Birth of steel industry in Gadsden Part II

April 24, 2015 chris
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  The Vagabond recently pulled out a speech prepared and presented in the 1980’s by The Vagabond’s father, Dr. Kenneth A. Crownover, who was a combustion engineer and energy coordinator for the Southern District of Republic Steel Corporation and gave speeches to Gadsden area clubs as a member of the Republic Steel Corporation Speakers Bureau.

Dr. Crownover continues:

“The project continued to be a secret, but at this point more people would have to become involved. The heads of the steel company said that the city (of Gadsden) would have to give them help, since they needed additional level land surrounding the site. There was a black village in the area that complicated matters. 

“It was finally learned that all the property could be purchased for $38,000. Captain Lay took his friends into his confidence, and the $38,000 to purchase the site was forthcoming. Captain J.M. Elliott, Jr., Colonel A.T. Stocks, Colonel O.R. Hood and other citizens rendered good service in cooperation with Captain Lay to secure the company.

“Construction was started on this site in 1902 to build a blast furnace and four 50 ton open hearth furnaces that had an annual rated capacity of 120,000 tons of ingots. The first steel was produced from the plants in 1904.

“Before the Schulers could finish moving their rod and wire mill from Ensley, they encountered financial difficulties in 1906, and their Alabama Steel and Wire Company was forced to undergo a reorganization. The new Southern Steel Company was caught up in the Panic of 1907 and had to shut down its operations. This company was reorganized after two years of idleness with the help of $150,000 put up by local citizens. It was again renamed and this time became Southern Iron and Steel Company, which completed the transfer of the remaining rod and wire mill from Ensley and opened a bar mill on Black Creek. At the same time, two open hearths were added, bringing the total to six.

“Unfortunately, the company had to reorganize again in 1911 and became the Standard Steel Company. It lasted for two years and was succeeded by the Gulf States Steel Company. 

“This company, aided by the World War I boom and the “Roaring Twenties,” operated successfully until the depression of the l930s. The company was sold in 1937 to a rapidly expanding Republic Steel Corporation.

“The forming of Repub-lic Steel is in itself an addition to the drama that unveils at the Gadsden plant. Cyrus Eaton is almost legendary in 20th century American industrial lore. “When he was little more than a schoolboy, Eaton went from Canada to Cleveland, Ohio to live with an uncle who was a distinguished Cleveland clergyman. In the congregation was John D. Rockefeller, who had founded the Standard Oil Company some years earlier in Cleveland.

“Rockefeller became acquainted with young Eaton and made him his protégé. Eaton was quick to learn, and with Rockefeller’s backing entered the utilities business with such ambition that he was reported to have been a millionaire several times ever by the time he was 30 years old.

“During the mid-1920s, Cyrus Eaton attempted to put together a steel corporation that would rival U.S. Steel and Eugene Grace’s Bethlehem Steel. 

“The largest components of Eaton’s conglomerate of corporate raw materials were those companies that became Republic Steel Corporation in 1930. The most galling to local Cleveland pride was that no major steel company was based in Cleveland.

“Eaton was destined to change that attitude. He used an investment trust called Continental Shares, Inc., and bought huge blocks of stock in various rubber, industrial and steel companies. Eaton and his Cleveland backers had every intention of putting together an operating empire that would rival and surpass Bethlehem Steel and be solidly entrenched as the No. 2 steelmaker in the nation.

“The 1929 stock market crash staggered the direction of Eaton’s plans but certainly did not stop such a tough operator. Eaton had been negotiating with Tom Girdler, president of Jones and Laughlin Steel, to become the chairman of the board of the new Republic Steel Corporation when the crash began. 

“The immediate effect of the stock market crash was that Eaton lost his ability to maneuver stock. As a result, the number of companies that actually were merged into Republic Steel Corporation did not measure up to Cyrus Eaton’s dream of a No. 2 steel corporation.

“Girdler’s biggest job was money and cash flow. In the fourth quarter of 1930, Republic lost $3 million, more than twice as much as the company had made in the first six months of that year. 

The company continued to lose money each year until 1935. To make matters worse, the company had no fixed banking connections. In spite of Eaton’s major hand in organizing Republic Steel, its first board of directors did net include him. By the end of 1930, Girdler said, Eaton was ‘fading out of our lives.’

“Tom Girdler continued as chairman of the board and chief executive officer of Republic Steel Corporation until 1955, when Charles White became president. Republic had made its first major expansion in 1935 and had made more expansions during World War II, but Charles White led Republic through its greatest expansion of steel-making capacity during the 1950s. Republic’s average annual capital spending more than doubled each decade from $8.4 million in the ’30s to $132 million in the ’60s.

“The expansion in Gadsden has kept pace with the expansion in other districts. During World War II, two boilers, a blast furnace, a generator, a coke battery, by-product and two open hearths were added. 

“Then the large expansion in the 1950s added a new cold strip mill, hot strip mill and plate mill combination, soaking pits and two electric furnaces. 

“The 1960s brought a new basic oxygen furnace, a battery of coke ovens, plate mill, pickle line and acid regeneration and additions to the hot strip mill and cold strip mill.

“A 355 million dollar expansion that was planned for Gadsden was canceled in January of 1976. The expansion would have added to the capacity of the Gadsden plant one million tons of steel per year. 

Project Dixie was scratched because the economic conditions were not satisfactory at the time and because the environmental demands were draining way too much of the available capital.

“You have heard the Republic Steel story and how through cooperation and dreams a great company was built in the Gadsden community. 

“This cooperation has not all been one way to the company. The company has been active and helpful in many enterprises in the community, and it is through this continuing cooperation that I have presented this story up to this time.”