Stone Container Corporation

In 1926, Joseph Stone and his two sons, Norman and Marvin, created J. H. Stone & Sons with $1,500. Stone’s business strategy for the company was to provide high quality service at reasonable prices, with minimal capital tied up in inventory. Because President Roosevelt outlawed price cutting, they changed from jobbers to manufacturers. This is because Stone and Sons purchased their merchandise at discounted prices, allowing their customers to save. However, after the law, Stone’s customers were required to pay a premium. In the following years, Stone and Sons grew tremendously via acquisitions that were paid either entirely in cash or borrowed money which was paid back early. The company reached sales of $1 million by 1939.

After World War II, Stone and Sons reincorporated as Stone Container Corporation. With Norman Stone as the CEO, the company continuously expended and diversified. More acquisitions were made to purchase mills that could produce the two primary components in corrugated containers. And as usual, the money that Stone borrowed was repaid within a year.

In 1947, the Stone Container Corporation went public and issued 250,000 shares of stock in its initial public offering. By becoming a publicly-owned company, Stone widened its reach by placing regional plants in Ohio, Indiana, Illinois, and Michigan. The geographic expansion was accompanied by Stone’s diversification in the paper industry; they began selling folding cartons, diver cans, tubes, tags, and special paper packages, along with the corrugated containers and paperboard. The company also started to produce more specialized containers that provided advertising on the exterior.

Roger Stone had been instrumental in refocusing the company on the sale of boxes to produces of nondurable consumer products in the early 1970s, and became the CEO in 1975. Stone’s strategy revolved around the idea that buying capacity from distressed producers during troughs in the industry cycle could create...