HELPING UNCLE SAM WIN THE WAR
When Uncle Sam, in the stirring days of 1917, was drawn into the vortex
of the Great War he mobilized his industrial and financial strength
just as truly as he mobilized the flower of his young manhood and
called upon it to spare no effort or sacrifice to ensure that his
standard should be carried, as it always had been in the past, to
victory.
And corporations, manufacturing and other, responded loyally for the
most part. A few, a very few, put profit above patriotism and haggled
over prices and percentages, but the great mass of American business
men showed by their actions that they regarded themselves as soldiers
of the United States and put their resources and their organizations
without question at the service of the Government. They were the men
behind the men behind the guns.
From among so many who did their duty, and more than their duty, it
would be invidious to pick out for particular praise or commendation
a single one. The war work done by such concerns as American Can,
American Car & Foundry, American Brake Shoe & Foundry, Dodge Bros.
Manufacturing Co., T. H. Symington Co., and many others must be a
matter of deep satisfaction not only to their managements but to all
who believe that American business men are not swayed solely by the
desire to gather in dollars. And among those concerns whose managements
asked themselves in regard to war activities not what profit there
was in them but how best they could serve their country and help win
the war, none was more ready and loyal than the United States Steel
Corporation.
From the date of the entrance of the United States into the war until
the armistice the Steel Corporation spent more than $200,000,000
for war plant, and from the beginning of the war in 1914 more than
$300,000,000 for plant and other properties for war purposes. Most of
these expenditures were made at the request of representatives of the
Government at a time when business caution would have advised against
them and at a cost estimated at about $103,000,000 above pre-war cost.
Some of the plants erected during the conflict will never be profitable
in peace times and others will not be for a long time. But profit was
not in question.
And the Corporation shipped for war purposes nearly 18,500,000 tons of
steel, nearly 28,000,000 gallons of benzol, and more than 21,000,000
pounds of ammonia sulphate and liquor intended directly for war uses.
Much of its other output unquestionably went into war material in one
shape or another, but indirectly, and so cannot be checked up.
Perhaps the most interesting single feature of the Corporation’s war
activities was the contract which it undertook early in May, 1918, to
erect for the Government the largest big gun plant in the world on
Neville Island, in the Ohio River, near Pittsburgh. This plant was
to have a capacity to forge fifteen 14-inch guns, and to machine and
finish twelve a month. Part of its capacity was to be devoted to the
manufacture of even larger cannon--up to 18-inch.
The estimated cost of the plant and equipment was $150,000,000, this
figure not including the cost of the guns.
To the fulfillment of this enormous contract the Corporation bent
a great part of its energies. And for its work and the work of
its officers it agreed to accept an annual remuneration of one
dollar--since neither individual nor corporation can make Uncle Sam a
present of his services. So the United States Steel Corporation was
one of a few, a very few, companies which may be reckoned among the
dollar-a-year war workers of the United States.
The Neville Island plant was, as has been said, to have been the
largest big-gun plant in the United States. The plans called for a
complete integration of operations including the erection of a big
steel plant to supply the necessary raw material. The site chosen was
an excellent one for the purpose, being located well toward the centre
of the country with all-water transportation to the Gulf of Mexico and
rail connections with every part of the United States. Besides the
manufacture of big guns the Neville Island plant was to be equipped to
make 40,000 shells, of 8-inch and larger sizes, a month.
Immediately upon the signing of the contract the Steel Corporation set
about the erection of the plant. Ground was broken and a number of
buildings of various kinds erected. But the construction of the giant
plant was necessarily a question of time. It is doubtful if, under
the most favorable conditions, it would have been possible to begin
operations until well into 1919 or to turn out a single gun until the
beginning of 1920, and the armistice intervened on November 11, 1918,
this causing the cessation of the work. The huge project, it might be
said, died before it was fully born. Such equipment as had already been
placed was moved to government arsenals elsewhere and the buildings
dismantled. And the war history of Neville Island came to an end. What
work was done, and property purchased on the final settlement, cost the
Government something like $11,000,000.
The abandonment of the project seems a pity. True, the winning of the
war seemed to make the plant unnecessary, but, in view of the excellent
location of the island for an arsenal, its position in juxtaposition
to Pittsburgh, the great steel centre, and the work actually done
and expenditures already made, it might be held that it would have
been better to continue the work at least sufficiently to give the
Government a small plant which could be expanded if need ever arose
again, a nucleus for a great-gun factory in the event of another war.
This could have been done at a comparatively small additional cost.
But, as Kipling says, that’s another story.
Of all the needs of the Allies and the United States in the summer of
1917 none was quite as urgent as ocean tonnage. The Hun U-boats at that
time were sinking ships and cargoes at a rate that the governments
concerned did not even dare to make public. The number of bottoms
operated by the Allies was being sadly depleted, and without ships
England faced something very like starvation; men, munitions, and food
supplies could not have been sent to the front. On the speed with which
the shipyards of this country and Great Britain could turn out steamers
depended, more than upon any other factor at the time, the victory or
defeat of the Allied arms.
How the United States met the emergency is a matter of history. The
fabricated ship was evolved and made a success. To secure vessels,
the Government placed contracts under which it stood the entire
expense of plant construction with payment for the vessels on a
cost-and-percentage basis. But the Steel Corporation, although it
probably could have secured similar terms, chose rather to build and
equip yards at its own expense, relieving the Government of this
expense. Two shipyards were started, one at Kearny, N. J., and the
other at Chickasaw, near Mobile, Ala.
Shipbuilding, of course, may be regarded largely as a commercial
venture on the part of the Corporation. But it is certain that it is a
venture that it would never have undertaken at the time, because of the
immense building cost then obtaining and the future uncertainties, had
it not been for the urgency of the need of the country and, indeed, of
civilization. As Judge Gary truly said in his report to stockholders
for the year 1918: “these plants were conceived and undertaken solely
as war measures.”
Both the Kearny plant, operated by the Federal Shipbuilding Co.,
a subsidiary of the American Bridge Co., and the Chickasaw plant,
operated by the Chickasaw Shipbuilding & Car Co., a subsidiary of the
Tennessee Coal, Iron & Railroad Co., were designed to build 10,000-ton
vessels. The Federal plant has twelve ways and the Alabama yard six,
with a combined capacity of thirty-six ships a year.
Once having decided on its shipbuilding venture the Corporation did not
lose time in setting about the work. The New Jersey plant was the first
one decided on and ground was broken for the plant on August 1, 1917.
By November 15th the first keel was laid and the first vessel, the
_Liberty_, was launched on June 19, 1918, and finished and turned over
to the Shipping Board, which had charge of all American shipping during
the war, on October 5th of the same year.
Chickasaw came later. This yard was started in November, 1917, and the
first ship to leave its ways did not do so until December 29, 1919, or
some time after the armistice. The vessel, the _Chickasaw City_, was
purchased by the United States Steel Products Co., the Corporation’s
export subsidiary, and put into service carrying steel products to
different parts of the world.
At the time of writing six vessels have been launched from the southern
yard, all for the Products Co., while the Federal yard has launched and
delivered a total of forty-four. Of these thirty have been delivered to
the Shipping Board and nine of the remainder have been taken over by
the Products Company, the other five having been sold to other concerns.
Although it is dubious whether, as a commercial undertaking, the two
shipyards will prove very profitable immediately, there is little
reason to doubt that they will eventually justify the expenditures on
them, occasioned by the war, from the purely business standpoint. They
are both favorably located for cheap manufacture and, making fabricated
ships, can naturally build at satisfactory costs in comparison with
yards constructing steamers under the old methods.
For there is every reason to believe that the fabricated ship has come
to stay. It has fully proven its right to existence in competition with
other vessels. Its methods of construction are standardized, which
is what made the cheap Ford car possible, and standardization should
eventually mean as much saving in ship as in motor-car building.
Whether the war had come or not the erection of shipyards by the
Corporation was a natural development sooner or later. It was in line
with the plans laid down by the Corporation’s founders. And it was also
part and parcel of the big company’s export programme. With its exports
mounting up to the two-million-ton mark annually the Corporation
had necessarily either to own or charter a large number of vessels.
Ownership, of course, was better in the long run and it was, for a
concern like U. S. Steel, with its big steel plants and experienced
organization, cheaper to build than to buy the vessels.
The Steel Products Company’s need of a large number of vessels--before
the war it owned nine and chartered constantly from thirty to
forty--itself assures a steady demand, at least for a time.
If the future of the fabricated ship is assured the Corporation, in its
shipbuilding programme, starts with an advantage over most competitors.
Now that it appears the great Hog Island yards, with their fifty ways,
will be abandoned, the Federal and Chickasaw plants will be the largest
fabricated shipyards in the world--and they should be among the lowest
cost of all yards.
But the assistance which the Corporation rendered the Government in
respect to providing ships to meet the war emergency was not confined
to the erection of the two yards and the fabrication of ships there.
Long before the yards were built, or even conceived, the American
Bridge Co. was pioneering in the production of fabricated ship parts
and the great part of the steel that went into the vessels built at
Hog Island and other plants was supplied by that company and by the
Tennessee Coal, Iron & Railroad Co., which put up plants specially for
the purpose. Before the close of 1918 these two subsidiaries of the big
company had shipped the steel for seventy complete hulls to various
yards.
No other metal plays such an all-important part in modern warfare as
does steel. Warships, transports, big and field guns, small arms,
shells, gun mounts, and other munitions are made entirely or almost
entirely of the metal. And when Germany first threw down her gauntlet
to the civilized world the Allies found it necessary to depend to a
great extent on American mills for a supply of this vital war metal.
And the manufacturers of the United States responded, among them the
Steel Corporation.
The Corporation did not go into the manufacture of munitions directly.
It supplied the raw material for them to other manufacturers, and it
did turn out a large number of shell forging, mortars, and later, gun
forgings. From August 1, 1914, to April 1, 1917, or just before this
country allied herself with the European enemies of Germanism, the
Corporation supplied a total of 6,057,640 tons of steel intended for
the manufacture of munitions of one kind or another. Part of this went
to manufacturers here who were making shells, but most of it was sent
directly abroad.
As soon as the United States became herself engaged in the great
conflict the authorities at Washington, realizing that steel supply
was of paramount importance, requested Judge Gary, in his capacity
of president of the American Iron & Steel Institute, to form a
committee to mobilize the iron and steel industry of the country
on a war footing and to take general charge of the supply of the
metal. This Judge Gary did with the hearty coöperation of other steel
manufacturers. Practically the entire steel production of the country
was put unreservedly at the disposition of the Government and no effort
was spared to secure and maintain maximum production.
And here it might not be out of place to remark that the situation
as it then existed presented the peculiar spectacle of a government
depending to a large extent upon the loyalty and coöperation of a
business organization, and availing itself of the use of its resources,
financial and other, while this very government was attempting in the
courts to destroy this same corporation. We also saw the Government’s
attorneys demanding that the Court which had to make the final decision
in the matter put the proceedings over until after the war. In a sense
the Government did not dare go ahead with the case as, had the Court
granted its petition and ordered the Corporation dissolved, the result
would have been a disaster greater than the loss of a battle to the
Allied arms.
The Government, it has been suggested, availed itself of the strength
and resources of the Steel Corporation. Two instances of this will
illustrate how. Tin plate, the steel product used to make cans for food
and other perishable goods, needs in its manufacture a large supply of
pig tin and of palm oil, neither of which products is obtainable in the
home markets. Tin plate was declared a war essential and supervision
of its output taken over by the Government which found itself promptly
faced with the necessity of securing a steady supply of both pig tin
and oil. But the difficulty was met by putting the matter in the hands
of the Corporation which, subject to arrangements with the British
Government which controlled the output of these two products, took full
charge of importations, arranged a steady supply, and financed the
operations out of its own exchequer, distributing the oil and tin to
other manufacturers at actual cost.
And then there was Neville Island.
After the United States entered the war the Corporation’s output of
war steel increased enormously. From April 1, 1917, to the end of
December of the following year it had exported to the Allies 7,292,950
tons of steel and supplied the United States Government and munition
manufacturers here with 9,104,440 tons, making its total of war steel
16,397,390 tons.
So many and so varied were the Corporation’s activities in the war that
only the briefest synopsis of them can be given here.
Of equal importance with steel, as a necessary adjunct to modern
warfare, are the chemicals that go into the manufacture of
trinitrotoluol and other explosives, gases, etc. And the Corporation’s
contribution toward the winning of the war was no less important in
this particular than was its output of steel products.
These explosive bases are derived from benzol and toluol, which in turn
are derivatives of coal extracted in the manufacture of coke. And long
before the war cloud had arisen the Corporation had been pioneering in
the coke by-products industry. It had for years been building plants to
convert into valuable chemicals the gases and oils formerly wasted in
the manufacture of coke. And the work it did in these early years along
these lines formed a foundation on which could be erected rapidly a
great explosive industry.
Prior to the war, the big company had made no effort to produce
benzol and the other bases for dyes and explosives. It had confined
its activities, in respect to coke by-products, to saving surplus gas
which was used for the operation of its own plants and to producing tar
and ammonia sulphate. But with the plants already equipped for these
purposes, it was a simple matter to make the necessary installations
for the extraction of benzol and other light oils and the experience
gained at those plants was of invaluable assistance in constructing and
operating complete new equipment at others.
Of the Corporation’s total coke by-products capacity to-day, consisting
of 2,992 ovens with an annual capacity of 11,960,200 net tons of coke,
131,805,500 gallons of tar, 174,960 net tons of ammonia sulphate,
99,550,900 cubic feet of gas, and 45,785,000 gallons of benzol and
other light oils, 53.6 per cent., or more than half, was installed
under war pressure, much of it at inflated cost, for patriotic rather
than for commercial reasons.
Actual expenditures by the big company in this field subsequent to
the commencement of the World War aggregated $62,000,000 as compared
with about $16,000,000 prior to August 1, 1914. These figures reflect
the increased cost of construction due to war conditions, and make it
easy to believe the assertion that much of the work done would never
have been undertaken had it not been for the urgent need of the United
States and the Allies.
When the war started, the Steel Corporation owned 1,452 by-product coke
ovens, of which 120, at the Benwood, W. Va., plant were operated under
a lease with the Semet-Solvay Co., this lease having been operative
when the Corporation was formed. Another 212 ovens were acquired when
the Corporation purchased the Union Sharon Steel Co., and the remaining
1,120 were constructed by the Corporation itself at its Joliet, Ill.,
Gary, Ind., and Fairfield, Ala., plants. These ovens had an annual
capacity of 5,545,500 tons of coke, 44,888,400 gallons of tar, 66,750
tons of sulphate of ammonia, and 45,472,900 cubic feet of gas.
Between August 1, 1914, and April 6, 1917, the Corporation installed an
additional 1,118 ovens, of which 90 were at its Duluth plant, 640 at
Clairton, Pa., 208 at Lorain, Ohio, and 180 at Cleveland, Ohio. These
new plants were equipped to produce benzol, and at the same time, the
plants existing prior to the war were similarly equipped.
Since April 6, 1917, an additional 140 ovens have been installed at
Gary, bringing the capacity of that plant to 700 ovens, an additional
128 at Clairton, and 154 at Fairfield, Ala. In the last two instances,
the construction of the plants was made in response to direct requests
of the Government, although the Corporation bore the entire expense. At
the end of the war the big company had a capacity of about 40,000,000
gallons of benzol, etc., since increased to the figure already given,
45,785,000.
The Corporation’s by-products ovens constitute 25.2 per cent. of all
such ovens in the United States. Its actual production is somewhat
higher than this percentage, which indicates how valuable were its
activities along these lines in the prosecution of the war.
Although constructed largely to meet the then-existing emergency,
this capacity serves a valuable end under peace conditions. In fact,
as suggested elsewhere in these pages, it is only a question of time
when the old wasteful beehive coke process shall have been consigned
to oblivion and the newer by-product method used exclusively. Benzol,
one of the principal war products, is used commercially as a motor
fuel, in the manufacture of dyes, in the rubber industry, and for the
purpose of enriching illuminating gas. Ammonia is used as a fertilizer
(in the form of sulphate), in refrigeration, and in the chemical
industry. Tar is used for heating purposes in the manufacture of steel,
and for distillation by which are recovered carbolic oils, used for
disinfecting; creosote oil, used as a wood preservative; anthracine
oil, used in making certain dyes; and pitch, for road making, roofing,
etc. The surplus gas generated in the process is used, as stated
already, for heating purposes in the manufacture of steel and for
municipal gas uses.
Further, if the day comes when the United States will have to draw the
sword again, the big company’s capacity of coke by-products will be of
immense military importance.
The work done by the Corporation in extending its capacity for war
purposes covers too wide a range to be detailed here. Besides the
activities already outlined, it included the erection at Gary of a
gun-forging plant for field guns and howitzers and, at the same plant
of new mills for rolling projectile steel. At Chicago, four electric
furnaces were installed to produce special steel for gun forgings and
other military uses; at Homestead, the armor-plate department already
in existence was enlarged and new facilities installed to make forgings
for gun carriages. At the Homestead and Schoen plants of the Carnegie
Steel Co., and the Ellwood and Christy Park plants of the National Tube
Co., shell-forging equipment, giving an annual capacity of 4,000,000
shells, was constructed, and at the last-named plant machinery was also
put in for making torpedo and submarine air flasks, gas bombs, trench
mortars, and other war material. At various plants of the American
Steel & Wire Co. machines were installed to make special barbed wire
for trench use and some of these plants were equipped to manufacture
rope for submarine nets and mines, and a number of other Allied uses.
These are only a few of the more important of its war-manufacturing
activities.
[Illustration: Drawing Fine Wire]
But the great Corporation’s war work was by no means confined to
manufacturing of military material. In no case was it called on to
assist the Government in any way without prompt and generous response.
Its ships on the Great Lakes were used in training naval reservists. It
took charge of the work of delivering at Montreal and Quebec vessels
commandeered by the Shipping Board on the Great Lakes. These vessels
had to be cut in two to enable them to pass through the locks. It
coöperated with the United States Food Administration in the movement
of grain and other commodities vital to the successful prosecution
of the war. It turned over to the Government seven ocean-going steamers
and five vessels of its Great Lakes fleet. It gave leave of absence to
over two hundred of its officials and experienced employees, to enable
them to devote themselves to governmental, Red Cross, and other work
during the conflict. And, incidentally, its service flag carried 34,407
stars.
[Illustration: Making Wire Fencing]
Financially, it responded to the Government’s call with the same
enthusiasm it displayed in meeting war-production needs. How generous
were its subscriptions to the various loans is indicated by the
fact that although they were reduced materially on allotment, the
Corporation and its subsidiaries, at the end of the war, held bonds
of the first four loans aggregating $97,134,900. In addition to this
amount, it was carrying, for account of employees on partially paid
subscriptions, another $24,171,000 and had turned over, on fully-paid
subscriptions, to employees, $6,645,000. Its allotment of the Victory
Loan was $25,682,300.
In the annual report for 1918 it was stated that the Corporation’s
subsidiaries had purchased a total (not counting exchanges and
re-issues) of $352,340,500 of United States Treasury certificates.
Finally, it subscribed to various war funds, raised by the Red Cross,
Y. M. C. A., Salvation Army, Knights of Columbus, and United War Work
Campaign, a total of $7,375,662, and declared a dividend of 1 per cent.
on its common stock, amounting to $5,083,025, in July, 1917, for the
particular purpose of aiding stockholders to contribute to the Red
Cross.
Since the close of the war the Corporation, early in 1919, gave
evidence of its desire to coöperate with the Government in deflating
the high cost of living, even although this meant the sacrifice of a
substantial part of its possible profits. For more than a year past it
has played a lone hand in this respect, maintaining a scale of reduced
prices in the face of a strong market. Yet it is questionable whether
this policy will not eventually prove a profitable one. In fact,
indications are not lacking at present that such is likely to be the
case.
Of course, United States Steel made large profits out of the war, both
while the United States was a spectator and while we participated in
the struggle. But always its officials put patriotism before profits.
And if ever again the need arises, it is a safe prediction that the
immense capacity and financial strength of the Steel Corporation will
be all the time and unrestrictedly at the service of Uncle Sam.