Fastmarkets AMM: The 1st 100 Years
In terms of technological development and sheer action, few periods in history can rival the era from 1882 to 1918. During that 34-year span, the United States was transformed from an essentially agrarian society still recovering from the Civil War to the world's leading industrial nation. The economy that emerged was based, to a major extent, on metalsiron and steel, copper, lead, zinc, tinand the products into which they were manufactured.
In 1882, Cornwall was still the tin center of the world, although its days were numbered. As early as 1858, the U.S. had produced tinplate, but was unable to compete with Great Britain on a cost basis. Growing pressure in the U.S. during the 1880s resulted in a 2.2-cent per pound duty on imported tinplate in the McKinley Tariff and afforded the domestic industry its first real start. Brokers, however, had been busy in the tin trade. Three particularly were to play leading roles in the
American Metal Market whose genesis was through the metals brokerage business, rather than publishing per se.
It was in 1882, as this whirl of industrialization was in full swing, that William I. Russell, a leading metals broker specializing in tin, launched a four to six-page weekly tabloid newspaper called the American Metal Market. His goal: To provide accurate information on the prices of many nonferrous metals, pig iron and iron bars. Price tables were the main component of the paper. He also wanted to disseminate brief pieces of news relating to metals, especially in the environment of growing demand by industry.
This sort of information had been obtained, generally, through company circulars and mini newsletters issued sporadically by brokers and some metal merchants. Some metals news was available in business journals reporting on commerce and trade.
As a metals broker, Russell had experienced more valleys than peaks. Ironically, as a broker, in 1890, he was able to capitalize, however, on a piece of metals news. Around 1885, the Secretan Syndicate, backed by French bankers, had attempted to corner world supplies of tin and copper, but creditors forced liquidation of large holdings at great loss. The Russell brokerage house was the New York agent for A. Strauss & Co. of London, which handled the liquidation. Russell reaped the financial rewards.
But in 1896, Russell faced serious financial problems. His publication, which had seen good growth over a decade, had deteriorated because of neglect. It was said Russell's attention to the paper was highly erratic. Price quotations often bore little relationship to actual market conditions.
Late that year, Charles S. Trench purchased AMM, launching a publishing dynasty that was to continue for 67 years. His brokerage company, C.S. Trench & Co., furnished the nonferrous metal reports to AMM.
At that time, metals businessmen generally were tight mouthed to reporters about their trade activities. Thus it seemed that a person engaged in the business, because of his inside knowledge, could perform in a superior way in reporting on that segment.
The early years were slow going for Trench in terms of recovering financially from the Russell regime. A year's subscription cost $5. In 1899, he decided to publish daily, in an attempt to boost the paper's profitability, going head to head with a number of other market publications, most notably the New York Metal Exchange's official report and the Daily Metal Report. The latter was inaugurated in 1890 by James E. Pope, another metals broker.
In early 1901, subscription rates rose to $7.50 a year. In July, Trench purchased the Daily Metal Report and its printing facility from Pope. Subscription rates were raised to $10 a year and the size of the paper increased to eight to ten pages.
Pope's chief compositor and foreman joined AMM at a very good salary and remained with the paper for over 50 years. Pope, himself, furnished the copper report for a while.
When Trench purchased AMM from Russell, a number of rumors had circulated as to why he had moved into publishing. A long-time bookkeeper and secretary with C.S. Trench & Co. noted one that may have reasonable credibility when she said: "Mr. Trench, it is believed, had been employed for about a year or so, probably as a business news reporter on a New York daily or some sort of business journal just after he came to Manhattan. From then on he acquired some sort of a sentimental urge to become a publisher...Obviously he wanted to present realistic prices."
From the days of the Civil War, the downtown area of New York City, encompassing Pearl, John, Beekman, Fulton, William and Murray Streets, was a center for metal trading establishments. The offices of the Russell, Pope and Trench firms had been in the district. The old New York Metal Exchange was at Pearl and John, and Phelps Dodge & Co. was on Cliff Street. Around the corner, at Gold and Fulton, was Handy & Harman, where large stacks of heavy silver bars were often stacked on wooden pallets on the sidewalk, for hours, with no fears of theft.
The brokerage houses were but a fraction of the industrial equation that fostered the growth of metals. New markets were being created in transportation, electrical and communications fields, building construction and military output, stimulating metals output and the development of new production technology.
Events, too, were shaping industry. A decade after Russell launched AMM, there was violence at the Carnegie Steel Co. in Homestead, Pa., when organized workers protested reduced wages. Sixteen people were killed in a daylong battle between 10,000 workers and 300 Pinkerton guards, and the state militia was called in to restore order. The financial panic of 1893 developed after the bankruptcy of the Philadelphia & Reading Railroad, which had debts of $125-million.
On the bright side, innovations in the electrical and communications fields opened up new markets for nonferrous metals, particularly copper. The telephone was patented by Alexander Graham Bell in 1876 and by 1879, the first telephone line linked Boston and Lowell, Mass. By 1883, service was available between New York and Chicago.
Thomas A. Edison, who patented his talking machine in 1878, completed his first commercial installation of electric light in 1882. Other related innovations were made by Nikola Tesla in the 1890s in the field of alternating current, which led to long distance power distribution; the discovery of the X-ray by Wilhelm von Roentgen in 1895; Guglielmo Marconi's discovery of wireless telegraphy in 1896; and the invention of the radio tube by Lee DeForest and others in 1904.
In the transportation field, the appearance of "Wheels" in 1878, a passenger-propelled vehicle with a large wheel in front and a small wheel in the rear, was to lead to the modern bicycle and the great bicycle craze of the late 19th Century. In turn, pressure for improved roads by cyclists and efforts by basement inventors was to set the stage for the automobile. Henry Ford displayed his first gasoline-powered vehicle in 1893. The bicycle, of course, expanded the market for steel.
Developments in public transportation also greatly expanded ferrous metal demand. Although most of the nation's rail system was in place by the end of the 19th Century, the need existed for rapid transit on the local level. The Beach pneumatic subway, which opened in New York in 1870, was to serve as the forerunner of underground and elevated railway systems in major cities. Of equal importance in the late 19th and early 20th Century were the street railway systems based upon the trolley car. The "tractions" or "inter-urbans" which made their appearance around the turn of the century were in many ways superior in speed and comfort to anything today as people movers in high-density areas.
Rounding out the transportation picture was the invention of the dirigible by Ferdinand von Zeppelin in 1900 and the Wright Brothers flight at Kitty Hawk, N.C. in 1903. Aviation added a new dimension to the metals field with the demand for such lightweight materials as aluminum.
A wide variety of other industrial markets opened up for metals, ranging from the invention of the adding machine more or less simultaneously by Door Felt and William Burroughs in 1887 to the toothpaste tube by Washington Sheffield in 1892 and the zipper by Whitcomb Judson in 1893. The simple box camera introduced by George Eastman in 1888 provided a greatly expanded market for silver. Military outlets for metals also expanded during the period with the introduction of the Maxim gun, the forerunner of the machine gun, in 1883 and the use of nickel-chromium steels for armor plate, a development associated with the activities of
James Riley of Glasgow in 1891.
C.S. Trench was one of the largest tin brokers in the country, and most of his energy and activity w as devoted to that business. As he assembled a staff of reporters and editors to run his paper, he functioned, along with one of his brokerage colleagues, as part-time editor.
C.S. was born in East Anglia, northeast of London, probably not far from Bury St. Edmunds. He moved to Jamaica, where it is believed he had some unimpressive association with a business in tinplate. Several years later, he came to New York, and in a relatively short time became an entrepreneur. He established C.S. Trench & Co. in 1881, at the age of 28. At one time, there was a separate Trench firm that operated a small metals warehouse, called Stewart Trench & Co.
He took pride in his British roots and his genealogical connection with the LePoer branch of the family, and also kept in contact with several metal trade principals in London.
C.S. had three sons: C.J. (Jack), Archer R.R. and Stewart P. C.J. began working for his father in 1901, some of his earliest duties being to check prices of lead, zinc and all metals. Archer R.R. was with the paper before he joined the Canadian army in 1916. He died in a service accident two years later.
The offices and composing room of American Metal Market in these early days were located at 81 Fulton St. The first formal editor was Austin Garry, but his duties may have been largely clerical, relating to correspondence, and locating portions of editorial matter to crib from metal trade circulars or magazines. He also was involved with statistics, headlines, proofreading and probably price recording.
In the opening days of the 20th Century, around 1905, letters to the editor were carried sometimes not only in one issue, but repeated in two or three consecutive editions, probably with the hope that a large number of subscribers would read the comments. Indeed, advertising revenue was meager, and around 1901-subscription revenue was said to be under $10,000 a year. Circulation was advancing slowly. New subscribers came from a variety of fields: metal producers, suppliers, consumers, merchants, warehouse distributors, dealers, brokers and speculators.
Around 1902, the American Metal Market experienced little journalistic improvement or gains in revenue, but shortly thereafter circulation registered a modest rise, probably to about 2,000. Around this time, some house advertising in the paper stressed modestly the good results that advertisers for materials wanted were obtaining.
While C.S. Trench was building his newspaper, the construction industry was building America and, in turn, a tremendous demand for metal, particularly iron and steel. The completion of the Brooklyn Bridge by the Roeblings in 1883 had represented a major breakthrough. The use of steel cable, which stands out in the bridge's classic design, was the single most important technological aspect of this achievement. Lesser known today, but of lasting importance, was the construction of New York's Flat Iron Building at 23rd St. and Broadway. The building's steel beam construction resulted in the era of the skyscraper and expanded markets for steel.
By the 1880s, U.S. iron and steel production was based in the Lake Superior Region, with barge traffic carrying ore in increasing quantities to emerging steel centers on the Great Lakes. The U.S. had overtaken the United Kingdom as the leading producer of Bessemer steel. The American Bessemer process that attracted the attention of Andrew Carnegie represented a combination of the best features of the systems developed by Henry Bessemer in 1856 in the U.K. and William Kelly somewhat earlier in the U.S. By 1894, however, open-hearth steelmaking, introduced by C.W. Siemens in 1862, was in position to take over, creating as it did a continuing major market for scrap.
Other major technological advances of the period included electric steel and alloy steels. In 1878, Siemens was the first to use the electric arc for smelting in a closed arc, but as electricity costs proved an obstacle, interest was limited to the Scandinavian countries. By 1906, however, commercial production had commenced in the U.S. In the alloy steel area, the United States led the world with the development of iron and chromium alloys in the 1870s followed later by the U.K. and France. Manganese steel was invented by Robert Hadfield in 1883, who later was responsible for silicon steels.
It was a busy time for steel. From 1899 to 1901, seven leading steel companies were organized. The history of the American steel industry through most of the later 19th Century was essentially the history of the entrepreneur Andrew Carnegie. Carnegie
First entered the industry in 1865 when he became a partner in a small iron forging company. By 1878 the Pittsburgh works of Carnegie Phillip & Co. was producing at a rate of 3,338 tons per month. Carnegie's business achieved its maximum rate of growth during the decade from 1880 to 1890, spurred on by the efforts of Carnegie's chief aides, Charles Schwab and Henry Clay Frick.
The Carnegie era ended in 1901, with the consolidation of Carnegie's interests with others in the formation of United States Steel Corp. The merger, engineered by J. Pierpont Morgan, has been regarded as the end of the day of the individual entrepreneur in the steel industry and the passing of control to the financial minds of Wall Street.
Covering the steel industry was the assignment of B.E.V. Luty, the first AMM correspondent. Luty also helped to launch, in 1907, the first annual volume of Metal Statistics, a compendium of prices, which grew to encompass supply and demand statistics of all metals.
Luty was probably hired on a half-time basis so that he could continue his very lucrative trade news writing for a number of other publications, which later included a weekly steel report for the Monday edition of the New York Times.
A brilliant fellow and a prolific writer, he was not much of a conversationalist, indeed, almost colorless, and gave the impression that he was lacking in writing ability. These characteristics tended to cultivate an empathy with metal producing interests who, in those days, had the false impression that metal buyers "should not be too well informed about what was going on in the industry." The buyers tended to become more talkative with Luty, and that trend started to spread out.
A graduate of the University of Pittsburgh, Luty had written an outstanding thesis on luminescence of fireflies and had intended to pursue a career in science. Unable to make a suitable connection in the scientific area, he started to freelance in trade news. In a few years he had his own publication, "Tin and Terne," and for a brief period there was an arrangement with AMM for the two publications to exchange news reports, until C.S. purchased the newspaper not long after Luty became a correspondent.
While the steel mills rolled to the nation's industrial beat, the nonferrous metals industries were keeping pace. Developments in copper were dramatic. Through most of the 19th Century Swansea, Wales, was the center of the world copper trade, receiving its raw materials from copper mines throughout the world and sending back Welsh coal in the same ships. By 1883, the United States was Swansea's leading supplier, having nudged out Chile. U.S. copper production had shifted from the Great Lakes to Montana, Arizona, Utah and Nevada. In 1884, spurred by rising electrical demand, the Swansea monopoly was broken with the construction at Butte, Mont, of the first copper converter in the nation to produce blister material from matte.
Michael Hickey, a prospector, was drawn to the Butte mining district in 1866 because of the reports of gold and silver deposits. It was not until 1875 that Hickey staked out the claims that became the Anaconda copper mine, which began operations in 1882.
As for the name of the depositHickey had read an editorial in the New York Tribune written by Horace Greeley during the Civil War predicting that, "Grant will encircle Lee's forces and crush them like a giant anaconda."
The word "anaconda" caught Hickey's fancy, and he gave it to the claim. During the 1890s, water-jacketed furnaces were rapidly introduced in the United States. The first U.S. facility for electrolytic copper was at Laurel Hill, N.Y. in 1892, following only five years after Emil Wohlwill's first modern unit at Hamburg.
Expanding demand for copper in brass production, as well as in the electrical area, was an important factor in the success of the Guggenheims. Brass demand, of course, also expanded the market for zinc. By the middle of the 19th Century, the American brass industry was already largely concentrated along the Naugatuck Valley in Connecticut from Ansonia north to Torrington. By 1800, Benedict and Burnham Manufacturing Co. operated the largest brass mill in the country; other large producers included Scovill, Ansonia Copper & Brass and Waterbury Brass. The major expansion of this industry occurred from 1900 to 1918, with applications ranging from brass clocks to tubing, photographic plates and kerosene burners. World War I created a huge demand in brass ammunition cases.
Technological progress in the zinc industry also responded to the growing market in the brass industry, plus growing demand as a protective coating in galvanized applications and zinc-based paints. Improving on existing German processes, the Mathiesen and Hegeler Zinc Works at La Salle, Ill., introduced the mechanical type muffle furnace in 1881. Progress in the electrolytic zinc area was also rapid, with patents issued to L. Letrange in Paris in 1881 and 1883 serving as the basis of the modern zinc plant. The economic structure of the zinc industry was typified by the formation of such large units as New Jersey Zinc in 1880, now a part of Gulf & Western.
Lead demand expanded due to growing use in electrical cable, lead-tin solders, paint and the lead acid storage battery, discovered in 1859. The National Lead Co., now NL Industries, was founded in 1881.
Production moved west from the Mississippi Valley. The open-hearth furnace was the principal means of refining, but in 1884 the first use of the electrolytic process was made by N.S. Keith in Rome, N.Y. Major improvements did not occur until about 1914.
By 1912, the Trench brokerage business was said to be flourishing and the American Metal Market gained more prestige. Among those working for the publication included Archer R.R. and S.P. Trench, proofreader Norbert Langer who later became copper editor and his younger brother R.A. Langer. These people were at quite low salaries. The latter, a pushy extrovert, advanced, to advertising manager and then president of AMM for about one year until his death in about 1954.
A very high percentage of AMM employees who started in 1912 were still with the firm in 1950. About five of these in time each saw 50 years of service. Probably around 1917, C.J. Trench worked for a British purchasing unit here as a buyer of zinc and some other metals. At that time he was very close to the buyer of steel products, Irving S. Olds, who later became chairman of U.S. Steel Corp.
The history of the copper industry is also the history of the Guggenheim family, in particular, the patriarch, Meyer, and Daniel, one of Meyer's seven sons. Meyer, who had immigrated to the United States in 1847, had by the early 1880s acquired two Colorado copper mines. Realizing where the future lay, Meyer then turned to smelting and refining. By 1891, the Guggenheims, with Daniel taking the lead, were successful in consolidating a dozen refining operations under the control of the Colorado Smelting and Refining Company. In 1901, the Guggenheims, using a trust device, were in position to gain control over the American Smelting and Refining Co. the modern Asarco, founded in 1899. Ultimately this dynamic family was to build a worldwide natural resources empire.
Nickel was still in its infancy in 1882 with what little demand that existed largely in the military area. Copper-nickel mining, however, which had commenced in Canada in 1866, accelerated in 1883 when extensive ore bodies were revealed at Sudbury in Ontario. The incorporation of the International Nickel Co. in Canada in 1916 reflected to some extent the promise of expanded outlets in steel alloys, turbine blades and growing automotive outlets.
At the same time, aluminum as a commercial product did not even exist. In 1884, the Cowle Brothers in Cleveland were the first to use electricity to reduce alumina. The major step forward, however, was the simultaneous discovery by C.M. Hall in the United States and P.L. Herould in France in 1886 of electrolytic processes to produce aluminum from alumina dissolved in molten cryolite.
Hall's efforts in the United States lead to the establishment in 1888 of the Pittsburgh Reduction Co., which by 1894 was producing one ton per day of metal at its New Kensington, Pa., plant. In 1907, the name of the company was changed to the Aluminum Corporation of America.
Only gold and silver remained as significant commercial metals in 1882 with platinum, among the precious metals, essentially a Russian curiosity. Gold, and to a lesser extent silver, symbolized the era of conspicuous consumption and bad taste in the United States in the late 19th Century as discussed most prominently by Thorstein Veblen and typified by the famous gold bathroom fixtures of Charles Schwab's Riverside Drive mansion in New York. Known as the Gilded Age in the United States and the Belle Epoque in France, the era was to be remembered for the antics of the robber baron, Jay Gould, and the never to be equaled trencherman, Diamond Jim Brady.
Gold and silver was very much news during the early days of American Metal Market. In 1886, the discovery of lode gold deposits in the Witswatersrand in South Africa in 1886 was to lead, through the efforts of Cecil Rhodes and others, to the Anglo-Boer War and the demise of the independent Afrikaan republics of the Transvaal and the Orange Free State.
In the U.S., the "free silver" controversy was to divide the public for more than a decade. Free silver, the demand that the U.S. Mint would accept unlimited quantities of metal for coinage, was a response to deflationary conditions, largely in the American rural economy, brought on by the resumption of the gold standard in the period following the Civil War and the redemption of the "Greenback" wartime fiat currency. The controversy came to its head with William Jenning Bryan bringing the Democratic Convention to its feet in 1896 when he expressed his objections to the crucification of mankind on a cross of gold.
The defeat of Bryan by McKinley, despite his support for obvious reasons by Western silver producers, is generally regarded by historians as the turning point in the free silver controversy. The real turning point, however, most likely was the discovery of gold on Klondike Creek in Canada's Yukon Territory that year.
The increased supply of gold, in a chink in the armor of classical gold bug philosophy, managed to inflate the monetary supply as effectively as silver. To borrow from the poet Robert Service, who immortalized the event, 1896 was to witness 30,000 members of "a race of men that don't fit in" flock to the Yukon to scrabble, muck and moil under the midnight sun for gold.
Woodrow Wilson was elected President in 1912 and the Federal Reserve Act was finally passed in 1913. The financial shock of war in 1914 led to the closing of the New York Stock Exchange for eight months. Never before had it been closed for more than eight days. Long before the U.S. entered WWI the nation's economy was strained by heavy exports of wheat, meat, sugar and zinc to the Allied nations. Steel production rose from 31.3-million tons in 1913 to 44.5-million tons in 1918. What was then considered shocking was the Federal debt rise to about $25-million by July 1, 1919.
More than an era ended in the trenches of World War I. The wartime period was characterized by strong pressures on metals demand as the industry struggled to increase supply. By 1917, the price of copper had reached 35 cents per pound, almost double the price that had prevailed a few years earlier and probably greater in real terms than that paid today. With Bernard Baruch as the wartime economic "czar," copper prices were to eventually be fixed at 23.5 cents per pound level. The metals industry delivered the goods, and by 1918 the United States was clearly the metals center of the world.
1919- 1938: C.J In Command
Following the end of the war, a period of inflation developed that gave way to a recession in late 1920. By July 1921, prices dropped by one-third, as did factory payrolls in New York State, unemployment zoomed to nearly 5-million and 100,000 businesses went into bankruptcy. Labor union membership dropped from over 5-million in 1920 to only about 3.6-million in 1930.
The American Metal Market was, it is believed, hit by the 1921 recession, but apparently weathered the letdown without serious suffering. Around this time, C.S. Trench purchased an old building at 16-18 Cliff St., adjacent to a building that at one time had been occupied by Harper Brothers & Co. A flat bed press was installed in the basement. The upper floors were used mainly for storage. The wrapping and mailing of the paper was handled by the Shaljian Bindery on the first floor; the composing room was on the third floor.
It is believed that in the early 1920s, the printing began of a regular size daily paper. Larger size advertisements could be carried, and the editorial and statistical content could be enlarged.
Around 1921, C.S. had a financial interest in the Norristown New Plate Process and in its experimental pilot plant to make tinplate by a more economic method. Reportedly it involved some electrolytic technique. According to S.P. Trench, it just barely missed being accepted by some big interests, probably because they had early visions of a continuous electro tin coating line, which became a reality in the late 1930s. S.P. indicated that the rejection was a tough blow to some of the Trenchs. He did not think Pope had an interest in the Norristown pilot plant.
While the Pope-Trench relationship was generally cordial over the years, there had been some battles, but the wounds were readily healed. It was somewhat of a mystery why Pope ran only very limited or no advertising in AMM and Metal Statistics.
The heavy responsibility of managing both the tin brokerage business and AMM fell on the shoulders of C.J. Trench after the death of his father C.S. in 1926 at the age of 73. When a young fellow, C.J. worked in a large bank for about two years to gain knowledge of foreign exchange and other banking activities. He had attended Ridley College near Toronto.
C.J. was a dynamo of energy, slender and moderately tall. He usually was "all business" in the office but occasionally he would let out a shout or a laugh with a salty or somewhat sarcastic comment. For example, after reading an incorrect statement in the Iron Age he might say, "The bigger they are the harder they tumble." When he was in the office, employees had a feeling of action in the atmosphere.
Being an almost tireless worker he had rather limited time for his family, except for weekends or summer holiday at their home on Martha's Vineyard. Occasionally there was a trip to London, but that was mostly business. He had some interest in sports and it was said that he devoted some of his limited spare time to the Anglican Church and British-American activities. He was active in the American Tin Trade Association of which he was president for some years, and he was on the editorial advisory board of the Journal of Metals published by the American Institute of Mining and Metallurgical Engineers.
When C.J. took over in 1926, the U.S. economy appeared in good condition following adjustments after many producers had been caught in 1921 with large stocks of goods purchased at replacing unemployment. About this time it was stated, No other nation in the world was able to furnish so many of its people with a radio, refrigerator or an automobile." Installment buying contributed greatly to the approaching new prosperity.
It is not known how advertising revenue for AMM performed from 1926 to 1930, but it is believed that little headway was made on circulation, which may have climbed to nearly 3,000. Certainly this situation was closely eyed by the new editor and publisher of AMM, who was also aiming to improve the editorial page, district coverage and other categories of content.
Like his father and also Pope, C.J. had an intimate knowledge of tin and some other metals. He was a recognized world authority on tin and tinplate and highly informed on zinc, lead and copper, with many years of contact with metal buyers. He had a keen sense of statistical analysis and was a sharp observer of shifting trends. C.J. was a superior writer of letters, editorials and market news reports. He was a man of high principles, fair in his judgments and thoughtful in decision-making on major issues, which usually involved consultation with his colleagues.
No one at AMM ever recalled C.J. making mention of price forecasting, other than in a mildly derogatory or humorous manner. Some years later, asked why reasonable success in metal price forecasting could not be accomplished by relating the demand to actual stocks and production along with some adjustments for short and long term swings, marginal supplies and future supply potential, C.J. laughed and said, in effect, that he did not wish to waste his time digging into crystal ball theories relating to several variables, some of which completely lacked accurate statistics. The subject was never brought up again.
It was sometimes said that C.J. as editor seldom went out of the office to meet metal industry people, but he had almost daily contact with many who lived on Staten Island. They would ride the Staten Island. They would ride the Staten Island ferry together, and from some of their conversations he had notable news beat at one point, concerning nickel.
Around late 1928, the offices of AMM and C.S. Trench & Co. moved to rather large offices on the 16th floor at 111 John St., just around the corner from 11 Cliff St. The brokerage office, excluding Trench's large office, probably had space for a dozen or more desks plus auxiliary equipment and several worktables. That area was to the left of the reception area. To the center and right in an expansive space, AMM had its advertising, promotion, circulation and bookkeeping department, and a large private office sometimes used for conferences.
To the extreme right around the corner was the editorial room with just ample space for about five desks, worktables, typewriters, tickers and a library of metal books and back issues. At the rear window was a unique apparatus with a large reel of rope. This was connected to a canvas pouch constructed of a large diameter fire hose with eyelets that permitted it to slide up and down a stainless steel guide wire. This wire extended from the 16th floor down to the rear of the third floor of the adjacent building at 18 Cliff St., where the composing room was located. The flat bed press was in the basement, two floors below. The forms were moved to and from the pressroom by elevator. The copy was transferred from the editorial room in short time via the canvas bag.
At each window there was a little door for inserting or removing the copy. Proofs could be sent up to the editorial room. Provisions were made to protect the copy from severe rain, snow or wind. The bag had some weights so as to drop by gravity if empty. Unfortunately, to lift the bag, the reel had to be wound by hand. The top and the lower floor could signal one another by an electric bell system. After considerable study it was considered impractical to operate the reel by an electric motor.
At times the conveyor system was out of operation because of severe storms but over all, its performance was remarkable. Visitors were amazed at its simplicity and ease of operation. The system was designed and installed by managing editor E.K. Browne, who held that post for about 14 years after 1926. He had been with the Providence Journal, an automobile magazine and for a while with the Daily Metal Reporter. His hobby was tearing down and putting together old automobiles. Incidentally, at his home he had a trained crow who was perched near E.K. while he had breakfast.
During the end of the 1920s, the paper was said to have been quite profitable, with circulation and advertising revenue showing good increases.
C.J. Trench seldom discussed the impact of the Great Depression on AMM except to make it clear that there were struggling times and a definite need for the paper to consider new approaches, including editorial staff and expansion and improvement of the quality of the journalistic product. Circulation probably had a big fall. No employees were laid off, although working time for some was temporarily reduced.
By 1932, the 50th year of the American Metal Markets, industrial production fell to half of the 1929 peak, the price of average stocks was down to 10 percent of the 1929 high. Exports and farm products had sharp declines. Unemployment hit 15-million in 1932. In July, Franklin D. Roosevelt pledged himself "to a new deal for the American people."
The groundwork was being laid for many stirring developments including the on-the move rise of the New Deal, repeal of prohibition, the national bank holiday, new controls after reopening the call in of all private gold holdings for paper or silver currency, prior to later devaluation of the dollar in terms of gold.
At about the time of the lowest depth of the Depression, an aide of C.J. hired a tall young lad by the name of James V. Stafford who had graduated from high school about a year or so earlier, but after great efforts could not find work. After serving as a messenger boy for some months during a provisional testing period and learning about chart making in his spare time, he joined the editorial department as a statistical assistant, chartist and writing trainee. Several years later Jim had said, "Going from idleness and no income to work for the Trenches was almost like entering an area close to paradise." He progressed steadily and eventually became managing editor of AMM.
The advertising revenue after 1934 probably did rather well under the direction of R.A. Rudy Langer, who traveled extensively and had many friends among nearly all segments of the metals industry. In addition to being generally well informed, he had a jovial and charismatic sales personality. At times he was over-enthusiastic in relating some of his space selling accomplishments to the editorial people, in a manner that more than hinted that they should start running to those companies to whom he had sold space for news stories.
Following a career of about seven years concerned with special electric lamp and electronic device development which was highly associated with a variety of metals and involved some writing, this writer sought work in advertising copy writing or on some electrical industry journal. Several good contacts in those areas cited a need for more writing experience. Resumes and covering letters were sent to a number of large and small publications including AMM. Several interviews developed, but the prospects seemed to have little attraction. In early February 1937, a secretary to C.J. Trench telephoned to learn and ask for brief additional information on background and references and knowledge of AMM while employed at the two electrical manufacturers and during college summers when working in the test laboratory of a railroad. Familiarity with the AMM was very minimal; occasionally some buyers had been heard to make quite favorable comments on AMM, such as "the information on prices is pretty good and some news articles and editorials are not bad." C.J. was highly amused when this remark was passed on to him at the Saturday interview on February 27. H e asked relatively few questions and of course no mention was made about the desire to gain writing experience prior to winning other connections.
One could readily sense that C.J. was a most interesting man, full of action and a disciplinarian. The paper, he said, expected to add a few editorial people in the near future and at the moment needed a writer to cover miscellaneous and minor metals, ferroalloys and nickel and in about a year to learn to submit suitable editorials. The writing was to begin in a small way and simultaneously with learning about every nook and corner of the paper's editorial, statistical and price coverage.
About 40 percent of the interview with C.J. was an exciting lecture about the alarming rise of Hitler and his Nazis, the German-American bunde activities for youth in the U.S. and the definitely disturbing increase of isolationistic views in America. Rather suddenly, he said he could offer me a temporary job with work to start immediately. The pay happened to be a little under that earned as a development engineer.
After a brief recess, the decision was m a d e to start work temporarily for AMM. On Monday there was an introduction to most of the employees. Work started under the guidance of E.K. Browne who was assisted by Jim Stafford and by one of the business office girls who was allocated to editorial.
The publication's employees represented a good team of loyal workers who got along with one another. They were friendly with, but rather isolated from, the staff of C.S. Trench & Co.
Zimmy: Legend In His Time
By Harry Steinberg
A special caveat in the earlier years of metals and metals journalism was the Daily Metals reporter; a competitive newspaper that was later bought and merged into the American Metal Market in 1961. The newspaper would probably not have been as well known throughout its 50 some years of existence had it not been for its spunky editor, Dr. Joseph Zimmerman, a man whose reputation and years have far outnumbered the Daily Metal Reporter.
Now as vice-president of Miles Metals Corp. and 90 years of age, Zimmerman clearly recalls some of the early years of the United States metals industry. Zimmerman's first exposure to AMM came in 1919, when Charles Lipsett, owner of Atlas Publishing, which produced DMR, hired him as a reporter for the Daily Metal Reporter and a dozen other trade papers. At that time Zimmerman, who had met Lipsett at a dinner, was earning $1,500 a year as an instructor in education for the City College of New York. Lipsett lured him away with an offer of $5,000 a year.
Within two years, Zimmerman became editor, replacing an editor who had gone on one drinking binge too many. "Many people thought I owned the paper," he recalled.
"They called it 'Zimmy's paper.'"
The metals business that the young Joe Zimmerman covered was a very different one than the metals business that exists today.
"I knew the Luria brothers when they went around with a horse drawn vehicle to collect the scrap," Zimmerman smiled. In those days to get a man to tell you what he was paying for scrap iron and scrap metals was impossible. "His argument was, 'why should I tell my competitors what I'm paying? Why tip them off?' It took about a year and-a-half before I gained the confidence of the scrap dealers."
He gained that confidence, he explained, by promising not to divulge the names of the dealers who supplied him with prices and by rigorously keeping that promise.
In fact, as Zimmerman speaks, he constantly returns to the close relationships he built up over the years with both scrap dealers and primary producers relationships built on trust.
Zimmerman boasts that his office at Miles Metals Corp. is decorated with more than 60 photos of the heads of the major metal producersall autographed to him, as an indication of his close friendship with the major factors in the business. In fact, when Zimmerman appeared before the character committee of the New York Bar in 1933, prior to his admission, he was sponsored by Cornelius F. (Con) Kelley, than chairman of Anaconda.
As Zimmerman recalls, the Daily Metal Reporter always played second fiddle to American Metal Market. For one thing, AMM had an audited circulation and DMR (which printed perhaps 2,000 copies) didn't. AMM also had a larger news staff and better access to information through the Trench metal brokerage.
But while Zimmerman is willing to concede honors to AMM, he's also more than willing to recall the times that he was able to score beats on AMM. "There's an interesting story," Zimmerman began. "Because of my contacts with the industry, I became very familiar with the secretary of the American Zinc Institute; Tuttle was his name. And I would get the weekly sales of zinc for the members of the American Zinc Institute...and in Monday's edition I'd publish the exact figures. (C.S.J.) Trench saw that and he tried to get the information and he couldn't."
"So in the next issue I see the figures I had published, in the American Metal Market. I said "I'll fix that S-O-B.' I began doctoring the figures, the last two or three digits, and this went on for two weeks. C.S.J. Trench was then the publisher, I wrote him a letter and said 'I feel pleased that the American Metal Market finds the Daily Metal Reporter so interesting that they're publishing the figures on zinc. For your information, they're not correct....'"
As Zimmerman recalls, Trench responded, "What you say may be true," but then proposed a wager that DMR "borrowed" more material from AMM than vice versa. This is a charge to which Zimmerman pleads guilty. He confesses that with DMR's tiny staff it was impossible to adequately cover the metals business, so he relied heavily on clipping and rewriting other publications.
If AMM's connection to the Trench brokerage did provide it with an advantage over DMR, Zimmerman was quick to use that to his own advantage. "Whenever I went out for advertising or subscriptions, my argument was this," Zimmerman said: "We are a trade publication exclusively. We have no financial interests in any of the markets. The American Metal Market has a dual function. The owners of American Metal Market are not only publishers, they're also the biggest traders in metals, and therefore you can see how one would influence the other. These arguments were unfair, but they worked."
Immediately after World War I, AMM found itself in a conflicting position when the producers of primary metals decided that they would sell only to consumers, not to dealers or brokers. AMM ran "scathing articles on the unfairness of producers refusing to sell to merchants. The result was that the producers stuck to their guns-...but because of the vitriolic articles by C.S. Trench, the producers began to punish (Trench) by taking out their advertising," Zimmerman said. "That's when I garnered quite a bit at his expense. EventuallyTrench didn't apologizehe stopped running the articles criticizing the producers and I think that's about the time the Trench brokerage business was closed."
While AMM's conflict of interest may have been clear, Zimmerman's was less clear. Since the Depression, DMR's chief advertising salesman was Joe Zimmermanhe earned a commission of 25 percent and recalls booking some $1.5- million in ads for the daily newspaper, its big annual issue and the Standard Metal Directory.
While AMM was merchant oriented, DMR was producer oriented "We took the position that we were the spokesman for the industry. The industry, in my opinion, consisted of producers."
The liquidation of the Trench brokerage business and the growing professionalism of AMM coupled with internal events at Atlas are what finally led to the demise of the Daily Metal Reporter. Charlie Lipsett, Atlas' owner, at first offered to sell DMR to its employees for $300,000, and then, when it appeared that they had raised the funds, changed his mind. Then came the rift between Lipsett and Zimmerman.
By 1960, Zimmerman had risen to editor-in-chief of all the Atlas publications and, when Lipsett was ill, ran the operation and signed the checks. When Lipsett handed out the Christmas bonuses that year, Zimmerman, who had done well and was expecting a suitable bonus, found he'd gotten only $10.
Zimmerman retreated to his office and typed out his resignation, effective, as he recalls, Feb. 21, 1961. Shortly after that, Lipsett sold the Daily Metal Reporter to the Trench family, with the provision that both buyer and seller would each pay Zimmerman $25,000 to refrain from working for a rival publication for three years.
The Trench family paid, Zimmerman said, but Lipsett never did.
The Big Fix
By Nancy Borrowitz
Rarely has a charge of price-fixing been made and defended so vociferously as was the one lodged in 1930 against Copper Exporters Inc., an international group of copper producers which had united in the name of price stability two years earlier.
In a series of fiery and often sarcastic editorials during the first four months of that year, American Metal Market railed against ambiguous enforcement of antitrust legislation and producers' contentions that "not a single ton more would be sold" even if copper prices declined from the fixed rate of 18 cents a pound.
And when the solidarity of Copper Exporters Inc., which represented about 85 percent of world production, finally broke after holding copper prices at 18 cents for a year, the paper crowed in a triumphant editorial that "the advocates of the open market for commodities have triumphed again, as they have so often in the past."
The Trench family, which owned a metal trading company in addition to American Metal Market, found the price control breakdown doubly gratifying. Copper Exporters Inc. had declared at its birth in October, 1926, that it would refrain at al' times from selling copper to traders, w h o it blamed for the post-World War I price volatility which it said it was trying to control. Late in 1929 and through the first quarter of 1930, they apparently had some success. Custom smelters, meanwhile, were having a field day, since primary producers had offered to buy from them all copper that could not be sold to consumers.
Jean Vuillequez, the former vice-chairman of Amax Inc. who was a young clerk at the American Metal Co. at that time, recalls that, "custom smelters were throwing copper at the primary producers. Trench couldn't get any. It didn't take very long before custom smelting increased. Companies like Anaconda and Kennecott were blasted near bankruptcy," he said.
The group had the blessing of the Federal Trade Commission because export associations were exempt from anti-trust regulations under the Webb Pomerene Act.
After first fixing their price at 14 cents a pound, the producers were forced to lower it several times during 1926 and 1927 because of slack demand. But by mid-1928, consumption was on the increase and so were producers' prices. Strong buying continued through the first quarter of 1929 amid reports that prices would continue to increase. A short panic ensued in which buyers, fearful of a supply shortfall, ran the price up to 24 cents in late March. Industry observers linked the surge to what they said was an attempt by the producers to bolster the value of their companies' stock on the New York Stock Exchange.
"Human nature is too frail to resist the swelling profits in sight from the pyramiding of prices accompanied by the swollen values of copper securities on Wall Street. The relation of the Wall Street angle to the whole affair is probably much closer than suspected," an AMM editorial written one year later said of the incident.
One month later, in an abrupt reversal, the producers' price dropped in a few days to 18 cents a pound. Consumers had realized that adequate supplies existed, especially since consumption had begun to drop. That month, as producers resolved to cut back production worldwide, shipments and consumption began a yearlong slide.
The stock market crash six months later in October 1929 was a turning point for the world at large. For the copper industry, the break didn't come until several months had passed.
Despite the cutbacks, copper inventories mounted and consumption fell. By the first two months of 1930, domestic deliveries of wire bar amounted to 78.6 percent of 1929 totals for those months, while deliveries of ingot bars, ingots, cakes, cathodes and other shapes was just 49.1 percent of the previous year's total, according to the American Bureau of Metal Statistics.
AMM noted on March 12: "The manipulation of the copper market is producing queer results, but none queerer than the fact that large quantities of copper are being imported from Europe, notwithstanding the fact that the surplus stocks in this country are the largest they have been since the 1921 panic, and notwithstanding that heavy curtailment in the American mining and smelting production to which it has been resorted.
"It has been noticed that every Saturday from 150 to 200 tons of copper have been shipped from Liverpool to New York...and it is understood that the greater percentage of this had been previously shipped to Great Britain from Germany. W h y the producers do not check the supply at the German source instead of allowing it to pass through the London Metal Exchange is difficult to explain unless, knowing that the open market in London can't be put out of business, the program is to make trading there just as difficult as possible," AMM noted.
Other "fantastic developments" attributed by AMM to the price control effort included producers paying competitors "18 cents for metal they could produce themselves for less than 10 cents" in order to keep fabricating subsidiaries stocked, and custom smelters competing with brass mills and ingot-makers for copper scrap to convert to electrolytic copper, "of which there is a tremendous oversupply."
A comment by L. Vogelstein, chairman of American Metal Co., to the effect that copper sold below the Export Inc. price was "bootleg," provoked two editorials in response.
First, on Feb. 11, 1930, the paper printed this comment: " We had never thought that 'bootlegging' would be connected with a perfectly legitimate activity, for surely it is legitimate for copper sellers to under quote the 'trust price.' Rather we are disposed to look upon price fixing as being the illegal and illegitimate undertaking, which by subterranean means permits the evasion of the anti-trust laws as knowingly and effectively as the rum runner is evading the conditions of the Eighteenth Amendment. The bootlegger and the price fixer, like Judy O'Grady and the Colonel's lady, are sisters under the skin."
And then on Feb. 12, 1930, AMM noted that "the chief price cutter in one of the historic holdups of the copper trade is today one of the important members of the copper-producing group. We have reference to Phelps-Dodge & Co - which energetically opposed" an earlier price-fixing syndicate.
Headlines from AMM outline the final chapter of the trust price's one-year stand at 18 cents a pound.
April 11, 1930: "Market Extremely Quiet Here and AbroadConsumers Awaiting March Statistical Showing"
April 15, 1930: "Refined Copper Stocks In March Increased 22,899 Tons to 256,020 Tons"
With producers holding their largest surplus in nine years, the next day's developments were hardly a surprise.
"Copper Price Breaks 4 Cents to 14.00 cc. Delivered Valley and 14.30 cc. C.I.F. Foreign Ports As Producers Break "Ranks." Finally, disproving the notion that lower prices would improve sales, the April 16 headline read: "Export Demand for Copper
Stimulated by Lower PriceOver 5000 Tons Sold On New Basis of 14.30 cc. C.I.F."
Initial reports attributed the breakdown to hoarding of customers by some producers. But AMM concluded that it actually was caused by recognition that other materials were being substituted on a scale "that foreshadowed a long period of lean years in the future in which work would have to be done to...recapture lost markets."
"Apparently oblivious to all portends, the little clique emboldened by the success of its famous romp a year ago and the soaring prices of their securities on the Stock Exchange, persisted in their folly of flaunting the law of supply and demand through many months despite the constant warnings of men of sober and rational judgment.
It is hardly fair to impute motives to people to account for their actions, but the facts in this case would seem to point to the manifestation of more personal interests in the outcome than for the general good of the industry.
By Roberta C. Yafie
When Henry Ford put Americans behind the wheel, he ignited a new industrial dimension. The automobile industry represented a marketing opportunity of unlimited potential for machinery builders, metalworkers and suppliers. Detroit became a mecca for the innovative engineers, metallurgists, researchers, technicians, and marketers.
Jumping on the bandwagon was the Climax Molybdenum Co., which saw the automobile industry as the most likely user of the alloy steels that it was developing.
These steels had been used during World War I, but after the Armistice and the drop in demand for war material, a marketing void resulted. The railroads and other steel consumers were still using primarily carbon steels and castings. But the new generation of equipment and machinery that was emerging was prime for alloy steels.
Brainerd Phillipson, a young chemical engineer, was hired by Climax to beat the bushes for peacetime applications, and the automobile was considered the prime target, the place where he could see the greatest future, according to George Timmons, now a consultant with Climax Molybdenum, but in the 1930s a member of the R & D team that pioneered the uses of molybdenum steels.
Phillipson went about gathering talented metallurgists, engineers and marketers for this development effort. William Park Woodside, who was a vice president of materials and standards for the Studebaker Corp. and owner of the Park Chemical Co., chose to remain in Detroit when Studebaker moved to South Bend, Ind. He took over the marketing of moly steels to the auto industry, aided by good friends and contacts among the important auto people. Woodside worked on a part-time basis, setting up operations over the Saunders Building on Henry and Woodward, then moving to the Book Building.
Another important figure was J. Kent-Smith a Briton who was hired as a consultant to work with Woodside. Ed Young, who came from the steel castings business, joined the team.
"They were just calling on people and telling them, 'Why don't you try moly in this alloy steel?' " Timmons noted. Phillipson then met C. Harold Wills, who had been at Ford and deeply involved in the development of the Model T when he was an engineer there. Timmons believes he brought some moly steels into usage in that early model, but Henry Ford was more interested in vanadium steels, and moly didn't fare as well.
"Mr. Wills wanted to build a prestige car at Ford, because the Model T was developed and invented, the engineering was all done, and Mr. Ford was going to leave it exactly as it was," Timmons recalls. "It made money, why change? Eventually, Wills became tired of that, as you would expect, and he sold his stock to FordI think the figure was about $4.5-million and acquired some other capital outside the industry in Detroit and went off to Marysville and developed the Wills-St. Clair car; the first car, I think, came out in 1921. Wills used the moly alloy steels as an element of the promotion of the Wills-St. Clair car. It was known as the Molybdenum Steel Automobile. Whatever alloy steels were used in the car, he used chrome molybdenum steel. He didn't bother talking about the chrome, he just talked about the moly because it was a little gimmicky, in a sense."
If that name was designed to pique the curiosity of the potential auto buyer, a clever promotion at the time took Wills' idea a step further. The name "molybdenum" was hyphenated as a pronunciation aidMo-lybden-um. It was used in all publications for national advertising, along with a man pouring hot metal from a crucible.
Wills went out of business in 1927. The car didn't sell very wellabout 27,000 units with a price tag of about $2,700. It was competing with the Lincoln, Packard, and Cadillaca true luxury car. It had a high-speed engine, modeled after the Liberty engine. Moly was in all the components: the connecting rods, crank shaft, cam shaft, gears, rear axle, ring gear, rear axle shaft, steering knuckles, steering rods, front axle forgings.
In 1931, the Climax Molybdenum Co. of Michigan laboratory set up shop in a rented garage space on Bethune Street in Detroit, where it remained for nearly six years. Young, Woodside and Kent-Smith concluded that they couldn't sell moly steels to the steel industry without some facts. "Everyone wanted to know, Whats the tensile strength? What's the hardness? What do we do with this stuff after we get it? How do we get the best out of it?' "Timmons said. The lab was the answer.
In 1932, Carl Loeb Jr. joined the company, and his first stop was the lab. He had been hired to take over some of the developmental work. After about nine months, he returned to New York. When Timmons joined the lab in 1936, Loeb was vice-president in charge of sales, research and development.
Loeb, in a separate interview, recalled some of the problems in selling moly. In the early 1920s, he said, the company had spent about $250,000 advertising the Wills-St. Clair car and other uses in the Saturday Evening Post.
"I decided we should advertise, because nobody knew how to pronounce the word molybdenum in the first place, and very few people knew anything about its use," he explained. "Of course, when I approached the president, Mr. (Max) Schott, he said, 'How can you possibly waste your money advertising; look what we did in the Saturday Evening Post.' My first expenditure was $10,000 in Iron Age, Steel and The Foundry."
Through these publications, Climax reached users, rather than producers, of alloy steels. "After all," Loeb observed, "very few producers are interested in pushing a specific steel: they don't care what you buy, as long as you buy their steel."
"I think Carl deserves the credit for one of the best marketing issues on moly. Timmons said. Before Carl took the job, moly was going down in price about the way tungsten was. People were a little reluctant to use it, because they were fearful they would get something started and then the price would go up and they would get pushed out economically.
"Carl came up with the idea that they should establish a firm price for molybdenum, so all the steel companies and everybody else knew what the price was going to be in one year. So he convinced management to do this."
The technique to sell moly steels to the user made salesmen of the researchers. For example, they would go to a steel foundry that wasn't using moly steel and show the advantage of a chrome-moly steel over a chrome-nickel steel. Once he knew it was good, Loeb noted, he was asked the names of his best customers, and the process was repeated with the customer.
It was a complicated process. Tests would be run in the research lab, which by that time had been moved to Woodward Avenue in Highland Park, a Detroit suburb. Timmons cited a time in the development of cast irons when they went to the Atlas Foundry.
"We knew the size of their ladle," he explained. " We would take packages of ferromolybdenum with us. We went to Atlas early in the morning, and Vic (Victor Crosby, formerly of Packard) and I would get the cupola operatinghe knew cupolas better than anybody. Once the cupola was operatinghe could tell the temperature and the way the iron poured and the amount of slagthen we would pour a ladle, and they would be making castings that day that they didn't care what the composition was. So they'd pour four test bars that we'd brought with us in test
bar molds, with plain iron. Then we would take our packet, and we'd know how much iron was in the ladle, and we'd add it, like 0.25 percent moly. After it was thoroughly digested, we'd pour four more test bars, they would pour their castings, we would pour another ladle and add 0.50 moly. We'd get it up to 1 percent."
Then it was back to the lab, to run transverse tests. The pieces were machined, impact tested, each ladle of iron was analyzed, and photomicrographs of the microstructure were taken. A report would be prepared and sent back to, in this case, Atlas, as well as added to the lab's files.
"We would do this foundry after foundry," Timmons recalled. "We'd go to Buick, we'd go to all of the foundries in the area, and each one would get a report on how its iron behaved. We were building up a beautiful catalogue of data.
"Timmons said that one of Loeb's contributions was the motto, "Moly must be sold on its merits." It was a dictum followed to the letter by the lab, as its lengthy procedures illustrate.
"The idea was to have the facts, and they had to be good and they had to be honest,"
Timmons stated. "In a sense, that went along with the fixed priceso people would have some faith in what we were doing."
Timmons agreed that the lab staff was involved in pioneering efforts. "In a sense, we were paralleling some of the nickel companies. They were doing much the same thing in their research."
At the same time the foundry related efforts were going on, test bars were being cast in the lab's 30-pound furnace. "We were making synthetic cast irons, if you will," Timmons said, "and it was all high purity materials. We were developing high strength irons with molybdenum and nickel and chromium. We considered nickel a competitor in the cast iron, field and actually in the steel field.
About 1936, things really got hot, according to Timmons, as the lab became the first group to use TTT (time/temperature/ transformation) diagrams for high pole eutechtide steels.
Climax was never able to develop a straight molybdenum high-speed steel that would heat treat without decarburization with normal processing, he noted. Before the salt bath came into production, Woodside, however, did come up with it.
"We were struggling and struggling with this idea of putting 9 percent moly in and we had copper additions and boron additions; we had all kinds of things to try and make that steel work, he recalled with a chuckle. Mr. Woodside came in one day-he was about 64 at the time-real hard-boiled hard rock miner with a good sense of humor.
1939-1953: Steel Goes To War
By any measure, the United States steel industry's achievements during World War II deserve big adjectives. Never before had so much raw steel been made in such a short time. And never before had so much metal been processed into the myriad forms needed to build ships, docks, factories and pipelines, and to make such enormous quantities of guns, shells, bombs, tanks and everything else needed to wage a global war.
The steel industry's accomplishments during the war years, from Japan's sneak attack on Pearl Harbor, Dec. 7, 1941, until its surrender on Aug. 14, 1945, add up to one of the great news stories of all time.
World War II hostilities started in Europe when Hitler's armies invaded Poland on Sept. 1, 1939, and grew into full-scale war when the German Blitzkrieg struck the Netherlands, Belgium and France on May 10, 1940.
The U.S. steel industry was expanding and upgrading many of its plants and much of its equipment before the bombs fell on Pearl Harbor. But it would be a gross exaggeration to say that the industry was prepared for war.
In 1932, during the Depression, domestic steel production had fallen to its lowest level since 1900. Output totaled 15,123,000 net tons, the industry operating at an abysmal 19.5 percent of its rated capacity of 78,780,913 net tons.
Recovery was relatively slow during the New Deal years. By 1937, however, domestic raw steel output was back up to 56.6-million tons, equal to 72.5 percent of capacity, largely due to a prospering auto industry, and its fast-growing appetite for flat-rolled steel. Indeed, during 1936 and 1937, steel's spending for new plant and equipment reached more than $536-million.
Steel had another poor year in 1938. Operations fell to only 39.6 percent of capacity and raw steel output dropped under 32-million tons. But the industry surged up again in 1939 as war began to engulf the world.
In 1940, U.S. steelmakers poured nearly 67-million tons of raw steel while operating at 82.1 percent of their rated capacity. This was a new record for that time, mainly reflecting record breaking 1940 exports of more than 8.7-million tons. Shipments of finished products totaled almost 46-million tons.
During the two years before Pearl Harbor, it was U.S. government policy to support England against the Axis powers and to check Japan's drive to dominate the Far East.
In steel circles, it became tacitly understood that our government wanted to buy as much time as possible. The domestic steel industry's cooperation toward these objectives during the pre-war period went far beyond business as usual, however.
In one case, the top executives of United States Steel Corp. got a hurry-up call from Major General C.R. Wesson, head of U.S. Army Ordnance, in June 1940, soon after the British army in France was rescued from Dunkerque, but minus all its guns and equipment. Hitler's armies were at the British channel and the British didn't even have enough rifles to arm the Home Guard.
Meeting with Irving S. Olds, U.S. Steel board chairman, and Benjamin F. Fairless, president, Gen. Wesson proposed that U.S. Steel buy $41-million worth of "surplus" munitions in U.S. arsenals, including field artillery and machine guns, and resell them to the British and French governments. Under the law governing neutrals, the U.S. government couldn't make this deal itself.
Olds and Fairless, however, agreed, but upon condition that U.S. Steel would sell the munitions shipped to the British and French at exactly the same price charged by the U.S.
The first ship loaded with these munitions sailed within four days; the last shipload was on its way to England before the end of June.
In another case, the Oil Well Supply Co. got an order from England in December 1940, for 50 diesel-engine driven pumping stations and 150 miles of pipe an entire water supply system. Before work could begin, the pumping units had to be designed and instructions written for their use. Nevertheless, the entire order, totaling 88 carloads, was completed and delivered to shipside in only six weeks. This water supply system contributed to the British forces in North Africa in turning back Rommel's Afrika Corps.
Meanwhile, U.S. steelmakers began to mass-produce munitions and steel for war under the "Lend-Lease" agreement negotiated by the Roosevelt administration with the British in March 1941, eight months before Pearl Harbor.
Of the $280-billion spent by the U.S. government for war purposes prior to July 1, 1945, about 15 percent comprised the value of steel, munitions, industrial equipment, airplanes, shipping and other services furnished to our allies.
These allies received 43,200 airplanes, 808,000 motor vehicles and almost incredible quantities of steel, guns, shells, and all else needed to wage war.
Shipments to the Soviet Union alone included 14,500 airplanes, 455,400 motor vehicles, 1,500 locomotives, 7,000 tanks, 546,000 tons of railroad rail, 343,000 tons of explosives and more than 1,100 acres of steel landing mats.
President Franklin D. Roosevelt called Dec. 7, 1941, the date of Japan's sneak attack on Pearl Harbor, "the day of infamy."
Congress acted swiftly to put the nation on a full war footing. Wages and prices were frozen. The distribution of essential materials, including gasoline, was rationed. New laws gave the government emergency powers over almost every part of the nation's economy, including the steel industry.
Although each steel company' s management and operation was left in private hands, the War Production Board and other wartime government agencies exercised over-all control. Steel production was allocated by a rigid system of priorities. Additionally, the government enlisted the industry's help in such vital areas as developing new and better weapons, and in the manufacture of munitions.
Still, there was talk of possible steel shortages, triggering speculative buying. Industry leaders tried to reassure their customers.
In a statement issued in October 1940, Walter S. Tower, president of the American Iron and Steel Institute (AISI), the industry's trade association, asserted that capacity was "ample to meet all essential needs now in sight," and that no large-scale expansion of basic facilities was needed.
Pointing out that all national defense orders for steel were getting "voluntary preference," Tower further asserted, "no system of enforced priorities or allocations of tonnage is now necessary."
He cited estimates that the nation's defense needs wouldn't require more than 8-million net tons of steel, and contended that the domestic industry could make all the steel needed even if the public's demand for steel products reached levels "equal to the hitherto unprecedented peaks of 1929." In case of an emergency, Tower declared, it would be far more practical to divert steel to government needs by temporarily curtailing "less vital forms of consumption."
He further noted that the industry's rated capacity, as calculated in those days, was from 10 to 12.5 percent below "potential capacity," allowing only for breakdowns and furnace repairs. In an emergency, he contended, U.S. producers could make 5 percent more steel than their rated capacity, or about 4-million tons more than 83-million tons. Starting 1941, the domestic industry reported that its rated steelmaking capacity was up to 84,152,000 tonsa figure said to be based on "actual operating experience"and that its potential output in an emergency could be as much as 86.5- million tons. The gain over the previous year was about 2.5 million tons, including a 700,000-ton increase in electric furnace steelmaking capacity and a further sharp drop in the fading Crucible steelmaking process.
The big increase in electric steelmaking was regarded as especially important, because this type of furnace was used largely to make alloy and high-grade steels, urgently needed for war goods.
As of June 30, 1941, the industry's rated capacity was raised again to more than 86.1-million ingot tons, about 2-million tons more than at the start of the year.
The industry's spending for mills, furnaces, and other capital equipment was $171-million in 1940 and $300-million in 1941, boosting total capital spending during the seven years, 1935 through 1941, to well over $1.4-billion.
As events turned out, it wasn't nearly enough. In the summer of 1941, government officials looked at gathering war clouds around the world and urgently asked the steel industry to add even more capacity.
To encourage domestic mill expansion, the government sharply restricted iron and steel scrap exports, effective Oct. 16, 1940, except to Great Britain and Western Hemisphere nations. This action cut off further scrap shipments to Japan, which had received more than half of 22.5-million tons of scrap iron exported from the U.S. from 1933 through 1940.
Japan's steelmaking capacity just before Pearl Harbor was estimated at about 7.1-million tons a year. Total steel output of Germany and the Axis countries was estimated at about 53-million tons.
By comparison, the U.S. industry's rated capacity late in 1941 was more than 88-million tons, and still climbing. In Washington, the War Production Board toted up Army, Navy and Air Force needs for fighting a global war and immediately became concerned about the steel supply. O n e of its first moves was to send a delegation to Pittsburgh, unofficial capital of steel. U.S. Steel's Fairless met the worried and grim-faced group at the airport.
Smiling broadly, it's been reported, Fairless cried: "Gentlemen, I hear you're looking for more steel. You've come to the right place!"
He was as good as his word. In 1942, the domestic steel industry poured 86-million tons of ingots, another new record. And Fairless' own company produced more than 30-million tons of raw steel, an all-time high. During 1941, the industry's own spending for new plant and equipment was about $295- million. Through the remaining war years, however, the federal money helped to finance increased steel output as well as many plants and facilities specifically targeted for war purposes, including the manufacture of armor plate, shipbuilding and the production of munitions.
The government's Defense Plant Corp. launched a $1- billion program which included building 13 big new blast furnaces, collectively capable of smelting enough iron ore to produce 7-million tons of molton iron a year. Construction of these furnaces, plus several others privately-financed, raised the industry's iron making capacity to about 70-million tons by the end of 1944.
The program included construction of a new steel plant at Geneva, Utah, mainly to produce plate for shipbuilding; several electric furnace shops; new by-product coke works; a huge addition to U.S. Steel's Homestead Works, including a great new plate mill; and numerous other facilities.
Government loans also helped Kaiser Steel Co. to build a new steel plant at Fontana, Calif. The steel industry's private spending during the four war years totaled at least as much as the government's, and reached more than $1.15-billion, including 1940 spending, according to industry data.
By August 1945, when Japan surrendered, the industry had boosted steelmaking capacity to 95.5-million net tons annually. Many of the mills and plants were much better equipped to roll and process all kinds of steel, especially the alloy steels, than they had been five years earlier.
To make so much metal available for ships and military hardware, of course, industry had to hold down shipments to the civilian front and to other consuming industries.
Data on finished steel shipments was kept secret until the fighting was over. When it was made public, they showed that the nation's steelmakers had done a creditable job of making steel for the home front, too.
From January 1942 through July 1945, the industry shipped 60.3-million tons of finished steel to the makers of ships, tanks, airplanes, ordnance and projectiles, or 28 percent of all shipments.
But during the same period, 25.3-million tons were shipped to steel jobbers, distributors and service centers, 20.1-million tons were exported, mainly to England and Russia, and more than 20-million tons were furnished to the construction industry.
The mills sent more than 18- million tons to converters and processors, such as the wire drawers and forge shops; 16.7- million tons to the hard-pressed railroads; and nearly 13.2-million tons to the can makers and container makers.
Prior to Pearl Harbor, steel shipments directly to the auto industry were more than 6- million tons a year. During the war years, however, while the government severely restricted the production of passenger cars and trucks for civilian use, shipments to the auto industry totaled only about 5.5-million tons, a cutback from about 19 percent to only about 2.6 percent while the war lasted.
The industry had to make massive shifts in its product mix while the fighting lasted. In particular, it had to convert from sheet and strip to plate, and from small bar and light shapes to heavy bar, forging billet, and large structurals.
Most of the major companies had invested multi-millions during the late Thirties in continuous strip mills, some of them designed to roll big coils of steel sheet up to six feet wide. But when the government cried for more and more plate, mainly to build ships, most of the continuous strip mills were converted to roll plate.
U.S. mill shipments of plate hit an all time high of 12.9- million tons in 1943, a record which still stands. But the bloom on the plate rose faded when Hitler's U-boats were driven from the seas. Plate shipments in 1945 dropped to only 6.5- million tons as sheet and strip shipments started to climb.
Soon after Japan's surrender, the conversion back to a product mix with primary emphasis on the kinds and forms of steel required for peacetime demand was in full swing.
Steel industry employment had reached an all-time peak, which hasn't been topped since World War II. In 1945, 51 companies, including all the major steelmakers, had 792,000 workers on their payrolls. Counting only those employees actually engaged in making and selling iron and steel products, however, the industry employed 551,200 in 1945, down from 647,200 in the peak war years.
In 1942, the average wage for steelworkers was slightly over $1.06 an hour, and the average pay for both wage and salaried workers was slightly less than $1.12 an hour.
Three years later, in 1945, steelworkers earned an average of $1,257 an hour, and the average pay for both wage and salaried workers was $1.30, up about 18 cents.
Open-hearth steel billets, at Pittsburgh, were unchanged at $34 a gross ton from July 1938 until June 1946, when the price was advanced to $36. Steel plate at Pittsburgh mills quoted at $2.10 a hundredweight in July 1938, stayed at that price until March 1945, when it was advanced to $2.18.
Tin plate prices were frozen at $5 a base box and both hot rolled sheet and hot-rolled strip held at $2.10 a hundredweight through the war years. But the hold down on certain steelmaking raw materials wasn't quite so tight. The price of furnace coke rose from $6 a ton in 1942 to $6.50 in 1943, to $7 in 1944, and to $7.50 in early 1945, as the United Mine Workers, under John L. Lewis, demanded and got higher wages.
Putting a further squeeze on steel company earnings, the United Steelworkers of America also asked for more money, retroactive to Feb. 15, 1942, plus the check off of union dues, and maintenance of membership clause in new contracts.
The National War Labor Board, created by Roosevelt to resolve wartime labor disputes, held a hearing on these demands in August, and then issued an order granting a retroactive wage boost of 5.5 cents an hour, as well as the union's other demands.
The order applied to the union's contracts with most steel producers. U.S. Steel's answer was that it would comply with the order on one premise only, that the nation was at war.
Getting and keeping enough workers was a continuing problem as millions of m e n put on uniforms. U.S. Steel's annual report for 1942 noted that "the U.S. Steel family has supplied about 70,000 men and women to the Army, Navy, and their auxiliary forces."
The draft law permitted the exemption from military service of men doing work essential to the war effort. And the steel companies obtained exemptions for many of their skilled workers, such as rollers, die makers and first helpers on furnaces.
But the exempted workers were often under heavy social pressure and sometimes were criticized as "draft dodgers."
To ease this problem, Jones & Laughlin Steel Corp. published a series of ads in plant town newspapers to emphasize that its draft-exempted workers were almost impossible to replace, and were doing what had to be done to supply steel and munitions.
George Bond, then on J&L's headquarters staff, remembers that these ads did sway public opinion favorably, and that the morale of exempted workers definitely improved.
As of early 1944, approximately 180,000 former steelworkers were in the armed services. Of those still in the mills and steel plants, only one-third were of draft age. The steel industry employed several thousand women before World War II, most of them to sort and inspect tin plate, which was made mostly as separate sheets before the late Thirties.
As men went off to war, however, the steel companies hired more and more women, many for jobs formerly classified as strictly for men. By 1944, the steel plants had nearly 50,000 women workers, or about 10 percent of its total employment. The peak, reached in 1944, was about 59,000, plus more than 28,000 women in steel company offices.
The number of women working in the mills declined quickly late in 1944 and through 1945 as it became obvious that final victory was near. Many were replaced by veterans returning to their old jobs.
Unquestionably, however, the old tradition that making steel was a man's job was broken. Quite a few women still work in steel mills, although mostly in jobs which require skill and technical knowhow rather than brawn.
As the Allied victory became apparent, demand fell off for alloy steels, reflecting smaller military needs. And the shipyards, which were by far the number one market for steel in 1943, took 1-million tons less than they had the year before. By June 1945, the reconversion of the steel industry from production for war to production for peacetime needs was well under way.
The AISI issued a report estimating that U.S. steel companies planned to spend $200- million on the reconversion job over and above any spending "to broaden their operations." Earnings, meanwhile, declined 5 percent in 1944 from 1943 levels, though 1944 was the record year for production.
The squeeze on profits, as wages and costs rose while the lid stayed on prices, was a constant management complaint during the war years. The war over, steel prices started to climb. And so did wages and costs.
Clearly, at war's end, the civilian steel market was bigger than ever, and the industry's leaders saw vast opportunities ahead.
Getting the Goods
When the United States entered World War II, a massive mobilization of its industrial resources was initiated, activity that stretched across the breadth of this country and extended around the globe. With Europe essentially out of the marketplace, the responsibility fell to the U.S. and Great Britain, and raw material centers in those countries, in Latin America and some parts of the Far East.
Simon Strauss, vice-chairman of Asarco Inc., New York, was deeply involved in the effort to secure vital raw materials, from copper to diamonds, beginning in March 1941, first as assistant vice-president, then as vice president, of the Metals Reserve Co., one of four subsidiaries of the Reconstruction Finance Corp. (RFC). R F C was created after the fall of France in 1940, and was under the direction of Jesse Jones, w ho with President Roosevelt brought in William Clayton of Clayton Anderson Co., a brokerage firm, to run the defense related subsidiaries under the title of Federal Loan Administrator.
"I was sort of a utility pinch hitter. I handled every commodity," Strauss recalled.
Indeed, Metals Reserve was involved in procurement of all metals, from antimony and aluminum to zinc and zirconium. The other three subsidiaries each had a special focus. The Defense Plant Corp. (DPC) was charged with building government owned plants for synthetic rubber, aluminum, shipbuilding and whatever else was needed for the war effort where it appeared that private industry, unsure of when the U.S. would enter the war or how long it would last, would be willing to put up the private capital for such expansion.
The Defense Suppliers Corp. was to acquire any non-mineral strategic materials, or rubber, including important pharmaceuticals that had to be imported, and imported fibers. "This was very important to the war effort," Strauss said, "like goose feathers and down, which always makes people laugh, but if we were going to be fighting in the Arctic, that was needed."
Another vital material was hog bristles. "The Navy said they couldn't paint their ships unless they had hog bristles for the paint brushes," he recalled.
The fourth subsidiary, the Rubber Reserve Co., played the essential role in the development of the synthetic rubber industry, and also imported as much natural rubber as could be obtained before Pearl Harbor.
"The business was run as a business, not like a typical government bureaucracy is run today, but that's only possible in wartime," Strauss acknowledged. "The Congress had a great deal of confidence in Jesse Jones and Will Clayton, and because they had that confidence, we had none of the appropriations stringencies that you have now. We had virtually unlimited access to funds. I don't ever remember, as we were writing a contract, somebody saying, 'Do we have enough money to cover this commitment?' We just went ahead and wrote the contract."
When Strauss joined the MRC, among the priorities were acquiring surplus Chilean copper and Mexican lead. "The Chileans up until then had enjoyed big markets in Europe, but Mr. Hitler had taken over Europe and they lost their markets," Strauss said. "The British were getting the copper that they thought they needed from within the Commonwealth Canada and Northern Rhodesia, now Zambia.
"So the Chileans suddenly were faced with this mounting pile of copper. The U.S., not yet in the war, didn't need it immediately, but President Roosevelt, Jones and Clayton had the foresight to recognize that it was important not to have the Chilean industry shut down for lack of a market."
Another major enterprise was buying Mexican lead. Mexico, too, had lost its European markets, as well as Japan.
"The first really big contract that I worked on at MRC in the spring of '41 was a contract with Aluminum Co. of Canada," Strauss noted. "Under our charter, Defense Plant Corp. could not build and own a plant in Canada. Alcan was quite willing to expand aluminum production to a considerable extent with their hydro potential and they thought they could get the bauxite from Guyana, but they didn't have the money. MRC made a contract which I think at the time must have been the largest single metals contract, for something like 3.5-billion pounds of aluminum, on which we made an advance payment SIMON STRAUSS of 5 cents a pound. We just handed them $175-million. And they used that $175-million to build the Shipshaw hydro plant which enabled them to expand their aluminum production."
That contract subsequently became the subject of an extended government hearing in 1945 when, with the war beginning to wind down, cutbacks were ordered in the domestic production of aluminum, chiefly in the Northwest. "Sen. Warren Magnuson, then a very junior senator from Washington, was indignant: W h y were we cutting back aluminum production in the Northwest and still importing aluminum from Canada?" Strauss said. "Well, the answer was that we paid 5 cents a pound in advance for the stuff, and we wanted to get the aluminum against which we'd paid. If we'd have cancelled the contract, we'd have lost the 5 cents a pound. You can argue the merits of that, and it was argued for several days in very extensive hearings."
The big emphasis, Strauss recalls, was on tin, since there was no domestic production; mica and graphite from Madagascar, India and Brazil; manganese, chrome and Brazilian quartz crystals. The U.S. also carried on a purchase of Brazilian industrial diamonds.
"It was generally believed that a good deal of the Brazilian diamond production was being smuggled out of Brazil in diplomatic pouches; submarines were coming into Rio Harbor carrying the mails to the German Embassy. So we negotiated a deal with the Brazilian government and made a preclusive purchase of the entire Brazilian diamond production... although you can't control all diamond production; people smuggle, and so forth."
The purchase involved 600,000 carats of industrial diamonds at an average price of $12 a carat. "So we spent $12- million, to acquire what we thought was the entire Brazilian crop."
Strauss recalls a man involved in the diamond, purchase that he calls "one of the really unsung heroes of World War II," Ike Hirsch. He ran the Diamond Drill Carbon Co. on Park Place in New York, and he graded and inspected these diamonds for MRC. "There's no way the government can ever pay a diamond inspector enough to keep him honest; he either is honest, or he isn't. Visual inspection is the whole thing, and you can't employ a diamond inspector at government salaries. It's just too much money," Strauss observed.
"Well, about three years into the war, by which time Brazil was on our side anyway, Ike Hirsch came to us in Washington and said, 'You know, that 600,000 carats that we bought from the Brazilians, there's a lot of diamonds that really are gem quality and the gem market is very strong. If you'd let me grade out the stuff that's not in the stockpile I could select certain parcels of it, and then you can auction it off. We sold a third of the 600,000 carats and realized an average of $100 per carat.
So the government got $20-million back from one-third of the stockpile. Now, if Mr. Hirsch had not been an upright fellow, well, he could have tipped off his friends to bid for this lot or that lot, and instead of which he wound up making $8-million for the government based on his decision."
One of the big problems, before Pearl Harbor, was the supply of mica and graphite from Madagascar. "Madagascar has unique qualities of these two minerals. They have what is known as phlogofite mica, which is an amber colored mica as compared with the muscovite, or white mica, that we get from India, and I think it was the sparkplug industry that particularly wanted the phlogopite," Strauss noted.
The quality of the lump graphite from Madagascar was what the foundry industry wanted for crucible liners. Madagascar was one of the French colonies that had opted to go with Vichy, and the British were blockading them, because Madagascar, off the east coast of Africa, would make an ideal refueling place for German submarines."
To obtain those minerals, Clayton of RFC reached an agreement with the Vichy representative in Washington, by which the U.S. would put in a ship to lift the graphite and mica and, subsequently, would ship in some supplies through the British blockade.
The ship, the Lone Star, reached the port of Tamatave in early June 1941, and started loading graphite; then it would go up the coast and take on the mica.
That was Sunday, early June. On Monday morning, Strauss was driving to work with a colleague when they heard on the radio that Roosevelt had decided to intern all French flag vessels lying in U.S. ports, including the Normandy. "We sent off a hot cable right away to the capital of Madagascar, a place called Tananarive, in code, to get the Lone Star going right away. We didn't want to lose the ship, as well as the graphite and mica," Strauss explained.
The captain was back at the port, supervising the loading, and the consul, at the capital 90 miles away, got the message. "Now, he's got a problem," Strauss continued. "If he calls, he's sure all his phone messages are being intercepted. He doesn't know what telegraphic codes, if any, the captain has on board, so he can't send him a coded message. Finally, he had a brilliant idea, the most successful single venture in the whole war. He calls the captain and says, Captain, this is Consul Carter up in Tananarive, but I don't know why your people send a telegram to me that's obviously intended for you. Can I read it to you?' And the captain said, 'Sure.' He said, The word is, Scram' The consul had counted on the captain getting the message loud and clear, and that no Frenchman would understand 'scram'."
Meanwhile, the captain had been moved out of the only dock in the harbor to allow a small ship that traded between Saigon and Madagascar to unload. It was the only ship the British allowed through the blockade, since there was nothing in Vietnam, then French Indochina, of a strategic nature. The ship arrived every six weeks.
"The Lone Star was out in the harbor. The tide was coming in. The captain decided he didn't want to attract a lot of attention by starting his engines, so he just upped his anchor and floated out with the tide," Strauss said.
About half of the graphite had been loaded, but none of the mica, which was still needed, so it was back to the negotiating table. This time, the French wanted to have an even trade, Strauss recalled. It was agreed to put in another ship to load the graphite and mica, and at the same time, the French would put a ship into Manilathe same little vessel from Saigon. There was an approved list of goods that the U.S. would provide in the Philippines and an approved list of what MRC was to get in Madagascar graphite and mica, plus two other things.
The operation began in early December 1941. The first vessel sunk by the Japanese when they bombed Manila Harbor Dec. 8 was the French vessel from Saigon. The U.S. consul on board, Consul Moore, had been sent from "very pleasant" duties in Mexico to Manila. He was still there when the Japanese came along, and spent three years in San Thomas prison.
U.S. personnel loaded their supplies on the West Hardaway, a ship that dated back to World War I with a maximum speed of 8 knots an hour. With German submarines operating off the Cape of Good Hope, it was decided to put the West Hardaway into Durban Harbor and reload the graphite and mica on three very fast Navy transports that had been used for Lend-Lease, the supplies going to the British in Egypt. All three vessels arrived safely. The West Hardaway loaded manganese, and about two days out of Capetown it was sunk by a German sub.
Through the months of 1941, the MRC worked very closely with the British on procurement, careful not to get in each other's way. There was a liaison called the Combined Raw Materials Board between the British Ministry of Supply and what was later where one would buy and not the other. Otherwise, the U.S. and Britain would have been competing against each other and would have driven up prices.
Indeed, it was through the board that Stauss first met Sir Ronald Prain, then the British Quartz Controller. He came to Washington because the MRC was buying up Brazilian crystals.
"We bought the entire crop, but we allocated a share of it to the British, and Ronnie came over to make sure they got their fair share," Strauss said. "And in the course of our conversations, w e discovered that w e had gone to the same school in Chile. He had left it the year I'd entered it.
With the outbreak of war, all imports of strategic materials became the exclusive domain of the government corporations. "Even Anaconda, operating the copper mines in Chile, couldn't bring their own copper in to the United States for their own fabrication," Strauss said.
This made possible the effective administration of the Office of Price Administration." Without it, consumers would have competed against each other for cobalt or manganese or tin or chrome or tungsten or copper or whatever," Strauss explained. So it was very effective as an instrument of controlling inflation during the war and keeping prices down.
"In the long run, it created a great deal of bitterness among the independent exporting countries, because they said, Chileans, for instance, 'You had a 12-cent ceiling on copper, you decided on that on your own. We weren't asked. You just said that was all you were going to pay, and we had no choice.' Part of the bad relationship that later developed between the American companies and the Chilean government goes back to this incidence of price control, not only in World War II, but the copper price controls during the Korean War," he said. "They still cite that; they're still offended by it. It helps to explain some of the impetus back of the nationalization of some of the American owned mining interests abroad. It was late '46 or '47 before price controls came off."
While for the war's duration, the prices of copper, lead, zinc and aluminum were unchanged, costs of domestic mines continued to rise. In about the third year of the warlate 1943 or early 1944a program called the Premium Price Plan was developed to keep some of the marginal mines going. Under the plan, the government made supplementary payments to those mines that could demonstrate that their costs were more than the price of the metal. A good deal of monitoring was required. Strauss was involved for the MRC. Plato Malozenoff, now chairman of Newmont Mining Corp., was the administrator of the plan for the Office of Price Administration. The Bureau of Mines was at work monitoring figures and making adjustments
"Some of the lower cost mines never got any premiums," Strauss noted. "It was done on a mine by mine basis. While the program was an irritant to the companiesthere were lots of questions about whether they were taking on low-grade or high-grade materialit allowed production to be maintained even though due to rising costs, the mines would otherwise have become marginal.
"I came down from New York in 1954 when we were in the dying gasps then of trying to make a formal licensing program out of one of our technical areas," Spendelow recalled. "We were up against a stone wall then from our customers, the steel companies. I think that was the beginning of a conscious shift. The whole thing, of course, cost a lot of money. I think that in the peak year of the late 1940s at Niagara Falls there was an R&D budget of the order of $10-million amounting to something over 10 percent of our total sales."
Spendelow noted that R&D dollars then were important because of the stock analysts. "They were very impressed by companies that plowed lots of money back," he noted. "I think that a lot of the work that was done in the industry was in response to that. When it got to over 10 percent, it was more than any company was spending in a commodity type business."
"The spirit, of course, came from the days that these products were not commodities, but they had eventually become commodities," Brown added.
The benefit of this research to Union Carbide, Brown said, related to chrome. "They were selling all the chrome at that time. We didn't really have competition in the 1940s. That was an outgrowth of a policy that had been put in effect in the 1930s when the company elected to become a supplier to the stainless steel industry, rather than a part of it." In the 1940s, one of the principal areas of research was in the role of carbon in the inter-granular corrosion of austenitic steels. Brown was involved in this project in no small way. "We presented our key paper on the subject in October 1948, at the Philadelphia meeting of the American Society of Metals," Brown said. "W.O. Binder, Russell Franks and myself were authors and the title was 'Resistance to Sensitization of Austenitic Chromium-Nickel Steels of 0.03% Maximum Carbon Content'."
Spendelow started off strictly on the production side. The outcome of their efforts leads in the mid-40s to an entire new approach to the manufacture of ferrochrome, the solid-state reduction of ferrochrome.
"The company had a system during that period in which a team of persons designated by the corporate officers went around to all the different laboratories and listened to the types of things that w e were working on," he said of the research approach. "Out of that would come a sort of consensus of what we were really supposed to be doing."
"The work was considered very secretive," Brown acknowledged. "The company at that time dominated the industry and didn't want anyone else to know what they were doing. There were strict security precautions at all times. Some of the old timers claimed that all they had to do was look at the smoke coming out of the chimney and tell what metal was being made correctly or not."
The significant achievement of their research, according to Brown, was recognition that you could decarburize more rapidly than you could oxidize the chrome.
"Well, the chrome-carbonoxygen equilibrium developed by Hilly and Kraft as the function of temperature was a milestone," Spendelow said. "It sounded the death knell of low carbon chrome in the long run. It took a while and the development of refractories that could withstand high temperatures."
"The company had elected during the Depression years to take advantage of available electrical power, rather than pay a penalty, and they converted all the available chrome ore," Spendelow explained. "There was little market during the Depression, so during the war, there were mountains of accumulated ferrochrome in the stockpile. It was fortunate, because without the stocks, you dont make steel.
The Lessons Learned
The economic instruments of war were wielded to achieve the maximum benefits for the United States and her allies. In some cases, their implementation filled domestic industrial voids. In others, they achieved a degree of stabilitystemming inflation, generating employmentthat could not be transferred readily to a peacetime environment.
The massive procurement effort, for example, was linked directly to the lack of substantial raw material reserves for defense emergency. It was in 1939 that Congress voted a small amount of money for stockpiling, but it was a rather routine government operation: a sealed bid procedure, through the Treasury Dept. Only about six materials were involved: chrome, manganese, industrial diamonds, tin, rubber, quartz crystals. Purchases were slow, and in limited amounts.
By the end of the war, the domestic minerals industry had undergone a radical transformation, spurred by the activities of the Reconstruction Finance Corp.'s (RFC) subsidiary. Through the Defense Plant Corp., a domestic aluminum industry had been born that would assume a leadership role in world markets in the decades to come. Domestic mine production had been expanded greatly.
The Metals Reserve Co. had developed procurement policies out of which modern stockpiling evolved, later to be assumed under the aegis of the General Services Administration (GSA). Some of the wartime policies, foremost among them, price controls, led to strains in relations with foreign metals producers that are still being felt in the 1980s.
The lessons learned from these experiences form an important chapter in metals history. Efforts to control wages and prices by the Nixon and Carter administrations are cited by Simon Strauss, vice-chairman of Asarco Inc., New York, as a perfect example of lessons not learned.
"This is one of the things that Mr. Nixon, when he had his price controls, and Mr. Carter, when he had his voluntary wage guidelines, forgot. There were mechanisms during World War II and Korea to permit the effectiveness of price controls on basic commodities. Nobody had to worry about the foreign price being increased by buying from the French, the Japanese or the Italians, because they weren't in our market. The war had created an absolute wall: There were really only two major consumers of metals left to the producers of Latin America and Africa, Australia and that part of Asia which the Japanese had not overrun. They had no alternative; they had to deal with us."
During Korea, it was a bit different, because although they were producing on a limited scale, the Japanese, Germans, Italians and French were back in the market. Price controls were not as effective as during World War II, but they were more effective than in the Nixon 1971-74 period, he reasoned, simply because of the scale of the economies of Japan and West Germany.
"The thing that defeated Mr. Nixon's efforts to control raw material prices from 71-74 was that the Japanese and the Germans weren't bound by our price controls here, and that on any commodity where there was international trade you've got these terrible distortions created by very much higher prices outside the U.S. than in the United States," Strauss explained.
"This is a lesson that needs to be understood by anybody who thinks you can control prices in peacetime: You can't."
There are other lessons that w e should bear in mind, he maintains. In order to maximize production of copper, for example, it was necessary to defer from military draft all the people working in the domestic copper, lead and zinc mines. "Now, what do these fellows do? Well, they operate rock drills, shovels, trucks, bulldozers, and scrapers: They have precisely the skills that the army engineers and the army engineers and the Seebees do. But because the miners were deferred in order to maintain metal production, we had to draft shoe clerks and brokerage salesmen and other untrained people and train them. If we had had a large stockpile of these materials, and if it hadnt been so important to maximize production during the war, some of the skilled mining people could have been taken into the engineer corp and the Seebees, and wed have gotten things done a lot sooner.
"Second lesson: Because w e had to expand production of materials, w e needed to give a high priority rating for trucks, shovels, rock drills, compressors. All these other things that are essential in running the mining industry had to be given a very high rating, equal to what the military had. The result is the military didn't get as many trucks, shovels, rock drills and the lot," he stated.
"Therefore, trying to expand production, which is what Nixon said w e would do if we ran out of the stockpileyou know, he reduced the stockpile objective to a one-year goal because he said we could always expand productionhe didn't recognize or understand that expanding production would hamper the military effort, because the same kind of equipment is needed to expand mineral production as is needed to develop air bases, naval bases, army barracks and all the rest.
"Third item, equally important: We had to use, in the absence of a stockpile, a lot of valuable transportation facilities to move minerals around. We had to import bauxite from Guyana that was then our only source, both British and Dutch Guyana. What happened? Twenty-five percent of all the cargo ships bringing bauxite in from the Guyanas were sunk by German submarines in the Caribbean during the first year of World War II. If those ships hadn't had to be bringing in bauxite, they could have been used to transport equipment to the fronts," Strauss maintained.
"This also is an argument for the stockpile, that people don't recognize. People say, 'Well you're turning up a lot of money, the stuff is just lying there, and maybe we won't need it.' Maybe we will need it. My point is, if you have it, you can make your military effort a lot more effective because of the three factors I've mentioned. And the fourth one is energy. Every pound of aluminum you stockpile is 7.5 kilowatt of energy.
So you have more energy available for manufacturing munitions and building ships or for whatever you need the energy." The silver stockpile that received much attention in the 70s and '80s was not from the war stockpile, but w as in the treasury. A great deal of material, however, is still in the stockpile from the war: Low-grade chrome from the Benbau and Moab projects in southern Montana, for example. Anaconda built and operated a project to produce chrome from that material. It was low-grade and poor quality.
Some of the tin in the stockpile is probably still from the war, according to Strauss, as well as some of the zinc. The MRC was wound down about 1947 or 1948, after the enactment of the modern stockpile act. Whatever was left on hand was transferred over to GSA.
During the Korean War, the copper industry expanded its mining capacity considerably, based on contracts to sell to the government at the ceiling price of 24 cents, which was double the World War II price. Those contracts provided that the companies would agree to expand their production and that they would have a 'put' with the government for 'X' quantity of copper at 24 cents a pound.
"They were not obligated to deliver it to the government if they could find a market for the copper," Strauss noted. "In the case of four or five of these contracts, no copper was ever delivered. Asarco's Silver Bell mine was brought into production under the basis of such an arrangement. And all of the copper from Silver Bell was sold on the open market at 24 cents a pound. Phelps-Dodge had a similar project at Lavander Hill; Kennecott had one at the Ruth Pit." The two big projects, financed with actual government loans, resulting in some deliveries to the stockpile, were San Manuel, Magma Copper's project in Arizona, and White Pine, Copper Range's project in Michigan. The companies built the plants, but they borrowed the money and they paid off the loans with deliveries of copper.
If you desire to expand mineral production, there is nothing more effective than a guaranteed floor price over a period of years, Strauss maintained. It takes time to get new projects started, and the board of directors of a private company will say, Oh, well, the price of cobalt is $40 how do we know what its going to be by the time we get into production three years from now?
It was a long distance phone call or summons to New York that paved much of the career of Charles M. Brinckerhoff, former chairman of Anaconda. During his 42-year career at the Anaconda Co. and Inspiration Consolidated Copper Co., he seemed almost to be on call, and poised in the right place at the right time.
"I was at Inspiration for 10 years and I was called to New York," Brinckerhoff, 80, recalled. "The vice-president in charge of the Inspiration and Cananea (Mexico) operations said to me, 'Brinckerhoff, Newlin (Richard S. Newlin, assistant mine superintendent at Anaconda's Portrerillos property in Chile) is not well and you look to m e to be in pretty good shape. I want you to go down to Chile and take his place. He'll come up and take your place (as general foreman at Inspiration). What do you think of that?'"
"I said, 'It sounds very interesting, I have to talk to my wife about it.' He said, 'Of course. But I want you back here tomorrow to tell m e what she says.'"
Brinckerhoff was at Portrerillos in 1941 when the Japanese bombed Pearl Harbor. "We got word at 2 p.m., and the United States government sent troops and big guns (to cover) the power plants which were right on the ocean and which served Chuquicamata," Brinckerhoff recalled. "They were kept there for four or five months until they thought they had trained the Chileans."
The Chilean mines then worked seven days a week for the duration of the war, sending all copper to the U.S., which under wartime controls was paying a fixed price of 12 cents a pound.
Brinckerhoff was manager at Portrerillos when he received a phone call from a vice-president of Anaconda who was down from New York. "Charles, I want you to accompany me to Chuqui (Chuquicamata, Anaconda's major property in Chile)," Brinckerhoff recalled this executive saying. "It was a five-hour trip from Portrerillos to Chuqui, and before I went, I asked, 'What are we going there for?'" Brinckerhoff said. " 'We want you to take over the job of manager,' was the reply, so I said 'all right.'"
In 1922, the Anaconda Co. had become an integrated copper and brass producer. It had found an outlet for its copper with the acquisition of the American Brass Co. for $45-million. But its fabricating unit needed even more raw material than Anaconda could supply from its mines in Montana and Mexico.
So the following year, Anaconda purchased Chile's Chuquicamata mine from the Guggenheim family for $70-million. Chuqui was to become Anaconda's jewel, then its most vulnerable property.
Before World War II, Chuqui was producing 240,000 tons of copper a year; its capacity was subsequently upped to 265,000 annually, according to Isaac F. Marcossons 1957 history of the Anaconda Co.
Brinckerhoff, who spent his salad days at Chuqui, recalled that when he arrived in 1948 he found railroad cars that had been used to build the Panama Canal more than 30 years before.
"Those cars were brought to Chile in 1914 and were still being used to haul mine waste. There was one steam locomotive still operating," he said. "In the next 10 years, we got the best diesel engines we could." Brinckerhoff is particularly proud of his recommendation in the late 1940s not to convert the open pit operation to an underground mine, as was previously planned as the pit there became deeper.
"I was at Chuqui for a year or year and a half when I came to the conclusion that we were making a mistake," he recalled. New equipment such as bigger shovels and tractors were developed after World War II that would keep open pit mining more economical than the more expensive underground method. "I thought the best thing was to delay that decision for 15 or 20 years," he said. "Chuqui still has an open pit today...and they'll go another 10 to 15 years."
Brinckerhoff believes that in small ways he was able to improve the quality of life in the mining town that served Chuquicamata.
"A previous manager had decreed that all houses would have to be battleship gray. The town was gray nothing but gray," he said. "One day, we were building some new houses and I said to my wife, we'll make different colors. This one will be green, this one coral, and we'll see how it takes.'"
"The town thought it was the most wonderful thing that had ever happened. The doctors said there was a great improvement in the mental outlook.'
Brinckerhoff was less delighted that Anaconda, by a 1925 agreement, was selling food and clothing to its workers at prices that prevailed in the 1920s. "As time went on, the costs of things went up and our prices remained the same," he said. This operating loss was charged off against the cost per pound of copper, which reduced Anaconda's earnings and its taxes to the Chilean government, Brinckerhoff commented.
The most difficult part of his time in Chile, Brinckerhoff recalled, was steering the operations through habitual strikes, which diminished output by 15 percent each year (although "our production was still very high," he added).
The Chilean system of multiple political parties contributed to labor unrest at that time, Brinckerhoff said. Union officials often represented a particular party and pushed for particular gainshigher wages or an expanded payroll.
Strikes or slowdowns would happen anytime, he said. Wildcat strikes any sort of strike. There would be a strike, and no one would come to work. For three, four or five years I met every evening, except Sunday, with the union director.
Brinckerhoff was manager of Chuquicamata when he received still another phone call, this one from Clyde Weed, chairman of Anaconda.
"Clyde got me on the telephone the connection was very poorand said, Charles, I want you to come up,'" Brinckerhoff recalled. "I said, 'Fine Clyde, what do you want me to bring?' thinking he wanted to discuss certain things." "He said, No, I want you to come up here.' That's how we prepared the moveI went back as president of Anaconda."
Five years later, he was named chairman. He retired at the end of 1968, three months short of his 68th birthday.
When Chuqui, along with Anacondas other Chilean properties, was nationalized by the Allende government 10 years ago, Anaconda lost two-thirds of its copper production.
Today, Chuquicamata and three of Chile's other large copper mines are operated by the state-owned Corporacion Nacional del Cobre de Chile (Codelco) and the Anaconda Co. is a subsidiary of Atlantic Richfield Co.
Brinckerhoff contended that Anaconda saw the possibility that its Chilean mines would be nationalized, but continued to upgrade the properties.
"Every presidential election, we were always worried," he said. "We had a tremendous amount to lose. We always considered, should we go in for this tremendous expenditure, then have (the property) nationalized? We didn't want (the Chileans) to think that we were stopping something that would be good for the operation. We wanted to put money into Chile, and that's what Chile wanted."
The News Front
In 1939, AMM received many invitations from companies connected with metal production or consumption to attend exhibits at the New York World's Fair, which ran from April 30 through October 31, and which opened again the following year.
More on the minds of the paper's staff were the winds of change sweeping across Europe. When Germany invaded Poland on September 1, C.J. Trench urged all of the younger employees to prepare to enlist.
The preparations for war that had begun earlier in the year were carried regularly in American Metal Market. New York operations were conducted by Norbert Langer, who had come to the paper from Reuters and was exempt from military service because of poor eyesight. Several assistants helped him, and C.J. pitched in as well. In Washington, Jim Stafford and several aides had handled the heavy news flow regarding prices, production controls and other developments related to war. A heart murmur had kept him out of action.
AMM's reputation during this period enhanced because of its effective performance in speedily transmitting details on price, production and other controls. At times, complete regulations on certain items were documented in AMM before the companies that were to comply with these regulations had received them by mail from the various government agencies.
From 1940 to 1945, paid circulation increased substantially, probably to around 9,000. This resulted from a carefully planned direct mail promotion by Samuel Glassford, the circulation manager. Born in Scotland, he joined AMM in the '20s. Since he was about 45, at the time of registration, he was never drafted.
The rise in circulation was also catalyzed by wartime regulations and influenced by the closing of the Daily Metal Trade, and the magazine, Steel, a publication of the Cleveland-based Penton firm. DMT had a circulation of about 4,000, and AMM probably picked up about one fourth or more of that.
Almost three years after joining AMM, I wanted to learn more about why subscribers really wanted the paper. To get more insight, I was permitted to sell subscriptions for one week in eastern Pennsylvania.
It was very hard work, often discouraging and unrewarding, in respect to learning more about what readers wanted. About 30 contacts were made over the week. Most of them gave me the brush-off, saying that they had too much to read, or had little need for new sources of price information. The final results were four paid subscriptions and about four potential subscribers; about half of those did come through with their payments.
Incidentally, some years later John Fry had requested each of the New York metal reporters to go out and visit about 20 subscribers at big companies, mainly purchasing managers, with a carefully designed questionnaire listing some dozen categories of their indicated main interest in AMM. In essence, the main subjects stressed were in this approximate order: news of price changes; shifting trends in industry; demand-supply changes; interesting opinion columns or editorial coverage; more coverage on miscellaneous metals; and profiles of executives and special feature stories.
C.S. Trench & Co. had supplied the AMM market report on about five metals. After the war, tin trading was not reactivated because of international developments. Tin producing countries mostly handled their own sales and the consuming countries of the large consumers tended to buy directly. Before the war, the brokerage company had about four brokers. Russell C. Clark, a nephew of Teddy Roosevelt and a cousin of FDR, had a financial interest in the Trench Company and was a good writer of newsletters that the firm sent out to its customers. At times he wrote the AMM tin report, and occasionally an editorial.
Another broker was E.L. Murphy, an excellent writer who could produce good editorials and write a fine report on almost any metal market.
A few years after World War II, or about the time the offices were moved to 18 Cliff St., C.J. Trench engaged several special writers to furnish occasional market reports and opinion columns. One who contributed editorials and a column on historical topics relating to metals for nearly 23 years was Frank N. Jones, head librarian at the University of Massachussets.
A notable "personality type" at AMM and an employee for many years was William Bowen. He started as a printers devil and eventually rose to manager of advertising production. He often supervised AMM exhibits and displays at trade shows. Over the years, Bill had a strong influence in maintaining high morale and esprit de corps among the employees. He was witty and outgoing, and directed the planning of many of the company's annual parties, theater parties and dinner dances.
Some of the affairs were on such a lavish scale or did not quite fit the Trench level of good taste, that C.J. sometimes had to put the brakes on Bill, whom he admired for his ability to follow through and get things done without lengthy and meandering conferences. One occasion that was said to have particularly upset C.J. was a party staged by Bill, but paid for by the employees, for a young lady at AMM who was to be married. It was held Friday night at a respectable tavern and restaurant on Fulton St., and of course many people besides AMM staffers were in the establishment. Friday was payday for many working in that area. At about 11:30, and only about 15 minutes after this writer luckily had left, four or five masked hoods entered and quickly cleaned out the possessions of the guestsnot only their pay, but also valuable jewelry and watches. It was a sizeable haul and the case was never solved.
Aluminum Comes of Age
Aluminum: the metal of war.
With billing like that, it's little wonder that aluminum has become more associated with World War II than any other single metal. The truth of the matter is that although the wartime expansion of aluminum in the United States permanently altered the shape of the industry, the industry was more than a half-century-old by the beginning of World War II.
Aluminum Company of America (Alcoa), initially named the Pittsburgh Aluminum Co. and later the Pittsburgh Reduction Co., was founded in 1888 by Charles Martin Hall, Capt. Alfred E. Hunt and other Pittsburgh industrialists. The founding of the company followed by only two years Hall's discovery of the electrolytic process for reduction of aluminum from aluminum oxide, making commercial production of the metal economically possible.
As a product of advanced technology, long protected by patents, world aluminum production was tightly controlled by a handful of companies that had the access to that technology. Such was the case with Alcoa, renamed in 1907.
Prior to the Post World War II era, Alcoa was as its name might suggestthe aluminum industry in the U.S. By 1937, amid increasing international tensions in Europe which would eventually draw the U.S. into warAlcoa's annual shipments had reached more than 300-million pounds, essentially the total of domestic shipments that year.
"Although w e were really the aluminum industry, w e were still comparatively small," John D. Harper, former president and chairman of the board of Alcoa, recalled. "We were trying like the devil to find things to use aluminum for, and we were in the process of doing what we've done ever since the formation of the company. We were in the process of trying to develop new uses. We did something very few people have done," he said. "If we developed a use for aluminum, we'd start up a company and make it (the product) ourselves until we'd get the market steady."
By the late 1930s and early 1940s, the 50-year-old company was ready to enter a phase of development that would drastically alter the course of the industry.
In separate interviews, Harper and Allen S. Russell discussed development of the aluminum industry during and after World War II. Harper, now of Comsat in Washington, joined the company in 1925 as a 15-year-old part-time employee. During the late '30s and '40s, he served in the Alcoa Power Division in Tennessee.
Russell, vice-president and chief scientist at Alcoa, joined the Alcoa Research Laboratories in 1940 as a research chemist.
Although Alcoa is probably best remembered for its wartime involvement with the federal government, it was actually an expansion program begun by the company in 1938 that may have been its most important undertaking.
Russell recalled: "The period of the '30s was, of course, a very difficult time for the aluminum industry a time of decreased sales and expanded inventories. By the year 1938, the industry still had heavy inventory positions and poor sales; it wasn't the best year. "But," Russell observed, "It was in the year 1938 that Alcoa executives decided to double the size of the company." This voluntary expansion program resulted in a number of new plants, the most important being the construction of the world's largest and most modern rolling mill at Alcoa Works North Plant in Alcoa, Tenn. The plant, which started up in 1941, played a significant role in building up the nation's air armada as the major supplier of aluminum sheet for the wartime output of more than 300,000 aircraft.
"Historians have said since this time that had Alcoa not taken that action, the results could have been disastrous because that was the plant which furnished the extra production for the aircraft that saved England," Russell said.
Harper agrees with the importance attributed to the North Plant. "This mill later rolled out most of the sheet for the Free World airplanes during World War II," he said. "Without that mill, we could not have built a fraction of the airplanes, not only for us, but for the whole Free World, because most of the sheet for all the airplanes came from that mill.
"I guess you can call this the timeliest plant ever built. This was built purely on our management's judgment that there would be a market for it. It came in just about exactly the right time," he noted.
"I think the people running Alcoa at that time had a lot of vision," he added. "They also had a lot of nerve, a willingness to gamble a lot, to build a plant."
Following on the heels of Alcoa's voluntary program was the company's wartime effort in conjunction with the Defense Plant Corp. Under a program administered by the DPC, Alcoa built and operated some 20 smelters and fabricating plants throughout the United States.
"I think w e were the largest contractor for the government during this period," Harper observed. "We built all those plants for cost plus $1, using our technology, without charging the government. No other contractor did that. This really built the aluminum industry in this country."
Russell remembers the early '40s as "a very exciting time" in the aluminum industry. "It was expansion everywhere in a frantic effort to get out the additional final product, which was, in that case, often airplanes."
Greatly increasing capacity was no easy task, particularly given the shortage of trained (and untrained) personnel to operate the plants.
"It was hard to get people and it was hard to get materials," Harper said. " W e had to stretch some people we took salesmen we didn't need and made plant managers out of them."
But with 24-hour workdays and seven-day workweeks, produce they did. "We say the time required to build a major aluminum plant is in the order of two to three years; these plants were built more in the order of one year," Russell noted.
Locating plants was tied to power sources. One plant was built near New York City in order to take advantage of power made available during blackouts. The plant was dismantled following the war. The job of obtaining the all important often fell to Harper, who at that time was coordinating power operations in the Tennessee River Valley.
"I bought power from every source that ever was," Harper smiled. "We found in Memphis, for example, some DC generation for a streetcar system that was shut down," he recalled. "So we got it started up and some rotary converters converted that back to AC and we put it in the system. Not economical, but it was still power."
Harper remembers an aborted plan to utilize the Normandy"it had a tremendous amount of generating capacity." However, before plans could be completed to have the ship moved to Mobile and tied into the power system, it burned and capsized. But despite the problems encountered in expanding production, expand Alcoa did.
The company's aluminum shipment statistics reveal that from the time Alcoa undertook its voluntary expansion program until the end of the war, shipments grew steadily. Much has been written about the 1945 Supreme Court decision that ruled that Alcoa's 90 percent share of the aluminum market was prima facie evidence that the company was anticompetitive and had to be broken up. Opinions on the topic range from the belief that Alcoa controlled one of the most effective monopolies on trade in history to the view that the company's only "crime" was to have created a demand for aluminum that it then satisfied by having plants ready to produce it.
Selling off the Alcoa-built smelters and fabricating plants to competitors by the federal government following World War II was no easy pill to swallow for the company that had become synonymous with U.S. aluminum production.
Both Harper and Russell recall the dispensation of the plants with mixed feelings. "The attitude of Alcoa would no be monolithic, Russell observed. "The attitude of many individuals, I would suspect, spanned from extreme resentment to what was my viewthat this was absolutely necessary for the industry. If the aluminum industry was to take full advantage of the metal, there must be several suppliers because the major user will hate to commit himself to a sole source for his material."
"Essentially," Harper said, "after World War II, the government sold the plants that we had built to other people and put them in competition with us at a very low price. We didn't like it; we weren't happy about it."
Some 30 years after the fact, Harper admits that his views have been somewhat tempered. "Actually, I suppose that you'd have to say that it was probably a very good thing, because I think the fact that we had competition made us grow smarter and work harder and do a better job. I think competition always does that. But, at the same time, you didn't find many of us very happy about it."
Despite the appearance of new competitionparticularly the emergence of Reynolds Metals Co. and Kaiser Aluminum & Chemical Corp. as dominant factors in the industry Harper dismisses the notion that competition was anything new for Alcoa.
"We've always been in a competitive position because we've had to scratch for every new thing that we've done," he asserted. "We've had to essentially prove that you can make it out of aluminum better than you could make it out of steel or bronze or wood or what have you."
Fears that the nation could not cope with the vast output of aluminum from the tremendous war machine for the most part proved unfounded. One factor that helped spur the development of aluminum markets following the war was that the U.S. GI had come to see aluminum in his daily lifein planes, mess kits and canteens.
"This was a period of very intensive market development," Harper explained. " W e were faced with not only a lot of capacity, but we were faced with a shift from war usage to commercial and domestic usage."
The architecture/building market was exploited shortly after the war. Although the first extensive use of aluminum in architecture was in the construction of the Empire State Building in 1930, efforts were increased, including the development of new alloys for architectural applications.
Aluminum sidingrelatively inexpensive and easily maintained found a ready-made market in GIs returning home and anxious to find housing.
One of the largest, and most significant, markets for the vast new aluminum capacity was in the area of consumer durables, to make the vacuum cleaners, washing machines, refrigerators and other products being clamored for by returning GIs and their families.
For Alcoa, the post-war years were not only a matter of developing new markets for aluminum, but also for re-opening markets that had been closed down because of the company's all-out effort to serve a defense oriented market.
One such product line was Alcoa's "pots and pans" market. In 1901, the company had organized the Aluminum Cooking Utensil Co. as a wholly owned subsidiary to manufacture the firm's Wear-Ever cookware. During the war, production of the utensil line was closed down in favor of other production.
"As long as we've stuck to a few fundamentals, we've done well," Harper said. When we exploit the basic characteristics of aluminumits light weight, corrosion resistance, ease of fabricating and ease of finishing weve really done well.
Into the Scrap Age
You know," Si Wakesberg, commodities vice-president for the National Association of Recycling Industries (NARI), smiles, "you're asking m e about things that happened so long ago, that it's like in another life."
And indeed, though Wakesberg is recollecting events that took place a scant 40 years ago, the events seem like they happened a lifetime ago.
The year was 1945, World War II was just winding down and Wakesberg had just started as a reporter and editor for the weekly Waste Trade Journal and the Daily Metal Reporter. The scrap industry was in its infancy, producers, for the most part, set iron-clad prices, the commodities exchanges played a minor role, aluminum and some of the alloying metals were virtually unheard of and there was but one scrap metal broker in business.
"I would say that the big story was the growing importance of scrapmetal scrap," Wakesberg recalled about the early stories he wrote for the two publications. "Strange as it may seem, the metal scrap industry was not the prime segment of the entire waste industry. When I first began to learn about this industry, textile waste and paper waste were, in a sense, the aristocrats of the industry.
"World War II really gave the metal scrap industry a shot in the arm. By the end of the war, metals had become a big thing in the United States, so the idea was, where to get the scrap," he noted.
"And, ironically, while today the U.S. is the largest exporter of scrap in the world, in 1946 it was looking to import scrap," Wakesberg explains. "And, of course, there were two big areasGermany and Japanthey had all the scrap, everything there was scrap. And that was the story: How to get that scrap over here so it could be used by industry that was then beginning to work not on defense projects, but on civilian projects."
Charles Lipsett, publisher of Waste Trade Journal, was one of the key figures in setting up a commission that went overseas to arrange for the shipment of scrap back to the U.S. With the import of scrap into the U.S.some of which was captured war materialthe business started to grow and expand in new directions.
"We tend to look back now and think, for example, that the stainless steel scrap industry has been here forever," Wakesberg observed, "but it's like a baby. I began to hear about stainless steel scrap and nickel alloys in the late '40s and you know, I knew nothing about it."
Wakesberg learned about this | new business from Maury Young, in Youngstown, Ohio, whom he went to interview. "I thought I'd find a huge plant, the way he was advertising, with thousands of people working. Well, I saw a small office with one guy sitting there with about six telephones on his desk, no exaggeration.
"He was a broker, but he was extremely knowledgeable and he had learned this new business that was coming up and he was one of the first guys I encountered, although there were others in Greenville, Pa., where National Nickel is today. "There was nothing like stainless steel stuff before this, so we saw it coming up right under our noses. What happened before that? They took that nickel scrap and threw it in with iron and steel scrap and it was worth ten times as much, but nobody knew it."
Another major difference in the scrap business today is the specialization of dealers. "When I first came into the business, they had what they called a wholesale scrap dealer, and that wholesale scrap dealer would buy everythingcopper, lead, zinc, whatever. And he would buy it from small dealers and then would separate it and would go on and sell it to consumers," he explained. "Today there are no such things as wholesale dealers."
With the specialization came the need for special equipment, laboratories, testing and identification. The industry grew up to a billion-dollar industry after the war. The re-opening of the London Metal Exchange (LME) and the opening of the Comex in New York years later, helped bring profound changes to the industry. Without the two commodity exchanges, prices remained relatively stable, changing on a weekly basis or even less often, Wakesberg recalls.
The copper producers, for example, had a strong hold on the market and they would put forth a priceAnaconda or Kennecottand that would be the price," he explained. "It was leisurely and controlled. The people who ran the business were copper producers who knew about copper. They weren't oil companies, and they knew how to handle a market. So our job was really to find out if a price was going to change."
The LME provided a check on world prices, but it soon grew to have an impact on the price of scrap. "You want a picture of the times, I'll give you this: One day I set out to interview a scrap dealer in Philadelphia. I came to Philadelphia," Wakesberg recalled. "I came to a dingy building. It looked like it was going to fall apart. I climbed up a series of rickety steps with every one dangerous, I came into a rather dusty office and a guy came in and he had a hat on h e was working in the yardbut he had a ticker in his office from the American Metal Market and he was getting the LME price for copper.
"It was very incongruous, but very symbolic of the things that were going to happen. That was the beginning of the change in the industry, which became very LME-conscious, very Comex-conscious, and some people say it was the ruination of many scrap dealers who paid more attention to the Comex than to their own business."
As the volume of the business grew, the number of brokers dealing in scrap grew sharply. The family nature of the business also started to change, though not as rapidly as some of the other sectors. Many of the early factors in the scrap business were immigrants, with practically no money, but many of them did very well for themselves and their families.
"At the NARI seminars at the University of Wisconsin, I look at these kids and I realize I knew their grandparents," he said, smiling. "For example, I knew Harry Klaff, the founder of H. Klaff, which today is integrated into Steelmet, but was probably one of the pioneer nickel- alloy stainless steel dealers. His son, Jerome Klaff, later became president of NARI, and his son-in-law, Marvin Plant, is the father of Morton Plant, who is today president of the Institute of Scrap Iron and Steel."
The cost of getting into the scrap business, incidentally, was substantially lower during those post-War years. "I used to talk to scrap dealers who used to say that you or anybody could sell scrap," Wakesberg recalled. "You go over and you buy a piece of property and you put a fence around it and you have a scrap yard. What else do you need?
"Then came a period when guys used to say to m e that to put the key in the door and open a scrap yard you need $1-million. Not everyone can go into the scrap business. But these early guys started little by little."
When Wakesberg started covering the scrap business it was not only a family business, but a personal business.
"I interviewed a guy in Cleveland one day, 70 years old, founded this company. His son was sitting there, well-dressed, and I said to him, when I got through talking to him, 'Is your father around? I want to say hello to him.' He was out in the yard. There was this old man, over 70, directing the operation of the company. I must admit, I had a lot of respect for these guys."
Wakesburg noted that for many years, Daily Metal Reporter and Waste Trade Journal had the scrap business as an almost exclusive news beat. Scrap Age and Recycling Today had not been launched, and AMM gave limited coverage to the industry.
One area where AMM and Daily Metal Reporter did compete, though, was in price reporting. To get the tin price, for example, which was AMM's mainstay, Daily Metal Reporter "challenged the price."
"This is what we did: We'd call a company," Wakesberg said, "let's say, and let's say they tell us they bought or were able to buy tin at a certain price. We would then call another company and if they told us a different price, we'd say, 'Well, we know where you can buy...' We were acting almost like a broker, in a sense: 'We'll give you the name of a company and you call them.' If the guy backed away, well then his price was very suspect. If he went through with it, w e went back and forth.
"I remember there were times when we'd start at a quarter to 12 and go on 'till a quarter to one, just going around and around on this thing 'till we finally arrived at what we thought was the actual price. It was a fascinating thing, I really enjoyed the tin price market." Because scrap prices weren't as volatile, there was no need to use the challenge system. Instead, Wakesberg developed a system of rotating his calls so that dealers would be called once every two months, to prevent any one dealer from gaining too much influence.
C.J. Trench (Man of Mettle)
The death of C.S.J. Trench, editor and publisher of the American Metal Market, on August 20, 1951, brought to a close a career that spanned nearly a half-century.
Although the paper would remain in the Trench family until 1972, the death of the 71-year-old editor and publisher was, indeed, a turning point in the life of AMM. Following in the footsteps of his fatherwho had purchased the paper in 1899 and served as its editor and publisher for the next 30 yearsC.J., as he was known to his colleagues, served in that same position for 22 years.
It was in 1929 that he succeeded his father, C.S. Trench, to the helm of what was already by then the authoritative voice of the steel and metals industries. But, if birth gave him these positions, his own love ofand talent formetals, statistics and journalism made him the ideal editor of a metals newspaper. He was, in fact, fully prepared for his editorship. By 1929 he had more than 27 years of experience as an AMM writer behind him. By the time of his own death, he had served the paper for nearly 50 years.
C.J. was raised in the unobtrusively prosperous business community of late 19th Century New York. The eldest son, he was born in 1881, the same year his father founded C.S. Trench & Co., a New York metals trading firm.
He was sent away for his education, as was often the custom first to Fay School in Southboro, Mass., and then to Ridley College School, a newly opened Angelican preparatory school in St. Catharine's, Ontario. The influences of his background and education made him a classic 19th Century gentleman, believing in duty, charity and 19th Century economic liberalism with its emphasis on free trade, competition and anti-isolationism.
After his graduation from Ridley in 1899, he entered business. He worked briefly in banking and with Stewart Trench & Co., jobbers in tin plate and metals, before joining his father's metals company in 1901. Moving to his father's firm gave him the opportunity of working for the American Metal Market. C.S. Trench had purchased the paper in 1899 and managed it along with his metals company. In 1902 C.J. also began to combine reporting with his brokerage work.
Except for a short association with the British War Mission in New York in 1918, probably inspired by his father's British birth and interests, C.J. Trench spent the rest of his life with these two companies, succeeding his father as president of C.S. Trench & Co., which he incorporated, and editor and publisher of AMM on his father's death in 1929. His double duty was made easier by the fact that both companies were housed in the same building.
His love of metals was deep and abiding, even to the point of limiting somewhat his knowledge of other important affairs, according to one man who knew him. But it was a love which en compassed scholarly, as well as financial, interests.
In the course of his life, C.J. Trench became one of the leading authorities on tin. He wrote widely on metals, especially on pig tin and tin plate. In addition to his memberships on the New York Metal Exchange, the Commodity Exchange and the American Tin Trade Association, of which he was the first president, he was a member of the American Zinc Institute, the American Institute of Mining and Metallurgical Engineers and the American Iron and Steel Institute.
Statistics fascinated him. Though he had no belief at all in forecasting from statistics, he entertained himself and enlightened his readers with tables, charts and graphs. He prided himself on the factual accuracy of his work; indeed, it was the one area in his life where he allowed pride to intrude, according to a colleague.
This pride in accuracy extended to his paper; he had a horror of inaccuracies, he could tolerate differences of interpretation he gave his staff considerable latitude in presenting editorials with which he differedbut facts were facts.
His enthusiasm for metals and statistics, combined with his devotion to work, helped him greatly as editor of the American Metal Market. Though he could, especially in his early days, be "a stern taskmaster and devastating critic," according to a staff member, he never asked more of others than he would of himself.
"He was a prodigious worker and was often concerned with many problems simultaneously," a colleague recalled. "There were many days when he wrote the editorial, four nonferrous metal reports, assembled some statistics, prepared other copy, handled correspondence and managed business affairs. His workday was too short and might have well been three times as long to accomplish all that he desired. He enjoyed writing about metals and, occasionally, on world affairs. He was not only editor and respected executive, but news reporter and human counselor. When everybody else was leaving the office after a day's work, he would remain at his desk to tackle new problems."
He also possessed a considered concern and a spontaneous kindness that won him the loyalty, as well as the respect, of his staff, which he called "colleagues." He appreciated a job well done and maintaining the paper was the effort of an organization, not simply his own. And if he held strong positions himself, he was willing to consider the opinions of others. He could also place himself in the position of others - not one person on the staff lost his position during the Depression.
He did not limit his gifts to the many charities he supported. There were also generous personal acts, such as his custom of taking the oldest male and female employees to a World Series game.
In his later days with the paper he sometimes told stories "about the old days of publishing a trade paper before the swarms of public relations personnel and the great volume of publicity releases."
At the time of his death, he was eulogized by many of the colleagues with whom he had worked. In an editorial published two days after its editor and publisher's death, AMM recalled: "The passing on Monday of C.S.J. Trench, president and publisher of American Metal Market, brought to a close a business career of over 50 years in the midst of the most phenomenal industrial and commercial expansions known to the modern world. In this remarkable drama, he was not merely a witness, but an active participant in his chosen field, and his appearance on the scene coincided with its beginnings, so his departure has occurred at the moment of its greatest expansion, with his prestige secure as an international authority on metals."
John P. Ruth, nonferrous metals reporter, said of his editor: "His autobiography would have represented an outstanding history of the marketing of metals during the half century."
Another AMM staffer, George Ehrnstrom Jr., wrote of C.J. Trench: "His interest in all phases of the metals trade and the reporting of it, as forthrightly and accurately as possible, won for him the full respect of all who knew him and his paper."
C.S.J. Trench, in sum, was a gentleman as well as a businessman. It is entirely fitting that on his last visit to the newsroom he should say, "It's not the dollars and cents that count, but what is fair and right.
Stewart P. Trench died in 1953, and was succeeded by R.A. Langer. Following Langer's death in about a year, the fast pace of executive changes continued. M.A. "Maje" Williamson, who had been in the paint business in Florida, was selected by the board of directors to head AMM, and became publisher and president. A graduate of Purdue University, he had been the band director there, and so acquired the nickname, Maje. His activities on Cliff Street centered mainly on planning and development. He served for two years, probably under a special contract arrangement until Archer W.P. Trench became chairman in 1956, about one year after he started working at AMM.
It is believed that the required majority control of AMM shares that year was accomplished by purchasing the stock of Stewart's widow. Archer's cousins, Charles and Pat, continued as officers of the company with Charles concentrating on advertising business operations and Pat highly involved with the editorial and printing activities. For some years he also wrote the tin report and other reports and remained with the paper until sometime after it was acquired by Fairchild. His brother left AMM in 1960.
During the 15 years that Archer W.P. Trench was chief executive of AMM, he was always a man of enthusiasm, outgoing, ready to listen to ideas from his staff and from people outside of the company. There was a kind of urgency about him. The publication became much better known by metal industry people, both on this side and overseas.
Archer was a 1937 graduate of Harvard and later attended the Harvard Business School. For almost a decade prior to joining AMM he worked mainly in sales for a Baltimore silver company and a New England manufacturer of ceramic coated metal products. While in the U.S. Navy during the war he saw service in both the Atlantic and Pacific areas and rose to the rank of commander. He won the Bronze Star in the Okinawa campaign. In 1969 he received the Fourth Class Order of the Rising Sun from the Japanese government for rescuing some 40 survivors from some small floundering vessel after hostilities had ended.
Archer, who then commanded a Navy supply vessel, took them safely to shore. The award was presented at ceremonies in Tokyo attended not only by many of the survivors but also Japanese dignitaries.
At the time of that presentation, the International Iron and Steel Institute also was meeting in Tokyo. Archer arranged a "briefing breakfast" for executives attending the meeting that was very successful. This innovation was repeated at several other international metal gatherings. H e generally tended to be on the move, exploring all angles of approaching new situations.
A number of special luncheons, at which some metal executives would speak and inform the staff, were developed. This evolved into the "newsmaker" conferences, which became very popular.
Reportorial capability and quality advanced and the staff was expanded. More attention was paid to special feature issues on a particular metal or trade association. Some of these became annuals or sections and supplements, the latter being the larger and more comprehensive. These efforts must have boosted the advertising income considerably. At one period about this time, George P. Lutjen was advertising manager. He was a mining engineer from Columbia University and later joined Engineering & Mining Journal. He subsequently returned to McGraw Hill following his experience in sales.
During this growth period AMM added to the editorial staff John Fry, a 27-year-old Canadian whod worked in Montreal for a custom publishing and public relations company that produced the magazine Aluminium News. Fry initially was hired to replace retiring copper editor Norbert Langer. His responsibilities rapidly expanded. He served as editor of something new for AMM -- periodic magazine-style sections added to the daily paper. In 1960 he was named AMMs managing editor. He spent time in London interviewing key traders on the London Metal Exchange. In 1961, he toured northern Europe reporting on the post-war recovery of the metal industry in Germany, on the four-year-old European Common Market organization in Brussels, and the Steel Committee of the Economic Commission for Europe in Geneva. Fry wrote numerous editorials on economics and politics affecting the metal industries. He headed the design project that converted AMM from a full-size newspaper to a smaller easy-to-read tabloid format that also powered the sale of more full-page ads.
Frank Smith, who became editor when C.J. died, held that post until his death in 1960, about four years after Archer became the chief executive. Smith started to contribute editorials in the late 1940s mainly on the economic, political and monetary scenes.
He was well experienced in guiding people without being a disciplinarian, as had been C.J. When a very young man from upstate New York, he joined the purchasing department of the Waldorf-Astoria. Later, he became manager of an important hotel in Baltimore. Following the election of Woodrow Wilson, Smith was chosen as secretary to Josepheus Daniels, the Secretary of the Navy. His office was located just between the offices of Mr. Daniels and Franklin D. Roosevelt, then Assistant Secretary of the Navy. Later on Frank joined an investment house and after the crash on Wall Street, he had a career with the Federal Deposit Insurance Corp.
Around 1958 Richard A. Lawrence joined the paper as controller, business manager and counselor. Lawrence was a lawyer working for a manufacturer of printing presses. Over the years he kept a close eye on the AMM operations and played an important role advising Archer. Later he became an officer of AMM and today is chief executive and principal owner of the printing facilities in Somerset, N.J., The Somerset Publishing Co.
William E. Hoffman became copper editor in 1960 after the Daily Metal Reporter was bought by Archer Trench from Charles Lipsett. Bill had worked under D M R editor Dr. Joseph Zimmerman.
When Edward J. Lally became editor, AMM had its first centralized news desk. Previously the copy usually was edited and headlines written by the various metal specialists. For example, copy related to copper would clear through Bill Hoffman around 1960. Lally had covered the steel industry from Pittsburgh for the Wall Street Journal and earlier had been a reporter for the U.P. news service. As a youth, he had been involved in a gold mining venture in the Southwest. He instituted brief weekly editorial conferences and strengthened the team of correspondents, and traveled quite a bit for special interviews.
The copy desk was headed by William Buckley from the Wall Street Journal who was highly skilled at editing, condensing, rewrite, make-up and the use of photographic art. He also wrote snappy, short editorials occasionally. Later, Bill joined Business Week.
Another important addition to the staff around that time was Hiram H. Howard, who had covered business news for a Pittsburgh dally. He became steel editor, operating out of Pittsburgh, and is now a senior editor. His capacity to get on top of some steel development at short notice was probably unmatchable because of the large number of sophisticated experts he cultivated in many channels over the years.
The goals of Ed Lally were to brighten the paper, to produce a clean, clear journalistic product. He wanted AMM reporters and editors to have more interviews with industry leaders, and encouraged the staff to search for news beats. He insisted that the staff not rely on news releases. Ed was quite close to his writers and they enjoyed his gentle sense of humor and stories of his news gathering experiences.
Not long after AMM moved from Cliff Street in the downtown financial district to uptown Manhattan, Lally left the paper to head public relations for the American Iron and Steel Institute at its new headquarters in Washington. In the fall of 1963, managing editor John Fry departed to become editor of SKI Magazine, and eventually editorial director of several magazines owned by a division of the Los Angeles Times.
After considering several options, AMM signed a long lease in late 1961 to rent two or three of the floors of a spacious building at 525 West 42nd St. just west of Tenth Avenue. At considerable cost, the company purchased a new high speed rotary press to shorten printing time and make it easier to meet post office delivery schedules. Unlike the old press at Cliff Street, there would be no production problems should daily circulation rise substantially above 15,000. The new press was installed in the basement, along with a high-speed operation for attaching the address label or wrapper to each paper.
The transfer of operations took place in the spring of 1962. Moving most of the typographers' and other equipment had to be performed over a weekend.
Most of the staff appeared to receive a psychological uplift on 42nd Street, moving from a gloomy, cramped and outmoded atmosphere to bright and spacious surroundings.
The president, controller, advertising manager and others had pleasant offices. There was also a large conference room with stacks of shelves for books. The typesetting department was on the floor below, on the fifth, and to the rear. In the front portion was the large editorial room, with a giant green oak directors' table and a larger copy desk from which edited copy could be passed through a hole in the wall to the printing area. The shop was supervised by long-time printing foreman William Traynor.
Among the staff during the Ed Lally editorship was a giant of a very likeable chap from the Bronx who had played football briefly for Coach "Biggie" Munn at Michigan State. Another staffer, William Weeden, was on the copy desk and for a short while reviewed the theater and restaurants for the paper.
Following the departure of Lally and Fry, Archer Trench searched slowly and carefully for a successor, during which period he, Pat Trench and Jim Stafford provided a sort of subdued direction.
Michael C. Jensen was chosen as editor in early 1965. He had been a special editorial aide to the publisher of a respected Boston daily, and was a graduate of Harvard who also earned a master's degree in journalism. Perhaps he did not even know the difference between tinplate and galvanized steel, but after a year of so of intense reading, indoctrination by all the staff and much contact with many in the industry, plus learning about metals while writing, Mike thoroughly established himself.
During his nearly six years at AMM, he launched the AMM forums that dealt with metals and related subjects.
It is believed that during the soaring Sixties there were some very good years for advertising. The sales manager was Owen Kean, who almost always reflected optimism and usually tended to softpedal any subtle suggestions for the editorial staff.
During 1966, the staff was informed of approaching major changes in AMM operations. Land had been acquired in an industrial park near Somerset, N.J., about 40 minutes by car from Manhattan. The new plant would include the latest costsaving equipment for cold metal printing and computerized typesetting, and a new high-speed press.
The move to Somerset took place before mid-1969. Simultaneously, Archer rented modern new offices at 576 Fifth Avenue, where he had his headquarters and a large conference room that also functioned as the library.
Mike Jensen, Jim Stafford, John Ruth, Bill Hoffman, Dave Morganbesser and a few editorial assistants and space salesmen and the editorial unit of Metal Center News were located on Fifth Avenue, where most of the editorial copy was cleared. There were direct telephone connections with the Somerset copy desk, feature and supplement editors and Pat Trench. Facsimile transmission between Somerset and Fifth Avenue was employed.
There were about 16 on the staff, excluding those in district offices, and a number of scattered part-time contributors. During Jensen's regime, John A. Moore became editor of special sections (and then, later on, managing editor for a rather brief period).
When Karl Rannells, the aluminum editor, retired in the late sixties, he was acclaimed and roasted at a lively "Out-of-the Trenches before Christmas" party which was attended by many from the aluminum industry and his journalistic friends.
After Karl departed, David Morganbesser covered aluminum, and at times wrote editorials for several years. Dick Carmen was a highly skilled copy editor and reporter who later worked as production editor.
Circulation probably reached its peakabout 16,000possibly two or three years before Mike left AMM to join the financial news department of the New York Times in autumn of 1970.
In August 1971, came the shocking death of Jim Stafford after a heart attack while on summer holiday. He was only about 57. Following Stafford's death events moved quickly at AMM. In October, it was announced that Fairchild Publications was purchasing the American Metal Market, Metal Statistics, Metal Center News and the price information wire service.
An Editor Reminisces
Many a subscriber has called the American Metal Market at some point, looking for a key price before it appears in the next day's edition.
Although a long-standing policy keeps reporters and editors from disclosing such information before the paper is printed, there was a time when simpler production processes made it available.
"The first American Metal Market site where I worked, down on John Street, had the presses," William Hoffman, longtime copper editor, said. "They had to use a building across the parking lot as editorial space."
Stories ready to be set in type were dispatched from the newsroom by a conveyor aross the parking lot, he said, but "more than once the damn thing fell, and somebody on Wall Street must have known what the prices were before w e published them."
Hoffman retired from AMM in 1976 with more than 25 years of experience covering the metals industry and an equally extensive store of knowledge about the paper. He studied it from several perspectives, including those of an employee under both Fairchild Publications and the Trench family, which owned and ran the paper until 1972.
Hoffman also knew American Metal Market for 17 years as a competitor, working under the tutelage of Dr. Joseph Zimmer- Nancy Bobrowitz is an AMM reporter, based in New York. man as a staffer for the Daily Metal Reporter before its demise in 1960.
"Zimmerman was the ringmaster," Hoffman said, and among his charges were Si Wakesburg, who went on to become commodities vice president of the National Association of Recycling Industries, and Si Lippa, current city editor of Women's Wear Daily, another Fairchild newspaper.
Hoffman also recalled Ben Morris, an employee on the business side of the Daily Metal Reporter. Hoffman described him as "a first sergeant."
"He had six rolltop desks that he kept jammed full of the oldest newspapers and tidbitsyou couldn't imagine. If you came up to him and said, 'Ben, I have to know something that happened 10 years before,' he would walk over to one of his desks and come out with a slip of paper on which he'd scribbled something which only he could read, and he'd tell you what you wanted to know."
Then there was Charles Lipsett, publisher and owner of Daily Metal Reporter.
"Ask him for a raise and he'd turn off his hearing aid. But if we were talking about him he could hear us across the building he'd turn around and look at us."
Although Hoffman and his colleagues wrote for the Daily Metal Reporter, their copy often appeared in a sister publication through a process known as "scotching."
"The way we did it at Atlas, scotching consisted of writing daily market reports for the Daily Metal Reporter. W e used hot type, so at the end of the day the forms were broken up. The printers would mark what was to be saved on the galleys or on the paper itself. Out would come all these stories and then they would be used in Waste Trade Journal, which was weekly, and all we had to do was change 'yesterday' to 'last week.' And we usually tried to update the prices."
Each paper was under pressure to match the stories printed by the other. Hoffman recalled the differences in those days between the Daily Metal Reporter and what he referred to as "the old AMM."
"At DMR we had to rewrite most of the handouts that came in. At the old AMM , they used to run the handouts complete. They had a big paper, the old style with eight columns, and they had to fill it. They would put everything in. They needed a big staff," he said.
The larger staffing requirements of AMM proved fortuitous for Hoffman and fellow Daily Metal Reporter staffers. When their paper folded in 1960, AMM found space for them on its staff. Hoffman was quite happy with the change.
"I don't want to downgrade the DMR, or Joe Zimmerman. But I must say, coming from the Daily Metal Reporter to the American Metal Market was like going from steerage to first class. Under Archer, everybody went first class.
"First, the salaries. And the American Metal Market editorial room wasn't a palace, but it had a lot of help, a lot of people, and it was a much bigger organization. In 1960 they had an editor for all the metals except the minor metals, and two people working scrap. "American Metal Market had a news desk and copy desk, which was unheard of at the Daily Metal Reporter. At DMR, everybody read their own copy and gave it to the managing editor. There was no news desk, unless something was checked by Joe.
"When I came to AMM, Archer Trench was firmly in control. It was a family-owned newspaper and it'd been modernized. They no longer ran press releases in full," Hoffman noted.
"Archer was a very young man, tall, outgoing, quite aware of being with-it. And he took as much interest editorially as he did in the business side of the newspaper. Between the old Daily Metal Reporter staff and the publisher, there was a huge age gap. Charlie was in his 60s then. Archer was in his 40s."
Hoffman described Trench's management style as "impulsive and flamboyant. He had good ideas and he wasn't afraid to gamble on them. During Hoffman's early years at AMM, he said, the paper's offices in the financial district of New York made him feel as if he was "at sea."
"They knocked through the walls of one building into another, and the floors always slanted. And with the presses downstairs, the building shook," he said. City fire inspectors, apparently aware of the building's condition, conducted frequent fire drills.
Whether it was the fire drills or some other impetus that prompted the Trench family to relocate is unknown, but Hoffman and his colleagues soon found themselves in new quarters on West 42nd Street between Tenth and Eleventh Avenues.
American Metal Market occupied most of the six-story building. "We hated the place. Why? I don't know what happens today, but the West Side, at that time it was a pit," Hoffman stated.
"The only place with a decent meal was the West Side Terminal they may have turned that into something else by now. It was at the corner of Tenth. Sometimes we'd walk way over to Eleventh and there were a few hotels or something, and we'd eat there."
Trench, seeking a more modern printing plant, sold the building and moved its editorial and business staffs to offices on Fifth Avenue at 47th Street. For the first time the paper was printed on offset presses outside New York City at a plant in Somerset, N.J.
The new offices were on an upper floor, "just high enough that you couldn't get a good look at the parades down below on Fifth Avenue," Hoffman said. "The first day there we all scattered for lunch, looking for places where our clients could take us. And that afternoon, one of the other staff members came to m e and said, 'Bill, who are those guys on 47th St. between Fifth and Sixth Ave.?' He said, 'You know, as I walked by, I got the feeling...were those diamonds they were dealing with in the gutter?' and he said 'They had these long earlocks.' "
"Of course, the people he was talking about were the diamond traders, the Hassidim. "We were glad to be there because there were a lot of places to eat on Fifth Ave." The paper moved again in 1972, this time because it had been sold. Hoffman was about to leave for a National Electrical Manufacturers Association convention in Spain when Trench called the staff together and told them the paper had been acquired by Fairchild. "It was a sad day because the Trenches were leaving publishing," he said. "You couldn't have asked for better bosses."
"We heard different stories about why they sold. I guess some estate had to be settled, and the cash would come in handy to settle up. Archer or his cousins, I think, said that their children had no interest in the publishing business. They weren't going to fight any longer so they sold the newspaper. "Fairchild saw it as a very good deal and I think it turned out to be a very good deal. They needed a companion for their Metalworking News, which was a weekly. "Archer must have been very homesick (after AMM was sold to Fairchild) because a year or two, maybe three after AMM was disbanded, he had a big Christmas party or I don't know what up at Rockefeller Center. We had the whole thing to ourselves. I guess he wanted to see us all."
Hoffman reports that he had little trouble adjusting to the new setting and staff. If anything, the pace at Metalworking News was a bit slower than what the AMM staff considered normal, he said.
"People who work on weeklies tend to fill up the time of the day it takes to do a little rewrite. I think the people on the copydesk were surprised at how fast the people on the daily were knocking out copy. "We quickly picked up the pace."
During his tenure at AMM, Hoffman worked for many years with another metals industry veteran, Robert Regan.
He "came to work in just a little suit jacket and nothing elsewinter and summer. And in winter, at that back window where he used to sit, he'd keep that open. He used to have a little fan to blow the air in. Anybody else got pneumonia." Hoffman collected tales of the copper industry and its personalities for another 15 years before he left the paper in 1976. That year, at what was to be the final Copper Club meeting he would cover for AMM, Hoffman was surprised with an award and the chance to recall a few of his more memorable incidents.
Simon Strauss, currently vice chairman of Asarco Inc., New York, was master of ceremonies.
"So I went up to the dais and Simon presented me with a nice bowlwhich by the way, we use quite often, fill it up with fruit saladand Simon said, 'well, Bill, the floor is yours. Speak frankly, whatever you want to say. I looked around and I thanked them. I said Thank you again. And I walked off.
Prosperity & Challenge: Two Decades of Steel
The steel industry's veterans remember the Fiftiesthat first full decade after the hectic years of World War IIas steel's golden age.
As one of the industry's historians put it in a review of those years: "Government regulations were few by today's standards. Imports were no problem. Money was easy to borrow at low rates. There were no material shortages. Demand for steel was heavy. And the customer was easy to please."
Contributing also to a sense of well-being during that period was a fairly consistent record of good earnings, averaging over 6 percent annually on sales, and a strong rise in shareholders' equity, from $5,438,000,000 in 1950 to $10,248,000,000 in 1959.
The demand for steel, spurred by the Korean War, seemed almost bottomless during the middle Fifties, and finished steel shipments in 1955 hit a new peak of 84.7-million tons, or 22.5-million tons more than during the peak World War II year of 1944. The industry's revenues climbed during the decade from $9.5-billion to more than $14.2-billion annually.
But the Fifties weren't devoid of conflict. The United Steelworkers of America, and other unions, too, flexed their muscles. Edwin H. Gott, then a young engineer who later became board chairman of United States Steel Corp., remembers being "locked in" struck steel plants three separate times during a single year.
President Harry Truman briefly seized the steel plants to win acceptance of a government labor board's settlement terms in 1952. And in 1959, most of the industry was shut down by a strike that lasted 116 days and caused the loss of an estimated 26-million tons of steel production.
But labor troubles didn't discourage the domestic steel industry from growing. By 1960, the industry's steelmaking capacity reached 140- million tons annually, versus about 100-million tons years earlier.
But a sea change began to occur in the steel market going into the Sixties. During the Fifties, imports were a minor factor. But the long strike of 1959 cracked open the door to foreign steel because many steel consumers, balking at the cost of building up their steel stocks as a hedge against steel labor trouble, began to look abroad. It was soon obvious that plenty of foreign steel had become available.
Imports in 1959 leaped to nearly 4.4-million tons, dropped back moderately during the following two years, and then started a steady climb, leaping to nearly 10.4-million tons in 1965 and to nearly 18- million tons in 1968.
After World War II, much of Europe's steel industry was in ruins. Aided by the Marshall Plan, however, Europe built new and highly efficient plants. The Japanese were even more aggressive, having made the construction of a world class, ultra-modem steel industry one of their nation's primary goals.
Steel from these new plants, many equipped with oxygen furnaces, sold in the U.S. at prices that sharply undercut domestic mill quotations.
With so much foreign steel available, on top of still-rising domestic capacity, it steadily became more apparent during the mid-Sixties that the supply in most products was potentially far ahead of demand.
As a result, it became more difficult for domestic producers to raise prices to cover rising costs. Even so, most of the major producers invested heavily in plant improvement projects.
As of 1960, U.S. steelmakers had only a few B O F furnaces and their combined output was less than 3.5-million tons a year. By 1969, however, when the domestic industry set a new raw steel production record of 141-million net tons, the basic oxygen furnaces made over 60- million tons, almost as much as the open hearths, and the industrys electric furnaces made more than 20-million tons.
Halfway through the 20th Century, steelmaking and steel processing in the U.S. long had been a mature industry, and was the worlds largest. Starting the sixth decade, however, the domestic steel companies had to start playing a whole new ball game.
Gott, Stinson: Growing Pains
War proved the domestic steel industry could produce. Peace provided the time to make it better. "Demand was so strong, you could sell all the steel you could make in the domestic market or, for that matter, in the export market," George A. Stinson, former chairman and chief executive officer of National Steel Co., observed. "Maybe," he suggested, "people (in steel) were so busy they didn't have time to advance the industry's technology as fast as they might have."
U.S. steelmakers were keenly aware of the need for new technology and improved steelmaking processes during those decades, and worked hard on both, Edwin H. Gott, former chairman of United States Steel Corp., said. Gott, w ho served as chairman from 1969 to 1973, singled out continuous casting as a major achievement.
"I would say that this country did the prime work on continuous casting and made it a commercial thing," he asserted. U.S. Steel experimented with a miniature continuous caster at its South Works in Chicago "sometime in the Fifties, when I was manager of operations," he recalled.
Somewhat later, he added, the company built a full-scale caster and "we learned an awful lot from it." U.S. Steel also built an experimental top-blown oxygen furnace and researched this process long before its worldwide adoption as a steelmaking "breakthrough," Gott noted. Many domestic steelmakers, he pointed out, were blowing oxygen into their open-hearth furnaces to speed up steel refining and to cut costs prior to their installation of BOF furnaces.
In another major effort, U.S. Steel developed a successful process for making two-piece tin cans back in the Fifties, through a contract let to an "outside laboratory." Using this process, Gott explained, tinplate was deep-drawn and formed into a seamless can body, essentially the same process used today to make most of the two-piece steel and aluminum beer and beverage cans.
The major can makers rejected the new idea, Gott said, charging the can makers were "jealous" of their own processes, including the welding and "cementing" of can side seams. It's a shame that the two piece metal can has been so long arriving, Gott commented, "but w e had to comply with what our customers wanted." Surveys have determined, Gott was reminded, that many people don't see the domestic steel industry as sufficiently innovative, and also have the impression that U.S. producers lag Japan and other nations technologically.
"I know it," Gott answered. "It's probably the feeling of most of the public. But I don't think it's correct at all. It's true, of course, that their (Japan's) mills are new, and that if you were building a new mill you wouldn't put the old stuff in it either. But this isn't something you can condemn us for. The Japanese got their technology from us. They have no process over there that w e don't have," he maintained.
Most of the industry's post-World War II expansion was in the same old steelmaking processes used through the first half of the 20th Century. The big producers built more and ever-larger open-hearth furnaces and upgraded their iron smelting blast furnaces. In the Sixties, Stinson said, "people began to wake up to the fact that technology was moving ahead and that we'd better get with it.
He credits Thomas E. Millsop, then president, and George M. Humphrey, chairman of National Steel, for working together.
"Tom knew the steel business better than George did, but George was a real statesman," Stinson observed. "They decided to move on technology. Their first step was to build the industry's first really big basic oxygen shop at our Great Lakes Steel plant (near Detroit), and they brought it into production in 1962."
That shop had furnaces so mammoth they could process nearly 400 tons of molten steel in a single batch, and just two of them were rated to produce more than-4-million tons of steel a year. These new high-speed furnaces, which could convert hundreds of tons of molten iron into steel in about 40 minutes, completely replaced open-hearth furnaces, which took eight hours or more.
But the new oxygen furnaces were only part of National Steel's far-sighted program to make maximum use of advanced technology.
Additionally, and simultaneously, Stinson recalls, his company engineered and built a whole new plant at Portage, Ind., in the Chicago area, for finishing and coating sheet steel in coils, and what was then the world's most powerful and fastest mill for hot-rolling wide sheet.
This new multi-stand continuous rolling mill, which cost about $100-million to build at the Great Lake Steel plant, was labeled a "new breed" mill to distinguish it from several dozen older continuous strip mills built during the Forties and Fifties.
With rolls 80 inches long and highly automated, the new mill could roll a 35 ton slab of redhot steel into a giant coil of sheet steel less than 1/16 inch thick. Furthermore, it was coupled to a computer programmed to control its speed, toll pressure and other variables for maximum productivity and product quality. As of 1962, it set new standards others had to follow to remain competitive.
Of National Steel's heavy spending during the Sixties, Stinson commented: "It was borne in on m e pretty well that basic oxygen furnaces had to replace open hearths. So, before that decade was out, w e retired all of our open hearths. In fact, w e retired the last of them in 1969."
This open-hearth retirement program included the company's Weirton, W.Va., plant, mainly a producer of tin plate and other coated sheet and strip. S o m e of the open-hearth furnaces there rated as the largest in the free world, but all were shut down and replaced by what National Steel called "the mill of the future."
This single steelmaking complex combines extra large BOFs (oxygen-blown furnaces) with the domestic steel industry's first two-strand continuous casting machine for shaping molten steel into slabs.
Financing improved technology was much easier in those days than it has been over recent years. "Our balance sheets were stronger then. And w e had a better debt to equity ratio," he noted.
"I don't remember exactly what our own ratio was in those days, but I suspect it was somewhere around 20 percent. I also very well remember that the money w e spent in the early Sixties (for B O F shops and other capital improvements) was about half from a bond issue and about half from the banks, and that we paid back the banks within the first year."
Currently, Stinson observed, almost all of the nation's major steelmakers are burdened with much larger debt-to-equity ratios (30 percent-plus for most of them).
Putting the cost upswing over the past decade or so into proper perspective, Stinson noted that National Steel built its Great Lakes plant for about $100- million in 1962. To replace it today, he estimated, probably would be around $400-million.
Steel's financial record, compiled by the American Iron and Steel Institute, the industry's trade association, shows that net earnings through the Sixties averaged less than 5 percent on revenues, versus an average of over 6 percent during the previous decade.
Further, income declined as a percentage of sales even though total revenues improved by more than one-third, from $14.2-billion in 1960 to $19.1- billion in 1969.
Also on the minus side were steel's employment costs that climbed much faster between 1960 and 1969 than steel sales volume. In 1960, employment costs (including social security, insurance and pensions as well as wages and salaries) totaled $4,031,000,000. In 1969, such costs totaled $7,495,000,000, a rise of about 85 percent.
In repeated negotiations with the steel union, steel's major producers managed to reach new contract agreements without a major strike in the decade. In view, however, of the industry's sharply rising labor and employment costs during this period, critics of the steel industry's financial performance have raised these questions:
Did steel management agree to pay too much for continuing labor peace, especially after foreign imports became such a big factor in the domestic marketplace?
Could the industry's negotiators have been tougher at the bargaining table, especially against union demands for wage and benefit gains greater than the industry's productivity gains during most years?
Gott observed that steel's negotiators "might have done a little better in certain negotiations, but not all, if we had had a united front While stressing that the industry always tried to negotiate its labor agreements "as a team," he added: "It wasn't a very closely-knit team, unfortunately. It was hard to hold them all on the same seat. Somebody was always backing out at the wrong time, making concessions. There was never a really united front."
Government challenges equal rights for minorities, environmental regulations and tradeprovided more growing pains for steel. Gott believes the industry has done a creditable job in these areas, citing the high employment rate of blacks and women, and continuing expenditures to fight pollution, including more than $1-billion by U.S. Steel.
The area where there is more to be done, both executives agree, is regarding steel imports, which Gott called the No. 1 challenge to industry today. Stinson traces the problem back 20 years, to the Japanese industry's growth and marketing.
"Looking back on it," Stinson commented, "I've often thought that things might have been handled better to dissuade the Japanese from doing what I think was a very disadvantageous thing for the whole world steel industry. They built their capacity up to the sky and went out for a big share of the world market. They took it away from the Europeans and came in here (into the U.S.) in great volume. Making it pretty obvious that they regarded steel as their prime target industry, they put unlimited government funds into low-cost loans."
As chairman of the American Iron and Steel Institute from 1969 to 1971, Stinson led an industry campaign for government action to hold down imports by a quota system.
The outcome was the negotiation, by the U.S. State Department, of so-called "voluntary" import restraint agreements with Japan and other major steel exporting nations.
In Stinson's view, this "voluntary" system "worked well" for a time because it put a cap on imports even though it didn't roll them back. "Without it," he declared, "I think we would have been looking at them getting 25 percent of our market instead of 16 percent.
The Torch Passes
It is is mid-way through the 1960s and the central African nation of Zambia, newly- independent of its British parent, is feeling the strains of autonomy.
Various factions have begun to press the young nation's president, Kenneth Kaunda, to wrest control of its vast copper mines from the foreign companies that developed them. But Kaunda, a former schoolteacher who built a political base during the last of the colonial years, finds that practical considerations keep him from unilaterally nationalizing the mines.
Looking back to those years, Jean Vuillequez, today a consultant to Metal Traders Inc., New York, recalled the situation." The big problem at that time was that the mines could not be operated by the locals. They didnt have the skills. The Zairians were in a better position because Belgium (their colonizer) taught the locals useful skills, to be good carpenters and muckers and to understand the rudiments of metallurgy. The British didn't do anything like that at all. In fact, the (Zambian) labor union seemed more interested in seeing that the Zambians learned nothing, except to use a shovel," he said.
"Therefore, anybody who wanted to nationalize had to be dead sure they could retain enough people to operate the mines. "The Europeansthey were called Europeans but it was really a union of skilled workers with white facesthey threatened all kinds of things if there was nationalization.
"And this deferred nationalization quite a bit until these chaps, these expatriots, were getting so much money that it became clear, nationalization or no nationalization, they were not going to quit. They were getting quite a premium (over African workers and over mining engineers in other parts of the world)."
Vuillequez viewed the tumultuous events of those years from a front row seat. He arrived in what was then known as Northern Rhodesia in 1963 to form the Ametalco Group of Roan Selection Trust, stayed on as executive vice-chairman of Roan, and led the company's efforts to negotiate the terms of nationalization before he left the country in 1974 to assume the vice-chairmanship of Amax Inc., which by that time had acquired Roan.
His recollection of those years was framed by civil and eminently comfortable living conditions on one hand and the evolution of an independent Africa on the other. Neither seemed to be ahead in 1927, when he joined the former American Metal Co. Ltd. as a bookkeeping clerk in New York.
After moving in rapid succession through various posts in the sales department, he was named its manager in 1946. American Metal, with its sales agencies, was at that time on the verge of becoming "probably the biggest individual seller of lead, zinc, and copper in the world. They had Inco copper, Zambian copper, Cerro copper, Carteret, copper in Mexico and Chile. They were biggest in lead largely because of Cominco and Cerro. Plus Pinoles in Mexico. In zinc, they had Yugoslavia. They were merchants, sales agents and highly integrated producers on their own," he said.
Despite the broad nature of its affairs worldwide, copper was the cynosure in Zambia in 1963, when Vuillequez arrived. "The political pressure was on Kaunda to nationalize the mines from what w e call liberals here, or maybe you call them leftists or socialists. They wanted to see that the natural resources belonged to the people. That pressure was very great, and I think it had the effect of hastening the takeover of the mines.
"I don't think it's possible to exaggerate the importance the type of government South Africa had on the thinking of the Zambian president as to what he should do with those mines. There was a feeling of hate against the South African whites because of the way they treated the blacks. Many of the skilled mining people came from South Africa, so the president and the entire administration were under tremendous political pressure to try and say, 'We own this and we are not going to allow anything to be done on behalf of the government of South Africa,'" he said.
Vuillequez contended that Roan Selection Trust might not have been a primary target of the nationalization drive.
"Kaunda didn't want the bigger group, the Anglo American Group, which was controlled from South Africa, to be in charge of those mines. And he couldn't take one without taking the other. The country was fine during that time. W e had no problems. It was much better than now. There was no anti-white problem or anything like that," he observed.
"It's only recently that they've had the murders and rapes. And I don't think they're racially directedthe direction is chiefly economic." Even in 1963, Vuillequez said, it was clear that Kaunda would eventually want control of the mines. In 1967, Roan and the Anglo American Group offered, "a majority interest (to the government) so they could show they had control, under certain circumstances," he said.
"At that point, (Kaunda) told (Sir Ronald) Prain, (chairman of Roan) in m y presence that he had no intentions of nationalizing. Well, in 1969, the president announced at Mulungushi Hall that he was going to take over the mining industry. The terms that came out were that they were going to start off with 51 percent and they were going to pay book value," he said.
Then the negotiations began. Vuillequez and Gavin Relly, negotiator for Anglo American immediately found out that "those people were trying to get the mines as cheaply as possible," Vuillequez said. H e resorted to some unusual tactics in order to make the Zambians believe Roan's shareholders were agitating for tough terms.
"I remember, during one of the negotiations, popping out to the airport and flying to Nairobi, and from Nairobi making a telephone call to Ian MacGregor, whose company, Amax, owned 42 or 43 percent of (RST). I asked him to please send us some tough telexs. I told him that if he got some very lousy answers from me, that he should not pay any attention.to them. You couldn't possibly telephone from Zambia or telex because everything was monitored.
"Negotiations were tough because they wanted to negotiate everything on the basis of book value less what they thought had not been sufficiently depreciated.
"But it so happened that the RST Group had a low book value, a very, very low book value because they had over the years quite a record of charging off to costs, what they called replacements. That is, if they put in a new piece of equipment, it would be charged off to costs. It was their way of diverting taxes. It was perfectly permissible and they were allowed certain replacement philosophies by the tax code.
"On the other hand, Anglo American did it the other way. They capitalized their replacements. So the Anglo American Co. had a very high book value and the R S T group was very low.
"I found myself in the position of trying to fight the very principle that the president had established and at the same time my so-called friend, the Anglo American Group, didn't have the same incentive.
"You're in a difficult position when you say, 'You know, what I charged off to expenses 10 years ago really should have been capitalized,' because then they say, 'Well if it should have been capitalized, then you should pay taxes on it.' Then the rejoinder was a fast little one. 'Yes, but there was no Zambia then, it was the British government as a colony then.'
After hours of discussion and argument, led by Andrew Sardanis, government negotiators finally conceded the point to Vuillequez.
"Other issues in the negotiations were the Zambianization of the trading corporation, the management contract, the sales contract and what those services were worth and what the obligations of the company were.
"Negotiations took about a year, once or twice a week. I personally didn't mind the negotiations going on as long as possible. I felt w e had time on our side. I felt the price of copper was going to go upwhich it didand at least make the book a little more valuable. At any rate, w e did get an adjustment of the book value, of which they paid 51 percent. We did get something like $100- million.
"In June or July of 1970, when the negotiations were about completed, (Amax chairman) MacGregor, who was no dummy, and Donald Donahue (Amax president) came through and w e had some private talks.
"They were satisfied with two thingsthat I got extemalization of all the quick assets of RST, which could have been taken over by the government (and that amounted to around $200- million in 1969 dollars, quite a lot of money), and they were happy with the book value I had produced.
"They were not happy with the management and sales contract. I told Ian at that time, 'Look, they're going to renegotiate that contract, because they are too good.' Well, that's exactly what happened, and Mr. MacGregor was gracious enough to tell me that at the time, that he was sorry that I had been right.
Vuillequez presided over the second set of negotiations, as well as over talks between Roan and Amax when the latter acquired full ownership of Roan in 1970.
Looking back over those years, Vuillequez recalled that he and Prain differed on the potential value of nationalization. "Prain thought nationalization would improve costs. I thought it would be just the other way. I was right. It's fair to say that changes in production and costs that had been planned went just the other wayproduction went down and costs went up. I think it's fair to say that management by the Zambians, by the government, has resulted in much lower efficiency.
"By this time (1981), RST should have been producing something like 650,000 tons of copper. It just hasn't happened. Same thing with Anglo American. I remember the country was supposed to get up to something like 1.2-million metric tons together. But they haven't gotten anywhere near that. They're producing something like 750,000 tons combined.
"Costs have gone up. They employ many more people for any particular job (for political reasons). The government found it necessary to continue operating even though they were selling at a loss, to increase the employment of the locals. Otherwise they wouldn't have stayed in power. I'm not blaming them. It's just a fact. The Zambian government, if it doesn't take care of Zambians, won't stay in power.
"The cutbacks that should have been made in 1975 were never made. You remember the boom in 1973 and 1974. The previous management would have cut production after that. The Zambians didn't. Why not? Because the Chileans didn't. Why didn't the Chileans? Because the Peruvians didn't. It was that kind of a vicious circle.
1972-1982: New Directions
On Jan. 5, 1972, Fairchild Publications bought American Metal Market from the Trench family, bringing to a close an 83-year chapter in metals journalism, and opening a page on a new era.
The purchase was a natural move for Fairchild, which was interested in acquisitions as well as developing new publications. "We liked American Metal Market because in many ways it was similiar to the business Fairchild had already been in," Kenneth Share, AMM publisher who was advertising director of Met New s at the time, said. "American Metal Market was a small circulation, but paid-circulation, newspaper with a high renewal rate." In spite of an increase in the subscription rate to $65 a year, the paper maintained its traditional high renewal rate of 80 to 85 percent. Its subscribers numbered 14,210 in 1971, according to Ayer Directory of Publications.
Metalworking News shared areas of common interest with AMM. With 48,721 subscribers, its circulation was much higher, but its $3 a year subscription rate was far lower.
Robert Mastro, then Met News editor and needed area of expansion. The market for Metalworking News at the time was limited, he said. "So w e felt what w e had to do was expand our marketget a bigger pie. We felt w e wouldn't have to spend an enormous amount of money to do this" with AMM.
Once John Sias, then president of Fairchild and now president, publishing division, Capital Cities Communications Inc., raised the issue of acquiring AMM with Daniel Newman, then publisher of Met News and currently president of Fairchild, in early 1971, it did not take the Met News people long to conclude they wanted the metals daily. By the end of July, Newman and Share, who conducted the analysis of AMM for the company, supported purchase. Shortly thereafter the board of Capital Cities Broadcasting Co., the parent company of Fairchild Publications, accepted the presentation by Sias and Newman recommending acquisition of AMM. In the late summer and fall, Sias, with the help of Newman, negotiated with Archer Trench for the paper.
The analysis of American Metal Market preceding the purchase included questions on the impact of combining AMM and Met Newsquestions on the estimated revenues of such a paper, the basic sales approach and the publishing concept.
Newman, Share and Mastro all expected the two papers would be joined, although the purchase itself was not contingent on union and no dates for union were established at the time of acquisition. The announcement of the sale in the Jan. 6 issue of AMM said only "Fairchild will continue daily publication of American Metal Market and other activities."
The Metalworking News executives believed a combined paper would offer more to the readership of both papers, but there were fears that the two groups of readers, which overlapped only slightly, might see losses rather than gains in a combined paper. The fact that such a venture would be more costly to the company in the short run, according to Share, simply added to the sense of risk.
In the end, the uncertainty of readers over company plans worked in favor of a rapid decision. Since all the executives favored union and since there were difficulties in maintaining control over staff when the papers were managed as separate units, in early March the company announced a decision to combine. The March 6 issue of Metalworking News carried a letter from Newman to the readers announcing that "On April 3 and every Monday thereafter the Monday edition of our sister publication American Metal Market, will be added to Metalworking News and all its regular features" at no extra cost. The March 8 edition of American Metal Market contained a similar letter, one that also announced the decision to begin air delivery of the paper.
The move was not strongly supported by the staffs of either American Metal Market or Metalworking News. Management was no problem; since none of the AMM management came over in a full-time capacity, Metalworking News assumed this function. Newman became publisher, Mastro, editor, and Share, advertising director. But staff opposition on both sides was "fairly intense," according to Mastro.
There were 32 editorial people on the combined staff, in New York and the eight bureaus; 12 came over from AMM. Both groups were anxious to retain their identities and loyalties, and editorial styles differed. The Met News people, who "had grown up together," according to Mastro, prided themselves on their aggressive pursuit of the news. The AMM people were less aggressive, more concerned about not upsetting their readers.
The problems of adjustment were, of course, worse for the AMM New York staff. By the time they had moved to Fairchild headquarters, feelings ran so high that even the number of files to be transferred was an issue. Although the move was only from midtown Manhattan to 7 East 12th St., on the edge of Greenwich Village, the change from a family business to a corporation was not measured in blocks.
Closer contact did not allay AMM staff fears. "They didn't trust us as far as they could throw us," Mastro said, admitting some of the staff fears were justified. Tensions were so great that the AMM people agreed to keep their files, cards and sources locked up and pretend they didn't have any, because they were afraid the Metalworking News staff would alienate their sources and their advertising accounts, according to Mastro. Though resentment died down with time and a few staff changes, Mastro recalled that moving the offices was "the most painful and hectic thing I have ever been through in m y life. It was outrageous."
The question of what to call the combined paper was also difficult. The possibility of retaining both names by having the Monday issue, which was to be the Met News issue, called other issues American Metal Market, died due to postal regulations, according to Share, which decreed one name only for a daily. Once the decision was made not to develop a new name, the executives came down in favor of the older, daily name. Mastro and his associates agreed. " We saw the tail couldn't wag the dog," he said.
American Metal Market/Metalworking News did not take the metals and metalworking industries by storm. Although management felt the editorial product improved immediately in both sections of the paper, some groups in the industries served had negative comment they felt the two papers should have been left alone. The new paper did not receive the acclaim that some on the staff expected. Mastro remembered second-guessing the decision to unify six or eight months later. "I don't think w e saw that some of the goals came more subtly than w e thought," he said. It was only when he looked at the financial statements after 18 months that he realized the venture had succeeded.
Since then, the path of American Metal Market/Metalworking News has been relatively smooth. The readership may be a little more split between the two sections of the paper than was expected in the early, idealistic days. Postal rates and with them subscription ratesmay have gone up much more than anyone could have predicted. But neither of these conditions slowed the growth of the paper. In mid-1981, 16,000 people pay at least $225 a year for AMM and 47,000 pay at least $26 for Met News.
"Our business had grown much faster than w e expected it to," Share said. "American Metal Market is much more successful than our original estimates." It is, in fact, the leading Fairchild Publication in subscription revenues.
In 1973, the editorship of American Metal Market/ Metalworking News passed to Patricia L. Walker, whose association with the paper began in Chicago in 1969, as a Met News reporter. In 1971 she joined the New York operations of Met News as associate editor.
John Moore, managing editor of AMM at the time of the merger, left the company and Walker assumed that position. In 1973 she became editor of the combined paper.
From a four to six-page daily, American Metal Market grew to 20 to 24 pages; Metal- working News ran from 40 to 56 pages. Special supplements, focusing on topics as diverse as copper, special machine tools and commodity trading, evolved from thin, newsprint sections to magazine type supplements, printed in color, and outnumber the publishing weeks in a year. Metal Statistics, which first published in 1903, was a leading statistical source on metals production and prices.
Looking ahead to the next 100 years, one tends to follow C.J. Trench's philosophy of not venturing to forecast prices, to "waste time on crystal ball theories." The factsthe statistics that C.J. so reveredwill speak for themselves, and AMM will continue to probe them.
Let the second century begin!