Mad Metals

Noted without comment last week by the New York Journal of Commerce was the fact that a third great group of prices in its commodity index had pushed above the average level prevailing in the boom years 1927-29. Building materials and iron and steel products have been in new high ground for some time. To these conspicuous markers on the highway to inflation were added non-ferrous metals (lead, zinc, copper, tin, etc.), which as a group have risen 46% since the commodity boom got underway last autumn.

Only a month ago tin was selling at 50-c- per lb. Last week it hit a ten-year high of 66 1/3, despite the fact that the International Tin Committee threw the London market into confusion by suddenly upping second-quarter quotas from 100% to 110% of 1929 figures. Copper, which was 13-c- per Ib. a month ago, was boosted for the fourth time this year to 16-c-, while in London, where speculation in metals is now as wild as Wall Street's wildest days in stocks, copper soared above 17 1/2-c-. So mad was the copper market that Business Pundit Bertie Charles Forbes quoted level-headed President Shattuck Gates of big Phelps Dodge Corp. as declaring: "This is no time to whoop things up, to send prices of copper skyrocketing. . . . The industry was making steady progress in a satisfactory way. It would be a pity to bring about hectic conditions which in the nature of things could not be expected to last." And as evidence of the industry's wholesome progress before the rearmament boom hit the metal markets. Copperman Dodge last week reported that Phelps Dodge earned $11,518,000 in 1936 as against $6,147,000 the year before.

Toward week's end the pace of metal speculation in both London and the U. S. slowed appreciably. Ominous reports that the British Government would step in, if speculators continued to boost the costs of rearmament, dampened London's ardor. But metals did not calm down until zinc had zoomed to the highest price in eleven years (7 1/2 per lb.) and lead, in the heaviest trading in that heavy metal in the history of the New York Commodity Exchange, was whooped to 7 1/4-c- per lb., highest since 1926.

Statistically the story of lead and zinc was simple. Last year the U. S. mined 463,000 tons of lead, used up 512,000 tons, resulting in a 28% cut in accumulated stocks. Zinc stocks were cut no less than 87% during 1936, and by the end of February were down to 24,000 tons, barely a two-week's supply at the present rate of consumption (more than 50,000 tons per month). Nearly one-half of all U. S. zinc is used to galvanize iron and steel and another one-fourth goes into brass, which is a copper-zinc alloy. Storage batteries account for nearly one-third of all lead, with paint a poor second. In good times building takes 10%, cable coverings 20% of U. S. lead.-- And all these big lead and zinc customers are either booming or slated to boom.

Lead. Biggest U. S. lead producer is St. Joseph Lead Co. which owns all the mines in south eastern Missouri and ac counts for 1 00,000 tons, around one-fourth of the country's entire output. Distinctly a heavy industry is lead, its peak year having been back in 1925 at the top of the building boom, when St. Joseph Lead made its record profits ($9,693,000). In 1932 with the price of lead at times below 3-c- per Ib. the company was in the red by $2,894,000. Since then St. Joseph has been slowly recovering, profits last year climbing to $2,511,000.

At the St. Joe stockholders' meeting in Manhattan last week President Clinton Hoadley Crane announced that current earnings were running "very much larger" than a year ago. His company, reported Leadman Crane, was the only one in the U. S. with substantial stocks of the metal on hand. St. Joe not only mines lead but also buys it for resale from Bunker Hill & Sullivan Mining & Concentrating Co. During Depression St. Joe built up its lead inventory from 22,000 tons to 108,000 tons by the end of 1935. About the middle of last year the demand for lead picked up and the big backlog decreased to around 75,000 tons. But even on that amount, every 1-c- rise in lead prices means $1,500,000 to St. Joe.

Yet Leadman Crane, like Copperman Gates, was by no means pleased with the state of the metal market. The profit rise, he told stockholders last week, was definitely "unhealthy." Admitting the possibility of a shortage, he gloomed: "If demand for lead and zinc continues and prices continue to advance aluminum is likely to take away some of our market through substitution."

An affable, talented engineer is 64-year-old Clinton Crane. Until 40 he was a naval architect and still lists that as his occupation in Who's Who, relegating his presidency of the biggest U. S. lead company to the level of his clubs (13) and directorships (three). Born to a well-to-do family which had a heavy interest in St. Joe, he sailed and designed boats from youth, studied naval architecture in Glasgow, worked for Philadelphia's shipbuilding William Cramp & Sons, later joined an independent firm of naval architects. Then it became imperative to do something about St. Joseph Lead which had exhausted its best ores, and Mr. Crane reluctantly set out to learn mining. He learned it so well that he was made president in 1913. For his contribution to mining, particularly in the profitable handling of low-grade ores, he last year received the Saunders Medal, top award of the American Institute of Mining & Metallurgical Engineers. Tall, straight, white-haired, he still likes everything that floats, including frostbite dinghies and the America's Cup yacht Weetamoe, which he designed at 56.

Zinc. A zinc as well as a lead miner is President Crane, St. Joe's zinc output last year being 26,000 tons. Biggest U. S. independent zinc producer is New Jersey Zinc Co., a conservative old concern which publishes few figures, always makes money, has paid dividends without interruption since the Century's turn and actually has its principal mines in New Jersey. Output of the New Jersey mines at present is probably close to 100,000 tons annually. Zinc is also produced by copper miners, partly for the use of brass-making affiliates. In boom times Anaconda Copper's zinc production has been higher than 150,000 tons. Another big zinc miner is U. S. Steel, which has mines producing around 50,000 tons annually for its own use.

Since the rise in copper has long since been discounted in the price of copper shares, the stock market has lately been combed for lead and zinc issues. Market-wise, U. S. Smelting Refining & Mining, which used to be a prime "silver stock," is now a "lead stock" with a high zinc flavor. On boom-time operating schedules it turns out from its own mines about 60,000 tons of lead, 30,000 tons of zinc.

*OnIy 5% is used for ammunition.

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