DEVELOPING WORLD MARKETS
Until the year 1914 American industry had been self-sufficient. Our
manufacturers made goods for home consumption, our bankers concerned
themselves only, or almost so, with American finance, and, broadly
speaking, the world outside was of comparatively small importance in
our business affairs. With the war this situation changed. The British
navy stood as an impassable barrier between Germany and her customers
abroad. England and France were devoting the mass of their man power
to fighting or the production of the wherewithal for fighting, and the
neutral, non-producing nations had only one market to turn to. They
came to the United States for all their wants of manufactured goods,
and in so doing brought home to the American manufacturer the real
importance of these vast markets he had previously neglected.
Some of our more far-sighted manufacturers, however, had long sensed
the value of this foreign commerce. They realized that the day would
come, sooner or later, when this country would produce a surplus of
manufactured goods above her own needs, and that if she was to be
prosperous she must find customers outside for this over-production.
They realized, too, that these markets must be assiduously cultivated
against the time when they would be necessary for the continuation of
our prosperity.
And among those who took this far-sighted view was the management of
the United States Steel Corporation.
In the office of James A. Farrell, president of the Corporation, at
71 Broadway, New York, stands a pedestal supporting a great globe. It
is a fitting ornament for that office, for the business of the great
steel company extends to practically every part of the known world,
literally “from China to Peru”; fitting, also, because Farrell’s name
is indissolubly connected with the development and extension of that
business in the markets of the world.
When the idea of a big steel combine was first conceived by Judge
Gary, one of the chief considerations in his mind was that such a
vast organization, and such an organization alone, would be able to
offer battle to the manufacturers of the other great steel-producing
nations--Great Britain, Germany, and Belgium--which were then
practically without let or hindrance, dividing between them the markets
of the world. The same thought was forcibly brought out by Charles M.
Schwab at the Simmons dinner, and was one of the most powerful factors
in influencing J. Pierpont Morgan to undertake the financing of the
giant steel merger.
Properly speaking, the development of the Corporation’s export trade
did not begin until about two years after the big company was formed.
Questions of internal organization were naturally paramount in the
Corporation’s infancy, and the first few years were taken up with
problems nearer home--physical organization, coördination, integration,
efficiency, economies, in a word, the welding into a harmonious whole
of the corporate organization and properties merged. Therefore, it
was not until the early part of 1903, when internal problems had been
gotten out of the way, that the question of securing export business
on a more systematic and profitable basis was actively considered and
steps taken toward the formation of an organization with a definite
export plan and policy. To do this, it was necessary to bring together,
to consolidate, the export offices and organizations of the several
subsidiary companies which had until that time been maintained on
a practically independent basis. This was done by creating a new
company, the United States Steel Products Export Co. (the “Export”
was later dropped from the title), late in 1903. The first organized
efforts of the Corporation to obtain export business may thus be said
to have begun with the calendar year 1904.
How beneficial was the coördination of the export trade of the various
constituent companies into one selling agency is forcibly illustrated
by the fact that the cost of doing export business has been reduced
from about 8 per cent. of gross, which it was when each company sold
independently, to something under 1 per cent. in recent years. As
the Corporation’s foreign sales in the past few years have averaged
more than $160,000,000, this has meant an annual saving of between
$11,000,000 and $12,000,000, or nearly a half year’s dividends on its
preferred stock. The lower selling cost also meant that the position of
the Corporation bidding against foreign competition has been improved,
and to that factor must be attributed largely the increase in the
Corporation’s export business.
The choice for the presidency of a new export organization fell upon
James A. Farrell. He was suggested and his appointment advocated by
the chairman. He was the man fitted preëminently for the job and his
selection was more or less inevitable. It is generally recognized that
no individual in the steel industry possessed so wide a knowledge of
the extent, character, and requirements of world markets as he does.
In 1903, when he became president of the Corporation’s new export
subsidiary, the country’s foreign trade in iron and steel was a little
more than 300,000 tons. In 1917 it was 6,268,514 tons.
For many years, during which there had been little disposition on the
part of American steel makers seriously to cultivate markets abroad,
Farrell’s entire time and energy had been devoted to that end. A man
with the genius that is “an infinite capacity for taking pains,” he had
developed a thorough knowledge of competitive conditions affecting
steel in every part of the world where the metal was used. He had
become, and still is, a walking encyclopedia on all matters relating
to the exportation of steel, carrying in his head details of freight
rates, steamship facilities, duties, and so on, at and between all
important and many unimportant points. His facility in reeling off from
memory these facts and figures, as displayed when he was called as a
witness for the defence in the Federal suit since dismissed by the
Supreme Court for the dissolution of the Steel Corporation, earned him
the soubriquet of “the man with a head full of figures,” a not inept
title.
And indeed, no more striking exposition of the wide scope of the export
market for steel made in America which has been developed within
the past sixteen years has ever been given than was embraced in his
testimony on the occasion mentioned. His statement which, incidentally,
consumed nine days, was a remarkable story of business achievement.
He showed that the exports of the Corporation were of a variety as
miscellaneously wide as was their distribution, ranging from cotton
ties for Egypt to highway bridges for Iceland; from wire products
for the Holy Land to light rails and pipes for the diamond mines of
the Transvaal; from galvanized sheets for the houses of the Borneo
natives to the steel skeleton work for some of Buenos Aires’ large and
beautiful buildings; in fact, everything made of steel was shipped
“from Greenland’s icy mountains to India’s coral strand.”
Farrell is one of the men of which the steel trade furnishes so many
examples, men who have worked their way up from the foot of the ladder
to the highest places in the industrial and commercial world. Born at
New Haven, Conn., on February 15, 1863, he started his working career
as a laborer in a wire mill in his home town while yet in his teens--at
the age of fifteen and a half. But it was not long before he was doing
skilled work, and from this it was, for Farrell, an easy step to a more
responsible position.
While he had made good in the shops Farrell’s ability ran rather to
the selling than to the manufacturing end of the industry. He was
a merchant, a salesman, above all things, and he was soon given an
opportunity to prove his ability in this line when he was sent on the
road for the Pittsburgh Wire Co., with which concern he had become
connected. Later, when that company was absorbed by the American Steel
& Wire Co., Farrell won his way to the sales managership. His success
there was pronounced, and when the company decided to enter the foreign
field, he was offered, and accepted, leadership in the new venture.
When the Steel Corporation later took over the American Steel & Wire
Co., Farrell acted as foreign sales agent for the big merger, and
finally, as already stated, became the first president of the Steel
Products Co.
How satisfactorily he filled this position was shown by his selection
by Judge Gary later as president of the parent corporation. Farrell’s
elevation to the presidency of the United States Steel Corporation took
place in January, 1911.
Farrell deserves to be reckoned, along with Gary, Morgan, Perkins, and
Schwab, as one of “the men who made United States Steel.” Although
occupying a comparatively unimportant position at the time of the birth
of the Corporation his connection with it has lasted throughout its
history and for the past ten years he has had general oversight of the
manufacturing and selling operations.
Although no longer in direct charge of the management of the Steel
Products Co., Farrell still takes a keen and personal interest in all
that concerns the structure of the foreign business which he helped
so materially to erect. He is in close and constant touch with all
its export activities, and keeps himself as thoroughly informed of
developments affecting world trade in steel as he did when his whole
time was devoted to that end of the business.
Quiet and unassuming, Farrell bears a name for thoroughness and
efficiency. He throws himself wholeheartedly into his work, giving it
absolute loyalty and untiring energy. He was at one time characterized
as “the man who never rested” and there was some reason for the
characterization. In times of stress his working day is fourteen hours
or longer. But he has a splendid physique and a constitution apparently
of the steel in which he deals.
At first glance Farrell impresses the observer as “pure business.”
His manner suggests impatience of waste of time or language, and he
seldom makes even an unnecessary gesture. In appearance he typifies the
cold, unsentimental, even hard, business man. But his looks do him an
injustice for he is, if one is fortunate enough to pierce beneath the
surface, a man of broad sympathies and rare delicacy and tact.
Farrell was succeeded as head of the Steel Products Co. by Eugene P.
Thomas, who since 1906 had assisted him in building up that company’s
world business. Thomas was born in Atlanta, Ga., on May 11, 1876.
He began as a newspaperman, but after a brief experience in that
profession entered the steel trade. He was one of the pioneers of
foreign trade in steel, having gone to England as a salesman for the
company with which he was then connected, Lorain Steel, in 1899. Before
he had attained his thirty-fifth year he was head of the greatest
export organization in the United States.
As already explained, American steel manufacturers had made little
systematic or sustained effort to capture foreign trade prior to the
organization of United States Steel. Such campaigns for world business
as had been undertaken had not been conducted, as a rule, in such a
manner as to give the steel maker of this country a good name abroad.
The people of the steel-consuming countries--as distinct from those
producing their own steel--preferred to deal with German, British, or
Belgian mills, and for obvious reasons.
The great steel-producing countries of the old world, under normal
peace conditions, are unable to consume more than a comparatively small
proportion of the output of their mills; internal or home consumption
is small. Hence, the exportation of the greater part of the steel
these countries make is a pressing necessity and no effort is spared
to secure foreign outlets for their product, to cultivate a world-wide
good will.
The steel maker of the United States, on the other hand, has always
had, except in times of severe depression, an excellent market at home,
one ready to hand and able to absorb all the steel he turned out. The
country had been building up and expanding. Steel has been and is
still needed for railroads, skyscrapers, bridges, factory buildings,
agricultural machinery, automobiles, and a thousand and one other
purposes. The result of this has been that our manufacturers have had
no particular desire in normal times to seek foreign business with
its attendant risks and expenses and the long-term credit it demands.
They were, until recent years, content to leave the foreign markets
to European exploitation and only to enter these markets when dull
business at home forced them to seek new outlets for their product. In
the earlier days of the industry American steel, at such periods, was
thrown on foreign markets at prices often below cost of production,
the loss being considered preferable to unemployment at home or the
disruption of company organizations which a continuous decline in sales
would have brought about. This process was commonly known as “dumping,”
and it was calculated to earn the bitter hostility of foreign
competitors who saw their carefully cultivated markets taken away from
them by cut-throat competition. A wave of returning prosperity at home
would cause indifference to, and independence of, foreign trade on the
part of our steel producers, an attitude that naturally did not create
good will among foreign consumers. One of the results of this state
of affairs was uneven and sporadic exports; another was that American
steel had no friends abroad.
It has often been charged against our manufacturers that, although
professing to be anxious to sell their goods in all markets, they
were unwilling to meet the requirements of the foreign buyer, taking
the “if they don’t like our goods, let them go elsewhere” attitude.
Fortunately, this is not nearly so much the case to-day as it was a
few brief years ago, but this disposition is still visible in many
quarters. And it gives the European competitor, who goes on the
principle that the buyer is always in the right, an incalculable
advantage. The basis for this attitude on the part of our manufacturers
lies in his assurance of vast home markets. His competitor abroad,
having perforce to sell half or more of his output in other than home
markets, naturally works to find out the needs of possible buyers
everywhere, and sets out to meet these needs. And he gets the business.
But the Steel Corporation, once having determined to build up a
permanent export business, accepted and adopted the attitude of its
European competitors that the consumer, no matter where he is, must
get his goods as he wants them, and not as the manufacturer sees fit
to make them. To do this, it became necessary to begin to manufacture
a number of new lines of steel for which there was no call in the
domestic markets, to adopt the weights and measures of each country in
dealings with buyers there, and in every way to make it convenient for
the purchaser abroad to order from the Corporation with the certainty
that his business would get the same welcome as it would if placed with
a British, German, or Belgian mill, and the same care and attention. To
suit the needs of the various foreign buyers catered to it was found
necessary, in some instances, to devote entire mills to making nothing
but export products.
Wire goods constitute an important item of export and of the eleven
thousand and more varieties of wire products made by the American Steel
& Wire Co., some 1,800 are manufactured principally for foreign trade,
many of these lines not being sold in the United States at all.
For instance, the countries in South America lying below the equator
demand what is known as “varnished” wire; certain of the tropical
countries, because of climatic conditions, require a wire heavily
coated with spelter to withstand rust; and so on. The Australian
carpenter is accustomed to fasten his woodwork with a nail of oval
section. No argument can convince him that the round nail, favored in
America, is just as good. He knows what he wants and knows also that if
the United States won’t supply it, Europe will. In other parts of the
world a square nail is popular. So the Corporation makes oval nails,
square nails, nails, in fact, to suit every clime and country. It does
not attempt to argue about tastes, it merely accepts them as they are
and endeavors to satisfy them--and this is the royal road to sales and
profits.
Even in the question of packing, local usage must be considered. In the
United States, the standard package for nails is the 100 lb. keg. For
the Japanese trade, picul kegs, holding approximately 133 lbs., are
demanded, while the Hindu trader, sitting bare legged and beturbaned
before his booth in the bazaars of Bombay or Calcutta, offers the
passer-by small packages of nails weighing seven pounds--put up by the
American Steel & Wire Co.
It was a big job that Farrell had handed to him when he was put
in charge of the exploitation of foreign markets for the Steel
Corporation. For not only did the varying conditions affecting sales in
the different parts of the world have to be studied and plans laid to
adopt manufacturing methods to meet these conditions, but there were
other obstacles to contend with, handicaps, by the way, which it would
hardly have been possible to overcome without the backing of the power
and prestige of the greatest of corporations.
One was the question of prices. The high wages paid to American
labor as compared with labor compensation in Great Britain, Germany,
or Belgium, combined with the fact that these countries lent
every assistance to their manufacturers in increasing their world
business--particularly Germany, which encouraged the artificial keeping
up of home prices and the reduction of export prices, with the object
of extending the nation’s foreign commerce--rendered it impossible for
American manufacturers to obtain as profitable a price in competition
with Europe as they did in the domestic field. Further, as the
Corporation entered many markets to find foreign competitors already
firmly established therein, it was necessary to offer buyers material
price concessions to get business at all in the first place.
Such price cuts were nearly always essential to give the Steel
Products Company its first foothold in the desired markets, to force
the entering wedge. The fact that the Corporation has at times sold
abroad cheaper than at home has been used as a weapon against it by its
critics. Apart from the fact that its doing so afforded labor to many
American workers and thus reduced unemployment, it seems plain that a
seller must make his price to suit the market in which he is operating,
that had such price concessions not been made the Steel Corporation’s
export business would never have shown the remarkable growth it has.
Europe would have undersold it in all markets. However, the Corporation
refused to follow anything like the old dumping policy, often refusing
otherwise very desirable business on the single issue of price.
[Illustration: James A. Farrell]
Besides the preference, natural on the part of the buyers, for
well-known and long-established goods and the close connection of
foreign manufacturers antagonistic to a new competitor in the field,
the Corporation had other difficulties to overcome. These included
banking facilities in the various countries opposed to business
with America; cheaper freights and better steamship accommodations in
foreign ports than were available from the United States; preferential
duties, and so on.
[Illustration: Transporting 222 Tons of Bridge Material in China]
For years the Steel Products Co. consistently contended against these
obstacles, gradually introducing its products into one market after
the other, until it eventually attained the point where the quality of
the goods it sold was recognized and business could be secured without
concessions in price from the levels charged by European competitors.
Although in its effort to gain a foothold in foreign markets the
Corporation was compelled to offer steel, at first, below domestic
prices, this condition did not continue as long as is generally
believed. For many years prior to the outbreak of the war prices
secured on foreign business were practically the same as those obtained
on domestic, more in the case of some products, less in others. In
1911, for instance, the average mill price received by the Corporation
on rails exported was $27.32 compared with $28.00 in the home trade.
Rail exports for the year were valued at $11,377,000. A concession of
68 cents a ton does not seem extravagant in view of the large volume of
business obtained. In 1918 average price realized for nails for export
were $17.49 a ton, and in 1919 $10.02 a ton, higher than the average
received on domestic shipments.
The European war, of course, changed the export situation for the time
being completely. The British navy stood between Germany, the largest
exporter, and her foreign markets. Belgium’s mills were seized and in
some cases destroyed by the invading Hun. England, of necessity, had
to turn the mass of her steel output into shells, guns, and other war
materials. There was but one country that could supply the hungry world
with steel--the United States. And to it every consumer turned.
From almost complete indifference the American steel trade turned to
enthusiasm regarding foreign business. Steel export companies sprung
up like mushrooms anywhere and everywhere. So great was the need of
foreign buyers of steel, that any one, with or without capital, could
become a broker in the metal, and was sure of getting all the buying
business he could handle. The trouble was to get the steel.
Most of the export firms and corporations that sprung up at this period
will eventually disappear. Many of them have already done so. But there
are a number, backed by conservative and financially strong interests,
that are in the business to stay, and practically every American steel
manufacturer, either directly or through one of these agencies, to-day
exports part of his product and expects to continue to do so. The
steel trade at large now realizes, what the Corporation did from the
beginning, that a permanent export business is of major importance in
assuring stability in trade conditions.
How much of the export trade secured during the war years can be held
permanently is entirely a question of opinion. Undoubtedly, Great
Britain and Germany will strain every effort, when they get over their
present difficulties, to regain the business they lost to us between
1914 and 1918. They are already starting to compete. And France,
having recovered the vast ore deposits of Lorraine, may become a steel
exporter, too. On the other hand, some authorities are of the opinion
that manufacturing costs of steel in England and Germany at the time
this is written are higher than in the United States, and that the
European producer will never regain the advantage of low labor costs
he once enjoyed. Time alone will settle these questions. But with the
steel trade of the United States as a whole devoting its energies to
cultivating and holding foreign markets the probabilities are that at
least a substantial portion of the gain in exports shown in the war
period will be maintained indefinitely.
The Steel Products Company has not sought merely to increase the gross
tonnage of its business. In the years preceding the organization of
the Steel Corporation the steel exports of this country consisted very
largely of the cruder and less profitable materials, particularly iron
ore, pig iron, billets, and steel bars. It will readily be seen that
the most important business is that which shows the greatest profit,
that in finished rather than in raw or semi-finished material, the
finished product meaning not alone larger profits to the shipper,
but more employment and a higher rate of remuneration to labor. The
higher degree of finish to the products manufactured the greater the
wages paid to the worker. In exporting iron ore, pig iron, scrap and
cast iron, only the cheapest materials are involved, the lowest paid
labor engaged. It is a question whether such exports, particularly
those of iron ore and pig iron, are of any real benefit to the country
as they involve the sacrifice of natural resources usually at such
unremunerative prices that from the standpoint of conservation it might
appear wiser, to economists, to withhold these reserves for domestic
rather than foreign consumption. And the policy of the Corporation in
developing its world trade has been in harmony with this thought; its
efforts have been consistently to decrease the volume of its foreign
sales of the less-worked-up materials and to increase sales of the more
highly finished products.
As may be supposed, conditions brought about by the war changed the
situation materially, hence, figures illustrating the policy of
the Corporation to develop exports more along the line of finished
materials must be sought in the pre-war period. In 1912, the record
pre-war export year, the Corporation shipped abroad 2,223,536 tons of
finished steel products and only 42,031 tons of pig iron, ingots, and
scrap. In the year 1904, immediately following the organization of
the export company, foreign shipments were 1,002,967 tons of a gross
value of $31,388,139, an average of $31.30 a ton. These figures are f.
o. b. on the seaboard. In 1912 the tonnage exported was 2,265,567 of
an average value of $40.60 a ton or a total value of $91,984,239. In
the period indicated there had been an increase of 125.9 per cent. in
tonnage, of 193.1 per cent. in total value, and of 29.7 per cent. in
the average price, more than $9.00 a ton. Incidentally, the average
price received on domestic business by the Corporation declined from
$41.34 a ton in 1904 to $36.53 a ton in 1912, or nearly $5.00 a ton.
Part of the gain in export prices during the period in question was due
to the increasing percentage of more highly finished goods in total
export shipments and part to the fact that the Corporation’s products
were becoming more established in world markets and were getting the
confidence of buyers therein.
How important has been the part played by the U. S. Steel Corporation,
through the Steel Products Co., in developing the iron and steel
exports of this country, is shown in the table below. Tonnages given
for the United States include only iron and steel exports proper, and
not machinery and other articles not manufactured by the Corporation,
or scrap sheet and iron:
=====================================
| UNITED STATES | U. S. STEEL
YEAR | GROSS TONS | CORPORATION
| | GROSS TONS
-----+------------------+------------
1904 | 1,139,519 | 1,002,967
1905 | 1,002,289 | 939,517
1906 | 1,314,444 | 1,123,545
1907 | 1,276,292 | 982,084
1908 | 942,409 | 765,947
1909 | 1,218,225 | 1,000,395
1910 | 1,509,864 | 1,270,599
1911 | 2,102,014 | 1,712,877
1912 | 2,826,576 | 2,265,567
1913 | 2,640,142 | 1,797,948
1914 | 1,512,848 | 1,108,483
1915 | 3,450,783 | 2,355,858
1916 | 5,885,948 | 2,463,922
1917 | 6,268,514 | 2,229,747
1918 | 5,341,360 | 1,648,160
1919 | 4,354,086 | 2,004,190
1920 | 4,925,000 (est.) | 1,645,192
-----+------------------+------------
Between 1904 and 1912 the Corporation’s exports increased 1,262,600
tons, and the exports of the country 1,687,057 tons, the Corporation’s
increase in shipments accounting for approximately 75 per cent. of the
total gain shown by the United States.
During the years of the World War the country’s annual exportations
of iron and steel products were greatly increased as compared with
the largest pre-war year. During the same period the Corporation’s
exports were only slightly increased. The reason for this was that the
Corporation’s operations were largely confined to commercial products
and not to war munitions. Large quantities of steel were, however,
produced and delivered to the government and to government agencies for
use in the manufacture of munitions and for other purposes in carrying
on the war.
Government records show that the exports of the United States in 1900,
the year before the Corporation was organized, were 1,154,284 tons, and
in 1901, 942,689 tons, these figures falling to 372,399 tons in 1902,
and 326,590 tons in 1903. Hence, it has been urged that the immediate
effect of the Corporation’s organization was adverse to exports.
But the government figures include a large number of items such as
subsidiaries of the Corporation do not manufacture, or such as they
do not now export--for instance, many articles manufactured of steel,
and steel scrap. As a matter of fact, the companies merged into the
Corporation exported 291,000 tons of steel products in 1901. In the
following year, the big company shipped more than 300,000 net tons.
To-day the Corporation’s products and agents penetrate into almost
every part of the known globe. Its ships plow nearly every sea. The
goods it sells to the world range all the way from wire nails and watch
springs to the steel frames for great buildings. In Buenos Aires, for
instance, the Corporation maintains its own force of erectors, and
nearly all the big modern buildings of the Argentine capital have had
their skeletons put together by the “Steel Trust” riggers, the men
whom Farrell once described as working with one hand for their job and
holding their lives in the other. The bulk of the steel used in the
construction of the Panama Canal, about 175,000 tons, was supplied by
subsidiaries of the great company.
Some of the principal markets for United States Steel’s surplus output,
with the products they take are: Iceland, wire products and structural
steel; Java, Sumatra, and Borneo, oil piping and galvanized sheets;
India, sheets and wire products; Argentina, structural and merchant
products; South Africa, pipe and light rails for use in diamond
mines; Pacific coast countries of South America, roofing material,
wire, rails, etc.; Patagonia, railway material; Canada and Mexico,
practically every product made; Northern Africa, wire and sheets;
Egypt, wire and cotton ties; Australia, a general line; the countries
formerly comprising the Austrian empire, wire goods and pipe; Syria
and the Holy Land, wire fence, pipe, and small nails used in putting
together date boxes; Rangoon, pipe, nails, fence, and sheets; West
Indies, a general line; Rumania, oil pipe; Central America, a general
line; Greece, pipe, wire, sheets, etc.
China has for years been an important consumer of American steel. Her
takings cover many lines and include bridge material, pipe, sheets for
roofing as well as for making stove-pipes; tin plate used in making
containers of egg yolk, which she ships principally to the United
States, wire goods of various kinds, nails, including an extremely
small type used in making bamboo furniture. In addition, owing to
her low labor costs, China is a great market for scrap steel, such
as defective wire rods, wire shorts and seconds, bar ends and plate
cuttings, which are worked by hand into all sorts of implements. The
patient and industrious Celestial even finds use for old horseshoes,
which he makes into razors.
The Corporation has thirty-six foreign offices, located in Argentina,
Australia, Belgium, Brazil, British India, Canada, Chile, China, Cuba,
France, Holland, Italy, Japan, Java, Mexico, Norway, Peru, Russia,
Spain, South Africa, and the United Kingdom. In addition to these,
it has one hundred and thirty-six distributors located in forty-four
foreign countries.
Although the Steel Products Co. avails itself of the facilities for
shipping offered by the many steamship lines plying between America and
foreign ports, the enormous expansion of its export trade has forced
it to establish and maintain a large ocean-going fleet of its own.
Formerly, the greater part of this fleet was chartered, but now the
Corporation owns twenty vessels, and has only a few others chartered.
These vessels carry its products all over the world, touching at
many little-known ports and harbors, the waters of which are never
disturbed by the prows of regular liners. At these places they put
off loads of rails, tools, and diversified products, instruments with
which pioneers, like railway builders, are extending the marts of
civilization into untrodden lands.
All of the owned vessels fly the Stars and Stripes, those built
in foreign countries having been transferred to American registry
immediately upon the passage of the Ship Registry Bill, in 1914.
Most of the ships owned by the Corporation were built at its own
plants in New Jersey and Alabama. The Federal Shipbuilding Co., the
Corporation’s shipbuilding subsidiary near New York, has supplied it,
so far, with nine vessels, each ranging from 3,450 to 3,821 tons net
register. The Chickasaw Shipbuilding & Car Co. is responsible for the
construction of four others, the largest of which, and the largest boat
owned by the Corporation, is 4,045 tons net register on about 10,000
dead weight. The other seven vessels were purchased. At the time of
writing the Corporation has under construction fourteen other vessels,
all of which will be added to its fleet when finished.
Two of the Corporation’s boats were lost during the war, one a victim
to a German submarine and the other running aground off the Chilean
coast early in 1918.
No less than fourteen different steamship lines are operated by the
Steel Products Co., which through them handles its fleet. These lines
are: Isthmian Steamship Line; New York and South America Line (to
Chile and Peru); Pacific Coast Service (to Pacific coast, United
States, and Canada); New York-Far East; New York-Rotterdam Service; New
York-Mediterranean Service; Gulf-Rotterdam Service; Gulf-River Plate
Service; Gulf-India Service; Gulf-Scandinavia Service; Pacific Coast,
United Kingdom & Continent Service; Norton Line (New York to River
Plate); United States and Brazil Steamship Line; Panama-Far East Line.
The shipping of steel to certain points lacking a regular service often
makes necessary the employment of expedients to reduce the attendant
costs. For instance, prior to the opening of the Panama Canal, a fleet
of six vessels was engaged in the trade with the east and west coasts
of South America. These vessels sailing from the Atlantic seaboard
made calls at various points in Argentina, Chile, Peru, and thence
to British Columbia, where they found themselves empty and without
opportunity for picking up a cargo for the return trip. The expense
of the long journey in ballast round the Strait of Magellan home was
prohibitive, so these vessels usually made trips to French or English
ports, carrying general merchandise, making the shorter trip across the
Atlantic to their home port under ballast, or with a cargo if it was
possible to get one. Such a voyage would cover 35,000 to 40,000 miles
and take about nine months. The opening of the Panama Canal, however,
has changed the conditions that made this necessary.
The shipping of steel to the less-known parts of the world involves
difficulties never encountered in the home market. The men in charge of
exports must be men of initiative, accustomed to overcoming handicaps
as they arise and to deliver the goods without the aid of the efficient
methods of civilization.
On one occasion a special order for a number of boilers took one of
the Corporation’s vessels to a harbor on the west coast of South
America where the arrival of a steamer was a rarity, and facilities for
landing cargo were conspicuous by their absence. The lack of hoists or
any other method for lifting the boilers ashore was easily overcome,
however. The crew of the ship was ordered to plug up the boilers at
both ends and hoist them overboard, floating them on the waves to the
sandy beach.
But this novel method of delivery created a dearth of labor in the
vicinity. The natives, at the sight of the huge steel cylinders leaping
from the waves and rushing ashore on the tide, decided that they were
strange and fearsome monsters of the deep and they fled in panic to the
woods where they remained for several days before they could be induced
to return and carry the boilers to their destination.
On another occasion similar difficulties were encountered, but the
cargo in this case was one of steel rails for the first line ever built
to Buenaventura, Colombia. The rails had to be unloaded separately
and sent ashore one by one on the little native dugout canoes. It was
only the skill of the natives in handling their frail barks with such
unwieldy cargoes that prevented a large part of the shipment finding a
resting place at the bottom of the harbor.
The American Bridge Co. has erected a number of bridges in the Far
East. Some of these have been in the interior of China, where the
rivers, subject to seasonal floods and periods of absolute dryness,
provide the main highways for freight traffic. In such instances the
steel for the bridges was hauled up the river beds during the dry
seasons, and if the rains arrived before the destination was reached,
the steel was simply left on the river bed until the subsidence of the
flood permitted the resumption of the journey up-stream.
In developing its export trade the Steel Corporation has performed a
real and important service to American commerce generally. To a great
extent, shipping depends on the trend of “weight cargo,” and exports of
other goods classed as “measured cargo” depend similarly on shipping
facilities. By supplying the heavy cargo for numerous markets where
American goods had never sold before the Corporation made it possible
for manufacturers of many lighter products to develop business for
themselves in these new markets. In other words, it blazed the way
for American commerce as a whole. How great is the debt that American
business generally owes to the Corporation, and to a less extent to the
Standard Oil and International Harvester companies, is plain when it is
realized that these three companies shipped for many years more than
half the “weight cargo” leaving the shores of the United States.
One of the principal benefits of large exports is its effect on labor
in the producing country. The Corporation’s effort has been to find
a regular market in foreign countries for 20 per cent. of its total
output. This level was never actually reached under normal conditions,
although during the war exports did, at one period, run about 33 per
cent. of total production for a time. Taking the year 1912, the record
pre-war year for exports, as a representative period, we find that
shipments to customers abroad represented nearly 18 per cent. of total
finished steel delivered by the Corporation’s mills. As the “Steel
Trust” in that year employed an average of 221,000 men, this meant that
about 39,000 workers were busy on material destined for export and that
$34,000,000, of the Corporation’s payroll of $190,000,000 was being
paid to American labor by foreign consumers. In 1919, 16.5 per cent. of
the total business was export and by the same analysis, foreign buyers
paid American workmen in the Corporation’s plants more than $79,000,000
in wages.
In the final analysis, this figure will be increased, as the
Corporation under normal conditions encourages and assists companies
manufacturing its products into machinery, cars, locomotives, etc., to
expand their exports, by giving price concessions on steel purchased
for that purpose. This re-export business gives work to a substantial
number of the Corporation’s employees.
The building up of the vast export sales organization maintained by the
Corporation has been a Herculean task, but it has been well worth the
effort. By establishing its name and its product all over the world
the Corporation has not only added to its profits and to its markets
but it has helped to relieve the pressure of over-production which
the industry feels from time to time, and thus it has conferred a
substantial benefit on the steel trade as a whole.