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The Development of the Cargo Fleet Iron Company, 1900–1914: Entrepreneurship, Costs, and Structural Rigidity in the Northeast Coast Steel Industry

Published online by Cambridge University Press:  13 December 2011

Gordon Boyce
Gordon Boyce
Affiliation:
Gordon Boyce teaches business and economic history at the Victoria University of Wellington, New Zealand.
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Abstract

Focusing on the Caigo Fleet Iron Company and its local competitors in Britain's Northeast, this article examines one company's response to changes in the steelmaking environment. By providing data at the firm level, the article is able to highlight specific contributing factors that are often invisible when scholars discuss Britain's industrial decline in the aggregate.

Type
Articles
Information
Business History Review , Volume 63 , Issue 4 , Winter 1989 , pp. 839 - 875
Copyright
Copyright © The President and Fellows of Harvard College 1989

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References

1 Burn, Duncan, The Economic History of Steelmating: A Study in Competition, 1867–1937 (Cambridge, England, 1940), 304.Google Scholar For a comprehensive analysis of the backgrounds of British steelmakers, see Erickson, Charlotte, British Industrialists: Steel and Hosiery, 1850–1950 (Cambridge, England, 1959).CrossRefGoogle Scholar

2 McCloskey, Donald N., Economic Maturity and Entrepreneurial Decline: British Iron and Steel, 1870–1913 (Cambridge, Mass., 1973).Google Scholar

3 Allen, R. C., “Entrepreneurship and Technical Progress in the Northeast Coast Pig Iron Industry: 1850–1913,” Research in Economic History 6 (1981): 35–71.Google Scholar

4 Elbaum, Bernard, “The Steel Industry before World War I,” in The Decline of the British Economy, ed. Elbaum, Bernard and Lazonick, William (Oxford, 1986), 51–81.Google Scholar In the same volume, see Steven Tolliday, “Steel and Rationalization Policies, 1918–1950.”

5 The following description of developments in the U.S. steel industry is based on Chandler, Alfred D. Jr, The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977), 259–69.Google Scholar

6 Burn, Economic History of Steel making, 270–73, and Tolliday, Steven, Business, Banking, and Politics: The Case of British Steel, 1918–1939 (Cambridge, Mass., 1987), 46–51.Google Scholar

7 From 1890 to 1913, British demand grew by 3.4 percent annually, versus 9 percent for the United States; Elbaum, “Steel Industry,” 58. Between 1906 and 1914, Britain's share of world pig iron exports fell from 69 to 47 percent and its share of exports of other iron and steel exports declined from 34 to 27 percent. From 1896 to 1913, U.K. imports rose from 460,000 tons to 2,231,000 tons (up 385 percent) and exports rose from 3,423,000 to 4,934,000 tons (up 44 percent). Carr, J. C. and Taplin, W., History of the British Steel Industry (Cambridge, Mass., 1962), 188, 231, 234–35.Google Scholar The North's share of U.K. output remained steady, at about 30 percent.

8 Carr and Taplin, History of the British Steel Industry, 188 and 235; Burn, Economic History of Steelmaking, 263–65.

9 Caigo Fleet Iron Company, Directors' Minutes [hereafter, CFI Minutes], British Steel Corporation (BSC), Northern Regional Records Centre, Middlesbrough, accession no. 04906, passim, especially, 13 Nov. 1906, 22 Feb. 1911, and 29 March 1911. See also Carr and Taplin, History of the British Steel Industry, 256–60.

10 Burn, Economic History of Steelmaking, 236, and Tolliday, Business, Banking, and Politics, 47.

11 Elbaum, “Steel Industry,” 54–57.

12 Carr and Taplin, History cf the British Steel Industry, 264–66, and Tolliday, Business, Banking, and Politics, 47–48.

13 Tolliday, Business, Banking, and Politics, 49, and Richardson, H. W. and Bass, J. M., “The Profitability of the Consett Iron Company before 1914,” Business History 7 (July 1965): 71–93.CrossRefGoogle Scholar

14 Boyce, Gordon, “The Growth and Dissolution of a Large Scale Business Enterprise: The Fumess Interest, 1892–1919” (Ph.D. diss., London School of Economics, 1984), chap. 2.Google Scholar

15 For details of the plant see The Times (London), 27 May 1905.

16 When Carnegie built the Edgar Thomson works, he hired Alexander Holley as a consultant to plan the facility and act as superintendent until operations started. Holley brought with him Capt. William Jones, whom Carnegie hired as general superintendent in charge of operations. These two men coordinated planning and construction with operational considerations. See Wall, Joseph, Andrew Carnegie (New York, 1970), 314–16.Google Scholar

17 For example, C. J. Bagley of South Durham supervised that firm's incremental modernization schemes; South Durham Steel, Directors' Minutes, 1900–14, BSC, Northern Regional Records Centre, acc. no. 048930.

18 For example, see discussion of William Jenkins' activities in Richardson and Bass, “Profitability of the Consett Iron Company,” 79–81.

19 The plan of 1902 has not survived, but it is referred to in another plan drawn up by Pease on 9 Feb. 1903 (BSC, acc. no. 07710).

20 CFI Minutes (BSC acc. no. 04906), 30 May and 21 June 1901.

21 Sladden to Furness, 5 Nov. 1900, SDS Correspondence, BSC acc. no. 04918.

22 The following is based on CFI Minutes, 16 Oct. 1903.

23 The following discussion of the committee's recommendations is based on “Report of Expert Committee,” 3 Nov. 1903, BSC acc. no. 07710. All quotations are from that source.

24 “Allotment of Cargo Fleet Capital,” BSC acc. no. 03362, and CFI Minutes, 2 Sept. 1904.

25 CFI Minutes, 5 Dec. 1907.

26 Talbot's correspondence with Ley, BSC acc. no. 04121, file 252 and file marked “Re Appointment of F. Ley.”

27 When Furness built ships at yards he did not own, he often made purchases from CFI and SDS a condition of the order. CFI correspondence, passim, and Minutes, 23 Feb. 1909. To attract overseas trade, CFI used Furness Withy's business contacts. See F. W. Lewis Correspondence, Furness, Withy & Co., Lewis to Talbot, 4 Feb. 1910 and CFI Director's Committee Minutes [hereafter CM], BSC acc. no. 04906, 22 Aug. 1911, 14 Feb. and 26 June 1912.

28 Talbot to Ley, 18 Jan. 1909, BSC acc. no. 04121.

29 Before CFI bought a colliery Furness Withy's Newcastle office handled the firm's coal purchasing; CFI CM, 28 Oct. 1909. Furness Withy shipped foreign ore to CFI; see Boyce, “Growth and Dissolution,” 93.

30 CFI Minutes, 14 Aug. 1907, 25 June 1913; CFI CM, 17 Jan. 1908, 25 June 1913; Talbot's correspondence with Furness, BSC acc. no. 04119, file 203.

31 Talbot's correspondence with Ley, BSC ace. no. 04121, file 252.

32 CFI Minutes, 16 April 1908.

33 Concerning Furness's tarnished reputation, see The Investors' Review, 19 Dec. 1903, 6 Feb. 1904, and 9 Dec. 1905.

34 CFI Minutes, 13 Nov. 1906. CFI's initial attack on the RMA won the firm an order for 185,000 tons, about eighteen months of work.

35 When efficient firms exceeded their quotas, they bid on the level of compensation that they would have to pay to the pool. Frequently, compensation levels were so high that CFI would have suffered a loss if it exceeded its quota. As a result, the firm was forced to restrict production. (CM, 11 Aug. 1911).

36 CFI Minutes, 22 Feb. 1911, and Talbot to Chandler, 28 April 1908, BSC acc. no. 04120, file 228.

37 CFI CM, 10 June 1909. CFI also joined the Joist Association (CFI CM, 19 Feb. 1908). Concerning “dumping” by firms that remained outside associations, see CFI CM, 10 June 1909, Minutes, 27 Sept. 1911, and Burn, Economic History of Steelmaking, 245–46.

38 For examples, see CFI Minutes, 15 Sept. 1909 and 31 Aug. 1910.

39 Carr and Taplin, History of the British Steel Industry, 227–29.

40 For discussions of economies that arose from innovations in blast furnace design and operation, see Allen, R. C., “The Peculiar Productivity History of American Blast Furnaces, 1840–1913,” Journal of Economic History 37 (Sept. 1977): 605–33CrossRefGoogle Scholar, and Peter Berck, “Hard Driving and Efficiency: Iron Production in 1890,” ibid. 38 (Dec. 1978): 879–900.

41 The excessive operating expenses of Tudhoe's finishing mill indicates that the experts advocated retaining the equipment because they were reluctant to write off even a relatively small amount of capital or because the mill covered its variable costs.

42 Report by A. Reese, 27 Feb. 1908, BSC acc. no. 04121, Misc. File.

43 CFI CM, 17 Feb., 29 July, 9 Nov. 1909, 28 Oct. 1910, and 16 Aug. 1911.

44 Some of the unknown taw material costs recorded in Table 5 may be related to these metallurgical problems.

45 Talbot to Furness, 3 Dec. 1908, BSC acc. no. 04119, file 203.

46 It should be emphasized that ore quality, rather than any technical deficiency on the part of the Talbot system, generated the higher costs. The Talbot system was the most successful and extensively used basic open-hearth process. The Bertrand-Thiel, Monell, and Saniter systems were less effective.

47 Furness to Talbot, 17 Oct. 1908, BSC acc. no. 04119, file 203, and CFI Minutes.

48 Owen, J. S., “The Cleveland Ironstone Industry,” in Cleveland Iron & Steel: Background and 19th Century History, ed. Hempstead, C. A. (Middlesbrough, 1979), 9–23, 39–42, and 44–47.Google Scholar Regarding attempted mergers, see Furness to Talbot, 3 Feb. 1908, BSC acc. no. 04119, file 203, and Furness to Walter Scott, 26 Feb. 1908, Lewis Correspondence, Furness, Withy & Co. During the war, CFI developed ore deposits in Northamptonshire and Lincolnshire (CFI Minutes, 20 March and 29 Oct. 1918). The firm closed the Liverton mine in 1922.

49 CFI Minutes, 22 Feb. and 29 March 1911.

50 Skinningrove Iron, Director's Minutes, BSC acc. no. 17223, 3 March, 24 May 1906 and 16 Oct. 1908.

51 Palmer's purchased the Grinkle deposit (ICTR, 14 April 1899). Concerning Dorman Long's and Bolckow's supplies, see Burn, Economic History of Steelmaking, 236, and Tolliday, Business, Banking, and Politics, 47. Bolckow tried unsuccessfully to take up basic steel-making. Thereafter the firm resorted to carrying out incremental plant improvements; see Burn, Economic History of Steelmaking, 273–74n2.

52 Richardson and Bass, “Profitability of the Consett Iron Company,” 79–81.

53 SDS Directors' Minutes, 1900–1914. During slumps, SDS also concentrated production in the most efficient of its three plants to sustain volume economies. Fearing postwar shortages of pig iron, SDS purchased Cochrane's and Seaton Carew Iron, blast furnace operators.

54 Skinningrove was run by long-established families (the Peases and Hutchinsons); Dorman Long by newcomers; CFI and Palmer's by newcomers; and Bolckow Vaughan and Consett by salaried managers. Furness devised strategies for Tees Furnace, SDS, Palmers, and CFI, while A. J. Pease was associated with Skinningrove and Normanby Iron.

55 Burn, Economic Growth of Steelmaking, 273n3; Skinningrove Iron, Directors' Minutes, 1908–13, passim, and Boyce, “Growth and Dissolution,” 147–48.