Inside the conglomerate

Hugh Stephenson

The Sovereign State — the Secret History of /TT Sampson (Hodder and Stoughton £2.95).

Mr Sampson has written an extraordinarily readable book at extraordinary speed. It is of compelling interest to any student of contemporary American politics or of the activities on multinational corporations.

The story evidently grew even as it was II,eing researched and written. It starts with trne origins of International Telephone and elegraph. It traces the development of this International conglomerate under the two re

markable men, who have dominated its half

Century of corporate existence: first the founder Sosthenes Behn, who gave the corn

Party its stamp and who remained in effective control until the late l 950s: then Harold GeIteen, the present leader.

Neither man was cast in the normal Ameri('an mould, Behn was born Danish, becoming

AMerican when his place of birth, the Virgin Islands, were bought from Denmark by the United States. Geneen is the son of a Russian lather and an English mother. Perhaps the

{act that both in this sense became American r]Y' adoption accounts for some of the zeal With which each adopted the particular American version of free enterprise. Neither can be accused of being the characteristic ,c'rnmittee man, or corporate diplomat / 'Iureaucrat, who has come to dominate the Upper echelons of big international business today, The founder of ITT was a flamboyant entrepreneur. The present leader is actively lanflamboyant, but nonetheless a freebooting entrepreneur with an astonishingly personal, even secretive style of leadership and control. Mr Sampson takes us through the interwar development of ITT, based on leaving the do

mestic American market for telephone equip

ment to the already established ATT and con'-`entrating by agreement on buying up tele

Phone operating and manufacturing comPanles, first in Spain, then in Britain and elsewhere; and organising them into one of the great inter-war international cartels. , For this period, Mr Sampson has unearthed nitherto unpublished evidence about the conern shown by the American authorities at 'ehn's pro-Nazi sympathies. Their particular concern was the danger that ITT's worldwide

c°Intnunications network was being used to transmit information to Berlin by German agents in Latin America. Consequently, there 1?xist transcripts of tapped telephone coriver '',ations with Behn over a prolonged period. oar Sampson alludes to them to illustrate par

ticular points. They' would, however, make

LI1"1 iq ue source material for a more specialised student of corporate Organisation and prat. lice. . For such a detailed record ,of the thoughts, words and deeds of the head of a ntalor corporation cannot exist elseWhere. Few also, I suspect, either Within or withnut ITT, knew or know of 'the active part laYed by the company's subsidiaries (with constant encouragenient of Behn) in the "erman industrial war Machine; that Behn ,tietively and successfully courted the Nazi is'oders to avoid his conanatiies being treated 0 Enemy •Property: Hat ITT had an active interest in riaLkhie Gel-MI.1'n bombers. 1Vir SampsOnt then covers the Jack Anderac'n revelations of ITT's contributions to

enable the Republican Convention to be held in San Diego, California, at a time when ITT was engaged in anti-trust negotiations with the Justice Department. Hard on the heels of this event came the revelations of close links between ITT and the CIA, and discussions about preventing or overthrowing President Allende in Chile. Finally, as the cast of this complex and often unedifying tale pass through the pages, the overlap with the cast of the Watergate story is so wide that all sorts of unanswered questions are left in the mind.

Does, however, the Sampson story have any wider relevance for the politics of multinational companies? Certainly ITT is sui generis. Yet, because of these episodes, more has come out about its internal workings than about any other large company. It reinforces certain conclusions.

The first is that the declared independence of subsidiaries of these large companies is 'more apparent than real. It is stressed whenever the political considerations and public relations require it. In reality the key decisions are increasingly centralised. Lord Caccia may be chairman of ITT-STC in the United Kingdom, but it is Gereen who counts.

Two telling little incidents in this book reveal the truth. Sheraton Hotels are a subsidiary of ITT. When arguing with anti-trust officials (particularly in their anti-conglomerate phase) ITT would stress its complete operational independence. Yet, when Geneen wanted a Sheraton Hotel in San Diego for wider reasons, a telephoned order was enough. Or again, ITT would insist that it gives huge autonomy to its manufacturing subsidiaries in Europe. Yet when resisting attempts by the Justice Department to end ITT's takeover of the Hartford Insurance Company, it argued with effect that it needed the cash from the premiums or Franco's demands for three years credit or telephone equipment would finish off ITT and lead to a Wall Street crash.

A second conclusion is that, once conglomerate companies begin to reach the size of ITT today, the amount of resources devoted soley to establishing and then keeping effective control an an esprit de corps is so high as to be inefficient. There is a limit to bigness and diversity in business and ITT is somewhere there or thereabouts, Hugh Stephenson is editor of the Times Business News.