K.A. President John Jackson.
The Jackson restructuring was a major reorganization of Kramer Associates carried out by Kramer President John Jackson between 1929 and 1932. The reorganization served to decentralize control of the company by redistributing assets from the parent company in San Francisco to eleven daughter companies located around the world.
The Jackson restructuring was a response to the attempt by newly-elected Mexican President Pedro Fuentes to establish control over K.A., since he believed that the company held too much power in Mexico, and he was determined to curb that power. He considered simply expropriating the company's assets, but believed that K.A. had too much influence in the Mexican Congress to allow him to do so. He also considered taxing the company's assets and profits, but feared that doing so would do too much harm to the rest of the Mexican economy. In the end, Fuentes decided to copy Governor-General Henderson Dewey's tactics in the C.N.A., and appoint a commission under Secretary of the Exchequer Stanley Zwicker to "investigate large corporations in the United States of Mexico, and make suggestions for legislation." Fuentes announced the creation of the Zwicker Commission on 17 June 1929.
Jackson's sources within the Fuentes administration kept him fully informed of the president's thinking, and he was able to launch his countermeasures a month and a half before Fuentes' announcement. Jackson called a press conference on 5 May 1929 to announce the restructuring. He said, "After three years in this chair I have learned that no one man can run this business or even understand it completely. For this reason the board and I have decided to deploy power much in the same way as a general deploys troops, or a bank its assets. There isn't much more I can tell you right now, gentlemen, but I can assure you that Kramer Associates will look quite different in the 1930s than it does today."
The company's lawyers spent six months mapping out Jackson's proposed reorganization, which would produce an organization so complicated that the registration materials alone numbered over 200,000 pages. The Proposals for the Restructuring of Kramer Associates ultimately ran to a total of 94 volumes which were compiled over the course of 1929, 1930, and 1931. In place of the original monolithic company, K.A. would be decentralized into eleven separate companies: Kramer of Mexico, Kramer of the Philippines, European Kramer, Kramer Finance, World Petroleum, World Locomobile, World Transportation, Technology, Ltd., United Dry Goods, Benedict Machine Tools, and Cortez Mines. Each company would be incorporated in a different country, with its own president, who was a national of the country of incorporation, and its own board of directors. These eleven firms spun off a total of 87 subsidiaries, which in turn had 165 sub-subsidiaries. All were controlled indirectly by Kramer Associates, S.A. by means of interconnections at the second and third levels consisting of gentlemen's agreements, individual contracts, and joint directorships. Stock in subsidiaries was sold, the majority in the subsidiary's country of origin, and each company was financed differently than the rest. Sobel quotes Stanley Tulin's description of the result as being not such much a pyramid with Jackson at the top as a tangled ball of twine that defied separation.
Sobel states that the Jackson reorganization succeeded in thwarting the efforts of the Zwicker Commission to investigate Kramer Associates, and that Fuentes' attempt to rein in the company was completely frustrated. Fuentes was made to appear inept, and when he ran for re-election in 1932, he was defeated by the Liberty Party candidate, Senator Alvin Silva. Silva, in line with the Liberty Party's economic policy, was content to leave K.A. alone.
Sobel's sources for the Jackson restructuring are the 94-volume Proposals for the Restructuring of Kramer Associates (Mexico City, 1929-1931); Tulin's The Kramer Associates: The Jackson Years, which was slated for publication in 1974; and an interview with Tulin conducted on 3 December 1970.
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