Kramer Associates, or K.A., is a corporation based in Taiwan but with subsidiary companies spanning the entire world. It was formed in 1865 in San Francisco, California by Bernard Kramer to build a canal linking the Pacific Ocean and the Caribbean Sea. By the end of the nineteenth century it dominated the economy of the United States of Mexico, and as of 1971 controls almost one-sixth of the world's resources.
Kramer and the Guatemalan Canal
Kramer Associates began in 1865 as a consortium formed by wealthy San Francisco businessman Bernard Kramer and twenty-five of his friends (including his Hispano brother-in-law), each of whom paid $200,000 for a share, with Kramer serving as president. The purpose of Kramer Associates was to "explore means by which the system of transportation within California, and between California and the rest of the world, might be bettered." K.A. hired California's leading mining engineer, Courtney Wymess, as its advisor, and mandated him to begin surveys at once. The following year, Wymess offered two suggestions: a railroad across Chiapas, or a canal across the Isthmus of Tehuantepec. Kramer rejected both proposals, but became interested in Chiapas, as well as Guatemala and New Granada. Kramer began making plans to approach the governments of the two nations about a canal through the Isthmus of Panama, but Wymess was able to convince him that a canal through the Guatemalan province of Nicaragua would be more advantageous.
In March 1867 Kramer traveled to Mexico City to see Senators Alberto Gomez and James FitzHugh, whose elections he had financed in 1863. When they were unable to persuade President Arthur Conroy to support the proposed canal, Kramer and Monte Benedict of Jefferson financed the election campaign of California Senator Omar Kinkaid in 1869. Kinkaid opened negotiations with Guatemalan President Miguel Rubio soon after taking office, only to learn that Rubio had granted rights to build a canal to a German consortium backed by King Frederick William III.
Kramer responded by arranging for Rubio to be deposed by Senator Vicente Martinez in March 1870. One week after seizing power, Martinez signed over rights to the canal to K.A. The canal zone was mapped out in June and turned over to K.A. in September. Wymess predicted that the canal would be completed by 1 January 1874, though in fact it was not completed until 1878 and would not begin making a profit until 1885. Work on the canal was accompanied by an expansion of K.A. to include Benedict and fifteen of his Jeffersonian business partners, and the formation of the Petroleum of Mexico Corporation.
Aided by funding by K.A. and Petroleum of Mexico, President Kinkaid was able to win re-election in the 1875 Mexican elections. However, the divisive nature of the elections troubled him, as did the revelation that he had been acting as K.A.'s front man, and he determined to break with his corporate sponsors. He took up his predecessor Conroy's reforms, including greater government control over railroads, a program of aid to farmers, and the beginnings of a social welfare program. The Mexico Tribunal declared a tax on corporations unconstitutional, and Kramer was able to block Kinkaid's other reforms in 1879. Kinkaid himself was killed by a thrown bomb on 7 December 1879, and was succeeded by Senator George Vining of Jefferson.
Vining created the Constabulary in 1880 to combat a growing Mexicano insurgency led by Senator Carlos Concepción, and was persuaded by Kramer to appoint Benito Hermión, the President of the Jefferson and California Railroad Company, as its first Commandant. A Constabulary raid on the Palenque Convention in July 1881 sparked a general uprising by the Mexicanos, and Vining placed the U.S.M. under martial law. However, he would not cancel the upcoming national elections.
When President Vining suffered a fatal heart attack nine days before the elections, the Cabinet, at Kramer's prompting, appointed Hermión Chief of State. Kramer suffered a stroke in February 1882 and died two months later, after which he was succeeded by Diego Cortez y Catalán as President of K.A. Cortez was content to allow Hermión to rule the U.S.M. as a dictator as long as K.A. was given a free hand in the economic sector.
Cortez and Benito Hermión
In 1882, Hermión announced that the U.S.M. would repudiate its debt to France, and confiscated all investments by citizens of the revolutionary French Republic. These investments were awarded to Hermión's most trusted supporters, presumably including Cortez. Hermión announced the creation of several new social programs, which were funded by new taxes on corporations, to which K.A. and Petroleum of Mexico were exempt. At the same time, Hermión forced the two companies to cede half-ownership of the Kinkaid Canal to the government. Hermión's conquest of New Granada in 1890 brought that country's economy under the control of K.A. and P.M. By this time, Cortez had expanded K.A. beyond its California base to control almost seventy percent of the U.S.M.'s non-petroleum industry.
Starting in 1891, Cortez began expanding K.A.'s investments throughout the world, financing railroads in Manchuria and Argentina, a copper mine in the Congo, and the Burger Steel Company in Belgium. The following year, Cortez merged K.A. with Petroleum of Mexico, and also masterminded a coup d'etat in Hawaii that led to its annexation by Mexico. In 1894 Cortez entered into negotiations with the Krupp firm in Germany to take control of the Ottoman Empire, though the negotiations were inconclusive. By 1895, K.A. was the third-largest business organization in the world, engaged in various kinds of manufacturing, foreign trade, railroads, food production, and other activities.
The rapid electrification of Europe and the C.N.A. had produced a worldwide copper shortage, and Cortez entered into negotiations with Russian foreign minister Pyotr Sviatopolk-Mirsky for an agreement giving K.A. concessions in Alaska to mine copper and other minerals. When gold was discovered in Alaska by K.A. in July of 1896, the Russian government reneged on the deal. Cortez responded by provoking a war between Russia and Mexico in 1898.
Mexican forces quickly defeated the Russians in Alaska in 1898, and K.A. was able to gain control of the Alaskan economy. The same thing happened the following year when Mexico invaded Siberia, which touched off the Russian Revolution and led to the breakup of the Russian Empire in 1900. The conquest of Alaska and Siberia went to Hermión's head, and on 2 April 1901 he declared himself Emperor of Mexico. Cortez responded by ousting Hermión on 15 October, and placing Martin Cole at the head of a provisional government. Elections were held on 14 June 1902, with a runoff election that resulted in former Senator Anthony Flores becoming president with Cortez' assistance.
For the next twelve years, Kramer Associates oversaw the growth of Mexico's economy, due to exports of petroleum, gold, cotton, and to a lesser extent, food. The U.S.M.'s gross national product doubled during this period. Cortez retired in 1904, and was succeeded by Douglas Benedict, the grandson of Monte Benedict.
Benedict and Manumission
Benedict began his administration of K.A. by decentralizing the firm, creating twenty operating units with their own vice-presidents. K.A. financed Jefferson Motors, the Carminales Lighting Company, and other new firms that were founded in this era. Of the U.S.M.'s $20.4 billion gross national product in 1910, K.A. accounted for $10.9 billion, with total worldwide sales of $16.1 billion, making it four times larger than the next biggest firm in the world.
The Hundred Day War with France in 1914 ended in a Mexican victory, but touched off a national debate on slavery in the U.S.M. Neither Benedict nor President Victoriano Consalus could find a way to deal with an institution that had become a burden, but could not be abolished. It was not until Consalus' defeat by General Emiliano Calles in 1920 that slavery was finally abolished. By then, Benedict had come to recognize that the institution had to end, and he used K.A.'s influence in Congress to ensure its abolition. However, this put K.A. at odds with Assemblyman Pedro Fuentes, a rising power in the United Mexican Party.
On 22 March 1922, President Calles announced a proposal to allow the nations conquered by Hermión to vote to join the U.S.M. Benedict opposed Calles, since K.A. controlled these territories, and he preferred to leave them as Mexican client states. By April K.A. representatives were busy working to block Calles' plan. Benedict succeeded in preventing Siberia and New Granada from holding plebiscites, and he was able to prevent Guatemala from joining the U.S.M., but he failed to prevent Hawaii and Alaska from doing so. After Fuentes was elected president in 1926, Benedict retired, and was succeeded by John Jackson.
Jackson and the Global War
Douglas Benedict had been grooming Jackson as his successor since 1916. He named Jackson head of K.A.'s Asian operations in 1923, and Jackson remained overseas until returning to take control of the company in June 1926. At that time, K.A. had assets estimated at $9,000,000,000, sales of approximately $11,000,000,000, and had a million employees around the world. Three quarters of its sales originated outside of Mexico, and France, Germany, and the Netherlands had passed legislation limiting its subsidiaries within territories under their control, while Japan refused to allow the corporation to operate in its lands, and placed import quotas on its products. K.A. controlled the economy of the Philippines under a contract signed by that nation's president, and all but controlled the economies of Argentina and Brazil.
President Fuentes believed that K.A. 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 power in the Mexican Congress to allow him to do so. Taxing the company's assets and profits would do too much harm to the rest of the Mexican economy. In the end, Fuentes decided to copy 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." Jackson in turn announced a restructuring of K.A. into eleven separate companies: Kramer of Mexico, Kramer of the Philippines, European Kramer, Kramer Finance S.A., World Petroleum Ltd., World Locomobile, World Transportation, Technology, Ltd., United Dry Goods Inc., Benedict Machine Tools S.A., and Cortez Mines Ltd. Each company was incorporated in a different company, with its own board of directors and president. In turn, these firms spun off a total of 87 subsidiaries, which in turn had 165 sub-subsidiaries.
Fuentes' failure to control K.A. resulted in his loss in the 1932 Mexican elections to Senator Alvin Silva of Durango. Unlike Fuentes, Silva cared little about K.A., preferring to concentrate on foreign policy. Jackson, meanwhile, had decided to move K.A.'s corporate headquarters to Luzon in the Philippines, a move he announced on 24 February 1936. When it was learned that K.A. had been selling securities and using the funds to purchase gold, the result was panic on all the world's securities markets. A month later, a delayed reaction from the securites panic caused the C.N.A.'s National Financial Administration to go bankrupt.
Silva was re-elected in 1938, despite K.A.'s funding for his opponent, setting the stage for the outbreak of the Global War the following year. In 1939 and 1940 Kramer executives in Australia and Japan met secretly with government leaders to warn them of Silva's plans to attack them. In 1940 Jackson went further, proposing an alliance between K.A. and the two nations "to guarantee peace in the Pacific, and, more particularly, defend the area against a potential Mexican challenge." K.A. spent more than N.A. £20 billion to subsidize anti-Mexican efforts in China, and an equivalent amount in the rest of the Pacific region. By 1943, K.A. was an equal partner in the alliance; by the following year, it had become the leader.
Silva responded by announcing on 22 March 1944 that all K.A. properties in Mexico would be seized and nationalized. The loss of key K.A. employees crippled the Mexican war effort, and due to the complexity of the Jackson reorganization, no more than one fifth (and possibly no more than one tenth) of K.A.'s assets were actually seized. Assisted by K.A., the Australians were able to defeat several Mexican and German invasion attempts, and Japan succeeded in conquering Siberia.
In 1948, Jackson took Taiwan, and added it to the Philippines as the base for Kramer Associates. In 1950, K.A.'s constituent firms employed over 2 million people; with families included, it had a "population" of over 5 million. In the wake of the Global War, K.A. employees tended to think of themselves as company people rather than as citizens of the nations where they resided.
Salazar and the Taichung Project
Mexico's defeats in China and Siberia cost Silva public support, and his cancellation of the 1944 Mexican elections led to uprisings by the U.S.M.'s Negroes and Mexicanos. In July 1949, Silva announced that national elections would be held in January 1950. The elections were deeply divisive, and after Silva narrowly lost, a possible civil war was averted by a coup d'etat led by Colonel Vincent Mercator. Jackson, meanwhile, had died on 15 September 1949, and was succeeded as President of K.A. by Carl Salazar, who had been a key figure in the Jackson restructuring.
Salazar had informants in several key positions in the Mexican government, and he knew in advance of Mercator's plans to nationalize K.A.'s Mexican assets. Although some 20% of K.A.'s assets were still in Mexico, despite Silva's earlier attempt, Salazar made no attempt to prevent the nationalization. Instead, he withdrew as many K.A. employees from Mexico as possible, some in secret by submarine. Salazar also ordered the abandonment of the Philippines and the industrialization of Taiwan soon after assuming control of the company. By the late 1950s Taiwan had become the richest nation in Asia, while Australia and Japan were slowly turning into economic colonies. Salazar and Taiwanese President Chiang Ching-kuo became friends and golfing partners.
In late 1953, K.A. afffiliates ceased doing business with Mexican firms, effectively creating an international embargo of the U.S.M. Mexican oil and foodstuffs could only be sold with difficulty, and it was equally difficult for Mexican firms to purchase raw materials. The result was a depression in the U.S.M., leading Mercator to announce on 4 January 1955 that "Mexico's enemies must not go unpunished. We will push in Mr. Salazar's ugly snout, and make him wish he hadn't thought of his slimy plan to destroy us."
Salazar sought an alliance with Governor-General Richard Mason of the C.N.A. in 1958, but Mason refused to respond to Mercator's arms buildup. Instead, Salazar set up the Taichung Project, which produced an atomic bomb that was test-detonated on 30 June 1962. Films of the test were sent to the leaders of the U.S.M., Germany, Great Britain, and the C.N.A. on 10 July, and ten days later Salazar held his first and only press conference in Taiwan. "We shall never use this device in the cause of aggrandizement," he said. "But we will not hesitate to destroy any nation that has the foolishness to re-open the Global War."
Salazar's announcement set off an atomic arms race among the world's major powers, with Great Britain testing its own bomb in 1965, and Germany and the C.N.A. doing the same in 1966. Despite several attempts, the U.S.M. has been unable to successfully test an atomic bomb.
According to Robert Sobel, by 1971 K.A. might be the strongest power in the world. It has employees in every nation, and indirectly controls almost a sixth of the world's resources. Kramer bombs, now equipped with missile delivery systems, are poised to strike at all the major powers.
This was the Featured Article for the week of 2 December 2012.