-Caveat Lector-
an excerpt from:
Mellon's Millions
Harvey O'Conner�1933
Blue Ribbon Books
New York, N.Y.
--[5]--
5
Aluminum Becomes
Mellon-metal
F Andrew Mellon was content to accept his father's Nineteenth Century social
ideas, he quickly discarded allegiance to the industrial system of small scale
competitive production on which they were based. Hardly a single merger of
jangling interests in Pittsburgh in the years following 1898 failed to bear
the impress of Mellon money or Mellon organizing. To him, combination became
the life of trade. Whether in coal, street railways, glass, natural gas,
water, public service, the magic wand of Union Trust brought coordination,
harmony in place of competition and price slashing. If stockholders often
failed to profit, and the public had to pay higher prices, at any rate the
rewards to the promoters were ample.
Unquestionably Mellon's masterpiece in monopoly is the Aluminum Company of
America. To have fashioned the nation's only 100 per cent large-scale monopoly
from a mineral which comprises one-twelfth the earth's surface, may to future
generations seem his outstanding achievement.
Lucky accident placed aluminum at Mellon's doorstep; a superb organization
propagated its virtues, applied its uses; but it was the Government itself
that cooperated with the Pittsburgh banker to force industry to beat a path to
his door. For twentyone years it shielded him from domestic competition by
throwing the mantle of patent protection around his process of manufacture;
thereafter tariff walls along the American seacoast kept his European allies
from falling out of line in the world-wide lockstep of aluminum prices.
Never before had one man cornered a metal so useful and essential to mankind.
When the 33-year-old banker took charge of aluminum's destinies, it was the
rare bauble of kings, an ornament to besilked and bejeweled ladies. But no
year since 1888 has failed to turn up a new use. Today it is essentially the
metal of the Twentieth Century, the metal of strength and speed and beauty. To
the future belongs Mellon-metal: aluminum planes, ships, railway cars,
automobiles will speed through air, water or along the earth's crust.
Silver from clay, they called it in 1884, when architects capped the
Washington Monument with the precious substance, aluminum, then selling at the
price of silver, $16 an ounce. Napoleon III patronized its production and
ladies of the Empire delighted to feel its feathery lightness in spangles on
throat, bosom and wrist. Chemists and metallurgists even then were conspiring
over bubbling pots and furnaces, to find more efficient processes to wrest
aluminum from powdery alumina, and alumina from bauxite, the whitish mineral
whose ultimate reduction presented such mysteries.
Official biographers of the American aluminum monopoly give Charles M. Hall,
Oberlin graduate, credit for the American invention of the process for
reducing alumina by electrolysis in a bath of cryolite, an obscure mineral
from Greenland's icy mountains. Oberlin was unable to furnish a furnace large
enough for further experiments. Boston capitalists who kept him in supplies
for six months decided the young inventor was pulling their legs. A Cleveland
banker praised him, but had no money for such esoteric researches. It was
then, in 1887, that he turned to the Cowles brothers, proprietors of the
Electric Smelting & Aluminum Company whose Brush dynamo at Lockport, N. Y.,
was the largest in the world. The Cowles had been producing aluminum alloyed
in copper for several years.
Here versions begin to differ. The Cowles declined to accept Hall's process in
return for a share in the company, assert the official biographers. "Let us go
to Pittsburgh," said Hall to his brother. "There is a city that is looking for
ideas." To Pittsburgh they went, to sell their ideas, or as Alfred Cowles
later insisted, to sell his ideas.
Henry Phipps, Carnegie Brothers partner, and later allied with Mellon in Union
Trust, is credited with being the first steel man to employ a chemist to
examine the seething contents of furnaces, placing his industry on a
laboratory basis. Such a chemist was Alfred E. Hunt, graduate of Massachusetts
Institute of Technology and later superintendent for Park Brothers Steel Works
in Pittsburgh. In 1882 he and George H. Clapp formed the Pittsburgh Testing
Laboratories, whose purpose it was to ally experimental science* with the
rough and ready men who made or bought products of Pittsburgh's iron and steel
mills. To Hunt and Clapp, Inventor Hall explained his process. Where hard-
headed business men had turned him away, the metallurgists gave respectful
attention, and backed it with $20,000 for an experimental plant. By November,
1888, Hall was turning out fifty pounds a day, to sell at $2 a pound. The
day's product was locked in the safe at night.
Soon it overflowed the safe. The newly organized Pittsburgh Reduction Company
was overwhelmed by the very efficiency of the new process which turned out
metal faster than the demand of Pennsylvania Avenue curio shops, Union Square
jewelers and a few advanced industrialists could absorb it. Tradition-bound
industry, as a whole, was reluctant to embrace the new-fangled metal. It would
have to fight for its life.
President Hunt of the new company sought an appointment at 512 Smithfield
Street. This was not merely an ornamental -metal, he explained to A. W.
Mellon. The French and German armies were experimenting eagerly with its use
for helmets and culinary gear for soldiers. The French navy was considering
building a torpedo boat of aluminum. In industry, too, it would soon be
competing with copper, brass, tin and nickel. Its praises must be sung in the
market places, the company must educate plant managers, buyers, consumers,
concerning the virtues of aluminum alloy, a third the weight of steel and just
as strong.
Mellon knew nothing about metallurgy. But he could visualize the role of
aluminum. In his cautious, hesitating manner, though, he would have deprecated
the suggestion that this puny $20,000 company which was begging him for help,
one day would count its assets at a sum ten thousand times greater. For
himself, he set minimum estimates on future earnings, and then welcomed all
the more heartily whatever was added thereunto. He called in his brother Dick.
They organized Pittsburgh Reduction into a $1,000,000 corporation, allowed
Inventor Hall a generous portion of the stock and kept 40 per cent, reputedly,
for themselves.
No one knew positively. Indeed secrecy was essential in this young monopoly.
For years it refused to publish figures on production, profits, dividends or
to release information of any kind. Guards patrolled its properties and
espionage became essential to see that workmen revealed none of their isolated
scraps of knowledge concerning the process.
Armed with a $250,000 credit from T. Mellon & Sons Bank, Manager A. V. Davis
dispatched salesmen, wrote letters, interviewed makers of machinery, wrestled
with reluctant kitchen utensil manufacturers. Young Davis was of the breed
known as "Mellon men," the kind judge Mellon loved to lecture while handing
out copies of Franklin's Autobiography. Son of a Boston preacher and a college
graduate, he did manual labor for two years, saved a little money and went to
Pittsburgh, where he began some little real estate deals.
One day he dropped into the bank to see A. W. Mellon. "I want to borrow $200,"
he said. "I'll tell you the worst. I am a college graduate and the son of a
minister, but I mean to pay." Mellon made him a personal loan and kept track
of him. Later he lent young Davis more and when the Mellons adopted Inventor
Hall and his aluminum process, he got a job.
With the price of aluminum pegged at $2, lower than Cowles' quotations,
profits were inescapable if sales could be pushed. Under Hall's driving, the
cost of production had been cut to $1 a pound. Unremittingly he puttered about
the furnace pots, adjusting an electrode here, changing the cryolite bath a
trifle there, instructing workmen on the proper care of the delicate
electrical mechanism.
The Cowles plant was also turning out pure aluminum now. Competition raged,
for the only time in the history of American aluminum. Cowles produced
seamless tubing by extrusion. Hall brought out newer and tougher alloys.
The lawyers labored, too. The Mellons' Pittsburgh Reduction Company brought
suit against Cowles, claiming infringement of Hall's patent. Cowles' attorneys
introduced an interesting defense. This man Hall, they claimed, had walked out
of Cowles' Lockport mill with ideas and experience gained there which were
worth millions. Was there no protection against this pirating of processes?
they demanded. Hall's boasted patent, they charged, was based on Cowles' long
and patient work in wresting aluminum from the recalcitrant bauxite.
William Howard Taft, already portly, listened from his Federal court bench in
Cleveland to learned counsel arguing abstrusely the intricacies of aluminum
processes; listened patiently to lawyers praising Hall's daring experiments;
heard other lawyers paint a picture of black piracy and ingratitude by a
former pupil of the master.
Judge Taft, affable and always patient, permitted them to weave their verbal
charms and then retired to his chambers. Perhaps as befuddled as any layman,
he arrived at his own conclusions. Cutting the Gordian knot, he fastened on
the irrefutable fact that since Hall's plant had been operating, the price of
aluminum had been reduced. "This is a revolution in the art," he declared,
"and has had the effect of extending the uses of aluminum in many directions
not possible when its price was high." He himself had been obliged, while the
patent suits were pending, to step in between the adversaries and arbitrarily
fix prices, first at $1.50 a pound, and six months later at 50 cents. He found
for the Pittsburgh Reduction Company.
That signature, "Taft, J.," was worth $100,000,000 to the Mellons. It meant
that in years to come the Mellon fortune would reach out from Pittsburgh to
encompass the globe'; that Mellon ventures in every direction could depend on
the leverage of aluminum profits; that eventually the head of the
financialindustrial house of Mellon would sit at the left hand of the
President of the United States, dictating a nation's fiscal policy.
With Cowles out of the way, aluminum shot up to 60, 70, 80 cents a pound. No
longer were consumers of the metal able to play Cowles against Mellon. They
would pay toll at Pittsburgh Reduction's gates-or go without. To at least one
rising user, the Illinois Pure Aluminum Company, Taft's decision proved
costly. Benefiting by the price war between the two companies, it was using a
ton of aluminum a week for the manufacture of cooking utensils. The sudden
rise in price in 1894 after Pittsburgh Reduction's court victory nearly wiped
out its market.
In the wake of the now successful Mellon company came a score of fly-by-night
concerns sponsored by speculators, capitalized at sums ranging up to
$10,000,000, selling stock on beautifully engraved paper to credulous
investors. Prospectuses written in the best manner of the gold mining stock
fleecers laid before their covetous eyes the fabulous possibilities in the
newest metal. One firm staked out a $1,500,000 "Aluminum Company of America,"
later to be chosen as the title for the rechristened Pittsburgh Reduction
Company.
Thanks to a tariff of 15 cents a pound, kindly provided by Senator Cameron for
his friend, A. W. Mellon, aluminum's selling price was 70-80 cents against
production cost of 50 cents. But even the tariff could not keep foreign
aluminum from seeping through the frontiers, betraying lowered costs obtained
by Neuhausen's Swiss plant which was using hydroelectric power. The Mellons'
plant at New Kensington still depended on steamproduced electricity.
Niagara was leaping over its ledge in those days without benefit of utilities
companies. Here, determined Pittsburgh Reduction executives, was the American
Neuhausen. In 1894 they closed the first contract with the harnessers of the
falls, for the use of 6,500 of Niagara's horsepower estimated to produce four
tons of metal a day. About this time the Willson Company, a competitor, was
diverted from its original intention of making aluminum under European
patents, into the manufacture of calcium carbide.
On January 28, 1895, the Pullman car Serapis left Pittsburgh for the Falls.
Aboard were A. W. and R. B. Mellon, accompanied by President Hunt, Vice
President Hall and Arthur V. Davis, assistant general manager of Pittsburgh
Reduction, and a group of Pittsburgh capitalists. The flumes imprisoning the
power of the great river, the turbines on which the angry water dashed,
engaged their admiration at the Falls. But it was the building near the
cliff's edge that was the cynosure of their eyes. Here Niagara's electricity
surged through hundreds of carbon-lined "pots" where cryolite seethed and
boiled as alumina powder dropped into the bath. Hawk-eyed foremen mothered the
pots with care not lavished on a royal infant�a slight error would ruin
thousands of dollars worth of delicate equipment.
The directors, enthusiastic, climbed into their carriages and were whisked
away to Prospect House to consider wider aspects of monopoly, and that
delicate point in price fixing where the traffic had been loaded with all it
can profitably bear. There were other matters of moment. In 1891-92, the U. S.
Patent Office had finally granted patents to Charles S. Bradley on prior
applications from 1883 on, covering the fusing and decomposition Of ore by
electric arc, and then maintaining it in flux by an electric charge. Cowles
had obtained control of the patent. An exhausting legal battle started. The
Pittsburgh Reduction lawyers entered the fray hopefully, only to receive a
stunning blow; the court upheld the validity of the Bradley patent. Pittsburgh
Reduction lawyers fought on to 1901 when defeat was admitted. The Mellons were
forced to pay a lordly fee in compromise of Cowles' $4,000,000 damage claim
and for future rights to the patent. There was some consolation: the new
patent ran until 1909 extending for three years beyond expiration of the Hall
patents the Mellons! undisputed mastery of domestic manufacture.
The sweet harmony that ruled the American market, soon ruled the
international. The Mellons, whose knowledge of geography had been pretty
closely confined to real estate maps of Pittsburgh, now essayed pronunciation
of such words as Neuhausen, Froges, Ivigtuk, Baux, and talked with the
proprietors of Aluminium A.-G., Societe Electro-Metallurgique Francaise and
British Aluminium, Ltd. French and German companies soon saw the futility of
working at cross purposes and agreed, patriotically, that each combine was to
cater to its own government's demands for aluminum military and naval
accoutrements. Pittsburgh Reduction and British Aluminium. organized the
Aluminium Supply Company, Ltd., owned 50-50, to fabricate finished products
from the metal. Part of the agreement read that the Mellons were to make no
more sales in Britain; in return the British company bound itself to take
3,000,000 pounds a year of Niagara's output. Russia, by common consent an open
market, in 1898 placed an order with Pittsburgh for lightweight soldiers' kits
and other paraphernalia for the slaughter just a few years in the offing.
In 1899, Niagara's plant being pushed to 24-hour-a-day production, a site was
purchased for a new aluminum plant at Shawinigan Falls, Quebec. Hydroelectric
power was cheaper thin at Niagara, French-Canadian labor could be had for the
asking, and the tempting markets of the British Empire were at the disposal of
the Northern Aluminum Company, subsidiary of Pittsburgh Reduction, now that
its own exports to England were under a quota.
The public was permitted an insight into the closely guarded financial history
of the company in 1904, on the occasion of a 100 per cent stock dividend,
which boosted the capitalization of the little $20,000 concern of 1888 up to
$3,800,000, on which 6 per cent was paid. The company followed the useful
procedure in enterprises controlled by the Mellons of plowing back the major
share of earnings into added plant. Richard B. Mellon became president and
Arthur V. Davis general manager.
In 1907 President Mellon scrapped the parochial title of the company,
renaming it Aluminum Company of America, in token of its rise to eminence
among the great American metal corpora-tions. Year in and year out diligent
propaganda came to the desks of possible users of the light metal; an unending
campaign of education was carried on. Perhaps more important, Aluminum
maintained well-equipped research laboratories where metallur-gists toiled day
and night seeking lighter and stronger alloys. Aluminum foil was introduced to
the market to replace tinfoil, aluminum paint was extolled. Wire drawn from
aluminum rods was found excellent for electrical transmission. Now the expand-
ing automobile market absorbed hundreds of tons of the light metal for
connecting rods, pistons, and even entire engine blocks, and only the high
price kept it from supplanting steel altogether. For airplanes it was
indispensable. Into a wider circle of middle class homes, and hotels -and
institutions, aluminum cooking utensils found their way.
A second plant at Niagara now taxed to capacity, the Mellons turned to a new
source for power. But it must be cheap-much cheaper than Niagara where
competition of varied industries for electricity had raised its price. There
was only one more site in the North suitable for the mass production of
aluminum. That was at Massena, on the St. Lawrence River, far from possible
competitors for power. The new plant had 40,000 h.p. at its disposal.
1912 was the year of the New Freedom. A trust-busting professor from New
Jersey was campaigning up and down the land against the menace of predatory
wealth. Great combinations whose unholy power was robbing the people of
billions, he said, had reached into the innermost recesses of government. 19
12 was also the year of Roosevelt's Armageddon: the land shook in the outcry
against the Trusts and the Money Power. President Taft, whose judicial
decision twenty years before had set the Aluminum Trust on its way to
millions, carried only Vermont and Utah.
The clamor entered the portals of Union Trust and called for grave
consultations in which the Mellon brothers and Pittsburgh's best paid
attorneys took part. The Department of justice had also heard the clamor, it
seemed, and had been prowling about through the private affairs of the so-
called Aluminum Trust. There it professed to discover nearly all the well-worn
devices of pricefixing and competition-elimination that had been thought of up
to that time. Suit was filed in Pittsburgh Federal court to break up these
practices.
Aluminum's attorneys were pained to think that an assistant attorney-general
could fail to perceive the company in the role of public benefactor, bringing
to a happy people the blessings of a superior metal. If some of its practices
did smack of monopoly, well, this was no longer the day of the one-hoss shay;
and as for prices, it must be remembered that the company had developed this
new metal in thirty years, against three millenniums for iron and copper and
brass. Such haste should be rewarded.
Plenty of people thought otherwise. Manufacturers, particularly. Auto
engineers liked the metal but said that 20-22 cents a pound was high to pay
for something that exists in every clod. Other firms using aluminum for
cooking utensils, sand castings and what not, in competition with the trust's
subsidiaries, found strange vagaries in supply and quality as well as price.
All these had been brought to the attention of the authorities in Washington
and there was hardly anything to do about it except ask the Aluminum Company
to explain in open court.
The Mellons' legal talent decided that the less explaining done, the better.
Whatever the difficulties of trust-busting in an age of combination, this firm
at any rate had been caught red-handed in violation of the honored Sherman
anti-trust act of 18go, and so Federal judge Young had no alternative, that
pleasant June day of 19 12, but to enjoin Aluminum Company of America
perpetually from continuing certain too-obvious policies and agreements.
He declared null and void, for example, that curious agreement, signed in
19o8, between Northern Aluminum, Ltd., of Canada and the Aluminium A.-G., by
which Northern Aluminum agreed not to sell to the governments of Germany,
Switzerland and Austria-Hungary while Aluminium A.-G. was not to poach on
Mellon sales to the American Government. The agreement affected for the most
part the sale of military supplies. The court held Northern Aluminum, wholly
owned by Aluminum Company of America, to be a rather thin disguise to mask an
agreement signed in reality between the German and American companies.
According to the agreement, the two companies had partitioned the world
between themselves. The German company had reserved 75 per cent of the
European market for itself, conceding 25 per cent to the American, with
percentages reversed for the American market, and a 50-50 split declared on
Asia, Africa, Australia and stray islands. It was apparent that the MelIons
and the seigneurs of Neuhausen regarded the world as their oyster.
Judge Young further declared null and void certain contracts with domestic
companies which he interpreted as indicative of Aluminum's desire for a
monopoly' on bauxite, the basic raw material.
Pittsburgh Reduction had been a monopoly by grace of the patent laws, but
those days of governmental protection were numbered by the laws themselves. In
1906 the Hall patents would expire; in 1909 the Bradley. The problem had
already been weighed by the Mellons. The high tariff wall was excellent, but
it would shelter 0 aluminum companies in the United States, and the Mellons
much preferred that it shelter only Pittsburgh Reduction. To rivet their
unchallenged dominion of the market, it was necessary to sew up the supply of
bauxite.
In early years bauxite had been mined in Georgia. Pittsburgh Reduction,
impatient of the Georgians' crude methods, organized Georgia Bauxite. By the
turn of the century richer deposits were turned up near Little Rock and the
Mellon bauxite subsidiary took charge. Unfortunately other companies were in
the field.
In 1905 Pittsburgh Reduction bought General Bauxite Company, subsidiary of
General Chemical Company, manufacturer of alum and alum products. Several
clauses in the contract excited the curiosity of the Department of justice;
particularly the fourth, fifth and eighth, providing that bauxite sold to
General Chemical must not be resold to any other company for conversion into
aluminum. The Mellons were even more explicit: the bauxite sold to General
Chemical must be used only for the manufacture of alum, alum salts, alumina
sulfate, alumina hydrate, and for no other purpose. Both firms agreed to
encourage each other's business.
Null and void, said the court; but actually General Chemical after 19 12 never
sold bauxite for two good and sufficient reasons: Aluminum Company of America
was the only purchaser in the field and its engineers had a very exact idea of
how much bauxite General Chemical needed for its alum trade.
By 1909 but one independent bauxite mining company was left, that owned by the
Norton Company, alundum manufacturers. The Norton firm was able to exact a
creditable figure for its holdings and even to reserve for its own use forty
acres of bauxite land; "and may mine and sell from the said property bauxite
or other mineral taken therefrom for any purpose except for the manufacture of
aluminum." The land however could not be sold, save subject to these
restrictions.
That completed the Mellon monopoly on known bauxite deposits in the United
States containing 40 per cent or more alumina, the minimum percentage needed
for profitable commercial exploitation. Ile Hall and Bradley patents were now
anybody's property. Fortunately aluminum could not be made out of patent
papers alone.
There were other holes to be plugged, to be doubly sure. For example there was
the Pennsylvania Salt Manufacturing Company with its plant for washing the
gangue out of bauxite, leaving crystalline alumina. That firm bound itself in
1907 "not to enter into the manufacture of aluminum as long as this agreement
is in force." Null and void, said the Federal court. Nevertheless it never
entered the manufacture of aluminum.
Other contracts seemed to indicate Aluminum's desire to stifle competition in
other branches of the trade. Gustav A. Kruttschnitt and James C. Coleman of
the New Jersey Aluminum Company, for example, agreed, when they sold out to an
Aluminum subsidiary, not to reenter the manufacture and sale of finished
aluminum products east of Denver.
William T. Chantland, special assistant to Attorney-General Wickersham,
complained to judge Young of a score of Aluminum practices which restrained
competition, he said, in the manufacture of finished products. Three
subsidiaries made 87 per cent of the stamped and spun cooking utensils in the
United States and Canada. For the purpose of "closing the only door remaining
open to the complete control of the aluminum industry," Chantland asserted,
the Mellon firm had forced several large companies to combine with its
Aluminum Castings Company. By shading prices 2. to 5 cents a pound, in favor
of its own subsidiaries, Aluminum had forced reluctant companies out of
business or into the merger. Similar tactics had enlarged the Aluminum Goods
Manufacturing Company, another subsidiary, he charged.
Judge Young, by four verbotens, attempted to cover the field of derelictions
pointed out by the Department of justice. His perpetual decree enjoined
Aluminum Company of America from:
1. Without reasonable cause and notice, delaying shipments of
material to a competitor.
2. Refusing to ship, or ceasing to ship, crude or semifinished aluminum to a
competitor, on contracts or orders placed, or on partially filled orders.
3. Charging a competitor higher prices for crude or semifinished aluminum than
are charged at the same time, under like or similar conditions, a company in
which defendant was interested; and
4. Furnishing competitors known defective material.
In conclusion judge Young, affirming that the Aluminum Company "has a
substantial monopoly of the production and sale of aluminum in the United
States," asserted that when it shall appear that substantial competition has
arisen, the decree might be modified to the company's needed relief. Such
modification was never needed.
The trust bowed gracefully to rebuffs, avoided signed documents, appeased the
noisier complainants.
It was pleased to cede the palm of apparent victory to Prosecutor Chantland;
enough "null and voids" and "perpetually enjoins" had been issued to satisfy
the most captious. The company proceeded quietly to even more impressive
profits.
On the eve of the World War, Aluminum Company of America stood ready with an
unparalleled organization, anxious to serve the war-makers. Its plants in the
United States and Canada worked to full capacity, once the great slaughter was
on. Ninety per cent of its production, it was estimated, was dedicated to aid
the efforts of the civilized nations to annihilate each other.
Aluminum time fuses, its laboratory discovered, could be used for shrapnel in
place of brass, and several million were put into shells made in the United
States for the Tsar's government. Several thousand tons were used to point the
long-tapered rifle bullets. Air-cooled machine guns used radiators of
aluminum. Ammonal, composed of powdered aluminum and ammonium nitrate, became
popular as an explosive. Acieral, an alloy with 92-97 per cent aluminum, was
used for the poilu's trench hats. Airplanes took immense quantities of the
light metal.
Another stock dividend had boosted capitalization to $20,000,000. Dividends
rose from 4 per cent in 1913 to 10 per cent in z916-j8. In 1915-16 $20,000,000
was taken from profits, to double the company's capacity to help out in the
war. Mad Industries, the trade annual, could state in 1917 that the Mellon
company had invested since its origin about $70,O00,000 of undivided profits
in its business. Its properties were valued at $80,000,000 while the market
value of its $20,000,000 in stock was placed at $150,000,000.
Statisticians, calculating as closely as they could concerning a company whose
financial history had been carefully guarded, estimated that the Mellons had
not invested much more than $2,000,000 all told in their aluminum holdings.
The rest of the splendid property had been financed from its own profits. If
so, annual dividends now equaled the total cash investment.
Never was business better than when the armies fought to gain inches on Marne
salients. Northern Aluminum, rushing supplies to Canadian and British troops,
in 1916, reported profits Of 30 per cent on capital investment. French,
British and Russian war orders enabled President Davis of the parent company
to report to stockholders that Aluminum had made 25 per cent on its inVested
capital.
The war headed off another attempt to challenge the Mellon monopoly. A group
of French capitalists who conceived of America as a happy hunting ground for
profits, organized the Southern Aluminum Company in 1912 to acquire the
unfinished Whitney hydroelectric plant on the Yadkin River in North Carolina.
They had invested $5,500,000 in their plant when the dogs of war slipped their
leashes. Sources of additional cash suddenly dried up.
President Adrien Badin made the rounds of Wall StreetJ. P. Morgan, General
Electric, Lee, Higginson, First National -and even appealed to International
Nickel and Henry Ford. All declined. Why President Badin had such bad luck is
still unexplained; eventually he was obliged to turn Pittsburgh-ward, to
interview the proprietors of Union Trust, guardians of the American aluminum
industry.
There he met understanding sympathy. The Mellons, pained by his misfortune,
would be glad to look over his properties and see what could be done. Before
mid-year of 1915 they had agreed to pay M. Badin 28,000,000 francs to cover
expenditures which he had made in American dollars. The transaction
represented the loss of a cool million dollars to the French company. That of
course is not unusual in the sale of distressed properties, particularly when
there is only one buyer.
The purchase was a godsend to Aluminum. With its sales dockets bursting with
orders, its plants working day and night, here was a partly finished
development suddenly thrown into its lap when most needed. Engineers and
workers were routed to the Yadkin and dirt flew with incredible speed. As a
touch of sentiment President Davis renamed the company town which had grown up
around the new plant. Henceforth it would be Badin, N. C.
Prices reacted gratifyingly to the stimulus of war needs. From a nadir of 19
cents in 1914, they rose rapidly to 26 cents in 1915, and to 37 cents a year
later. The United States had been in the fray nearly a year before the War
Industries Board's price-fixers got around to aluminum. Bernard Baruch, who
had found it necessary to make a man-to-man plea to Henry Clay Frick to
persuade U. S. Steel to ease off on profit-taking, discussed the situation
with President Davis. On March 15, 1918, aluminum was fixed at 32 cents, 3
cents under contract rates but around half the market quotation for
speculative orders. Ten weeks later it was boosted to 33 cents. In 1920 after
the war was over, the price dropped to 22 cents, "to meet market conditions,"
as President Davis explained.
pps. 79-92
-----
Aloha, He'Ping,
Om, Shalom, Salaam.
Em Hotep, Peace Be,
Omnia Bona Bonis,
All My Relations.
Adieu, Adios, Aloha.
Amen.
Roads End
Kris
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