intensifying the country's dependence on the industrialized metropoles...
...This process can only be expected to accelerate in the future as capitalism passes from one crisis to the next, generating an ever-sharpening class struggle throughout the capitalist world...
...Senate, 79th Congress, 2d session, Document 206, pp...
...The Peruvian government's 1969 nationalization of Grace's sugar mills and a 25,000 acre plantation (discussed in the last article of this Report) followed in the wake of the earlier expropriation of the corporation's Cuban holdings in sugar...
...The Alliance had two essential goals...
...congressional committee reviewing the Sugar Act Peruvian Times, April 30.1971,46...
...Sold Clas...
...In addition...
...COMAP's tasks were tied to the first goal--developing and bolstering capitalist growth...
...16,.1974 24...
...median up until 1973.33 These low production costs translated the Hatco Division's 1970 deficit into a profit in 1971, the first year its Puerto Rican subsidiary, Oxochem, was fully operating...
...70 But, to J. Peter, actions speak louder than words to workers both in Latin America and in the United States, and Grace's actions destroy the mythology of his statements...
...2) Paper, Boxes, and Packaging Materials During the 1930's, Grace developed a new process for making paper out of bagasse, a sugarcane byproduct...
...The company's 86 years of experience in Latin America and the dominant position of its shipping lines in South American trade routes seemed to provide a sufficient guarantee to many of Grace's directors that they would be able to profit handsomely from the expanding exploitation of the continent...
...Capitalists turned to two new mechanisms to overcome this limitation: the joint stock company and the bank, now playing a new social role of collecting the money capital of individuals and channeling it for the use of a few members of the bourgeoisie...
...5 0 At the same time, Grace was planning similar investments in Australia, Taiwan and the Philippines...
...In addition the U.S...
...corporation that had plundered its wealth for decades...
...crop production by onethird or more...
...While the Guatemalan and Bolivian insurrections of 1944 and 1952 respectively, had aroused the apprehension of many U.S...
...Sold the Grace Lines to Spyros Skouras...
...In its early years, as a representative of British capital, Grace was the archetype of the family-run commercial trading house...
...Grace quickly entered the second category...
...sparked by the technological innovations of World War II...
...The first is the structure of the industry-the degree of vertical integration and centralization-and the second, the relationship which historically evolvesbetween industrial corporations and banking institutions...
...Thus, the BGLA replaced COMAP and Rockefeller replaced Grace...
...Food as a foreign policy weapon and U.S...
...1971 Sold 2/3 interest in Minsur, a copper and tin mine, to Luis Banchera, Peruvian fishing magnate...
...PUERTO RICO: PROFIT ISLAND U.S.A...
...Finally, since World War II, Grace has concentrated its investments in the capital-intensive chemical industry and has begun to move out of the many laborintensive industries in which it was previously located...
...this could provoke serious problems for Grace if a falling out with Pan Am as we will see...
...Treasury of $76 million which would be distributed to the companies % ith legitimate claims by the Slate Department...
...As the capitalist accumulates more capital and as technology advances, the size of the unit of capitalist production increases...
...In response to charges of polluting, Corco in 1970 absurdly but not uncharacteristically pointed to "overpopulation" as the "fundamental" cause of pollution...
...Lenin then concluded that this "merging or coalescence of the banks with industry is the history of the rise of finance capital...
...And, in 1965, the BGLA expanded into the Council for Latin America, also led by Rockefeller but now representing more than 225 companies, approximately 85 percent of all U.S...
...They moved quickly to sell otf as many holdings as possible and to demand exhorbitant compensation for properties already nationalized by the regime...
...James R. Green, a former foreign service officer in Latin America and a senior vice-president of Manufacturer's Hanover Trust, was appointed as special negotiator...
...If old William R. and Joseph P. could havewandered into the Wall Street of 1975, they would have had a hard time recognizing their firms as the present day Grace Corporation...
...Incorporation was important since it insured the smooth passage of the empire from W. R. to his son...
...6. "Case Grace," Fortune, 158...
...But it did produce a marked departure from the company's traditional preference for Latin America and provoked a significant trend toward investments of a new nature in different parts of the world (see article No...
...The Peruvian government began to settle an old 1.8 million pounds sterling debt with British bondholders in 1848 with profits reaped from the guano trade...
...by its many friends in Latin America...
...2 9 Both countries had high unemployment rates and, therefore, a cheap labor force...
...The government declared a state of emergency which immediately triggered a revolt by half of the island's 800-man military force...
...Company officials went so far as to praise ". . . the willingness and sincere interest of the Revolutionary Government in Peru to work constructively with foreign private companies and investors...
...Prior to World War II, U.S...
...In particular, the government wanted to channel a significant portion of total investment into essential industrial projects and actively encouraged foreign investors to aid in this process...
...Breaking Up Is Hard To Do: Grace Unloads Its Old Empire Quetsion,: Was there any sorrow about giving up some of these (older Latin American investments...
...He had come with his father to oversee the settlement of a colony of 200 Irish peasants who were fleeing the potato famine of 1846-48...
...government and corporations...
...It compels him to keep constantly extending his capital, in order to preserve it...
...When Lenin wrote of imperialism as the highest stage of capitalism, he noted that it was characterized by the export of capital rather than goods from advanced capitalist areas to less developed regions...
...They have participated directly in the political arena, serving as elected officials,* as members of key policy commissions of the government, as well as helping to develop and promote governmental institutions supporting their position...
...The second section will examine the post-1968 confrontation between Grace and the Peruvian regime, focusing on the company's negotiating tactics and its attempts to gain the support of the U.S...
...As a consequence production soared and prices plummeted after 1966...
...Outside of chemicals, the Consumer Group is the largest component of Grace, with annual sales of over $700 million in 1972, up from $35 million only ten years earlier...
...U.S.-based petrochemical firms were cut otff from this new source when the U.S...
...4 2 "This loss was unusual for the Grace Lines which had generally turned a profit for the corporation...
...Accurate unemployment statistics are difficult to come by as the lax official criteria for measuring unemployment obscure the real plight of the Puerto Rican people.23 Unemployment levels fluctuate between 12 percent (colonial government figures) and 30 percent (U.S...
...Grace expanded into mining, food processing, industrial production, trading, banking and finance...
...THE CALM BEFORE THE STORM While U.S...
...enterprises continue to operate successfully...
...capitalism, the Graces were able to avoid the disastrous consequences of Peru's defeat in the war, a loss which crushed most of the Peruvian commercial bourgeoisie...
...trade and shipping...
...a flexible combination of cautious diplomacy and hesitant financial blockade . . "18 As far back as 1969...
...1915), the New York Shipbuilding Corporation (1916) and the Grace Russian Company (1917).35 In 1915 Joseph Grace created his own bank, the Grace National Bank, "to carry on the various banking activities that had been entrusted to W. R. Grace and Co...
...The key to Grace's successful transition and the distinctive character of its transformation can best be explained by examining the reorganization of its cor- porate form and changing position within the structure of U.S...
...Grace Company began as a transportation and trading company, shuttling merchandise and passengers between Great Britain, the West coast of Latin America and the United States...
...Large corporations replace smaller merchants houses and family-run businesses...
...oil and petrochemical companies have become the dominant investors in the area...
...Oil & Gas Journal...
...Both aspects offer new insights into the intertwining of Grace's international interests and the foreign policy of the United States...
...6 Goodsell, 45,57, 58,67...
...H. TURNING THE CORNER: GRACE EXPANDS INTO THE TWENTIETH CENTURY By the 1880's Grace was one of the top three merchant houses in Peru, a prime government creditor, a booming shipper and freight contractor, the owner of railroads and an important public works contractor...
...Flick's 12 percent ownership in Grace and its three representatives on the Grace board cemented the earlier ties between the two companies and will give Flick a very strong voice In Grace's future operations...
...Some of Grace's advocates attribute the changes to J. Peter's dynamic insights into the corporate world, while others simply chalk it up to what they call his "bizarre personality" and leave it at that...
...The latter failed to generate much en- thusiasm among workers living on subsistence wages...
...6 In the 1960's, Grace embarked on a campaign to "de- paternalize" its relations with the labor force and to rely more and more on a corrupt labor union structure it had helped to shape and maintain...
...Said the American Chamber otf Commerce of Peru in a letter to both House and Senate Committees studying the bill: While Peru is currently implementing political and economic changes...
...Andean Times, March 1, 1974...
...Grace's share of the pie consisted of a joint venture with Corco in the production of oxo-alcohol...
...and quantitative, because a much larger number of wage laborers were created to work on the sugar plantations than had been involved in shipping and trade...
...3) Industrial Chemicals Developed in conjunction with its paper-making process, Grace's chemical plants made necessary inputs such as caustic soda...
...2 6 To meet these production levels, it is estimated that the United States will have to import one-third to one-half of its nitrogen fertilizer within the next ten years...
...Grace, "A Consensus in Action," 8. 71...
...Stephen Abrecht and Barbara Durr24 III...
...Corco, as well as the other petrochemical producers, promised that the industry, particularly in its final stages, would be an important source of employment for the Puerto Rican people...
...These were the cost differences that not only spelled Grace's survival during the U.S...
...and January 9,1976, and Grace's Proxy Statement, May 9, 2975...
...By the end of the nineteenth century, Grace was investing directly in production-mines, mills and plantations-and producing commodities as well as trading them...
...As J. Peter would put it, ". . . the more * W. R. Grace served as a two-term Democratic mayor of New York in the 1880's and could have gone on to be New York's governor had he not opted to return to his company instead...
...1918), 57...
...Grace formed the Cartavio Sugar Company in 1891 which, in less than 30 years, had expanded three-told and become Peru's second-largest sugar producer...
...2 4 Thus Grace's investments in the productive process in Peru had an important impact on the Peruvian class structure, an impact which was much less evident when it operated solely as a commercial firm...
...12 The struggle inside COMAP between Grace and Rockefeller is notable because it did not seem to be based on serious political differences...
...Many U.S...
...The streets alternate between mud and dust and contain debris and the leavings of freely running animals...
...excluding the oil companies Shell and Texaco...
...Economically, Grace expanded from a commercially-oriented firm to one which is involved in direct production...
...Corco, the fourth and largest complex, combined the investments of nine established petrochemical firms, including W. R. Grace...
...A reporter at Grace's two largest sugar plantations in Peru...
...Thus, while the Grace enterprises could not be considered totally representative of U.S...
...These merchant houses were family owned and controlled with branch offices, often headed by family members as in the case of the Three Graces, located in the world's major ports...
...The United Nation's Food and Agriculture Organization estimated that the loss of production in the 43 poorest countries of the world was equivalent to 2.7 million tons of grain, the margin between subsistence and starvation...
...Puerte Rice: Profit Island, U.S.A., a public relations brochure published in 1974 by the colonial government of Puerto Rico, and Trinidad and Tobago: the Making of a Nation, published in 1962 by the British Information Services, an agency of the British government...
...33, El Diarna, April 23, 1970...
...Forbes, September 1, 1972, 27...
...Grace's interests seem to have been sacrificed for those of the other companies and for the general objective of restoring the investment climate in Peru...
...Have you purchased a tennis racket from Herman's Sporting Goods in New York City or a toy at FAO Schwartz...
...Bollinger, The Rise of United States' Influence, 144...
...In over a century of involvement in Latin America, the company has been opposed to numerous nationalist and anti-imperialist movements, first in Peru, and now in Trinidad and Puerto Rico...
...It also began manufacturing other fertilizer products such as urea, ammonium and sulfuric acid, and spread its tentacles to other Caribbean islands including Aruba (Netherlands Antilles) and Jamaica...
...6 6 And why not, for how many people could claim without choking that "All three--business, labor and government-quite obviously believe in the democratic form of government, in the capitalist system, in private initiative and in promoting the general well-being of the individual...
...Two countries in particular, Puerto Rico and T rinidad, have become the targets of this new wave of U.S...
...companies responded by turning Puerto Rico into the largest single recipient of U.S...
...imperialism could tolerate...
...While it is not our intent to analyze the laws governing the development of capitalism, we can describe in the most general terms the nature of these changes, particularly as they relate to the export of capital from the more advanced capitalist countries to the peripheral areas...
...And to ensure an appropriate climate for compromise, the United States gave its long-delayed approval for an InterAmerican Development Bank loan to Peru ($12.3 million) and a World Bank loan of $27.6 million...
...Grace is one of the few companies to have passed through all three of these stages and it is for this reason, as well as for its importance in Latin America, that we have chosen Grace as the focus of this Report...
...By 1970, the company had agreed to sell its majority interest in Lima's largest telephone company to the government and to reinvest the proceeds in the construction ofa new Sheraton Hotel in Lima...
...2. W. M. Mathew, "Peru and the British Guano Market, 1840-1870," Economic History Review, Second Series, Vol...
...New York Times, October 20...
...Special loopholes were opened in the quota system in 1965 by presidential proclamation and within ten years four huge petrochemical complexes had sprawled all over the island...
...It has been my view from the start that the company must attract investors in the United States and Europe in order to have, as the fundamental force of its dividend-paying ability, operation in these areas...
...Yepes del Castillo, Peru: 1820-1920, 138...
...1 two of the oldest and largest foreign companies in Peru, ('Cerro de Pasco and IPC, had Failed to make any headway toward compromise after years of negotiation...
...And I say to you, there must be change...
...Yet as soon as capitalist production advanced in other countries, England's imperialist monopoly was challenged...
...One minute they tell you what a great and successful company W. . 1. Grace is * AND WE AGUI...
...Dec.3,1971...
...The rebellion was crushed and a wave of repression was unleashed against the working class and unemployed...
...By 1975, 25 percent of its stock was held by 400 bank trust departments, investment and insurance companies and brokerage firms...
...the executive vice president of Phillips Petroleum, ex plained his company's expansion into petroctfemicals on the basis of higher returns: "Crude liquid hydrocarbons (oil and natural gas) are generally priced in the vicinity of Ic per lb...
...VIII...
...S. Menshikov, Millionaires and Managers (Moscow: Progress Publishers, 1969), 281...
...And, as Amazing Grace is swept away on the tide of that struggle, he will be (Irowned out by workers singing a different tune--Solidarity Forever...
...Most often, British citizens made the long journey for one of two reasons: to oversee British loans and/or establish British businesses, or to escape the harsh economic crisis and periodic famines which shook England and Ireland throughout the nineteenth century...
...In 1960, more than 3,000 workers on a Grace-owned plantation struck for three and one-half weeks...
...The Flick Empire dates back to 1918 when Fredrick Flick started building what became one of the most powerful industrial combines of Europe...
...The British sent in troops while the Nixon Administration flew in ammunition and weapons, and stationed 2,000 marines off the coast...
...Both represented essential elements of U.S...
...Over the last three decades, both countries, the former a colony of the United States and the latter of Great Britain until 1962, have established special programs for U.S...
...Ibid...
...polymers, ethylenes, vinyl chloride, etc...
...In withdrawing from its traditional investments in Latin America, Grace avoided what could have been a fatal confrontation...
...Business Week, June 8, 1974...
...W. R. Grace & Co., Annual Report 1974...
...government during this period was marshalling all of its forces, both on the bilateral and the multilateral level, to apply pressure against what it saw as excessive nationalism...
...One representative was Earl Butz...
...Business Week, September 3, 1960...
...In 1954 Grace began construction on its first fertilizer plant...
...25 pr yew for profl-mWakag andm gvwram nt aqnaooM (4 for two y ). Copyght 1976 by the North Amerama Compin an Latit Anari, Ine...
...A closer examination of the largest individual holders of' stock and debt, as well as the reflection of these dominant interests in the composition of Grace's board of directors would define more clearly the specific sectors of the financial oligarchy which exercise this control...
...companies had engaged in negotiations in Ahich the bargaining positions of the two parties were seemingly irreconcilable...
...A "self-help" program was instituted in the company towns, which included the conversion of stores and other services into worker-run cooperatives and a mortgage plan for workers to purchase their own houses...
...2 1 In the late 1930's Grace transformed its Paramonga7 plantation into an agro-industrial complex designed to use bagasse (the cane fiber left after the cane is milled) to produce paper...
...government excluded them from the oil import quota system established in 1959...
...For a general summary of the Law see Infolermation Guide for Doing Business in Peru, Feb...
...As monopolization increases in both production and finance, there is a tendency for both monopolized sectors to merge and coalesce.34 While we cannot enter into a fuller discussion of either of these *in 1920 the Lincoln National Bank merged into the Irving Trust Company...
...The emergence of a new role for banks and their merger with industrial capital is indicative of the advent of finance capitalism, characteristic of capitalism's highest stage, imperialism...
...representatives at the international lending agencies to veto any new credits to countries which had not compensated satisfactorily for expropriated U.S...
...government which pumped $3 billion into chemical plants to supply the war effort...
...Casa Grace," Fortune...
...5) Mining During the 1960's, Grace began a program of backward integration In the mining field...
...7 5 Why Father Hesburgh would make such a statement is understandable in light of Grace's frequent contributions to Catholic causes and institutions...
...Panagra, the Grace Lines, the bank: We ought to have medals on those...
...The British had banned the "coolie" trade to Peru in 1874, but Grace attempted to get around the British embargo by "re-exporting coolies left over from United States railroad gangs" to Peru...
...He passed on to his son, Joseph, a company whose past lay in British imperialism and the nineteenth century merchant house, and whose future was very much embedded in U.S...
...During the 1960's, a new paper and corrugated box facility was opened at Trupal...
...2 1 The W. R. Grace Company, in a pamphlet on fertilizer production, cited the old argument that the ability to meet future demand is based on high profits in the industry...
...The second option required buyers with cash on hand, an unlikely possibility in a country which promised an uncertain future to foreign investors and whose bourgeoisie was embryonic to say the least...
...In the earliest stage of imperialism, as we have seen, foreign capital tended to concentrate in the commercial and financial sectors of less developed countries...
...Yet the need for expansion is still not satisfied...
...All we ask is that you keep an open mind and give us a fair period of' time in which to prove to you what the union already knows-IN GRACE NO ONE NEEDS A UNION PARTNER IN HIS PAY ENVELOPE...
...2. Wall Street Journal, April 2, 1975...
...6 (December 1935), 158...
...According to one source, "it soon dwarfed the activities of the other merchant firms...
...The company called in the police and a violent battle broke out in which three workers were killed and sixteen injured...
...What's more, pouring money into a country that was politically and economically unstable was clearly risky business...
...Company executives estimated returns on invested capital of 30 to 65 percent although they admitted that many producers achieved even higher returns by controlling the sources of their raw materials...
...industry after the war...
...Roughly coinciding with the turn of the century, however, capital began to flow directly into the productive sectors of dependent countries...
...English farmers began to turn away from Peruvian guano (which was rapidly being depleted), finding other sources of supply for their fertilizer needs...
...Yarur was perhaps the largest textile firm in Chile and...
...Grace's efforts to coopt union leadership and de-politicize the character of labor struggles failed to eliminate serious and prolonged labor conflicts...
...Actually what was needed was an entire economic policy to insure continued U.S...
...We are therefore against the system in Trinidad which can only result in the perpetuation of the status quo...
...The leaflets said, in part: We are writing you this memorandum because we do not think a labor union has anything to offer our employees...
...Williams was then forced to recognize the company's stranglehold over the industry...
...There is much debate about why this shift has taken place, a debate which centers around the concept of the calling rate qf profit...
...food production, U.S...
...Foods were packaged in Grace paper, shipped in Grace boxes, on Grace transport lines, to be sold at retail outlets again run by Grace...
...be handed over to the Foreign Claims Settlement Conmmission which would then handle the distribution of funds to "legitimate" claimants...
...For example, the Foundation, whose officers are generally directors at W. R. Grace, has given AIFLD over $100,000 since 1%2...
...It could not hope to penetrate a new industry through mergers and meet the heavy investments required to monopolize certain chemical product lines without expanding its capital base...
...Although during 1973 and 1974, the effects of the energy crisis restricted the growth of the industry to two or three new plants a year, by 1975 expansion was in full swing with 12 new plants under construction or in the planning stage...
...Series 7792 Treaties and Other International Acts...
...3 3 This coalition of British, U.S...
...Only the combination of such forces could have provided Grace with sutficient capital to climb to the top of the chemical industry...
...This proportional shift of U.S...
...grain and fertilizer companies used their control over food production to squeeze even greater profits from the Third World...
...But I don't think personal feelings ought to enter business decisions...
...3 6 Very little is known about the bank's early years and the use of its capital to finance W. R. Grace Co...
...Grace withstood the 1960's slump, got a shot in the arm from the 1970's "ripoff" and now ranks among the top seven producers in a field of 100 accounting for more than 5 percent of U.S...
...Many of these larger trends are reflected in the development of the Grace empire both in the United States and abroad...
...trade, the Graces had become one of Peru's major merchant houses during the late 1860's...
...Most Peruvian guano went to England where it fertilized British turnips, stimulating the growth of a number of rich landowners in the process...
...Political Thesisot the Puerto Rican Socialist Party: The Socialist Alternative," NACLA's Latin America Empire Report, Vol...
...Although petrochemicals had the multiple branches of production...
...Finance, June 1966...
...An influx of new blood and capital were the genesis of Grace's rising star...
...XII, No...
...Today Grace is the sixth largest U.S...
...small, multiple, unpainted and without running water...
...developments here, it is important to examine the growth of the Grace Company within this context rather than isolating it from the major trends which shaped the development of capitalism as a whole...
...1969 Sold Vencedor, Peruvian paint and resins facility, to Millmaster Onyx, a U.S...
...Grace Company, because of its long history, is one concrete case which can be used to heighten our understanding of capitalism, particularly in its current stage, imperialism...
...And the War of the Pacific, in which Peru and Bolivia fought against Chile, left the Peruvian economy in shambles...
...Although Trinidad has since moved up to the status of a neo-colony...
...With respect to the labor movement, Grace's efforts to promote the ideology of labor-management harmony have already been discussed in relation to AIFLD...
...9. Mathew, "Peru and the British Guano Market," 126...
...This first section also highlights the participation of J. Peter Grace, the corporation's current president, in the political arena by focusing on his activities in the Alliance for Progress, the American Institute for Free Labor Development and the Grace Foundation...
...I haveabsolutely nothing but joy and pleasure at the list of divestments," he chortled in 1972...
...Between the 1880's and 1945, while transport and commercial activities continued to play a major role in the company's overall activities, W. R. Grace and Co...
...Grace exported 85 percent of its Trinidad production in its own tankers and at the time22 the industry doldrums would have offered few alternative buyers in the case of a Grace pull-out...
...High unemployment and underemployment, corruption in government and the domination of the island's predominantly Indian and black population by the white minority left over from the colonial era sparkled the rebellion...
...Statistics obtained from W. R. Grace & Co., Fertilizer and Food Production: World Trends to 1900 (New York, 1974...
...There was a big rip-off last year," said Robert J. Eastman of Blyth Eastman Dillon and Co., a Wall Street brokerage firm...
...In the late fifties, the company had made a multi-million dollar blunder by initiating a costly freight service from Chicago via the St...
...1,1975...
...Bollinger, The Rise of United States Influence, 116...
...Said Geddes Granger, the leader of the National Joint Action Committee: Our movement is working towards the day when each black person will be able to get a lair deal, be he of African or East Indian descent, will be able to feel that he has a stake in the future of our society...
...which was shared with the owners of the Vitarte cotton mill (British) and the owners of the La Victoria mill (Peruvian...
...Journal of Commerce, May 19, 1972...
...and Trinidadian government forces proved too formidable for the February Revolution...
...William Russell Grace (1832-1904...
...4 3 While sales and revenues from shipping rose from $84 to $94 million between 1956 and 1968, sales and revenues from chemicals soared from $171 to $800 million in the same period...
...said "We have met the enemy and they are us...
...to challenge British hegemony in Latin America, finally adding some bite to the bark of the Monroe Doctrine...
...rivalry for trade with Latin America (specifically, west coast Latin America), and became in- timately linked to the building of the Panama Canal...
...It further commented that "some experts estimate that higher application of fertilizer may have increased U.S...
...agricultural "assistance" programs including the U.S.-backed Green Revolution...
...4. Forbes, October 1, 1954...
...they quickly dominated most of the incipient industrial activity...
...Grace's operations were responsible for almost all of Peru's paper and cardboard output...
...GRACEFULLY BRIDGING THE GENERATION GAP: J. PETER TAKES OVER Petrochemicals, beer, newsprinting, processed food, nuclear fuel, chocolate, plastics, pasta, restaurants, fer- tilizers, women's clothes, sporting goods, paper mills, toy stores, chemical warfare agents, mining, shoes, real estate...
...Ibid...
...More pertinent to the purpose of this article are two other aspects of Grace's global reach: first, its role as a fertilizer company in the context of the world-wide food crisis and, second, its thrust into the Caribbean in the search of cheap raw materials...
...Capital moved from the commercial sector into the sector of direct production...
...7 1 A wave of repression followed, sweeping many of the coastal sugarlands...
...Grace has kept right in step with expansion plans, an- nouncing an additional investment of $25 million in its Oxochem subsidiary and the construction of a $50 million plant to produce phthalic anhydride...
...strategy within this context was not static, but evolved as the possibilities for U.S...
...Negotiations between Peru and the International Petroleum Company were deadlocked, IPC asking $120 million in compensation for nationalized properties and the Peruvians countering that IPC owed it $640 million for crude oil extracted in the course of four decades of illegal operations.ll The U.S...
...Puerto Rico's colonial status gave U.S...
...The Municipal Assembly of Guayanilla and the Mayor of Penuelas, both towns located near the Corco complex, charged in official complaints in 1972 that residents' health was being attected...
...The vast majority of new U.S...
...EXPLODING INTO CHEMICALS One of the primary tendencies of monopoly capitalism is to further concentration and centralization within industry...
...and began to build the first of his Santa freighters.l6 When the Panama Canal opened two years later, a Grace ship christened the northbound passage...
...On the contrary, company executives seemed convinced that investment conditions could only get worse and repeatedly resurrected the Grace nationalizations in Cuba as an omen of things to comee...
...In our opinion, the primary reason why this labor union is interested in you is to collect membership dues and additional assessments and strike fund charges from your paycheck...
...J. Peter Grace13 "IN GRACE NO ONE NEEDS A UNION PARTNER IN HIS PAY ENVELOPE...
...The company filed a claim with the Foreign Claims Settlement Commission citing a 52.45 million loss...
...This is most clearly seen with petrochemicals...
...Fishmeal, used as a high protein feed for livestock, became one of Peru's most Important export industries during a boom In the 1960's...
...While it is not possible here to analyse the above-described process in depth, it is important to brietly characterize the context in which the first nationalizations of Grace's operations took place...
...Ibid...
...Numerous workers at Grace plants in Latin America are trained in AIFLD seminars and many are brought to the Institute's school in Front Royal, Virginia for advanced courses...
...Company otticials vigorously protested both the amount and form of compensation outlined by the Peruvian regime...
...Grace was particularly active in the National Agrarian Society and was heavily implicated in the Society's obstinate resistance to the most minimal reforms in the countryside...
...C. Sugar, Textiles, Paper Grace's empire in sugar and textiles began to shrink in the sixties although it continued to expand in the paper industry...
...On the one hand, the interconnections between stages bind the different companies which operate within each phase creating a high degree of' interdependence within the industry and a "gentlemanly" attitude about competition...
...In Peru, for example, Grace provided the peasants in his sugar estates with a sample of the benefits of "the free, democratic and capitalistic society...
...The same year the IDC was established Grace acquired a 49 percent interest in Federation Chemicals Ltd...
...lo ensure its position within the industry, Grace, like other chemical companies, has also seen the need to integrate vertically to insure access to the raw materials for its operations...
...In addition to a new type of investment, Grace began to search out a new location for investment...
...firms, Grace had become the ninth largest of the U.S...
...The structural changes implied by these new relationships are of fundamental importance to understand Grace's position within U.S...
...The Earl of Donoughmore headed the Committee of Peruvian Bondholders...
...There was no other recourse but to return to the bargaining table and otffer concessions and a semblance of compliance with Peruvian stipulations...
...Finally, in 1886, the bondholders turned to Michael P. Grace to act as their agent in the negotiations with Peru...
...knew what he was talking about...
...government was involved from the outset in overseeing and trying to manipulate the environment in which negotiations between the companies and the Peruvian government took place...
...7 2 In the United States, Grace came to the conclusion that workers could cooperate much better with business if they were not represented by a union at all...
...Most of this expansion was financed by the U.S...
...when the Peruvian government protested the payment froni the lump sum of $22 million to Exxon Corporation in compensation for the IPC nationalization...
...The profitability of fertilizers had thus attracted many oil companies out to make a quick killing...
...Although COMAP fell apart, J. Peter's committment to the ideology of the Alliance was steadfast...
...and a plan for the establishment of "industrial communities," in which workers would acquire stock in the industry...
...The new legislation included a plan for the gradual reversion of certain basic industries to partial or total state ownership...
...The Petrochemical Opportunity in Puerto Rico, published by the EDA, January 1975...
...Capitalism, characterized by the relationship between the owners of the means of production, on the one hand, and wage laborers without means of production of their own, on the other, came to predominate in more and more areas of the economy, clearing away pre-capitalist forms as it developed...
...On the Grace plantations a wage labor force was obtained through "sheer impressment on the part of labor contractors or by a system of engancho (literally "to hook") whereby Indians were given cash advances for wages and thereby drawn into a type of debt peonage...
...I'm paid for one thing-to increase the earnings per share of stock and to increase the company's market price per share as rapidly as possible...
...scared you are the better you play...
...A directorship in the bank allowed this descendent of a Peruvian guano shipper to rub elbows with such scions of U.S...
...44 The sale of Panagra was a different matter...
...4 8 Grace's sale of the Grace National Bank is indicative of the difficulties small banks face given the increasing monopolization in the banking industry...
...William's father, James, was a large Irish landowner, and he had arranged for these workers to farm a friend's estate located between Lima and its port city of Callao...
...Today, several decades after the shift in Grace, 90 percent of its profits come from chemical, oil, natural gas and coal operations...
...The leaders of the "February Revolution" saw foreign control of the country's resources as the primary cause of poverty, unemployment and racism...
...4 Finally, and most importantly, most of Grace's operations were still using laborintensive techniques and a rise in labor conflicts was severely cutting into profits...
...Moreover, supplies of cheap domestic natural gas were plentiful...
...economy...
...Through the process of Grace's expansion, we have seen how the growing contradiction between capital and labor in various parts of the world including the United States has forced Grace to abandon certain areas of investment...
...government had threatened what amounted to a full economic blockade, its actual tactics were characterized by what Anibal Quijano has described as...
...But the parallel stops there, for the Seaway actually lengthened rather than shortened Grace's trips to Latin America...
...Grace himself talks of a search for dividends when he speaks of the reason fbr moving the company out of shipping and Latin American activities in general...
...2 1 On the surface this agreement al)ppeared to cmbotly a high level of compromise...
...In 1975 the EDA put the total capital investment in this sector at $1.6 billion and estimated new investments would raise it to $3 billion by 1980...
...capital in 1865, neither, after that time, were they any longer of British capital...
...What's more, according to a study carried out by the Interfaith Center on Corporate Responsibility, underdeveloped countries depend on U.S...
...0095-5930 Original cartoons and cover by Mark Smith NACLA'8 LATIN AMNRICA & .MFI RIORT VoL X, No...
...The company continued to expand its plant capacity until the late 1960's when a glut in the market brought on a fierce price war...
...Grace, with ownership of over 40,000 acres of Peru's most fertile lands, was high on the list of foreign holdings ripe for nationalization...
...the State Departnient had decided to "defer" invocation of the Hickenlooper Amendment and in 1971, a State Department otlicial testified against the Grace amendment, reflecting the position of the U.S...
...Grace, "A Consensus in Action," 19...
...4 According to the Peruvian Times, April 12, 1969, Grace lost $8.5 million in 1967 and 1968 due to currency devaluations in Peru, Brazil and Chile...
...3 The pattern of Grace's investments reveals a highly integrated structure...
...And, finally, labor militancy had also cut into Grace Line profits...
...Panama...
...Fred Hirsch, An Analysis of Our AFL-CIO Role in Latin America (San Jose, California: np), 1974...
...William RussellGrace came for both reasons...
...inferior in quality...
...Grace obtained a fifteen year guaranty of natural gas at almost a third of U.S...
...But in the same propaganda paper they claim that only the Auto Workers Union can get for you "a vage increase, decent fringe benefit and job security...
...negotiators were pushing for at least $200 million and Peruvian officials said that company claims had originally totalled about $300 million.26 In quantitative terms, however, the arrangement met the criteria which Nixon and Flannigan had formulated in order to normalize relations with Peru...
...2 3 On February 19, 1974, a package deal, worked out between Green and the Peruvians, was announced...
...GRACE AND THE FINANCIAL OLIGARCHY Grace's chemical mergers were therefore part of a generalized trend...
...The result was a reformulation of the strategy towards Latin America and its re-articulation at a much more intense level...
...The capital required for business expansion had surpassed the limited possibilities of the merchant house to raise it...
...the company %as to receive a 51 per cent cash down payment with the balance to be paid over a ten-year period...
...found "the workers' sections of Cartavio and Paramonga distressingly dirty and crowded...
...war production levels had doubled and the future prospects for markets and raw materials looked bright...
...Despite their importance, both were sold in the sixties, although for different reasons...
...In effect Grace has more than doubled its ammonia capacity in the island using Trinidadian government funds and U.S...
...In addition, expansion has led J. Peter Grace personally to play more of an active role in defense of his interests and the interests of his class...
...As Puerto Rico lacked the essential energy resources, a petroleum refining industry had to be created from scratch using imported crude...
...citizens "for those less fortunate than themselves at home and abroad," although it was precisely the type of monument Grace wanted to erect...
...New York Times, November 20, 1975...
...7. David Joslin, A Century of Banking in Latin America (London: Oxford University Press, 1963), 19...
...Still, as difficult as it may have been, J. Peter managed to keep a stiff upper lip while casting off' the corporate traditions...
...Secondly, the U.S...
...More importantly, Bradley Dewey, the head of Dewey and Almy, who joined the Grace board when his company was merged, brought with him the experience and contacts of a former administrator fotr the U.S...
...Listed 16th and 23rd by sales in 1948 they nevertheless held a strong position in their areas of specialization and had shared in the prodigious growth rates of the industry...
...9 Peru sold more securities in England during the 1840-1880 period than any other Latin American country...
...Most of the claimant companies retrieved at least a portion of their asset-value through the deal...
...There was no doubt that U.S...
...Equally important to Grace's bargaining power was the nature of its operations...
...3 (April 1975), 13.30 and "AFL-CIO in Latin America-The Dominican Republic: A Case Study," Viet Report (September October 1967...
...In the end, both companies sold their shares to the now-predominant Latin American carrier: the Houston-based Braniff International corporation...
...And the Nixon administration never imposed the sanctions...
...The young Flick struck up a friendship with J. Peter Grace which later had Important economic ramifications...
...As its reformist-nationalist character came to the fore, more and more companies were drawn into open confrontation with the regime...
...The petrochemical companies seized upon this bargain and the massive flow of investments which followed deepened the exploitation of these countries, tying their economies more closely to U.S...
...In 1952 it obtained its first large loan from four insurance companies led by Metropolitan Life...
...Political Thesis of the Puerto Rican Socialist Party...
...The earliest functions of merchant houses in Latin America were to promote trade and commercial activity between Europe, North America and the former Spanish colonies...
...Grace and the Peruvian Bondholders By virtue of their dominance of the Peruvian-U.S...
...But Green seems to have fared poorly with the State Department, for its annual report estimated the company's combined portion at $23.6 million, a tar cry froni its $96 million claim...
...This image, no doubt, was engendered by countless ads in business publications and newspapers which stressed the "Grace Line" ships, offering the latest in luxury cruises to South America, and little was said of Grace's growing investments in mining, textiles or other products...
...It soon became a leader in the field, using many of Its own inputs (i.e...
...And, second, it sought to control the degree of class conflict with a two-pronged attack: limited social reforms and preparation of Latin American military and police forces for conditions of insurgency...
...Tlhe relentless drive fbr expansion forces smaller, less productive firms out of the market and centralizes the means of' production in fewer and fewer hands...
...See case studies of IPC in Peru by Adalberlo J. Pinelo, The Multinational Corperations as a Force in Latin American Politics (New York: Praeger Publishers 1973) and George M Ingram...
...bourgeoisie...
...Eighty-five percent of the output was then exported, most of it shipped in Grace refrigerated tankers to the Unitd States for processing into nitrogenous fertilizer...
...Lenin, Imperialism, The Highest Stage of Capitalism (Moscow: Progress Publishers, 1968...
...They belong to what is known as the Consumer Products and Services Division at Grace...
...7 In the nineteenth century, English commerce, backed up by English naval power, dominated international trade...
...Flick took over the empire after his father's death and tried on several occasions to arrange join ventures with Grace...
...But a look at their work shows that misinformation, unsubstantiated assertions and undocumented scare stories formed the bulk of the Committee's production...
...In Peru, the AIFLD Union Programs were directed at unions involved in organizing sugar and cotton workers...
...GIACI 6 COPANT I. C. Hayworth Vice Presideat - - --U II...
...While he rebuIkt his empire In the 1950's, his son, Friedrich Karl, was working as a trainee with W.R...
...In 1950 Robert T1...
...31 The profitability of Grace's Trinidad subsidiary can be judged from the terms of the recent 15-year contract signed between Grace and the government for the supply of natural gas...
...corporate world, propelled it into one of the "premier industries" of the U.S...
...to join with Ambassador to Peru, Taylor Belcher in devising a new strategy for resolving the Peruvian disputes-one which would clear the books of all claims and counter-claims...
...It1...
...capitalism with a major offshore industrial subsidiary to the mainland and U.S...
...The in- vestment totalled $35 million and Grace exported the output to its Hatco Division in the United States for the manufacturing of plasticizers...
...During World War II, Flick continued to produce for Nazi Germany, taking over foreign properties and using slave labor in his factories...
...Robert Levy...
...While over 40 firms manufactured sizeable quantities of a few chemicals, any given product was, on the average, made by only a flew17 companies...
...This position was strengthened in the 1870's through their handling of the Peruvian foreign debt...
...Halfa dozen U.S...
...I his newest deal had three major components...
...J. Peter Grace has often been considered a business wizard and the later success of his company was attributed to his entrepreneurial vision...
...Grace's switch to petrochemicals and the reorganization of its corporate structure brought it into the mainstream of the U.S...
...The tremendous rate of population growth, is...
...minimum standards by January 1, 1976, wiping out the cost differential which might have attracted new investments for the final labor intensive processing stage of petrochemical production...
...Prior to the War of the Pacific, the Chicama Valley (location of the Cartavio plantation and one of Peru's major sugar producing regions) was divided into approximately 64 Peruvian-owned coastal estates...
...They obtain the use of it only through the medium of the banks which in relation to them represent the owners of capital...
...Unidas Vitarte, Victoria, Inca S.A., three remaining textile mills, to Peruvians...
...3 3 Under Joseph Grace the firm expanded its entrance into the field of finance on two levels: indirectly, through a directorship in the National City Bank of New York and directly, through the creation of the Grace National Bank...
...Indeed the crisis raised doubts about the validity of U.S...
...I'm always scared...
...Karl Marx, Capital, Vol...
...By the time of the election in 1970...
...As in the Alliance, J. Peter Grace had an important role to play in AIFLD...
...Cartavio, however, did not satisfy Grace's sweet tooth...
...petrochemical firms intensified their international expansion, mostly in Europe and the Caribbean...
...desires...
...Within four years, the company could hope to obtain $26 million in forced compensation.17 Conflicting interests were at play...
...Grace added air service to its transport network in 1928 with the creation of Panagra Airways, a joint venture with Pan American...
...It is not clear, however, how much of this stock the bank actually votes...
...Thus Grace maintained a cautious attitude toward natural resource investments until the "oil crisis" forced the company into a third round of' cz,11, acquisitions...
...business community in Peru...
...In 1972, the two firms jointly invested over $24 million in a Colombian paper mill...
...Grace accomplished this in the chemical industry not by major technological innovations but by using its capital resources to acquire smaller technology-rich firms...
...Thus, it was the English merchant house which oversaw that trade and profited from it...
...We must bear in mind that we cannot allow Communist propaganda to divide us between liberals and conservatives or between business and labor, or bet- ween the American people and thier government...
...SmDubewitfm: $10 pr yew for lad1wdmals ($1S for two yeas), $16 p yew for aSa-WoIt liastutlom ($80 for two yam...
...While Grace had become notorious for its ability to combine paternalism with more sophisticated modes of exploitation, paternalism was becoming very costly...
...Grace & Co...
...Miami Herald, March 22, 1971...
...It's not that they had forgotten about the potential of class struggle in Latin America, it's just that Cuba brought the actuality of a victorious struggle crashing home...
...Food production levels that will keep pace with a growing population in the future will require even greater utilization of fertilizer materials...
...Last Tanqo in Lima INTRODUCTION The history of Grace's involvement in Peru dates back more than a century-to the times when the name W.R...
...2 7 This new competition was particularly threatening to fertilizer companies which were soon faced with overproduction in the market and falling prices...
...Senate study of 238 basic industrial chemicals found that 102 were produced entirely by four or fewer companies...
...25, No...
...The first three consist of the families-the original Grace and Phipps interests, as well as the Flick group of Germany which acquired 12 percent of' Grace's stock in 1975(See box...
...properties...
...This is not to imply that the company's history of involvement in Latin America came full circle in the 1970's, beginning and ending in Peru...
...3 2 Unable to put down the rebellion the government received immediate support from the United States and Great Britain who feared another Cuba in the Caribbean...
...The Structure of American Industry (New York: Macmillan, 1961), p. 235...
...Moreover, with the implementation of new reform decrees in 1973, additional U.S...
...The law clearly ear-marked the nine largest sugar and cotton-producing estates on the Coast as targets for expropriation...
...BUSINESS U.S...
...Source: Fortune, November 1955 and September 15, 1968...
...1975...
...following the nationalization of its holdings, a major source of opposition to the Popular Unity government.8 Grace's world-wide operations, 1966...
...In its mid-century survey, Fortune marveled over this "premier industry of the United States": (The chemical industry) now feeds all sixty-eight industrial divisions of the U.S...
...It was within this context that the Peruvian government turned its attention to the agricultural sector in the summer of 1969...
...the banks grow from humble middleman into powerful monopolies having at their command almost the whole of the money capital of all the capitalists and small businessmen, and also the larger part of the means of production and of the sources of raw materials of the given country and in a number of countries...
...NACLA's Latin America & Empire Report, Vol...
...Journal of Latin American Studies, Vol...
...Wall Street Journal, November 27, 1972...
...We cannot and indeed will not allow our black people to be further dehumanized...
...domination of the Caribbean are fundamental to Grace's current mode of operation...
...The government, and not individual investors, would now establish priorities in accordance with the country's longrange needs...
...Intense political lobbying in Congress defeated the Nicaragua project, but Grace began to expand his fleet in anticipation of the day when a U.S...
...W. R. Grace's paper and packaging subsidiaries were nationalized without compensation by the Cuban government...
...Addrms a corran em pomdae to Box 57, Cake*d Staton, New York, NY 10025, or 1 22k Dwkdsy, CA 94701...
...Foreign firms snatched up the natural resources, mines and oil fields of dependent areas...
...aid, but in the "improvement of the business climate" in Latin American countries: "The U.S...
...Moreover, a depression had hit the fertilizer industry in the late sixties which had cut into investments and curtailed production...
...Even Christ was crucified...
...Of the latter two possibilities, both of which were booming, Grace settled on chemicals...
...However, Grace and Pan American, co-owners of Panagra, picked at an irresolvable bone of contention...
...NEw YORK 14182 March 26, 1965 The paid union orlanliers can't seem to asks up their tnads what "pitch" to give you...
...industry's depression but also brought huge superprofits when fertilizer prices jumped after 1973...
...That's why I try hard...
...Industrial capital tends to merge with finance capital and soon banks and other financial institutions come to play a dominant role in the economy...
...The Peruvian government officially took charge of these sugar operations in February, 1970 and announced its valuation of the properties at $10.1 million...
...Rather, the dispute appeared to be much more centered on the question of who had hegemony in setting U.S...
...Goodsell, American Corporations and Peruvian Politics...
...Grace owned and supplied every essential service, including company housing, schools, food and clothing stores, churches, etc...
...The ability of the SNA to shape government policy to its needs was a constant deterrent to agrarian reform in the pre-1968 period...
...Yet with these monopoly contracts, the primary orientation of trade to England and the utter dependence on the guano trade, the Peruvian economy was fundamentally weak...
...This spree in chemicals continued until 1972...
...In the 1940's the U.S...
...The structure of the Corco complex also responded to the coalition of family and financial interests which had originally organized Corco itself...
...W. A. Tucker, Textile Markets of Bolivia, Ecuador and Peru, Department of Commerce Special Agents Series No...
...Paul Baran,The Political Economy of Growth (New York: Prometheus, 1960), 174...
...When an agrarian reform la* was proposed in 1964, under the Bela6nde regime, the SNA was able to revise the legislation to exclude the large coastal estates by writing in convenient loopholes and exceptional clauses...
...interests.1'4 Thus many foreign firms had become resigned to greater state control over investment policies and direct state participation...
...56 The first major response to the challenges presented by the Cuban Revolution and the new economic conditions of the sixties came in March 1961 with the Kennedy Administration's formulation of the Alliance for Progress program...
...4 By 1860 Grace, now worth more than $180,000, virtually had taken over the ship chandlery firm and he began to ship consignments of guano himself...
...government...
...Grace had marketing expertise and coal and oil reserves which were attractive to the German concern...
...Yet Grace did have a particularly conspicuous presence in Peru...
...Corco, Summary Report, Annual Meeting of Stockholders in San Juan, P.R., April 28...
...Ibid., 133 134...
...The Grace company's near-bust at that time provided eight-year old i. Peter Grace, the company's future president, with his first business lesson...
...NACLA-East Grace Project ISBN No...
...In Guayanilla region alone, 19 percent of the population suffered from respiratory disease...
...1 (April 1970),112.114...
...Goodsell, 136 137...
...Comparative income figures lor (..race underscore these cstinmates...
...And the W.R...
...Fundamentally, workers are driven into the wage labor relationship, through expropriation of their own means of production (their land, craft industries, etc...
...I he need for a break-through in the deadlocked negotiations was attended to directly by the Executive Branch...
...Foreign capitalists snapped up the mines, oil fields, sugar plantations and textile mills of the less developed world...
...NACLA's Latin America & Empire Report, Vol...
...It still depends on its foreign subsidiaries for 40 percent of its pretax profits...
...This interest was filtered through local producers's associations, with powerful lobbying skills and leverage at the national level...
...2 3 Comparative income figures for Grace unLOUSY FLICKS FROM THE PAST On January 9, 1976 W. R. Grace announced that it had completed the sale of 12 percent of its stock, valued at $104 million, to the Friedrick Flick Group of West Germany, a family holding company with interests In chemicals, steel, paper, machinery and automobiles...
...percent...
...as external coercive laws...
...6 9 AIFLD was also eminently suited to serve as a subtle intelligence gathering network due to its position inside LatinAmerican labor movements...
...In the final section of this article we will example J. Peter Grace's political activities in the 1960's, concentrating on his participation in the Alliance for Progress, the American Institute for Free Labor Development (AIFLD), and the Grace Foundation...
...The government approached Grace in early 1971 with a proposal to take over 51 percent of its fertilizer operation...
...aid to private investors in order to spur their investments in Latin America...
...we are still left with the question, why the shift to Europe and the United States in order to be able to pay dividends...
...Grace's post-war investments, then, are dominated by two trends: the movement away from labor-intensive and towards capital-intensive industry, and the movement away from South American investments and towards investment in the Caribbean, Europe and the United States...
...wrappers, boxes, tubes...
...1961 64...
...Grace began to invest in sugar, paper and textile production, mining, and some industrial activity as well as entering the field of commercial banking...
...It also suggested creating new loan programs and extending the previous government loan programs (such as the food-aid PLA80 program) to include loans made through private channels...
...Bollinger, The Rise of United States Influence, 147 148...
...Briefly, in the dependent areas the movement of capital into the productive sector accelerated the development and spread of capitalist relations of production...
...By the late 1950's, when 90 percent of the petrochemical output of the capitalist world was supplied by U.S...
...Sugar production implied both qualitative and quantitative changes in the relations of production in Peru: qualitative, because capital was being introduced into production, whereas before it was exclusively centered in distribution (i.e...
...chemical producer with 80 percent of its pretax profits provided by chemical-related operations.l7 Its products range from industrial and specialty chemicals to plastics and packaging components and agricultural chemicals (see chart...
...While Grace allowed the land to sit idle for the next nine years, this was an important turning point in his operations, for it marked Grace's formal entry into a sector of direct production...
...5. Testimony given by James P Freeborn...
...11 Grace's $643 million long-term debt is even more concentrated...
...The Federation of Sugar Workers (FTA), in particular, had succeeded in establishing a strong organizational base on the coastal estates and had come to represent a formidable threat to sugar and cotton-growing interests...
...As previously stated, this source of cheap raw materials saved the day for Grace's fertilizer division when the 1960's slump hit the U.S...
...He advocated social improvements for Latin America which reflected neither his firm's past nor its future actions in Latin America...
...But Grace is now confronted by new contradictions...
...In some cases, negotiations over compensation, reinvestment or the renewal of contracts resulted in amicable settlements...
...Grace was also to commit itself to these ventures for ten years...
...Economically, the policies of the new government have been interpreted as an attempt to restructure the Peruvian economy 1) by expropriating the landed oligarchy to foment industrial development and the development of an industrial bourgeoisie, and 2) by renegotiating the terms of dependency on foreign capital.10 Grace's visibility, its ties to the oligarchy and its traditional resistance to reform, however mild...
...Freeborn, Grace V.P., proposed that an amendment be attached to the U.S...
...colonialism in Puerto Rico must also be seen in terms of the coalition of financial interests which Grace personifies and therefore the broader sectors of U.S...
...Corco's core facilities would produce the basic aromatics and olefins while others, either singly or in joint ventures with Corco, would develop the intermediate stage of production...
...The Graces' separate branches in England, Latin America and, the United States worked in coordination to move products between the East and West coasts of the United States and Europe, with essential stops at Callao on both trips in order to deposit manufactured goods and pick up guano and other raw materials...
...In 1961, he had written his own "alliance for progress" program entitled, "It Is Not Too Late in Latin America...
...In 1959 Union Carbide set up a small petrochemical plant to use the feedback produced by the Corco refinery...
...These chemical facilities were expanded into the area of plastic compounds (i.e...
...All over the country, according to one writer, "the Army and plantation guards . . . have been moving peasants off in bloodshed, burning their homes, their villages, their crops-seizing lands in behalf of large owners and foreign corporations such as Cerro de Pasco, the Peruvian Corporation, Grace and Company and the Gildemeisters...
...1 he failure of Grace's strong-arm tactics forced the company to seriously reassess its approach to bilateral negotiations Aith the Peruvian government...
...J. Peter Grace, It Is Not Too Late in Latin America: Proposals for Action Now (New York: W.R...
...The Peruvian "affair" did not rid the continent of Grace by any means...
...Grace unloaded its shipping interests in 1969 because of a poor investment strategy, increased competition, challenges from transport workers and a fundamental decision to invest more extensively in chemicals...
...6, July August 1972, p. 4. The figure for Trinidad wasquoted inthe New York Times, August 31,1965...
...V. I. Lenin, Imperialism (Peking: Foreign Language Press, 1970), pp...
...And, more often than not, these products began to flow directly out of Grace-held interests in sugar, mining, textiles and other industries...
...firm...
...The next article in this Report will examine the major aspects of Grace's movement towards chemicals and its related branches...
...government...
...at 160 Chimat Ave., New York NY 10027...
...This position allowed Grace to enter into a number of important joint operations with the bank and its overseas holding company, the American International Corporation (AIC...
...In 1945, 90 percent of the company's profits came from Latin American operations, including shipping...
...For more on AIFLD, see Susanne Jonas, "Trade Union Imperialism in the Dominican Republic," NACLA's Latin America Empire Report, Vol...
...5 7 The Grace report had two central recommendations...
...blueblooded, ultra-wealthy, gilt-edged corporate "aristocracy," the Irish Catholic Graces had risen considerably from their *The Chemical Bank of New York and Bunge Borne Investments...
...2 Fully half of the profits arising from the guano trade went directly to pay the English bondholders who had floated the Peruvian loans of 1824-25.3 *A ship chandler is a retailer specializing in selling provisions to ships...
...Only the U.S...
...Simultaneous to the announcentent of this agreement, it %as revealed that a consortium of U.S...
...Relations between the corporation and its labor force must also be brought up to date...
...By 1928 all the estates had been consolidated into three huge plantations owned by the Larcos (Italian), Gildemeisters (German) and Graces (U.S...
...Los Angeles Times, Jan...
...capitalism and the dynamics of its development...
...Finally, Grace has increasingly centered its investments in capitalintensive industry...
...The new capital onslaught was seeking higher rates of return in capital intensive sectors of production-those sectors requiring advanced technology, a large capital outlay, and fewer workers...
...When I became president of the company in 1945," he said, "these businesses...
...privileged labor aristocracy that would defend material gains against unemployed people and non-unionized, workers...
...The bonds could be redeemed for cash, however, if the amount were matched by new company funds and if the total were reinvested in industrial projects approved by the government...
...Transportation One of Grace's longest-lived and most well-known investments was in the field of transportation...
...3 4 The early 1970's turn-around in fertilizers produced the intended effect of rapid expansion by U.S...
...In 1968, however, Grace's fortunes in Peru took an abrupt turn for the worse...
...Many of the Foundation's annual gifts of more than half a million dollars a year go to Catholic charities and institutions ranging from wellestablished universities to such groups as the American Council for the International Promotion of Democracy Under God, Inc., which received $20,000 in 1%5.76 Other gifts are mostly overtly political...
...corporate control in Latin America in two vital areas: the use of food as a weapon of U.S...
...See footnote 29...
...By August 1975 a presidential Ad-Hoc Advisory Group on Puerto Rico had recommended changes (now embodied in legislation before the U.S...
...67...
...investments in Latin America rose from $4 billion in 1945 to $20 billion in 1969...
...Grace and the Peruvians hIad finally agreed on something...
...Bollinger, The Rise of United States Influence, 127a...
...Under such an agreement, Antony Gibbs and Sons virtually monopolized the sale of guano to Europe between 1849 and 1861, and the French banking house of Auguste Dreyfus replaced them in 1864...
...Chemical fertilizers had become essential to Third World food production due to the policies of U.S...
...Nevertheless, textile production in Peru was still highly underdeveloped owing to the huge amount of cotton and woolen imports from England in the nineteenth century...
...fertilizer producer...
...The incorporation of the Grace Steamship Co...
...and First National City Bank participated through W. R. Grace...
...capitalists sought a means to swing the balance in their favor...
...The conception of the Corco complex was to construct a self-contained stream of production from oil refining to the manufacturing of a whole gamut of consumer items for export...
...VIII, No...
...Grace constantly acquires firms President John Kennedy with his old pal J. Peter Grace.11 throughout the world, keeping them if they are...
...And maintaining profitability meant maintaining a high level of investment...
...Yepes del Castillo, Peru: 1820-1920, 59 60, 88...
...Peter Grace)l In 1945 J. Peter Grace's dilemma was not so much whether to branch out into a new industry, but which in- dustry to choose and whether the required capital would be forthcoming...
...1970 Sold Cuvisa, a textile subsidiary, to Peruvian interests...
...Whereas in the beginning, some expected, a full scale socialist revolution, it gradually became apparent that the goveir-nient was attempting a restructuring of the economy in which foreign capital would continue to play an important role...
...But in the area of "charitable donations," Grace's motivations are, to say the least, suspect...
...agriculture, while it still uses little fertilizer per acre relative to other advanced capitalist economies, is rapidly increasing its consumption of fertilizer over and above the available supply of domestic raw materials...
...Internal Revenue Service, Form 990-AR, "Return of Organization Exempt from Income Tax," Grace Foundation, 1965...
...3 7 In any case, the bank remained a fairly small operation which was one reason for its take over, as we will see, by the Marine Midland Bank in 1965...
...corporations in Peru...
...3, No...
...Over three quarters of the increased acreage-up 11 percent from 1972 to 1974--was planted to corn and wheat, which utilize relatively large amounts of fertilizer...
...In April, 1971, Grace moved beyond the bargaining table to the U.S...
...investors abroad), amending tax laws to increase the incentive to invest by adding tax credits, and allowing tax deductions to compensate for currency devaluations...
...Raw materials were cheap due to the special import quota system...
...In reality, however, the company's practice was abysmal...
...and New York Times, April 24,1970...
...In the summer of 1970, the Velasco government decreed a new Industrial Law, designed to accelerate the country's industrialization process under tighter state auspices...
...New York Times, February 7, 1969...
...The sketchy data on Grace points, nevertheless, to five dominant interest groupings...
...l Pulp and Paper, August 17,1968, 27...
...The alterations required of Grace at this time reflect a much broader process in the development of capitalism as an economic system...
...companies for 50 percent of their fertilizer needs...
...foreign policy was a boon to the agricultural chemical industry and Grace, which holds a leading position in the fertilizer industry, stood to reap substantial benefits...
...1 5 In 1912 Joseph Grace founded the Atlantic and Pacific Steamship Co...
...companies doing business in Latin America.61 The Graces remain part of the Council and even hold important posts within it.62 But the struggle for dominance has been resolved, at least for the present...
...The Migration of British Capital to 1875 (New York: Alfred Knopf, 1927...
...Ill25 Thus in the decade of the 1960's, Grace had two options in Peru...
...Accordingly, Butz turned on the spigot...
...J. Peter Grace, "A Consensus in Action the AIFLD," speech given in Houston,Texas, September 16,1965 (Washington, D.C : AIFLO, 1965), 5. 56...
...GRACE: THE RECURRING HISTORY Such confrontations are not foreign to Grace's history...
...Grace was to assist the Peruvians in obtaining suitable financing in New York for both the cash down paynient and the Peruvian half of the mixed enterprise...
...Three years had gone by since the military take-over and the effects of the initial reform decrees could now be assessed in more cool-headed terms...
...The first oil refineries were opened in the mid-1950's by Gulf Oil and the Commonwealth Oil Refining Corporation (Corco...
...He joined the Nixon team as the Secretary of Agriculture beginning in 1971, giving up his directorship in International Mineral and Chemicals, the largest U.S...
...Needless to say, the U.S...
...Capitalists continue to shift the nature and location of their investments in order to increase profits and gain dominance in their industries...
...Congress...
...I'm always scared...
...Grace Spins a New Trade: Textiles Grace's investments in Peruvian textile production paralleled those in sugar production in two respects...
...Finally, however, when negotiations completely broke down and the disputed properties were formally nationalized, the company had no choice but to put its fate in the hands of the U.S...
...With this phase fully developed by the end of the nineteenth century, the second phase began to play a predominant role...
...6 4 To combat this menace, Grace apparently believed that words spoke louder than deeds...
...Clearly, Grace has undergone many changes since World War 11...
...Scattered capitalists," according to Lenin, "are transformed into a single collective capitalist...
...Department of State, Settlement of Certain Claims...
...W. R. Grace & Co., Fertilizer and Food Production...
...Gargill...
...5. Bollinger, The Rise of United States Influence, 105 120...
...The second article discusses the company's most recent expansion into the chemical industry, particularly in Puerto Rico and Trinidad, and examines the alliances which made that expansion possible...
...Grain Arsenal," NACLA's Latin America A Empire Report, Vol...
...Heinz...
...Proposals for Action Now...
...The Citizens Committee was founded in 1963 by such people as CIA-labor agent, Jay Lovestone, in order, according to the New York Times, to "gather information about conditions in Cuba and to help the U.S...
...8. See 0. C. M Platt, Latin America and British Trade, 106&1914 (New York Harper and Row, 1973...
...The newly liberated nations attracted British citizens as well...
...By mniid-1973, the Nixon administration, eager to restore conditions for successful U.S...
...now Ingersoll-Rand) which produced mining equipment for Latin American operations...
...Civil War was symbolic of a much larger trend...
...followed quickly...
...7 (Sep tember 1974...
...Grace parlayed Paramonga's success-the first such use of bagasse to create paper-into an enormous paper, pulp and paperboard industry in Peru, Colombia and Ecuador...
...The standard mechanism chosen by Peruvian governments for servicing its debts was to offer foreign merchantbankers a monopoly over the export of guano in return for assuming the debt...
...It does not, however, mark any tendency for corporations to separate themselves from banks...
...Central to Butz's approach was monopolization of the means of food production, including fertilizers...
...Ihe development of the W. R. Grace Company has closely followed this model of growth...
...News & World Report, February 25, 1963...
...In Latin America, however, textile production was first crushed by the flood of English manufactured goods in the early nineteenth century and, then, what was left was taken over by non-national producers...
...Growing popular opposition, sparked by rampant inflation, continued unemployment and environmental pollution, threatened to stall the expansion of the industry and shelved plans for a huge superport equipped to service the largest tankers bringing oil from the Middle East...
...New investment projects in the petrochemical industry jumped from 2 in 1974 to 12 in 1975 topped by the sudden take-over of Corco's $800 million assets by a small but aggressive Texas oil company, Tesoro Petroleum Corporation...
...In 1%968, Grace was not only the only company vulnerable to the threat of nationalization, nor was it the only one ultimately affected...
...Since the beginning of 1975 there has been constant speculation in the Puerto Rican press about the imminent discovery of rich oil and natural gas reserves on the island and within its territorial waters...
...investors...
...Pan Am monopolized the MiamiPanama link of the U.S.-Latin America flight, and refused to sell it to Grace...
...Both of these questions reveal two important variables in the dynamics of capitalist development and the evolution of the corporation...
...aid to Peru and suspension of the country's sugar quota were threatened repeatedly...
...2 2 The incentives were, no doubt, quite attractive after 1973...
...Nevertheless, for Grace to expand it needed to change...
...Journal of Commerce, Aug...
...4 1 Peasants cannot raise crops on chemically ruined soil, fisherman can no longer find a catch in the contaminated water, and workers and their families' lives are shortened by the fumes they breathe...
...For when William Russell Grace fled famine in Ireland, back in 1832, his search for money and adventure led him straight to the shores of South America...
...19, 1974...
...4 1 A...
...IX, No...
...Charles T. Goodsell, American Corporations and Peruvian Politics (Cambridge, Mass.: Harvard University Press, 1974), 208...
...Following World War II, with the defeat of the Axis powers and the devastated condition of other advanced capitalist countries, the flow of U.S...
...Forbes, May 15, 1974...
...The company also owned a facility which produced various kinds of packaging materials (i.e...
...2 5 When Grace entered textile production in Peru, mill production was already half a century old, having been initiated by the British in the mid-1800's...
...When William Grace died in 1904, he left a personal estate estimated at nearly $4 million...
...On the other hand the bank is forced to sink an increasing share of its funds in industry...
...The AIFLD," he stressed, "urges cooperation between labor and management and an end to class struggle...
...New York Times, April 5, 1970...
...Grace in Peru, and the scope of its holdings in 1968, made the company extremely vulnerable to attack on both nationalist and reformist grounds...
...and 2) the release of $74 million in blocked remittances...
...Workers' struggles pushed wages up and federal legislation embodied in the Federal Fair Labor Standards Act of 1974 mandated equalization of wage scales in Puerto Rico with U.S...
...Jerome Levinson and Juan de Onis, The Alliance That Lost Its Way (Chicago: Quadrangle, 1970), 159...
...Compensation was to be paid in the form of bonds which would mature in 20-25 years and pay a moderate rate of interest...
...taxpayers' money...
...foreign investments in the Caribbean have traditionally been asociated with sugar, tobacco, coffee and other crops which grow in the hot Caribbean climate...
...In some countries, such as Peru, Grace faced the competition of cheaper Japanese textile imports which cut into its profits as early as 1947...
...A skeletal vision of its holdings (see Chart) reveals a network of far-flung interests in virtually every sector of the economy, from mining in the mountains to fishing on the coast...
...For those who can find jobs in or around the industry, there remains the problem of surviving the air and water contamination...
...These were the first significant industrial investments arranged by EDA Chairman Teodoro Moscoso, who later switched to the chairmanship of Corco...
...sugar quota allocation to Peru at this time could produce a disturbing reaction prejudicial to those U.S...
...It hardly stood as a monument for the "concern and compassion" of U.S...
...Seeking to extend its markets abroad, capital from the advanced capitalist nations flowed into the commercial sector of less developed regions, coming to control both the trade and the finances of the dependent areas in the process...
...2 8 By the mid-1930's Grace controlled the two largest textile plants in Chile: Tejidos Caupolicdn, the largest cotton textile plant, and Fdbrica de Patios Bellavista, the largest textile fabrics manufacturer, not to mention a smaller firm in Vifia del Mar and the Fdbrica de Patios "Las Tres Pascuales...
...Its main report was issued in 1963, written by Felix Larkin, chairman of W. R. Grace...
...Under monopoly conditions, the drive to expand is not lessened, but rather takes a new direction...
...The Alliance for Profit We need to understand that today the choice in Latin Amirica is between democracy and Communism...
...He left his Peruvian operations under the able charge of a younger brother, Michael, who, it seems, was even more adept at commercial expansion than William...
...By 1974 Grace had over 32 million shares of common stock outstanding, valued at $851 million and distributed among 54,000 stockholders...
...6 He was followed by Charles E. Wilson, the former chairman of General Electric, who joined the board of directors to take charge of the chemical investments...
...in talking of pollution problems...
...But the real onslaught began in 1965 when U.S...
...ITT agreed to set up a telephone equipment manufacturing plant in partnership with the government...
...penetration...
...GRACE CORPORATION 1. "Casa Grace," Fortune, Vol...
...The line had maintained a virtual monopoly of air transportation to many parts of Latin America...
...A thorough evaluation of the nationalization of Grace properties in Peru...
...Joseph Grace joined the board of directors of the National City Bank of New York in 1907...
...The large Texaco refinery on the island supplied the feedstock which Grace refined into anhydrous ammonia...
...The Graces and the Rockefellers represented two of the most important U.S...
...158 (Washington, D.C.: Government Printing Office...
...The country that gave Grace its start, add the government that had served its interests with subtle complicity, was taken over by a military regime of a very new type...
...Curtailed Casa Grace merchandising operations in Peru, Chile and Colombia...
...They provided assistance in training skilled workers, infrastructure improvements, and duty-free imports of machinery and raw materials...
...foreign policy towards Latin America in the sixties, and Grace was involved, although to differing degrees, in each...
...in short, the incentive for new investment must be adequate if production is to be increased...
...While we are not prepared to enter into this debate, we are clear that capital in general has been shifting both the type and location of its investment since World War II, and that the question is much larger than why any one executive moves his or her investments from one place to another...
...The relatively good positions of these two companies in the ranking of the chemical industry gave Grace a firm foundation on which to build...
...Wall Street Journal, Feb,249, 1974...
...Corco has, however, failed to keep this promise...
...The penalty fees would *In 1960...
...3 9 But...
...a set of guidelines for foreign participation in all industrial enterprises, with provisions for joint ventures, mixed enterprises and special state contracts...
...In November, 1970, Grace officials offterd to sell the Peruvian government all of their paper, chemical and other sugar-related assets at a "fair book value" and to provide administrative and technical assitance on a contractual basis...
...His son married Michael Grace's daughter in 1901.5 silver mines at Cerro de Pasco...
...were 100 percent of our business...
...Since World War II, U.S...
...companies...
...Business Week, June 13, 1964...
...Later it came to represent not only the United States but, just as importantly, the multinational corporation...
...Although it has successfully maintained a small interest in Libyan oil since 1956, it suffered a $2 million loss from its brief 52 percent ownership of Cosden Petroleum Corporation between 1960 and 1963...
...Together, the AIC and Grace acquired control of the Pacific Mail Steamship Co...
...Here, however, we will look at divestment, Grace's shedding of its old empire, and the decision to enter the consumer products market...
...Housing conditions for workers at the Grace sugar haciendas were described by a visitor as "depressingly dirty and crowded...
...Burgess and Harbison, Casa Grace, 3. 37...
...Both objectives will face a major challenge from the militant trade union movement, particularly the United Workers Movement, and the independence forces, led by the Puerto Rican Socialist Party and other progressive organizations...
...Such has been the growth of its agrichemical investments in the area that Grace now relies on the Caribbean for 49 percent of its ammonia output and 35 percent of its urea production...
...6 0 Thus, while both reports encouraged private investment in Latin America, Rockefeller, more than Grace, took a hard line on denying aid to those countries which "persisted in policies which discourage private investment...
...U.S Houseof Representatives, Committeeon Agriculture, Hearings, Extension of "the Sugar Act, April 20,197),233.230, 259-265...
...The nature of the export of capital, however, has also undergone changes during the imperialist epoch...
...In Peru, he found a wealth of unexplored possibilities for money-making, and quickly exploited them to the fullest (see article No...
...RACE'S CHEMICAL REACTION 1. Forbes, April 1. 1963...
...Ibid., 46...
...Lenin further quoted from Hilf'erding, a leading theoretician of' his time: A steadily increasing proportion of capital in industry...
...Sept...
...To have clung to some of its controversial holdings would have isolated Grace in a losing battle...
...policy makers...
...0-196024-15-6 ISSN No...
...Above all, though, it was clear that shipping, in J. Peter's...
...Three of these are operated by Union Carbide, Phillips Petroleum and Pittsburgh Plate Glass...
...Peruvian Times...
...Thus, the first part of this article focuses on a brief history of the company's economic involvement in Peru and its over-all social and political impact...
...Estimate made on the basis of information drawn from the Wall Street Journal, April 2,1975...
...Textile investments had also declined...
...19 The Peruvian producers had vanished...
...they used their best lands to produce sugar, coffee, cotton and other cash crops...
...And finally, it provided the Graces with tighter financial and operational control over their business activities...
...The industry then ploughed through seven years of depression, shaking off most of the newcomers and leaving only seven companies, including Grace, in control of the field...
...Forbes, September 1, 1972...
...should concentrate its economic-aid program," he wrote...
...royalty payments and other company assets held in Peruvian banks...
...4 3 The continued super-profitability of these U.S...
...Ibid...
...As the final settlement involved both the Meiggs-built railways and the Cerro de Pasco mines, the bondholders had to reach an agreement with Michael Grace and a New York syndicate he had created for this purpose.1 3 While a future Peruvian government eventually cancelled some stipulations of the Grace contract, the bondholders held on to Peru's railroads, helping to complete and extend many of them with rails, ties and bridges purchased from and shipped through W. R. Grace and Co., and contracted by Michael P. Grace.1 4 And, although the majority of the Graces' interests rested in Peru before the War of the Pacific (they had even shipped arms to Peru during the war), by adroitly shifting some interests into Chile, merging their interests with the larger community of English bondholders, and strengthening their ties to U.S...
...Insurance companies hold 42 percent of its obligations and only seven of these control 34 percent...
...NACLA: "Argentina: AIFLD Losing Its Grip...
...Grace was one of the first to take advantage of Trinidad's new foreign investment legislation...
...Their investments in finance and ship building soon gave them an important level of control over these commercial activities...
...New processes were developed to produce synthetic rubber, explosives, textiles and fertilizer...
...Grace opened trading posts in Russia, China, India and throughout Europe...
...Ibid...
...World Trends to 19U0 (New York, 1974...
...investments in Latin America were shifting away from Grace's historical field of in- volvement into more capital intensive manufacturing operations...
...Few other corporations have managed such a transformation in their total structure...
...J. Peter sold his firm's interests in Mexican and Puerto Rican bagasse-paper production to International Paper, claiming that it was a mistake to have attempted to make paper out of low quality bagasse...
...Puerto Rico's total dependence on imported oil became a liability with the price rise for crude oil...
...Perhaps in an ironic twist...
...Thus the result of these new bargaining sessions turned out to be more sessions, and unproductive talks stretched on through 1973...
...contractor Henry Meiggs as well as his claims to some of the *The contract was called the Grace-Donoughmore contract in England...
...COMAP sunk into obscurity with Kennedy's death, and David Rockefeller took the offensive by forming, in 1964, the Business Group for Latin America (BGLA) under his chairmanship...
...companies are striking...
...and, Burbach...
...But by the 1960's a burgeoning of new shipping interests had produced an oversupply of shippers relative to the amount of cargo and the number of passengers needing transportation, and a very costly rate war ensued...
...The first phase, occuring in the mid-nineteenth century, is the commercial phase...
...The fact that niany investors had learned to live with the new regime and more importantly, the fact that the limits of the so-called Revolution were much clearer by 1971 had had its effects upon U.S...
...The 1968 coup was greeted with little enthusiasm by the foreign business community...
...Just as in Trinidad, Grace's new subsidiary had a notable effect on the company's profit picture...
...The "Grace Lines" was a major shipper from the United States to Latin America and "Panagra" was one of the most important air carriers serving Central and South America...
...By 1959 the U.S...
...Management and technical personnel, on the other hand, lived in comfortable, modern facilities and had separate recreational and educational services...
...2 The Graces had a distinctly personal interest in arranging for a settlement between the bondholders and Peru...
...John Kennedy tapped his old friend and fellow Catholic, J. Peter Grace, to head the influential Department of Commerce Committee on the Alliance for Progress (COMAP...
...Grace had become one of the most important firms in sugar and textile production, a world-wide shipper, trader and merchandizer, and a banker of some note...
...These changes reflected a trend characteristic of the evolution of capital begun at the turn of the century...
...Grace was one of the founding fathers of AIFLD in 1961, and since then has served as chairman of the board, fundraiser in the business community, personal contributor, and a faithful mouthpiece for AIFLD principles...
...Renewed activity in late 1974, however, pointed to a new thrust on the part of U.S...
...Property in Seuth America (New York: Praeger Publishers 1974) 12...
...18 (June 1975), 78 81...
...We will also look at the financial interests that control Grace as well as its role in the Caribbean, specifically in Trinidad and Puerto Rico...
...Ibid., 132 132a...
...Within each of these sectors, Grace was often the dominant force in production and/or marketing, amidst a field of smaller competitors...
...Acquiring these companies in the early 1950's immediately placed Grace among the top 15 chemical companies in the United States...
...government had financed extensive research and had built ten plants at a cost of $250 million to produce synthetic ammonia, a by-product of natural gas used to make nitrate explosives as well as nitrogen fertilizer...
...COMAP's task was to evaluate the young Alliance and draw up recommendations for its future role...
...David Chaplin, The Peruvian Industrial Labor Force (Princeton, New Jersey: Princeton University Press, 1967), 62...
...Other government corporations offered low interest loans and even equity investment, occasionally supplying foreign corporations with 90 percent of their capital to set up their local subsidiary...
...9 Myron J. Frankman, "Sectoral Policy Preferences of the Peruvian Govern ment...
...Fundraising and AFL-CIO Impact Projects Prepared for Board of Trustees Meeting, September 14, 1965...
...4 6 In 1970, however, an anti-trust inquiry by the Federal Reserve Board forced J. Peter Grace to resign from Marine Midland's board of directors since he simultaneously held a directorship on the board of First National City Bank...
...When Corco moved into petrochemicals these same interests contributed to the combination of industrial firms which divided among themselves the different stages of production...
...The government of Velasco Alvarado was intent on carrying out substantial retbrms in the country's social structure and on changing the nature of Peru's traditional dependence on foreign capital...
...They supplanted the traditional cruder coal tar compounds as the basic raw materials for the industry...
...social ladder through a series of business partnerships and marriages...
...3. Ernesto Yepes del Castillo, Peru: 1820-1920, Un sigio de desarrolto capitalist (Lima: IEP and Campodonico ediciones, 1972), 62...
...The package deal had a price-tag of $70 million...
...Sonic were even reassured by the stabilizing eftfects that the state's new role could have on labor conflicts and on the investment climate in general...
...Grace interests had taken root on three continents...
...Nixon assigned his special counselor for International Economic Policy, Peter Flannigan...
...TheChanging Faceof W. R. Grace," Dun's Review (July 19671), 22...
...and completed the construction of a large nitrogenous fertilizer plant...
...5 1 Thus, by 1972, J. Peter Grace had fundamentally altered the company created by this grandfather and father...
...And as growing opposition from Third World peoples undermines these strategies, Grace will find itself in an increasingly vulnerable position...
...As the chemical industry is capital intensive and requires a highly skilled labor force, it has sought expansion in the more advanced capitalist countries...
...15 A lengthy process of negotiation and confrontation ensued between company and government representatives...
...capitalism as the Rockefellers, Stillmans, Fricks and Morgans...
...In others, the negotiation process was seemingly endless and broke down repeatedly...
...Cerro proudly announced that it expected to receive a total of between 75 and 80 million dollars froni both parcels...
...Peruvian Times, May 6, 1960...
...and competition makes the immanent laws of capitalist production to be felt by each individual capitalist...
...Did you know that economic strikers can be permanently replaced by their 1mp/'l#r?73 The AIFLD strategy has no possibility of any success in the long run since it is based on mediating what is a fundamental contradiction between capital and labor...
...1 7 Grace held a tight rein on its shipping network by simultaneously controlling terminal facilities, docks, tugboats and storehouses in most of the ports where Grace ships put in...
...James P. Freeborn, Vice-President in charge of Grace's Latin American operations, denounced the industrial investment scheme and expressed the company's decisive disinterest in making any new commitments in Peru:28 Not only do we obviously have no motivation to invest further in Peruvian industry, but on the contrary are obliged to disinvest, so the use of agrarian reform bonds for industrial investment hardly appears practical...
...Business Week, April It., 1964...
...New contracts were being signed with the oil29 companies, investment rules were being revised in the mining sector and the vacuum left by several U.S...
...corporations had reached amicable settlements which ensured their continued presence in Peru, under new conditions and often in new sectors of the economy...
...NO EXIT Politically, the military government that took power in 1968 based its popular mandate to a large extent on nationalist sentiment...
...public and Government officials arrive at conclusions regarding the threat Cuba presents to our security and to the security of this hemisphere...
...Vickers Associates, Inc., Guide to Bank Trust Portfolios, 1975...
...By the 1950's, Grace produced over 100,000 tons of refined sugar per year, 75 percent of the refined sugar produced in Peru and nearly one-fifth of Peru's total sugar production...
...3 6 Grace's first petrochemical investments in the island in 1959 were thus restricted to small fertilizer companies which mixed imported components and distributed the final product locally and to other Caribbean countries...
...7 7 One of the committee's "educational" activities was to brief the press, which it did, on a number of occasions, by presenting false or misleading information about Cuba...
...Both mechanisms are, in reality, indications of major developments within capitalism itself...
...William S. Bollinger, The Rise of United States Influence in the Peruvian Economy, 18691921, unpublished Master's Essay (Los Angeles: UCLA, 1971),98.99...
...Davison and Dewey and Almy were precisely such companies...
...Annual Report 1974).21 The similarities between Puerto Rico and Trinidad's recent history of penetration by U.S...
...The petrochemical industry began building pressure for a reform in the oil quota system and Puerto Rico became the sacrificial lamb...
...At the time of the deal's announcement, Andean Times speculated that W.R...
...Puerto Rico set up "Operation Bootstrap" in 1948 and Trinidad passed the Aid to Pioneer Industries Ordinance in 1950...
...companies operating in Trinidad were enjoying profits 30 to 40 percent higher than in the United States due to lower wages...
...The new project figures were obtained from the Oil & Gas Journal, March 17, IWS1975...
...Second, fight labor militancy by fighting militant workers, "prevent Communist infiltration and where it already exists, get rid of it...
...Indeed, its operations also surpassed those of most of the multinational industrial corporations...
...In 1974 Grace began construction of a new fertilizer plant in Trinidad, valued at $80 million...
...banks would lend $150 million to the Peruvian government over a ten-year period.25 "IThe compensation olttred by Peru in the package deal was less than many U.S...
...J. Peter Grace 5 5 By the 1960's the W. R. Grace Corporation was active in numerous Latin American countries but under the pressure of a decline in profits and a change in the political winds blowing across the continent...
...taxpayers and the Latin American working class...
...corporations...
...COMAP, composed of the presidents and vice-presidents of 25 major corporations, focused on short-term ways of increasing the flow of private investment to Latin America...
...But in his report, Grace recommended that approximtely $2.5 billion per year, as opposed to $1 billion, of U.S...
...foreign investment in the world...
...economic policy for Latin America...
...Grace's investments in banking and finance rounded out his empire before World War II...
...It had avoided the credit market and its long-term debt amounted to barely $3 million...
...Its hundred-year history has been marked by constant changes in both its economic and its organizational structures...
...Both aspects of Grace's response to the new regime, adamant demands for compensation and divestment, were intensified as the course of the so-called Revolution proceeded to affect new sectors of the economy and new segments of the Grace domain...
...In addition 19 percent of the work force remains underemployed...
...Foreign firms, alongside native landowners were among the major beneficiaries of an inequitable system of land tenure in the countryside...
...They had come to expect the unchallenged flow of profits from their Latin American operations...
...All these firms are...
...Furthermore, Grace profits from the Lines had been somewhat inflated given that they received the benefits of protective regulations and federal subsidies since the passage of the Merchant Marine Act in 1936...
...4 9 Profit margins could not match the level of the chemical industry, however, and Grace began to sell off his textile mills in both Peru and Chile in the 1960's...
...Competitive capitalism passes into history and is replaced by monopoly capitalism...
...of course, the main reason for environmental problems, along with the growth of cities and the industrialization that have accompanied it...
...Grace would receive approximately 35 to 40 million dollars in compensation and remittances...
...businessmen, the Cuban Revolution of 1959 was the clincher both for Grace and for most of the U.S...
...imposing still' penalties and reducing the Peruvian sugar quota, the invocation of the sanctions was left entirely to the discretion of the Chief Executive...
...The Graces sought to strengthen their claim to these holdings by linking them into a settlement with Peru's European bondholders...
...Finally, in the third article, we examine some aspects of Grace's recent history in Peru, concentrating on the company's reaction to the nationalization of its property by the Peruvian government...
...Grace's shift into chemicals at mid-century offers a clear illustration of how these two variables influence the direction of corporate growth...
...war ships in the Pacific two months to reach Cuba...
...Grace, in a cahoots with its oligarchical chums, took an active interest in political and economic developments within the country...
...AIFLD, "Notes to Estimated Budget, 1966...
...Whereas Grace had unsuccessfully fought nationalization of its mining, manufacturing and agricultural interests in Peru, an outright takeover of its highly integrated and technologically complex operations in Trinidad was highly unlikely...
...Roll over, William Russell, here comes the Grace of the seventies, its feet firmly planted in the chemical industry and a finger stuck in every consumer pie...
...corporations benefitted greatly from the investment incentives offered by Operation Bootstrap, the Puerto Rican colonial government could not protect them either from international developments or from the rising resistance of the Puerto Rican working class...
...2 2 Grace's dispute with Peru was not originally within the scope of the Green mission, since bilateral discussions between Grace and the Peruvian government had not been formally terminated...
...Grace made $15 million on the deal, not bad for an initial investment of only $,500,000.45 B. Banking In banking, too, profits from the Grace National Bank could not compete with those now flowing in from the chemical industry...
...Grace has extended primarily into Europe where 18 percent of its chemical business was located by 1972...
...chemical industry welcomed such hospitality as a solution to some of the problems it was facing on the homefront as well as the world market...
...6, No...
...In the early fifties, there was a steady stream of new blood...
...1970...
...29 Thus, by World War 11, workers at Grace mills were spinning over half the cotton textiles produced in Peru and Chile and about 15 percent of the woolen textiles produced in Chile...
...In that same year William Grace joined with L. P. Morgan and J. J. Astor to organize the Interoceanic Canal Corporation which favored a canal through Nicaragua...
...New York Times, April 5, 1970...
...31, 1969...
...Barron's, November 4, 1974...
...2. Charles T. Goodsell, American Corporations and Perevian Politics (Cambridge, Mass.: Harvard University Press, 1974), 47...
...3 9 The petrochemical industry is probably the most typical deterrent to the availability of more jobs...
...In August, 1969, Grace's sugar plantations and refining facilities at Cartavio and Paramonga were seized by government "interventors...
...w4 time left to live and advised him to leave Peru for a healthier climate...
...But the growth in the size of enterprises, the concentration and centralization of capital led to the appearance and to the prevalence of the collective-capitalist form of property...
...Between 1972 and 1974 Grace sank $200 million into small oil and coal companies to secure independent sources of supply...
...What is more, Grace was seeking to sell its stock to offset Its burgeoning debt...
...Both merchant houses and sailboats may persist, but they are remnants of an earlier era and not characteristic of the present period...
...Those areas which were particularly affected included the production of raw materials, commercial agriculture and early manufacturing...
...Thus in February of 1974, Grace joined w ith ten other companies participating in the Green negotiations and announced a total claim of $96 million for all its nationalized holdings...
...Quilano, 41...
...before a U.S...
...was officially organized in Peru in 1876...
...Environmental pollution is a problem because there are so many of us...
...The result was neither industrialization nor rapid capital accumulation but "industrial infanticide" and dependent capitalism...
...Its sales and profit figures indicate a consistently higher rate of profit for its foreign investments over its domestic operations.18 However, the nature of its new investments has completely altered their geographical distribution...
...To guarantee its continued growth Grace went into the chemical industry...
...Agreement between the United States of America and Peru, Feb...
...Unlike most other chemicals, synthetic ammonia requires just one additional stage to process the gases released by oil drilling...
...The long, complex negotiations between Michael Grace and Peru resulted in the Grace-Aranibar contract of 1887* which cancelled Peru's debts contracted between 1869 and 1872 but only in exchange for several of Peru's mines, its railways and its guano...
...While the going price of natural gas for U.S.-based producers is $1.30 per 1,000 feet, Grace only pays Trinidad 5.40 to $.50 per 1,000 cubic feet...
...Thus by the close of World War 1, Grace controlled the two largest mills in Peru and employed more than 50 percent of all workers in cotton textiles (the largest urban industrial employer at the time...
...Grace, however, was not satisfied with either the pace or the direction of the negotiations and began to rally other forces to exert pressure on the regime...
...Michael took over the ship chandlery firm which had been Grace's first investment in Peru...
...Puerto Rican workers were paid only a third of what their counterparts on the mainland received and the head of the IDC asserted in 1965 that U.S...
...1 (Spring 1965), 1 2. 63...
...7 Peruvian Times, May6,1960,1...
...When Grace began searching for acquisitions, the chemical industry had just experienced its most explosive decade of growth and presented seemingly limitless possibilities...
...Limitations of Dependency: An Historian's View and Case Stuty, Boletin de Esfudios Latinoamericanos y del Caribe, No...
...Of course you know no union ever pays for cheese benefits - only the company can provide them...
...The only major exception to the financial blockade of Pet`6 until 1973 came in the form of U.S...
...Grace also began to change the focus of its economic activities toward the end of the nineteenth century...
...Military Mission...
...investments in Peru., was undertaking a careful review of the whole operating framework for investment disputes...
...capitalism...
...Tlhe Peruvian drive toward greater independence and autonomy had nonetheless preserved an important role for foreign investment...
...lhcese suns were to go directly to the following companies: Grace...
...By the time the first of Grace's holdings were taken over, relations between the Peruvian government and foreign capital had already become highly strained...
...Sold Imaco, an importing company, to Peruvian interests...
...9 Thus, the nationalist and retorm-minded military takeover of 1968 has to be seen in light of what came before it-domination of the economic and political spheres by an alliance between foreign capital and the Peruvian oligarchy...
...While the company's total assets of $80 million in 19672 were small in comparison to firms uniquely involved in sectors with high capital requirements, such as mining, Grace was famous for having its finger in every pie...
...1 The colonization scheme failed, the workers dispersed, and James returned to Ireland...
...Clearly this legislation, which has encountered little congressional opposition, will open the way for U.S...
...8 The Grace companies had originally developed as British merchant houses, but they soon came to reflect a new influence: the growing commercial strength of the United States...
...Grace fought back by modernizing its outdated equipment and encouraging the Peruvian government to erect tariff barriers against the Japanese...
...dollars...
...News & World Report, February 25, 1963...
...We all contribute to the problem in one way or another and the efforts of all of us are needed if we are to solve the problem...
...If anything, it was actually late in joining the many nonchemical companies entering the...
...5 Most of this investment was channelled into the most capital-intensive sectors of Grace's operations, particularly chemicals...
...The first required increased capital outlays that would no doubt compete with the capital-intensive ventures Grace was pursuing in other countries, particularly in the area of petrochemicals...
...6 3 Paralleling Kennedy's program ideologically and programatically, "It Is Not Too Late" set out Grace's personal attack against the spectre of "Kremlin-guided international communism," which swoops down on the poverty-stricken masses of Latin America, leading them down the road to "ultimate slavery...
...Although its $80 million stake in the Corco/Tesoro complex is small relative to the invest- ments of other firms, the importance of its Puerto Rican subsidiaries to its worldwide petrochemical network is significant...
...imperialism and the twentieth century multinational corporation...
...Direct U.S...
...2 0 While an antendment to the Sugar Act was eventually passed...
...5. 42...
...In its final form, the legislation left the coastal situation untouched...
...To maintain their monopoly over chemical fertilizers and to insure lasting supplies for U.S...
...sugar, paper wrappers...
...Roger Burbach, "The Evolution of Imperial Institutions: The Chilean Ex perience," unpublished mss., 12...
...Business Week, October 13, 1975, Wall Street Journal, January 9, 1976.derscore these estimates...
...They have been aided by boards of directors, timely business alliances and opportune financial links...
...The latter, known as the 'joint-stock' or 'corporate' form, grew up as a means which gigantically accelerated the accumulation of capital...
...The first article in this Report provides an historical overview of the company, discussing its beginnings in Peru, its expansion into new areas of investment in the twentieth century and its most recent acquisitions in the area of consumer goods and services...
...Grace was far from willing to become enticed into new investment schemes as a means of receiving compensation...
...All emphasis in original...
...At present, potash imports-another component for fertilizer-already account for two-thirds of U.S...
...As bor Grace's landholdings, the company was to receive governnent bonds in return for its land...
...54 As we will see, Grace, to continue the analogy, is doing everything possible to make sure he doesn't end up on the cross...
...3 During this same period a new dimension was added to chemical production: petrochemicals, the up-graded byproducts of oil and natural gas...
...8 The company's expansion was therefore limited to the availability of surplus generated by its own activities...
...Department of Commerce...
...In the past 35 years J. Peter Grace has divested almost every trademark business from the com- pany's past while developing a far-reaching chemical-based conglomerate...
...For an excellent analysis of this new policy and the role of U.S...
...April 22, 1974 and Wall Street Journal, November 7, 1974...
...In the United States, he bought into the Ingersoll Sergeant Drill Co...
...Nevertheless, it is important to note that the initial process through which workers came to sell their labor-power in return for a wage was marked by force and coercion, not the "desire" of the workers to "earn money...
...began to emerge as an enterprise rooted directly in the productive sector...
...Its tax exemptions and cheap labor force made for low cost production...
...In addition three family groupings, whose interests are closely intertwined with investment companies and banks, controlled approximately 20 percent of the stock...
...Peruvian Times, Oct...
...At the same time, Grace initiated a divestment process (see Chart) designed to pre-empt any further doses of nationalism...
...cit., p. 281...
...By incorporating four plantations into one, Paramonga soon grew to more than 17,000 acres...
...North American Congress on Latin America, New Chile (Berkeley, California: NACLA, 1972) 154...
...Peru was forced to suspend all payments on its foreign debt...
...In this period, Grace was both selling and buying in the paper industry...
...15, 1973 and Washington Post...
...Haslam, the retired research director at Standard Oil of New Jersey, joined Grace as a consultant to map out the company's diversification...
...Kennedy had proposed that approximately $10 billion in public funds go into Latin America over the 10-year period starting in 1961, to be matched by funds fromprivate sources and other institutions (World Bank, etc...
...That's why I try hard...
...LASTTANGO IN LIMA I. Remark made by a Grace Company official upon denying a request by NACLA foe personal interview on these matters...
...John Meyer, a women's apparel manufacturer, in Norwich, Conn., and Alimentos Kern, a food producer, in Guatemala...
...chemical sales totalled only $700 million (1937), but by 1950 they had passed the $3 billion mark...
...Most of these high-level positions (75 percent) were filled by foreigners...
...Casa Grace," Fortune, 157, and Eugene W Burgess and Frederick H. Harbison, Casa Grace in Peru (Washington, D.C...
...Its deep water ports facilitated transportation...
...Grace was soon processing coffee in Colombia, cacao in Ecuador and importing and exporting throughout Latin America...
...A complete picture, however, is not available as the bourgeoisie has taken great pains to throw a veil of secrecy over the details of corporate control...
...83 percent of the country's arable land was owned by less than one per cent of the total number of landowners.1 3 The Agrarian Reform Law promulgated by the military regime promised radical changes in both land distribution and the organization of production...
...If it were to maintain its important position in the twentieth, it would have to modify its organizational structures and economic activities...
...the investment will probably not be realized unless prices produce returns sufficiently attractive for investors to put their money into the fertilizer industry...
...and Ronald Radosh, American Labor and United States Foreign Policy (New York: Random House), 1969...
...Menshikov, op...
...2 7 there was a faint echo of agreement in the New York offices of Grace...
...Nobody's got the world by the tail...
...Utilizing food as a weapon of U.S...
...Wall Street Journal, February 7, 1969...
...EAST NIAGARA STREET *010 TO ALL AIAOLD, o PtYZES * TONAWANOA...
...In addition the ExportImport Bank sweetened the deal by supplying $37 million in loans toward the building of the refinery...
...India, for example, dropped its fertilizer consumption by 25 to 30 percent in 1974 and more than doubled its dollar imports of U.S...
...controlled canal would join Atlantic with Pacific...
...A merchant house was no more suited to the demands of advanced capitalism than a sailboat is suited to the demands of travel in the twentieth century...
...In yet another related field, the company shared control of a fertilizer plant with Montedison, an Italian corporation...
...The labor component of Grace's production process proved more difficult to re- structure than the capital component...
...7. Chemical Week, April 28, 1971...
...The Graces were able to bolster their position in Peru at a time when that country was suffering both a drastic decline in its major revenue-earning export (guano), as well as long its critical nitrate fields in the War of the Pacific (1879-1884) and when the nascent Peruvian commercial-speculative bourgeoisie was being crushed in the process...
...Its tax exemption extended for 15yearsand the average wage in the industry was only two-thirds of the U.S...
...Ibid., 12...
...It also turned to the other major source of investment capital: credit...
...govern- ment's synthetic rubber program during World War II...
...3 (March 1976) Pub ~ehd monthly, ezcsqt May-Jun, and July-Augwnt wh it is pibiMied lM-moatM...
...National Planning Association, 1964), 8 9. 21...
...In fact, company representatives now respond to inquiries about Grace's world-wide operations by resolutely declaring that "Latin America is a thing of the past...
...Puerto Rico is not as well endowed in natural resources as Trinidad...
...The corporate form born in the era of free competition, was also ideally adapted to the conditions of monopoly capitalism...
...As iarl Marx wrote, . .. The development of capitalist production makes it constantly necessary to keep increasing the amount of capital laid out in a given industrial undertaking...
...In 1927 Grace purchased Paramonga, its second sugar estate...
...Larkin later became the President of Grace and the Washington representative, John Moore, was appointed U.S...
...What's more, its "Operation Bootstrap" was ideally conceived to provide U.S...
...The Graces, personally, had begun their arduous climb up the U.S...
...Although Grace's current emphasis on chemicals and natural resources was paralleled by the liquidation of many of its traditional Latin American-based holdings, the company has not lost its international perspective...
...5 3 Unlike chemicals, which is the foundation of Grace's present growth, the Consumer Group serves an additional purpose--quick cash...
...environmental protection laws...
...2 7 At approximately the same time Grace began its expansion into neighboring Chile...
...The corporation as a whole was carrying a substantial debt and Grace wanted hard cash and a quick escape route if the tide of nationalism continued to rise...
...PRELUDE TO INTERVENTION Trinidad more than any other Third World country has become absolutely vital to Grace's growth...
...he third component was financing...
...The sugar harvested from the company's vast plantations on the coast went into the production of candies and rum, as well as raw sugar exports to the United States...
...This shift began in the early 1950's when W. R. Grace acquired two moderate-sized chemical companies and within only a decade it was completely transformed...
...Ibid., 8. 69...
...Sweetening the Empire: Grace and Peruvian Sugar In 1882, W. R. Grace received 5,800 acres of sugar fields as payment for a debt contracted by one Peruvian landowner who, like many of his peers, was crushed by the War of the Pacific and the Chilean invasion of the coastal sugar estates in Peru...
...1 4 The terms of compensation spelled out a clear message: foreign investment still had an important role to play in Peru, but no longer on its own terms...
...The second response came one month later with the U.S.-backed Bay of Pigs invasion...
...And, since it operated in many areas characterized by pre-capitalist modes of production...
...Congress) which would transfer to the government of Puerto Rico the power to determine the applicability of Federal laws to Puerto Rico, particularly the minimum wage and environmental control laws...
...The Grace report's second major recommendation called for more public aid to Latin America...
...Then you have helped ring the cash register of the W. R. Grace Corporation...
...T1he Federal Reserve 20 Bank ot Chicago observed in 19/5 that "planted acreage or the 16 principal crops grown in the United States increased substantially during the past two years...
...I (Moscow: Progress Publishers), S55...
...The sale of guano, the nitrogen-rich bird droppings which accumulated on a number of islands off the coast of Peru, dominated the commercial and financial life of Peru from the late 1840's until the early 1880's...
...In short, Grace was symbolic of foreign capitalist penetration of Latin America...
...But they have also strongly advocated an active political and ideological role in accordance with their interests...
...during the 50's and 60's...
...Flick has important chemicals interests, including 84 percent of Dynamit Nobel, a company with annual sales of $800 million...
...And, an anti-trust suit blocked Grace from selling its half of the line to Pan Am...
...ce tleet, on both sea and air, served to unite the re in the first half of the twentieth century, with Ways playing the leading role...
...A major portion of the 10,000 people on Grace's payroll worked the company's giant agro-industrial complexes at Cartavio and Paramonga...
...Yanqui Dollar (New York: NACLA, 1971), 12 13...
...3. "The Chemical Industry," Fortune, March 1950, p. 71...
...Cerro...
...Estimate made on the basis of information obtained from W. R. Grace & Co., Notice of Annual Meeting of Shareholders and Proxy Statement, May 9, 1975...
...I he Peruvian government hod agreed to supply the cash that Grace had been pressing for and Grace in turn had agreed to accept government bonds and to participate in a partnership with the Peruvian government...
...ITT was a case in point...
...Grace also began construction of a fertilizer plant to complement Davison's processing operations...
...1. WHY PICK ON GRACE...
...Most countries were tbforced to cut back their fertilizer consumption yet pay more for what they got...
...A mere 17 of these institutions held a total of 12.5 percent of all its common stock...
...New York Times, Feb...
...THE OILS WERE TOO BIG A CLUB TO CRASH...
...Companies were formed with English capital to mine the region's gold and silver, to dive for its pearls, and to organize its coastal transportation systems...
...The stench of Cartavio's public toilets (the only ones for many residents) is quite unbelievable...
...The company could either modernize its operations or it could attempt to sell out and reinvest elsewhere...
...agribusiness, but to prevent other countries from nurturing competitive food producers...
...Reports from the Grace National Bank in the early 1960's struggled to maintain optimism vis-a-vis the lack of' dynamic growth required in this highly competitive phase of banking...
...Citizens for a Free Cuba" is perhaps the most suspect group to have received funding from Grace...
...in addition, the U.S...
...and Bollinger, The Rise of United States Influence, 128-135...
...Grace's narrow focus in the banking field became a weakness rather than the strength it once had been...
...Grace belonged to only one man, and not to an entire corporate structure...
...The organizational structures of capital which predominated in the most advanced capitalist countries also underwent important modifications...
...Grace had sunk large amounts of capital into its Peruvian operations...
...V. CONCLUSION Expansion is a central drive of the capitalist system as a14 whole and of each individual capitalist within it...
...economy and meshed its interests with the more dynamic elements of U.S...
...normalize relations and yet cost neither government a loss of face...
...Sold La Gaviota, a fish processing plant, to a U.S...
...quickly came to dominate trade and finance in Latin America, while others, including the Barings and Barclays, became the merchant-bankers of the British Empire...
...The consolidation of industrial capitalism in the United States after the war initiated a process of rapid capital accumulation...
...2, 289 300...
...W. R Grace & Co., Annual Report, 1952...
...finance capitalism...
...In 1970 Nixon appointed a special commission to map out this policy...
...2 4 "lhe skyrocketing prices, combined with a shortage in supply of fertilizers due to the industry's slump, wrought havoc in the T hird World...
...The company also rubbed shoulders with Peru's reactionary oligarchy...
...The expansion of its operations during this decisive phase of U.S...
...Congress was less prepared to adopt the new conciliatory line of the Nixon Administration toward Per6...
...By 1974 this figure had dropped to a meager 4 percent...
...corporations in Peru is complicated by a number of factors...
...Carelton Beals, Latin America: World in Revolution (New York: Abelard Schuman, 1963), 34...
...Thomas Moorehead, an executive of Beker Industries, a major fertilizer concern, was equally explicit: "You might say we're gouging the poor, but we're also generating funds to build the additional capacity that will be needed in the next five or ten years...
...Once the decision was made, J. Peter Grace had only to convince a reluctant board of directors whose knowledge of chemicals was limited to the commercialization of bird droppings for fertilizer during the 19th century...
...Tlhe bank had never seriously competed for small accounts or consumer loans...
...What attracted Grace and other firms to the island was the "investment climate" which Puerto Rico offered U.S...
...The statistic for Puerto Rico was taken from "The Ferre Family...
...Reod-4m postage paid at New York, N.3 I. Amazing Grace L AN EMPIRE BUILT ON BIRD SHIT Throughout much of the nineteenth century, British capital dominated Latin America, given England's role as the world's most advanced capitalist country...
...On the eve of Latin American independence, George Canning, England's foreign minister, boasted, "Spanish America is free, and if we don't mismanage our affairs, she is English...
...Thus, until the end of World War 1, textiles occupied the second place in terms of Peruvian imports...
...William R. Grace participated in the formation of the Lincoln National Bank* in 1882, and went on to become one of its directors...
...2 3 These methods, common to many Latin American countries, were used to bring workers to Cartavio and Paramonga until the 1940's...
...9 (November 1974...
...Grace's role as the second largest industrial employer in Peru was a primary aspect of the company's conspicuous and pervasive presence in the country...
...The $150 million deal was divided into two separate parcels: I ) a direct payment by the Peruvian government to the U.S...
...NIXON'S NEW ECONOMIC POLICY: THE GOOSE THAT LAID THE GOLDEN EGG The complementary role that the government plays for capital was clearly spelled out in the developments in U.S.foreign policy, specifically in Nixon's New Economic Policy...
...And even if these investments would appear to be mere childsplay in light of the present day domain of Grace, they were of critical importance in maintaining the company solvent when sugar and other products crashed on the commodities market in 1921...
...tax money be funneled into the Latin American economies.59 David Rockefeller's minority report to COMAP underscored the tensions between the two families, both of whom had important interests in Latin America...
...VI, No...
...Peter Klaren, La formacion de las haciendas arucareras y los origenes del APRA (Lima: Moncloa Campodonico, 1970), 23 41...
...Thus in the 1960's, AIFLD programs for this union and others included heavy doses of political education, courses in collective bargaining and community organizing...
...Sold 40 percent interest In Minera Alianza, a metal mine, to Peruvians...
...Moneybags Transportation, sugar and textiles stood at the heart of the Grace empire by the end of the 1930's...
...8. Fortune, August 1963...
...The retail dealers and distributors took advantage of the shortage to rip-off the farmers in this country, and the producers sold to countries like India and Brazil at inflated prices...
...From Grace Company Leaflet to Their Workers workers to help increase their company's business and to improve productivity so that they can gain more from an expanding business...
...in the political stability and favorable investment climate of the island was tested in 1970 when the "February Revolution" attempted to overthrow the government of Prime Minister Eric Williams...
...crop land used fertilizer at the time, 1 9 the world consumption of fertilizer was increasing annually at 8.2...
...government, the largest supplier of fertilizer "aid," reduced its assistance by two-thirds...
...The apperance of the joint stock (or corporate) form reflects the evolution of private capitalist property from its individual form to its "collective capitalist" form...
...And these friendships were not limited to social engagements...
...Military aid was suspended and U.S.-dominated agencies such as the World Bank and the International Monetary Fund held up loans to the Velasco regime...
...The third stage is the manufacture of the thousands of plastic, rubber, paint, textile, fertilizer and other goods with which we are all familiar...
...fertilizer corporations have moved quickly to extend their hold over available raw materials abroad...
...With independence came British loans, limited investments in mining, and immigrants...
...While there were no ready made solutions to Grace's problems, the company was by no means ready to let its vast holdings in Peru go down the drain...
...Income from its agrichemical division jumped from $6.9 million in 1970 to $87 million in 1975 and from 10 percent to 45 percent of the company's total income...
...refusing to accept Nelson Rockefeller's "goodwill mission" in Peru and continuing state intervention of foreign interests.1227 CASA GRACE IN PERU Investments in the Post War Period 1) Manufacturing Grace purchased controlling interest in a flour mill in the late 1940's and subsequently developed facilities for the production of various candies, biscuits, crackers, etc...
...Nevertheless, the story of the W. R. Grace Company before World War 11 is still not complete...
...Levy,"The Changing Faces of W. R Grace," 22...
...And Grace, once again, finds it possible to visit his operations in Latin America where he is now greeted by bearhugs from his shop stewards rather than rocks and curses.74 The Grace Foundation: Bedrock of Reaction Shortly before J. Peter Grace donated "Grace Hall" to Notre Dame University, Father Hesburgh, the University's president, remarked that Grace "personitied, to a remarkable degree, the genius of America's business and industrial leadership as well as the concern and compassion of the American people for those less fortunate than themselves at home and abroad...
...The report exposed an in- teresting rift between the Graces and the Rockefellers who presented a minority report written by David Rockefeller...
...Grace was by no nimeans willing to adjust to the new circumstances surrounding foreign investment...
...Michael also formed a Britishbased company (Grace Brothers and Co., Ltd...
...5 and 6 and Anibal Quilano, Nationalism and Capitalism in Peru, New York: Monthly Review, 1971...
...But by conversion to a petrochemical it can boost the sales price per lb...
...Moreover, developments in the chemical industry itself were a critical factor in the company's later success...
...ONWARD CHRISTIAN SOLDIERS: GRACE MARCHES INTO THE POLITICAL ARENA For more than 100 years the Graces, from William Russell to J. Peter, have guided their company from country to country and from investment to investment in search of higher profits...
...In Trinidad we have a black Government which is not working in the interest of the people, for they strive to perpetuate a system of capitalism, a system which serves to provide huge profits for the foreign firms like the Royal Bank of Canada, Alcan or Texaco Trinidad...
...This perception did reflect a certain reality for, while not Grace's most dynamic aspect, shipping did represent the flagship of the Grace fleet of industries until the Second World War...
...Grace's Chemical Reaction L- I INTRODUCTION When J. Peter Grace took the helm of the family company in 1945, it appeared that Grace was in an excellent position to take advantage of a new era of rapid growth and international expansion for U.S...
...NACLA's Latin America and Empire Report, Vol...
...Paper mills were first established at Paramonga where they were coordinated with the sugar refining processes...
...New York Times, December 9, 1972...
...A 1945 U.S...
...XXIII, No...
...Its stake (as well as that of others such as Texaco and Tesoro Petroleum Co...
...This movement from one stage of imperialism to another provoked numerous alterations within the dominated countries as well as within the metropoles (i.e., the industrialized centers of advanced capitalist nations...
...It teaches ". .. the more scared you are the better you play...
...Company officials immediately began an intensive lobby in Washington to enlist the muscle of the U.S...
...Joseph Grace led the company into the tin and tungsten mines of Bolivia, the sugar mills of Chile and the flour mills of Peru...
...Phtalic anhydride is another component of01 plasticizers used by Grace's Hatco Division...
...This production flow highlights two important structural aspects of the industry...
...NACLA's Latin America & Empire Report, Vol...
...Finally, in the third phase, underway in the early decades of the twentieth century and dominant by the end of the Second N orld War, foreign capital sought investments in the industrial sector of dependent countries...
...S. Economic Concentration and World War II, Report to the Smaller War Plants Corporation to Special Committee to Study the Problems of Small Business...
...Although it had maintained a long- term relationship with a large commercial bank, First National City Bank of New York, it had not drawn extensively on this connection to supply its capital needs...
...In addition, the new agrarian policy emphasized the transformation of the large agro-industrial complexes, primarily owned and operated by foreigners, into state-owned and worker-controlled cooperatives...
...Ambassador to Ireland, the Grace family's country of origin...
...imperialism...
...Peruvian Times, Freeborn testimony...
...1, February 1975, p. 9 and 19...
...Letter from Thomas Fowler (Vice President of Latin America Group, W. R Grace & Co...
...Together, Paramonga and Cartavio produced sugar primarily for internal Peruvian consumption, although they had a small quota allocation from the United States and also sold to other countries on the West coast of Latin America, particularly Chile.20 Grace restricted nearly all of its production to refined sugar which, as a luxury good, went mainly to the Peruvian upper class...
...It's always been in the back of my mind," says J. Peter, "that if my father (Joseph), who was much more conservative than I am, almost went broke, then I have to be terribly careful...
...Daniel A. Sharp, U.S...
...The Foundation's anti-Cuba funding often gives rise to charges that the Grace Corporation has been used as a front by the CIA...
...A radical reduction in the U.S...
...Most of these efforts were part of Grace's plan to reduce the overhead costs of obligations it had contracted over years of building and maintaining these company towns...
...While Grace's interests represented an extremely high level of capitalist integration within the Peruvian context, the company's Peruvian operations had certain anachronistic features when seen in the context of Grace's world-wide operations.What's more, the company was facing some serious problems in Peru...
...Even before most Latin American countries had won their independence, British capital had made a mockery of Spanish colonial trade barriers and comfortably had settled into the colonies' nascent commercial sector...
...Until 1945 Grace was a privately held company with no publicly traded stock...
...This shift in operations also implied a radical change in Grace's presence in Latin America...
...To tap both the equity and credit markets Grace had to rely on large financial institutions...
...1 8 Grace's acquisition of Cartavio in the late nineteenth century is a vivid example of the denationalization process which occurred in the Peruvian economy at the turn of the century...
...efforts to increase productivity at the Cartavio complex by installing time-clocks resulted in a three and a half week strike by 2000 workers...
...All we ask is that you keep an open mind and give us a fair period of time in wbich to prove to you what the union already knows a J1 2Ae AH ND M M=1 E PM-m A MI =t 'VLISy : Sincerely, W. ft...
...Do you want to join this type of STRIKE HAPPY UNION...
...corporations was rapidly being filled by Japanese and European investors...
...Fer- tilizers were exempted from Phase IVrestrictions and prices went through the ceiling...
...13-4...
...11 and 8.32 27...
...In 1965, Grace company leatlets-some even printed on Grace stationery-were handed out to the Airmold Products workers in Tonawanda, New York, in order to discourage workers from joining the United Auto Workers' Union...
...needs.* The shortage of cheap domestic raw materials can be traced back to a general supply problem faced by the whole petrochemical industry in the early sixties...
...According to company calculations...
...Furthermore, by creating a legal entity, W. R. Grace and Co., it protected the Grace family members from personal liability for the company's debts...
...Organizationally, the small business run by William Grace became a large merchant house, the merchant house became an important family-controlled company, and the company became a large multinational corporation with an increasingly complex linancial structure...
...flagship through the newly opened Seaway...
...government was encouraging this trend by simultaneously launching an anti-trust suit against DuPont, the largest chemical corporation, and by selling some of its "war surplus" plants to newcomers...
...Finally, Grace came to control a substantial bloc of shares in the Banco Internacional of Peru.*38 With the Second World War, W. R. Grace and Co...
...The18 lion's share, over a quarter, is owed to Metropolitan Life, the largest insurance company in the United States.12 Finally, a commercial bank, the First National City Bank of New York, was reported in 1975 to hold an additional bloc of 7 percent of Grace's debt.13 Such concentrated holdings of the company's debt and stock explain not only the degree to which Grace has merged with banking capital and the dynamics behind its new growth, but they point also to a new coalition of interests which have established control over the company and make major policy decisions...
...Much of the housing is small, multiple, unpainted and without running water...
...capitalism's industrialization strategy in Puerto Rico...
...Their needs and operations were compatible...
...2 5 Some countries tried to make up for this sudden scarcity with additional food imports, but Nixon's New Economic Policy had sent world food prices sky high...
...Petrochemicals stand out as the most important component of these investments...
...At this tise all we are legally permitted to any to you is that W. R. Grace's outstanding employees benefits in all its plants (a very large percentage of which are lON-UI00) are what cakes it the great, successful company the union admits it Is...
...Factories which gather together greater numbers of" workers replace smaller workshops...
...it helped to bring more and more new workers into the process of capitalist exploitation...
...ceases to belong to the industrialists who employ it...
...Consequently the Government was forced to back down and watch its cheap natural gas nurture Grace's record protits...
...3 Goodsell, 77...
...The reactionary stand taken by Grace and its tiiends on the agrarian question was paralleled in every other policy area, from taxes to import controls...
...6 The center of the Graces' business operations at the time was in commerce and finance, which they guided through the mechanism of the merchant house...
...CLEANING UP ITS ACT...
...Quoted in a report by Frank McDonald on the "February Revolution" printed by the Instltuteof Current World Affairs, April 30,1970...
...The Grace merchant house structure was well-suited to the economic context of commerce and finance in the nineteenth century...
...And even when company investments spread to other continents, Grace was still a domineering force in the Peruvian economy...
...Milwaukee Journal, June 22, 1970...
...New York Times, September 15, 1963...
...Expropriation of U.S...
...W. R. Grace & Co., Annual Report 1969...
...It came of' *There were indications that a significant portion of the U.S...
...It is these transformations of the company during the last three decades that we will examine in this article, highlighting the rationale behind the shift into chemicals and the new capital structure which made that shift possible...
...Chase Manhattan Bank, the head Rockefeller bank, also holds 700,000 shares of Grace common stock in its trust department...
...William stayed on, however, taking a position with one of Callao's largest commercial houses, a ship chandlery.* By 1854 Grace was a full partner in the firm which specialized in supplying the ships engaged in Peru's booming guano trade...
...2 0 The fertilizer industry had a large stake in this strategy and was well represented in its implementation...
...chemical manufacturers...
...On the other hand, Grace, in partnership with International Paper...
...Both invocation of the Hickenlooper Amendment which would cut oil' U.S...
...Ihus by December 1971, Grace and the Velasco government had hammered out an outline agreement for the gradual sale of Grace's remaining industrial assets and for compensation of the expropriated land holdings...
...31 and 52 3. 11...
...4) Fishmeal In the early 1960's, Grace purchased control of a medium sized fish processing plant...
...9 W. R. Grace was therefore something of an anomaly in the corporate world in 1945 and its potential growth was restricted by its capital structure...
...The Flagship of the Grace Empire: Transport and Com- merce in the Early Twentieth Century To many people, Grace has always been a shipping firm and nothing but a shipping firm...
...AID and Inter-American Development Bank fundsforearthquake relief in 1971.30 conveniently just days before Secretary K issinger's meetings in Mexico %ith Latin American and Caribbean foreign ministers and received the acclaim of President Nixon and the liberal NorthArerican press...
...Through the Seaway a trip between Chicago and Venezuela took--80 days whereas the normal trip between New York and Venezuela took only 20 days (plus a few days to get freight overland from Chicago): chalk up a $2.1 million loss through miscalculation to the Grace Lines...
...See page 11 below...
...Economic and political conditions in Peru indicated that the developmlentalist approach of the military regime was something that U.S...
...It opened up wide scope for the unprecedented concentration of industry and banking, provided a very convenient and flexible form for organizing the largest monopolies, trusts and concerns...
...and the New York Shipbuilding Corporation...
...both were colonies at the time and their governments were rolling out the red carpet and displaying their natural resources to whoever would take them...
...Perhaps they meant "investment climate," for Grace soon moved to New York where he founded W. R. Grace and Company and lived for another 39 years...
...The W.R...
...By conversion to gasoline or some other fuel, the oil company is able to add a penny to their original value...
...In the decade of the 1960's, the company reinvested about S75 million in sugar and paper production, including $35 million in a new paper processing facility alone...
...Vice president W. R. Grace & Co...
...At the turn of the century, U.S...
...So, in 1969 the Grace Lines was sold to Spyros P. Skouras for $42 million in cash...
...corporations and Puerto Rico's bourgeoisie tied high employment rates and "development" to massive inputs of foreign capital and technology...
...Two years later, Grace acquired the Vitarte mill, thereby gaining control of the Inca mill as well...
...Years later, Grace would also acquire the Victoria mill...
...5 2 From Soup to Nuts: Consumer Products and Services Ever enjoyed a nice cold Miller beer or savored a rich van Houten chocolate bar...
...7 8 In short, the committee was one of a large number of anti-Cuba agencies created after the Bay of Pigs, with the funds or approval of the CIA, to foment a climate of hostility towards the revolutionary government in Cuba...
...as did Grace's joint interests in the Pacific Mail Steamship Co...
...fertilizer sales...
...Gold Kist and H.J...
...The man who...
...Statistics obtained from Forbes, September 1, 1972, Barron's, November 4, 1974, and W. R. Grace& Co., SEC 10-K Form, 1974...
...Grace quickly put aside its labor- management harmony rhetoric for more traditional labor relations techniques...
...It purchased 2/3 control of a small mining enterprise, 20 percent Interest in a very large copper-lead-zinc mine, and full ownership in a recently developed copper and tin deposit...
...By this time, however, Phase IV had put a clamp on prices and the industryhad to turn to the Nixon Administration to resurrect it through a new agricultural policy...
...market was exempt from these monopolies, and this was dominated by the Graces, who were also made the exclusive nitrate consignees for the U.S...
...1 6 W.R...
...or at one time were, part of the Grace Corporation...
...Miami Herald, Feb.20,1974...
...Sold Peruvian real estate, including "Lima House," the former Grace corporate headquarters.31 NOTES I. AMAZING GRACE: THE STORY OF THE W.R...
...His efforts finally paid off In 1976...
...4 7 Finally, in late 1972, Grace sold the majority of its stock in Marine Midland back to that bank, absorbing a book loss of $20 million after taxes...
...6 5 AIFLD: The American-Inspired Form for Labor's Defeat The Alliance for Progress provided Grace and other U.S...
...Thus, in the period preceding the coming to power of the Velasco regime, Grace sold what it could of its least profitable ventures and attempted to shift its capital into its most productive areas...
...Grace prized its new acquisition because it was one of the few places in the world where natural gas was available close to a deep water port...
...Ibid., 28...
...The largest mpany serving the West coast of Latin America, a major shipper of Latin American raw materials Vnnn ndrIrat Lm u- aA-.nn (Vr- . I- - panded to nitrates, sugar, copper, tin and other commodities...
...Sugar by-products and chemicals produced at the Grace plants were used in paper production...
...Marshalling only a slim majority of the board, 2 Grace began its first chemical acquisitions, taking over in quick succession Davison Chemical Co., a producer of agricultural chemicals and petroleum catalysts, and Dewey and Almy, specialists in producing plastic containers and films...
...2 8 THE CARIBBEAN CLIMATE GROWS PROFITS FOR U.S...
...Grace's properties had a current value of $26 million in 1969 and a replacement value of $46.7 million...
...Grace's interests in shipping, begun upon his arrival in Peru, expanded for the next seventy-five years...
...In fact, however, the agreement was no more than a paper compromise because the two parties could not settle on a valuation of the properties involved...
...In addition to its membership26 in the American Chamber of Commerce of Peru, Grace participated in such prestigious bodies as the National Society of Industries and the National Agrarian.Society (SNA...
...3 0 Together with its closest competitor, the old British firm of Duncan Fox and Co., Grace controlled 81 percent of textile production in Peru in 1936.31 Rounding Out the Empire: Grace As Mr...
...l0 Grace's "coalescence" with financial institutions is most clearly demonstrated through the concentrated holdings of its stock and debt by the banks...
...6 8 And finally, deny class struggle by arranging a "consensus" between management and labor based on enforcing a higher productivity for labor...
...The business enterprise also undergoes structural changes as a consequence of the process of capitalist accumulation...
...The Peruvian government responded to Washington's pressure tactics by expelling the U.S...
...Within five years, the debt had been repaid and Peru began to borrow afresh and in earnest...
...in- vestments to both Latin America and Europe have in- creased, but those going to Europe have increased at a much faster rate until they finally surpassed the Latin American investments in the mid-1960's.40 Beyond the elements of personality and business leadership-which are obviously of great importanct to an individual corporation and may, in fact, determine if dividends are to be paid-- are a series of fundamental factors which underlie the development of capitalism itself...
...Government action did not focus on expropriation but on stricter controls and an expanded role for the public sector...
...The Nuremberg war crimes tribunal se39 him to jail but he was released in 1950, still in possession of a third of his original holdings...
...The chemical companies, only too pleased to serve a guaranteed market, operated the plants for the government and later purchased them at bargain rates as "war surplus...
...As early as 1824-25 the English held nearly 17 million pounds sterling in Latin American bonds...
...R. Grace Tries a Different Tack," New York Times, April 5, 1970...
...Ninety percent of Grace's profits, on the other hand, depended on investments in land, mining, transportation and trade where rates of return were decreasing...
...Unable to get the workers to return, the company called in the police who killed three workers and injured 16, which broke the strike...
...The fertilizer plant loomed large among the new foreign investments in Trinidad, as it represented approximately 46 percent of all operations set up by 1962 under the "pioneer" investment laws (i.e...
...Capital investment in itself, however, cannot serve to modernize a production process...
...At least one writer claims that Grace's position on the National City Bank (now First National City) came in exchange for the strong influence of the First National City Bank on the Grace National Bank...
...The company also set up a plant to produce commercial paints and resins...
...The Corco complex, along with other projects that embodied ihe Bootstrap philosophy have turned out to be prodigious generators of profit and pollution, and scarce contributors to the Puerto Rican job market...
...J. Peter Grace: Yes, and I would say the greatest personal sorrow was to cut the ties with the people in these different companies...
...Thirdly, the nationalization process covered a number of years and must be understood within the context of evolving strategies on the part of both the Peruvian and the U.S...
...In the 1960's, Grace controlled 20 per cent of total sugar production, over 50 per cent of sugar refining and nearly 90 per cent of total paper production...
...7 Later the mergers of Deway and Almy and Davison provided the key management who still run most of Grace's chemical operations...
...domestic prices in return for a 50-50 joint venture with the government in the new plant...
...These were "company towns" in the utmost sense, whose total population of 38,000 inhabitants experienced the effects of company control in virtually every aspect of their lives...
...It soon established an expanded trading network, shifted its focus from Great Britain to the United States, and sought financial connections in order to expand its capital base...
...The process by which this wage labor force was created is a complex one which is beyond the scope of this article...
...l he Nixon administration was clearly reviewing its general policy toward the military regime it had (deemed so dangerous in 1968 and was reluctant to accept the pressure tactics proposed by Grace...
...Rqckefeller stressed that the problem was not in the amount of U.S...
...The Grace Foundation, incorporated in 1961, is not as important as the Rockefeller or Ford Foundation, but then again, J. Peter Grace is not as important as David Rockefeller or Henry Ford Ill...
...The frenzied growth of petrochemical operations was slowed by the onset of the so-called energy crisis...
...In 1959 Grace acquired a small fertilizer mixing operation in Puerto Rico and an important fertilizer plant in Trinidad...
...Yet, as before, the restless development of capitalism left the Graces no time to rest on their blue-chip laurels...
...The up-grading of petroleum and natural gas hydrocarbons into a variety of chemicals and final products is divided roughly into three stages...
...however, over sugar sanctions and other forms of economic blackmail...
...7 The company subsequently brought in Cuban exiles trained in the art of brutal exploitation at Grace's paper operations in pre-revolutionary Cuba...
...22 More than shipping or commercial importing/exporting, sugar production helped spread capitalist relations of production in the Peruvian countryside...
...These two organizations accounted for the largest industrial, agricultural, banking, commercial and real estate interests in Peru...
...In fact, the Rockefeller's pre-eminent position was soon apparent to all...
...and, often forcibly moved to areas of capitalist employment...
...Bollinger, The Rise of United States Influence, 40...
...Consequently, the decision to issue common stock was made in 1949...
...While most chandlers worked out of Callao, Grace discovered he could beat the competition by loading a barge with supplies and towing it directly to the Chincha Islands...
...Joseph Grace's move into banking was very characteristic of a trend which had developed in the last third of the nineteenth century...
...When it was finally over, the company's experience with Peruvian nationalism had left profound marks on its future strategy for expansion...
...In this sense, then, William Grace's relocation to New York at the close of the U.S...
...Quarterly Bulletin of the Council for Latin America, Vol...
...Their efforts focused on the sugar quota, an instrument used many times over to blackmail troublesome governments into submission to U.S...
...foreign policy and the expanded domination of the Caribbean exclusive of Cuba...
...cit., pg...
...Finally, and of particular importance to the petrochemical industry, was the freedom to pollute at will out of reach of the U.S...
...The Wall Street Journal, August 22, 1969 14...
...Best's Market Guide: Corporate Bonds-Insurance Company PortfolIos, 1975...
...Casa Grace," Fortbne...
...English merchant houses such as Antony Gibbs and Sons and Duncan Fox and Co...
...Freeborn calculated that the penalty fees would be equivalent to one-third of Peru's total sugar revenues...
...It was so successful that Grace bought out the whole company in 1964 and invested another $10 million to expand capacity to 250,000 tons of ammonia...
...The majority of these investments were located in Peru and Chile...
...industry...
...companies a stranglehold over the world's food production and an effective weapon to bolster U.S...
...From South America, Grace shifted its investments increasingly towards the Caribbean, Europe and the United States...
...By mid-19th century, merchant houses, including the Graces, expanded by adding banking functions to their overall operations, serving as promoters and clearing houses for government and private loans, establishing credit systems and, occasionally, even issuing currency...
...The nationalization of Grace's properties provoked a legal and extra-legal battle with the Peruvian regime that lasted for more than four years...
...investors with an opportunity to expand their operations and profits in Latin America at the expense of U.S...
...companies joined the ranks of those with outstanding claims against Peru...
...In 1960, for example...
...Moreover, in three fourths of the remaining products, the top four companies accounted for 70 percent of total output.5 This peculiar structure generated many separate monopolies in which the smaller companies, possessing specialized technology, could coexist with the giants and, despite their size, share in monopoly profits...
...foreign investments from Latin America to Europe has been a notable feature of the Post-World War II era and deserves the attention of a separate study...
...If all its basic and processindustry ramifications were rolled into one, they would account for at least 20 percent of the total national product...
...A humble man never ascribes anything to his own brilliance," he preaches...
...Price waterhouse& Co...
...businesses, it still remains a fact that the majority of U.S...
...J. Peter Grace prompted a major reorganization of the company's industrial base and financial structure...
...As with the opening of the Panama Canal, a Grace ship was the first U.S...
...The American Council for Emigres in the Professions, Inc., a society for the promotion of reactionary Cuban exiles, received funds in 1%5 and 1%6...
...When Grace went into fertilizers, the industry was at the peak of a tremendous boom...
...On the other hand, the multiplicity of product lines, particularly during the period of rapid expansion in the late forties, forced most companies to concentrate on a few areas of production and prohibited the complete horizontal integration of chemicals under three or four giants...
...IX, No...
...It bought Barilla, the world's largest produce of pasta, in Italy...
...In fact, Grace's decision to invest in chemicals, a highly capital-intensive industry, forced it to rely ever more on new sources of capital...
...Sugar Act which would invoke stiff penalties (S15 per ton) on any sugar-quota country that failed to provide adequate compensation for expropriated U.S...
...In addition to its debt holding, First National City Bank has traditionally been considered Grace's head bank and shares with Grace a long history of interlocking directorships.1 4 Finally the Rockefeller empire maintains a direct influence in the company through the participation of Metropolitan Life.1 5 While this summary does not provide an in depth analysis of Grace's controlling interests, it does point to those forces (except for Flick) which were instrumental in the major switch in company policy in the early 1950's...
...Without claiming that any one enterprise can demonstrate all the trends of a complex economic system, we do think that the business enterprise and its evolution can provide a focus for understanding the much larger historical process of capitalism...
...In the highlands, landowners whose properties had already been forcefully seized by the peasants were compensated, while the remaining properties were left intact...
...There also seems to be little doubt that Grace's chairmanship of COMAP came about much more through his personal friendship with Kennedy (both from Irsh Catholic families sharing a history of social association) than from any superior position of strength visa-vis the Rockefellers...
...The British Colonial Development Corporation helped finance part of the 31 million West Indian dollar investment...
...Most private enterprises had operated on this basis until the latter part of the 19th century...
...The Grace empire has changed radically since 1945 when J. Peter Grace, the current president, replaced his father at the helm of the firm...
...A number of years earlier they had gained control of a number of rail lines built by the U.S...
...It was led by the National Joint Action Committee and spread from the student movement to the major unions and the unemployed...
...sugar properties...
...In 1899 William Russell Grace gathered together all of the Graces' separately held merchant houses into one company, W. R. Grace and Co., which he incorporated in Connecticut...
...Grace Company has always represented more than just the country it comes from...
...Yet after thirty years, the industrialization plans of the EDA have resulted in the migration of two million Puerto Ricans (40 percent of the population) to the United States, left many others unemployed, destroyed the country's agricultural base and polluted its environment...
...Key to this investment is the fact that the Colombian mill was given access to the potentially lucrative Andean Common Market...
...government in settling the dispute...
...It also demonstrates in a very concrete fashion that workers can have better living conditions within the framework of a free, democratic and capitalistic society...
...firms had hoped for...
...Grace Brothers and Co...
...9. S. Mensikov, Millionaires and Managers: the Structure of the U.S...
...August II, 1970...
...This was to be done by expanding the investment guarantee program (an AID insurance program for U.S...
...There is also evidence that Grace was involved in trade in Chinese "coolies" in the last part of the nineteenth century, although it is not clear if the Chinese workers went to work directly on Grace's estates in Peru...
...corporations with severe im- plications for the Puerto Rican people...
...Although investments amount to over $1.6 billion in 50 plants, the industry employs only 7,700 workers...
...of the original hydrocarbon stock material an average of 10c to 15c...
Vol. 10 • March 1976 • No. 3
