The McCann Time Capsule: McCann and the Supreme Court

The McCann Time Capsule: McCann and the Supreme Court

As underscored by the intense partisan battles surrounding the choice of a new Supreme Court justice, the high court’s decisions can be exceedingly consequential on American lives and institutions. This was certainly true for McCann individually as well, since one of the court’s major decisions 107 years ago had a very direct impact on the formation, U.S. history, and global expansion of the agency.

On May 15, 1911, the Supreme Court upheld a 1909 federal court ruling calling for the dissolution of John Rockefeller’s Standard Oil Company monopoly, giving the company six months to dissolve itself.The unanimous ruling from the nine justices (shown in the attached photo) was that Standard Oil’s organization was in violation of the Sherman Antitrust Act. At that time, Standard Oil refined more than 75% of American crude oil and marketed more than 80% of all domestic kerosene, as just two examples of how much concentrated industry control it wielded. As a result, Standard Oil in July 1911 announced it would be broken up into 34 different companies, including individual oil companies in New Jersey (which became Esso, then Exxon), New York (which became Mobil), California (which became Chevron), Indiana (which became Amoco), and Canada (Imperial), to name a few.

The mid-1911 timing was coincidentally significant in McCann history because it was just several months after a new ad manager had been hired by Standard Oil.  This new department head was Harrison King McCann, who had been the successful, high-profile ad manager of New York Telephone for the previous four years, and was now heading the 35-40 employee oil company ad department just as it was about to be discontinued.

As explained in a February 1917 McCann internal newsletter, the corporate breakup of the oil monopoly “made necessary the abandonment of all general departments; that is, those departments which were used in common by all the Standard Oil Companies.”  One of these shared resources was the advertising department, which created a problem all of its own. “There were outstanding at that time several hundred thousand dollars worth of advertising contracts, which had been contracted for by the department for joint advertising and which, before the dissolution could legally be completed, had to be adjusted in some way, among the various Companies.”

As the newsletter explained:

 “Naturally the advertising had to be continued. It could not be carried on jointly and none of the Companies had either equipment, facilities, or experience for carrying on its advertising unaided. This situation, and the problem of the equitable distribution of the cost of the contracted space were sources of considerable perplexity for the committee appointed to arrange for the dissolution.

“This dilemma for the Standard Oil Company was opportunity for Mr. McCann which he was not slow in recognizing. Early in the Fall of 1911 he presented to the directors a plan which solved immediately their difficulties—the formation of an independent advertising agency to carry on the business of the various companies.”

The plan, which was submitted to the Dissolution Committee, was accepted. As Mr. McCann would recall later, H. Clay Folger, Jr., who was in charge of Standard Oil’s reorganization committee, “had all kinds of problems with pipelines, refineries and overseas operations, to which the advertising was only a peanut, and consequently he would say yes to any good suggestion.”

But the plan was not without risk.Standard Oil could not help finance the agency in any way, or offer any guarantees on the business. Mr. McCann, though, after reportedly contacting personally some high-level Standard executives, particularly on the West Coast, felt assured that certain key portions of the ad business would stay with his independent agency.

On Nov. 13, 1911, Mr. McCann and four partners met in the Hotel Mansfield in New York City to incorporate their new agency. With capitalization of about $5,000, The H.K. McCann Company then opened its doors on Jan. 2, 1912, with about 20 ex-Standard Oil advertising department employees. The office was at 11 Broadway in New York City across the street from Standard Oil.

Because the initial company strategy called for winning as many newly independent Standard Oil units around North America as it could, this led to McCann’s early expansion and networked office approach to its business. San Francisco was opened in 1913 to start up with the Standard Oil of California account and Toronto in 1915 with Imperial Oil.  

While the H.K. McCann agency’s client list would quickly expand beyond oil companies, the initial accounts, representing about $500,000 in ad contracts, included the Standard Oil companies of New Jersey, New York, Louisiana, and California, as well as the Imperial Oil Company in Canada. Chesebrough Manufacturing Co. (makers of Vaseline) also became an early client of the McCann agency. Chesebrough, founded in 1870 in Brooklyn, became part of Standard Oil in 1881 and then resumed independent operations in 1911 as one of the subsidiaries that had to be spun off.

By 1919, The H.K. McCann Co. had grown in eight years from a base of two dozen people working in one New York office on five Standard Oil accounts to a total of 150 employees working on 45 active accounts in a five-agency, two-country system in New York, San Francisco, Cleveland, Toronto, and Montreal.

But there was one other aspect to the Standard Oil breakup that would shape McCann’s organizational character. The Supreme Court’s ruling only affected the U.S. business. Standard Oil’s foreign business, outside the control of the U.S. government, was left intact, which would ultimately provide the impetus for McCann’s international expansion.  In the spring of 1927, McCann opened its first European offices in Paris and London, which would also act as hubs for the Continent and North Africa. As the agency announced in August of that year, “arrangements have been made by which the McCann Company will handle the advertising of a number of subsidiary companies of the Standard Oil Company (New Jersey), which operate in Europe. These include companies operating in France, Belgium, Holland, Germany, Denmark, Norway, Sweden, Switzerland, Poland, and Italy.”

Similarly, Standard Oil drove expansion into Latin America in the mid-1930s. In early November 1934, McCann announced that it had recently “completed arrangements with the Standard Oil Company to handle advertising for its subsidiary, the West India Oil Company, and associated companies throughout Latin America.”  Agencies in Buenos Aires and Rio de Janeiro would the

 McCann Summer Party 2018

McCann Summer Party 2018

 Truth About Age

Truth About Age