CHAPTER XV

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.