Dale Richard Perelman is the author of
Steel and
Road to Rust – the Story of the Disintegration of the Steel Industry in Western Pennsylvania and Eastern Ohio. Perelman is the past president of the King’s Jewelry chain of retail stores and holds a bachelor’s degree in English from Brown University and an MBA from Wharton in Industrial Relations.
THE BIRTH OF ALCOA
In 1889, 22-year-old Arthur Vining Davis, Captain Alfred Hunt, and George Clapp of the Pittsburgh Reduction Company appeared by appointment at Mellon Bank. Charles Martin Hall, the technical superintendent for the company, had produced aluminum, at one time the world’s most costly metal. Local curio shops, jewelry stores, and a handful of industrialists used the magic material. The French even contemplated using aluminum for a torpedo ship.
Charles Hall.
Davis, the spokesman for the group, removed a tissue-wrapped sample of aluminum from his pocket, placing it on the desk of the banker, Andrew Mellon, who marveled at the lightness and smoothness of the grey glob as he rotated it through his fingers. Although aluminum happened to be the most abundant metallic element in the earth’s crust, only Hall had figured how to harvest it economically.
As Mellon toyed with the orb, the feel captivated him. Davis outlined the elegant process for retrieving the metal. When Hall attended Oberlin College in Ohio, his chemistry professor, F.F. Jewett, lectured on aluminum’s potential: “If anyone should invent a process by which aluminum could be made on a commercial scale, not only would he be a great benefactor to the world, but he would also lay up for himself a great fortune.” Hall subsequently became determined to win the golden ring.
Following countless experiments, Hall passed an electrical current through a crucible lined with carbon dissolving aluminum oxide and cryolite. The process generated pure buttons of aluminum. Impressed by Hall’s progress, Pittsburgh Testing Bureau members Captain Alfred Hunt and George Clapp each invested $20,000 USD, valued at over $500,000 today, to form the Pittsburgh Reduction Company. Recent Amherst graduate Arthur Vining Davis joined the company as a driving force. Aluminum, previously selling at $115 per pound, now could be manufactured for $8 per pound.
Aluminum sheet production.
Like most new companies, Pittsburgh Reduction bled cash. They needed an immediate influx of $4,000 quickly to repay an overdue loan at a competing bank. Andrew Mellon and his brother, R.B., listened to the persuasive Davis. They liked what they heard, but concealed their fascination in silence, refusing an immediate commitment. Andrew asked the visitors to return the following morning. In the meantime, the brothers toured the company’s modest Smallman Street plant a few blocks from downtown.
Mellon felt convinced of aluminum’s promise, but he knew $4,000 would be insufficient. Instead, he offered $25,000, seeking a stock position in addition to interest payments. The loan quickly paid dividends.
Andrew Mellon.
The addition of two new Westinghouse dynamos, driving a 125-horsepower engine, powered machinery and reduced aluminum cost to $5 per pound. When aluminum costs plummeted to $1 per pound, industrial prospects proliferated. Henry Clay Frick and George Westinghouse purchased aluminum foil for wall decoration in their homes. Carnegie Steel and Jones & Laughlin experimented with aluminum as an additive.
In January of 1890, the Mellon brothers acquired an additional 60 of Pittsburgh Reduction’s 10,000 shares at $100 per share. Sales growth pushed the need for a larger plant. The company borrowed another $7,000 to relocate on four acres owned by the Mellon brothers in New Kensington, nineteen miles from Pittsburgh, and Andrew Mellon joined the board. When Clapp resigned as treasurer, Mellon temporarily took his place. By 1894, the Mellon holdings stood at 12.5 percent, eventually hitting nearly 33 percent.
Alcoa aluminum plant.
When Hunt died in 1899, Mellon accepted the presidency, although Davis ran the day-to-day operations. In 1901, the company produced aluminum cookware under the popular Wear-Ever brand, which was sold door-to-door. Legend recounted a story of an executive receiving a late-night call from an irate citizen confused by a garbage disposal company with a similar name, demanding the immediate removal of a dead horse carcass from the road near his home and cursing his refusal to oblige. Thus, in 1907 the Pittsburgh Reduction Company changed its name to the Aluminum Corporation of America, later shortened to Alcoa.
To read more of Dale's work, check out his books here.
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