The International Telephone and Telegraph
Company (ITT) began operations in 1920 as a
New York-based holding company. Its founder
was the Danish-Frenchman Sosthenes Behn, whose
first two acquisitions were indicative of ITT’s
future expansionist policy: the Puerto Rican
Telephone Company and the Cuban Telephone
Company. In its first year of operation, ITT
employed 1,400 workers and had total revenues
of $3.9 million. 1 By 1971, there were 398,000
workers in 70 countries with revenues at $7.3
billion.
ITT moved into telecommunications manufac-
turing in 1925 by purchasing American Telephone
and Telegraph’s (A.T.& T.) International Western
Electric Company which produced telephone equip-
ment in eleven countries. ITT’s international
operations were threatened during World War II
and Behn was forced to quickly negotiate the
sale of some foreign holdings to avoid having
them confiscated. ITT gave up its facilities
in China, Czechoslovakia, East Germany, Hungary,
Poland, Rumania and Yugoslavia.
After World War II, ITT continued its inter-
national expansion, primarily in Canada, Western
Europe and Latin America. At the same time, the
development of the telecommunications industry
within the United States became a priority.
This policy was continued until 1959, when a
change in ITT management (the arrival of Harold
S. Geneen), began the process of rapid diversi-
fication into other industries, and centralized
control of ITT’s vast corporate empire. By 1970,
47% of ITT’s assets and sales were located abroad
and 59% of its profits flowed from foreign
operations.
“HURRY-UP-HAL” GENEEN
Lapel buttons recently distributed to ITT
executives at a management meeting provide us
with insight into what the conglomerate concept
is all about: “Dig for facts. Make decisions.
MOVE! Reap profits.” The author of these
military-like directives was “Hurry-Up-Hal”
Geneen, ITT Chairman and President since 1959.
In his eleven years at the helm of the eighth
largest corporation in the United States,
Geneen has brought the number of companies
under. ITT control to 331 (not counting the 700
companies controlled in turn by these subsidiar-
ies), raised revenues and sales from $930-million
in 1961 to over $7-billion in 1971, and has upped
the market value of the giant to an amazing $11-
billion. This incredible expansion is due chief-
ly to ITT’s frenzied rate of diversification:
the acquisition and merging with companies in
completely different lines of business.
After arriving from the Raytheon Corporation
in 1959, Geneen wasted little time in putting
his expansionist ideas into practice. Between
1960 and 1968, ITT acquired over 110 new corpor-
ations, half within the United States and half
in other countries. According to the 1971
Annual Report, ITT receives only 23% of its
earnings from telecommunications equipment and
operations, the business in which the company
was originally engaged.
WHY DIVERSIFICATION?
As a result of increasing anti-trust rulings
against mergers between suppliers and customers
(vertical mergers) and between competitors
(horizontal mergers), many multinational
corporations have embarked upon the strategy
of diversification, to insure profit and to
increase their economic control over many
industries.
Geneen believes that diversification “is
an insurance policy for orderly future growth,”
because if one company loses money, there are
others that are not affected. Since Geneen
took command, ITT acquisitions have covered
everything from hotels and insurance, to real
estate development and foods. The following is
a brief list of corporations controlled by ITT:
— Hartford Fire Insurance Company; the
controversial merger of this giant Connecticut-
based insurance firm was the biggest in history.
It accounts for 26% of ITT income.
— Sheraton Hotels; Operators of 220 hotels
in 22 nations, including openings in Iran,
Buenos Aires and Portugal, in 1972.
— Avis Rent-A-Car; Second only to Hertz,
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Vol. VI, No. 4 / April 1972- 3 –
this firm operates at 1,336 airports around the
world and in the U.S.
— Continental Baking; Makes Wonder Bread
(6 million loaves a day.), Hostess Cupcakes,
Twinkies, etc. Legal work for Continental is
handled by Mudge, Rbse, Guthrie, Alexander &
Mitchell, the law firm that’President Nixon
worked for from 1963-68, and the firm that
Attorney-General John Mitchell recently
rejoined.
— Levitt & Sons; Largest apartment and home
builders in the world. Developers of whole
communities, such as Levittown, Pennsylvania.
ANTI-TRUST MEANS PROFIT
The acquisition of the Hartford Fire
Insurance Company by ITT reveals that there are
very few obstacles in the wayof the expanding
conglomerates. A suit to stop the merger was
dropped by the Justice Department in favor of
an out-of-court settlement. According to
columnist Jack Anderson, a confidential ITT
memo (the ‘Dita Beard’ memo) linked the
settling of the deal with a pledge by ITT of up
to $400,000 for the Republican National
Convention in San Diego, California. ITT want-
ed this merger at any price. Offering money to
the GOP convention was a way of guaranteeing it.
The agreement stated that in order fr Hart-
ford to become part of the ITT empire, ITT
must sell six subsidiaries within three years:
Canteen Corp. )a food and vending servicing
company); Levitt & Sons; Avis; the fire protec-
tion division of the Grinnell Corp.; the ITT
Life Insurance Co.; and the Hamilton Life
Insurance Co. ITT complained that’this was a
“bad deal”, but upon closer examination of the
facts, it becomes apparent that the settlement
was favorable and profitable for ITT.
Recently, letters from ITT personnel were
found which indicated that even though ITT
had protested about the terms of the settle-
ment, the corporation had actually proposed
almost the same deal privately to the
Justice Department.
The six corporations that ITT must unload
accounted for $33 million of ITT income in
1971, while Hartford accounted for $105 million.
This means that Hartford’s earnings are a full
three times the earnings of the six corporations.
ITT expects to sell these corporations at a
“considerable profit” as well. In addition,
Hartford’s earnings increased by 28% in the year
1970-71, indicating that far from hurting ITT,
the settlement will mean a huge boost in profit
for the corporation.
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