Caro - A History of the Nation's Oldest Surviving Sugarbeet Factory

Michigan's lumber industry and the 19th century drew				throughput. Nine water-tube boilers fitted with
to a close together. Lumber barons had swept				mechanical stokers provided an adequate supply of
through the state like a hurricane, much as they had				steam. A concrete floor, a luxury according to
done in New England and New York, carting away				Michigan factory standards of the day, separated the
the world's last great stand of white pine forests. In				factory from the mud and clay that lay beneath.
their wake lay dying towns, hundreds of miles of				Two significant differences between a factory of
combustible debris, erosion-made swampland and				American design and one of German design caused
wonderment on the part of those left behind that				some immediate rancor. The first was that American
they had traded their heritage for a handful of bright				management style called for superintendents who
coins. Lumber towns across the state, one of them,				inspired the invention of the phrase, "manage on your
Caro, named for some inexplicable reason after Cairo,				feet, not on your seat" while the German method
Egypt, faced extinction.				called for a field marshal who commanded from afar,
If a town was to have an even chance of finding a				sending lieutenants forward to collect information and
place in the 20th century then it needed an industry.				to dispense managerial wisdom and dictates.
Town mayors and other leaders across the state				In addition, the European method of management
cast about for one. In Caro, talk about sugarbeets				called for much secrecy between management and
had drifted from Bay County where an entrepreneur				the managed and in addition, technicians reserved
named Thomas Cranage constructed a sugar factory				their knowledge to themselves, sharing what they
in Essexville, a suburb of Bay City, another lumber				knew only with sons or those who paid handsomely
town searching for an economic foothold to replace				for instruction. The departmentalized factory fit the
lumber. The results of Cranage's experiment sparked				European management style perfectly. For that
enthusiasm that quickly replaced the gloom that had				reason, the Caro factory consisted of a number of
settled into the hearts and minds of the leaders of				separate rooms, or departments, the effect of which
faltering lumber communities.				encumbered communication and increased the
Cranage traveled to Nebraska, Utah, New Mexico,				number of laborers required to operate the factory.
and California where he witnessed the process and				Messengers scurried between rooms delivering orders
talked to the technicians and then hired them. He				and information, not always as timely as
then created Michigan Sugar Company and, avoiding				circumstances required. The arrangement, in later
the mistake of many entrepreneurs, saw that it had				years, would make it difficult to expand the factory;
adequate capital to survive the disappointments that				expansion of one area generally occurred at the
so often accompany new ventures.				expense of another. Kilby-built factories, those
Michigan Sugar Company benefited not only from				constructed by Joseph Kilby of Cleveland, Ohio,
good planning but from good weather. The first				considered by many the premier constructor of sugar
sugarbeet harvest and processing season (called a				factories, conversely, provided sufficient space that
"campaign" in the parlance of the beet sugar industry)				during two and more generations of successive
in the state's history was, by every account, a				development allowed for five-fold enlargement of
remarkable success. Farmers harvested an average				capacity with only minor additions to the structures
of 10.3 tons from each of 3,103 acres for a total of				or foundations.
32,047 tons of sugarbeets. The sugar content of the				Wernicke's record from the standpoint of practicality
beets averaged 12.93 percent with a purity of				and fairness, however, was outstanding. Between
eighty-two percent from which the factory				March 1, 1899 and October 23 of the same year, the
extracted 5,685,552 pounds of sugar. A sugar				German company had shipped a good portion of the
content of 12.93 percent meant each purchased ton				factory from Germany. It then arranged for the
of beets contained 258.6 pounds of sugar. From that,				design and construction of a complete operating
the new sugar factory packaged 169 pounds, which				facility in a relatively new industry in a foreign country
equated to total sugar recovery of sixty-nine				in just under seven months, becoming the first of
percent, an excellent result for a first campaign.				eight beet sugar factories constructed in Michigan in
Principal among leaders in Caro, the center of				1899 which then made it the second such factory
business activity for Tuscola County, was Charles				built in Michigan after Essexville's. By standards
Montague. The town waited to learn what Mr.				existing in 1899 and more than one hundred years
Montague thought of the sugar talk.				later, Wernicke's accomplishment stands as a
Montague was fifty-two years old when Michigan				monumental achievement. Other than ordinary
began to open its eyes to the prospects of sugar.				upsets, the factory had operated as well, and in
He had already achieved success in many fields				some cases, better than any start-up that took place
including banking, farming, lumber milling, merchandising				that year.
and manufacturing. In addition to owning and				Because of the loss of records, specifically, the sugar
operating the town's hotel, he operated the local				content of the processed beets, the results of the
telephone system and electric lighting company.				first campaign can only be estimated. Nearby Bay
If a sugar factory was going to be built in a town, it				City reported sugar content of thirteen percent and
needed a prominent citizen to get on board,				eleven percent was reported elsewhere in the state.
someone's whose participation would create a				Applying an average of twelve percent, then, to the
groundswell of enthusiasm - enough to shake dollars				crop received at Caro, indicates the new factory
loose from hidden places - enough to cause farmers				recovered 66 percent of the sugar in the beets,
to favorably consider raising beets that could make				comparing favorably to the 61 percent recovered at
townsmen rich. As it would turn out, Caro was one				Benton Harbor but short of Alma where recovery
of the few Michigan communities that did not need				reached 72 percent.
to generate investment from within the community.				However encouraging the results may have been,
In Detroit, ninety miles to south, eager investors				the simple fact was Wernicke failed to achieve three
searched for ripe opportunities and closer to home in				conditions spelled out in the contract, failures that
the nearby town of Vassar, lived a man whose				would result in a hurried walk to the woodshed. First,
roving eye never ceased to search for opportunity.				the factory did not slice 500 tons per day for 30
Richard Hoodless lived in comfort in Vasser, a small				consecutive days, as guaranteed. Secondly, cost
city named after Mathew Vassar, the founder of				exceeded three cents per pound, and third, the
Vassar University. He had for many years traveled				factory was not ready to accept beets on
Europe's roads as a buyer of agricultural products for				September 1, 1899, as promised. Also, according to
an English concern. He saw his first beet fields in				the company, the sugar produced lacked salability and
Germany twenty years earlier, saw prosperous				much of it was lost in the process. It was then that
factories perched near towns, factories that hired				Wernicke learned the litigious nature of Michigan's
laborers, purchased supplies and paid taxes to local				pioneer sugar manufacturers.
governments and generally caused a rising tide of				It may have been possible that the company would
sustained prosperity in which no citizen directly or				have relented somewhat in consideration of
indirectly was denied a chance to dip into the				Wernicke's exceptional effort except that the
treasure-trove formed out of beet fields.				directors contemplated operating losses because the
Hoodless looked for ways to duplicate the success				State of Michigan decided to withhold payment of a
of Germany's farmers. As luck would have it, an				promised bounty on any sugar produced after
advertisement appeared in a Chicago newspaper,				January 1, 1899. The bounty provided payment from
placed by August Maritzen, a youthful architect,				the state treasury of one cent for each pound of
recently married, who had taken time out from his				sugar produced in Michigan from sugarbeets but had
honeymoon to promote business for a manufacturer				been declared unconstitutional by the Auditor General,
in Germany whose name could be pronounced by				a decision later upheld by the state supreme court.
most Americans only if they first filled their mouths				The decision represented a disaster to investors
with marbles. It was A. Wernicke Maschinenbau				because one-cent equated roughly to one-third of
Aktiengesellschaft of Halle, Germany. Hoodless replied				the operating costs. The United States Supreme
to the advertisement and in return, Maritzen offered				Court declined to consider the case, giving rise to the
the significant sum of $4,000 (more than $80,000 in				mistaken belief that the decision upheld the lower
modern dollars) if Hoodless could generate enough				court's decision. The unremitted bounty money
interest to establish a factory in Caro.				amounted to $40,436; a much needed offset to an
On one hand, Hoodless had in Charles Montague, a				approximate $65,000 loss.
man of wealth who dearly loved both opportunity				When it came time to take Wernicke to court, the
and technology as evidenced by his control of the				company directors chose as their legal advocate,
local telephone and lighting companies, new shining				Charles Evans Hughes, a brilliant jurist destined to
hallmarks of late 19th century technology, and on the				become the Chief Justice of the Supreme Court. In
other, in Wernicke, an experienced factory builder				preparing for his day in court with Wernicke, Hughes
eager to construct a factory in the United States.				learned the German language and the beet sugar
For help, he turned to two friends, Fred Wheat linked				industry from the ground up to enable him to
to the Montagues by marriage for many years, and				cross-examine German engineers appearing as expert
John Wilsey. Wheat was a lawyer whose wife was				witnesses. According to James Howell, a former Caro
Maria Montague, a sister of Charles Montague.				factory superintendent who authored a detailed
Hoodless then assembled a citizens committee that				account of Caro's factory history, Hughes spent a
became the predecessor to the Caro Sugar				month at the Caro factory exploring every nook and
Company. A member of the committee, Fred				cranny until he became expert in its design and
Slocum, also served as editor of the Tuscola County				function.
Advertiser and helped promote the idea in his news				The ensuing court case, according to Gutleben,
columns. Farmers in Caro's neighborhood, aware of				resulted in a forfeiture of the $300,000 bond
the great excitement occasioned by the Essexville				underwritten by Wernicke, seventy-five percent of
experiment signed on as did Charles Montague and				the contract price, causing Wernicke to withdraw
his associate, banker John Seeley who had earned his				altogether from constructing sugar factories in the
spurs in coal mining. He served as the vice-president				United States. Howell, writing six years before
of the Sebewaing Coal Company; an organization				Gutleben, gave a slightly altered account. He related
headed by Spencer O. Fisher who also was involved				that Wernicke remitted $150,000 and forgave
in Essexville's Michigan Sugar Company and would				$125,000 still due on the construction contract.
later become president of the West Bay City Sugar				Shortly, Oxnard Construction Company appeared in
Company.				Caro to affect changes to the factory, none of
Once Montague picked up the ball, he ran for the end				which were material in terms of the original
zone without considering competitive quotes for				construction. American made centrifugals, these by
factory construction. Indeed, it was Wernicke				the American Tool Machine Company, often called
representative, Max Schroeder who joined Montague				"Amtool" in the industry, replaced those of German
and Seeley on an excursion to Detroit on a January				design. One major change had nothing to do with
evening in 1899. The night was blistering cold; the				defects in the original design. It was the addition of
deal in the making was hot. The great fear was that				the Steffen process for removing sugar from
some other town would beat Caro to the punch,				molasses. A chief problem of the era was the high
drawing investment dollars away from Tuscola				ratio of sugar that escaped the manufacturing
County. Time was of the essence.				process and ended its days mixed in with molasses,
For one week, the town held its breath as the trio				the gummy syrup left over from the manufacturing
met with important financiers in Detroit. Daniel				process.
Gutleben, in his The Sugar Tramp-1954 reported the				The second year's financial results were impressive.
receipt of a telegram by the organizing committee at				The new centrifugals and Steffens process (called
Caro announcing that investment capitalists had				the Steffen's House in the industry) proved their
invested in the factory and had awarded Wernicke				worth. Seven million pounds of sugar passed through
the contract for its construction. Pandemonium				the storehouse, the product of thirty-two thousand
"reigned supreme" according to the Tuscola County				tons of sugarbeets that contained 14 percent sugar.
Advertiser. Seeley arrived alone on Tuesday's				The factory extracted 243 pounds of sugar from
evening train with a story to tell, one that lives yet in				each ton of sugarbeets, a 35 percent improvement
Caro's memory, passed down by each succeeding				over the first year. The new Steffen process had
generation and recorded in Daniel Gutleben's				not only recovered sugar from the approximate
chronicles. It is a story that reveals how Charles				twenty tons of molasses produced each day but also
Montague persuaded some big city wheelers and				recovered sugar from molasses left over from the
dealers into investing heavily in Michigan's second beet				previous crop.
sugar factory.				Henry Oxnard founds a management dynasty at
No one questioned Wernicke's ability to build a				Caro
factory four thousand miles from its base in a foreign				Henry Oxnard did more than merely redesign a
country where the language, customs and economic				factory when he applied his efforts to the problems
conditions differed significantly from the home				then existing at Caro; he founded a management
country. There was no one on the board of directors				dynasty that would permanently influence not only
who possessed any experience whatsoever with				the Caro factory but also the fledgling U.S. beet
beet sugar factories nor did the board foresee a				sugar industry. Nearly ten years earlier, in 1891, Henry
need to engage corporate officers possessed of				Oxnard had recruited from Germany and France
such experience. After all, Wernicke was the sugar				some of the finest and best educated technicians of
expert, claiming more than 200 projects, including one				the day who after arriving in America formed the
just completed in Australia. It also did not matter				nucleus of a cadre that would set about to train
because Wernicke, with enthusiasm running amuck,				Americans in the production of sugar from beets.
signed a contract guaranteeing the new factory				Having formed his first-tier of management, Oxnard
would slice 500 tons of beets each day for a least				then proceeded to provide for the mechanical
thirty successive days at a cost of three cents per				engineering department. For overall construction
pound for sugar currently selling in Chicago for six				management responsibilities, he turned to A. P.
cents per pound, retail.				Cooper who had served at the pioneer Ames,
That a new factory, even one built by someone				Nebraska factory in the capacity of assistant
lacking the disadvantages of building a factory in a				engineer. Cooper promptly surveyed the Caro
foreign land, could operate at 500 tons per day				factory and set in motion a plan to affect change,
during its maiden voyage was unheard of. Inevitable				putting to work a duet of draftsmen that had
construction problems always created delays;				accompanied him to Caro. One was Daniel Gutleben
fine-tuning would deter full slicing capability for weeks,				who would one day rise in the ranks of premier
sometimes months. Added to the mix were factory				factory operators and still later, as the chronicler of
crews more accustomed to walking behind plows or				the beet industry's history.
knocking down trees with axes than operating				With the two top tiers firmly in place, Oxnard then
boilers, engines, diffusers, vacuum pans, and				saw to the placement of a group of promising
evaporators all in perfect harmony. A year earlier, the				laborers who lacked adequate training but who could
Essexville factory builders had missed its guarantee				perform with a high degree of satisfaction if given
to produce sugar for three and one-half cents per				proper tutelage.
pound by fifteen cents and paid for it with a costly				Charles Sieland, a thirty-six year old native of
out of court settlement, a fact either unknown by				Germany employed by Oxnard to oversee the
Wernicke or dismissed in a moment of unwarranted				changes, disavowed his countrymen's tendency to
confidence. Further, Wernicke agreed to finance				withhold information except for financial reward. He
$300,000 of the estimated $400,000 construction				adopted Henry Oxnard's philosophy of sharing
cost.				information. Caro, in his mind, was not only a factory
For Caro and its Detroit investors, it was too good a				but also a university. A long roster of factory
deal to pass up. It got better as time went on. The				technicians and managers began their careers at Caro
village council, as an added inducement, purchased				under his tutelage and then carried their shared
100 acres of land in two parcels, one of which				knowledge to others when they moved from
belonged to Charles Montague, and gifted it to the				factory to factory. One of them was William
factory owners, one of whom was Montague. The				Hoodless, son of the same Richard Hoodless who had
Caro Water Company sweetened the deal when it				started the ball rolling for gaining a factory in Caro.
offered, free of charge, up to 500,000 gallons of				Within a few years he held responsibility for all
spring water daily.				factory operations and not long afterward accepted
Thus did Caro, as a result of Montague's energy and				the presidency of the Pennsylvania Sugar Refinery in
Hoodless's ambition and the will of a town that would				Philadelphia.
not be left behind, find itself the beneficiary of a				In 1906, the Sugar Trust consolidated most of its
factory largely paid for by outside investors.				Michigan holdings into one company, the Michigan
Foregoing the original name, The Caro Sugar				Sugar Company, reviving the name of the first
Company, the organizers formed the Peninsular Sugar				company to construct a sugar factory in Michigan.
Refining Company on January 30, 1899 with 30,000				The new Michigan Sugar Company included the Alma
shares with a par value of $10. By August of the				Sugar Company, Bay City-Michigan Sugar Company,
same year, the capitalization jumped to $500,000 and				Peninsular Sugar Refining Company, Carrollton Sugar
jumped again in February 1902 when it climbed to				Company, the Croswell Sugar Company, and the
$750,000. Its final increment occurred in September				Sebewaing Sugar Company. At the time, the Trust
1902 when it advanced to an even one million dollars				through nominee shareholders held a majority interest
- 100,000 shares at $10.00 par value.				in the Blissfield Sugar Company built a year earlier in
The moneymen included Detroit industrialists Charles				1905, and the East Tawas Sugar Company, a
Bewick who a few years later invested in the East				company, while failing as a business venture in 1904,
Tawas sugar factory and Henry B. Joy, who in 1905				was in possession of a fine Kilby-built factory the
became president of the Packard Motor Car				Sugar Trust had use for in Chaska, Minnesota where
Company. Joy and members of his family invested in				it operated for the next sixty-six years. The
a number of Michigan's sugar factories, including those				Carrollton Sugar Company also included the defunct
at Alma, Croswell, and Bay City. His brother-in-law and				Saginaw Sugar Company which owned yet another
a co-founder of the Packard Motor Car Company,				Kilby-built factory, this one destined for Sterling,
Truman Newberry, invested in Caro, as well, and				Colorado where it served from 1905 to 1985. Charles
along with Joy, became one of the company				Warren assumed the presidency of Michigan Sugar
directors. Newberry would in 1918 catch fleeting fame				Company, a position he held until 1925.
as the successful bidder for a U.S. Senate seat for				By 1920, the sun had set on the Sugar Trust. After a
Michigan, defeating Henry Ford, another magnate				generation of withstanding attacks by various federal
who sought the same post. (Newberry fame lasted				agencies including the U.S. Justice Department and the
longer in Michigan's Upper Peninsula where they				Interstate Commerce Commission, the American
named a town Newberry to commemorate his				Sugar Refining Company gradually sold of its many
father's thoughtfulness in chopping down all the				components to private investors and in that way
hardwoods he could find and turning them into				Michigan Sugar Company loosened itself from the grip
charcoal.)				of the Sugar Trust. Its entire post-trust board of
David Cady and Gilbert Lee, owners of a large				directors consisted of Michigan residents, none of
wholesale food distributorship in Detroit, controlled				whom had association with the Sugar Trust with the
between them, nearly five thousand shares. Gilbert				exception of its president, Charles B. Warren whose
Lee moved into the president's chair while Henry Joy				interest now lay further afield first as Ambassador to
settled for a vice-presidency.				Japan, 1921-1922, and then Ambassador to Mexico in
Within a few years the Sugar Trust came to town				1924. He lost a bid to become Attorney General of
and everything changed. The American Sugar Refining				the U.S. in 1925 during a politically charged senate
Company referred to everywhere in newspapers as				vote influenced by an aversion to Warren's past
the Sugar Trust, moved into Michigan in 1901 and				association with the Sugar Trust. His aspirations for
1902 and began absorbing beet sugar factories at a				roles in the public sector kept him away from the
rapid pace. Gone now was Charles Montague whose				President's office, a role ably filled by William H.
energy and drive assembled the parts that made the				Wallace who carried the title, 3d vice-president and
company. Gone, too, was John Seeley, his friend and				General Manager. The first and second
partner. Richard Hoodless, who started it all, never				vice-presidencies fell to a couple of heavy hitters on
made it to the stockholder list.				the shareholder list that had no involvement in
By 1903, the shareholder's list reflected some of the				day-to-day activities.
top names in the Sugar Trust. Chief among them				Caro survives time and change
was Charles B. Warren, legal counsel to the American				Thanks to James Howell, Caro's superintendent
Sugar Refining Company, whose 22,001 shares				beginning in 1944, who prepared a recorded history in
topped the 1904 shareholder list. The second ranking				1948, it is learned that Caro began stockpiling beets in
shareholder was Thomas B. Washington of Boston,				the factory yard in 1937, an important step for
Massachusetts, a director of the American Sugar				growers who after delivering the beets to the
Refining Company who held 15,667 shares. He would				factory, could look to the needs of other crops
rise to the presidency of the Sugar Trust four years				whereas formerly it was necessary to supply the
later upon the death of Henry O. Havemeyer, its				beets as they were needed.
founder. Third was Lowell Palmer, an executive with				During the period 1928-1937, the Caro factory, like
the American Sugar Refining Company who held				nearly all the Michigan beet sugar factories suffered
10,126 shares. Together, the three controlled 48% of				the ill effects of the Great Depression. However,
the Peninsular Sugar Refining Company. An interesting				from 1937 until the present time, Caro reported
feature of the shareholder list was the absence of				steady improvement in terms of modernization and
the names of Caro residents except for a few latter				expansion. Centrifugals for white sugar and a new
day residents, employees of the sugar factory.				pulp warehouse were added in 1944. A centrifugal is
The American Sugar Refining Company, vilified in the				an apparatus designed to separate sugar crystals
daily press for its monopolistic tendencies and harried				from syrup by filtering the syrup through a screen
in federal courtrooms for perceived violations of the				that spins with sufficient (usually about 1,200 rpm)
Sherman Antitrust Act of 1890, was held in high				speed to create a centrifugal force that propels the
regard by its 13,000 shareholders who enjoyed a				syrup through perforations in a spinning basket. The
steady stream of dividends, 12% per annum since				sugar crystals remain in the basket while the syrup
1894. An under-appreciated aspect of the Sugar				recirculates through the process to recover more of
Trust was that it demanded that companies under its				the sugar. These and other changes have caused the
jurisdiction produce products of high quality at low				average daily slice rate to expand to more than
cost and to that end provided expert advisors who				3,600 tons each twenty-four hours from the 500
traveled from factory to factory dispensing technical				tons per day in the original design which makes it a
information, overseeing training and staffing, and				relatively small factory compared to others in the
inspecting the facilities.				United States that range from twice as large to four
But in 1899, the village of Caro's interest lay, not in				times as large.
the realm of high finance or corporate philosophy but				If Caro has a secret for surviving more than 100
in the hundreds of workers in need of boarding,				years, it is that the factory Oxnard rebuilt remained
food, and clothing and other necessities and luxuries				precisely that for many years and remains so today,
that caused cash registers to ring all about the town.				meeting challenges as they arise , gaining the support
Men, money, equipment, and building materials poured				of its community and changing when occasion and
into the hamlet. Forty-eight carloads of equipment				opportunity join together to compel change. In that
plus six million bricks and one thousand cords of				way, the oldest surviving beet sugar factory in the
stone arrived in rapid succession. Three hundred				United States hangs on in a fast paced industry.
workers, including bricklayers who earned fifty-cents				Sources:
an hour compared to fifteen cents for common				HOWELL, James, A History of the Caro Plant of the
laborers and five cents for apprentice electricians,				Michigan Sugar Company, an unpublished account of
created a buzz of activity that began when the				the Caro Factory history, May 1, 1948
snow melted in April and ended October 23 when				GUTTLEBEN, Daniel, The Sugar Tramp - 1954 p.182
Superintendent Georg Bartsch, a noted expert in				concerning purchase of sugar factories by the Sugar
sugar manufacturing with special acclaim won for				Trust, p. 177 concerning organization of Sebewaing
expertise in crystallization and vacuum pan operation,				Sugar and operating results, printed by Bay Cities
declared the factory ready for operations.				Duplicating Company, San Francisco, California
Performance guarantees for new beet sugar				MARQUIS, Albert Nelson, editor, The Book of
factories plagued those who dared to issue them-and				Detroiters, pages 465-468, A.N. Marquis &
would soon plague Wernicke. The factory as				Company, Chicago, 1908 - concerning the biography
described by Gutleben, while eschewing some				of Charles B. Warren
American preferences in terms of materials,				MICHIGAN ANNUAL REPORTS, Michigan Archives,
nevertheless represented the foremost in factory				Lansing, Michigan:
design. It possessed four quadruple effect				Peninsular Sugar Refining Company filed 1904 and
evaporators made of wrought iron, supplying a				Michigan Sugar Company filed 1924
combined 8,911 square feet of heating surface, two				MOODY, John, The Truth about the Trusts, in
pans each 9-1/2 feet in diameter x 13 feet high				reference to the comment that the Sugar Trust
containing 753 square feet of heating surface, and				began buying beet sugar companies in Michigan in
centrifugals that used steam jets for the final				1902 and dividend payments between 1892 and 1900.
washing of the sugar. Six 700 cubic-foot spray-cooled				UNITED STATES. In the District Court of the United
vacuum-filled crystallizers installed on the pan floor				States for the southern district of New York
expedited cooling, a modern feature that improved				United States vs. American Sugar Refining Co., et al.

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Caro - A History of the Nation's Oldest Surviving Sugarbeet Factory