Copper, Cates & Commotion

U. S. copper producers chuckled gleefully three weeks ago. Cause of their merriment was the successful manner in which they had called a bluff. Bluffers had been the representatives of Belgian Congo's Katanga Copper Co. (Union Miniere du Haut Katanga) who had refused to agree on production curtailment, had booked passage for home only to cancel it on the eve of sailing, return to the conference-table (TIME, Nov. 23). There was no glee when, a few days later, the Katangans suddenly rebooked passage, actually embarked. Copper curtailment, only solution to the industry's plight, seemed impossible.

Last week the bluffing Katangans suddenly realized they no longer held the upper hand. An event occurred which led them hurriedly to cable their agreement to curtail to 181,000,000 lb. of copper a year, of which only 115,000,000 or 26% of capacity would be for sale. But their acceptance brought no jubilation in the U. S. The same event which had startled the men from Katanga, took the U. S. industry by surprise and was no conference-table bluff. Copper's famed United Front was broken.

Potent is tight-lipped Copper Exporters, Inc., foreign sales agency for U. S. producers. This group was formed in 1926, has since set the price abroad. Katanga belongs to it. Foreign consumers have often complained bitterly about the price, roundly denounced the association. Although copper for export should theoretically be no more than the shipping rate above the New York price, the disparity has often been .0075-c- instead of the accepted .0025-c- per lb. Smaller members of the association have complained, found themselves up against a strong voting control which brooked little criticism. Last week all dissenters found a new champion. Louis Shattuck Gates, president of Phelps Dodge Corp., suddenly announced his great company would retire from the association.

A big copper company selling abroad independently would have no trouble underselling Copper Exporters. Last week, in expectation of a rough-&-tumble fight, sellers deluged the copper market, buyers withdrew. The result was a new low of 6 1/4-c-. Hence the alarm of Katanga, great proponent of sales pools; hence Katanga's hope-that their acceptance of curtailment would send Phelps Dodge back to the fold.

There was no indication last week that Phelps Dodge would return, but since 30 days must elapse before the withdrawal becomes effective the industry hoped that some new agreement on foreign sales might be reached, curtailment made possible. Without Phelps Dodge copper curtailment could not be accomplished. President Gates made clear that he planned to be no "bull in a china shop." Conferences continued.

Chief significance of the Phelps Dodge move was its revelation of a serious split in the copper world, a split likely to increase as tariff agitation grows. Firmly opposed to a tariff is Anaconda whose U. S. production is diminutive and costly to its imports, chiefly from South America. Neutral ground is occupied by Kennecott. Its Alaskan mines, its prodigiously great subsidiary. Utah Copper, and its Nevada Consolidated Copper would not be affected, while its mines in Chile (Braden Copper) would suffer. Phelps Dodge, third biggest in the industry, is pro-tariff because it operates entirely in the U. S. except for a few unimportant Mexican camps. Behind Phelps Dodge stand the rank & file of U. S. producers--Calumet & Hecla, Miami, Old Dominion, Seneca, Tennessee Copper.

Although Phelps Dodge conducts a business founded in 1830 by Anson Greene Phelps it has only lately become a conspicuous top-flight company. The management of Walter Douglas (brother of famed Copperman James Stuart Douglas, father of Arizona's lone Congressman, Lewis Williams Douglas) prepared it for this phase but the growth has been since Mr. Gates pulled up stakes in 1930, left the vice-presidency of Utah Copper to succeed Mr. Douglas as president of Phelps Dodge. Its greatest expansion came when it renewed its diminishing reserves by the acquisition of Calumet & Arizona, the deal boosting its assets from $285,000,000 to $376,000,000. It has also acquired Nichols Copper Co., founded in 1905 by Dr. William Henry Nichols, one of the organizers of Allied Chemical & Dye Corp. (TIME, March 2). Nichols has two refineries. One, at Laurel Hill, Queens. Long Island, refines copper from all over the world and handled much of the Katanga output until Katanga built a refinery at Oolen, Belgium. The other, finished two years ago, is at El Paso. Nichols operates a new refinery at Montreal which it built with Noranda and British Metals Co. Phelps Dodge likewise bought National Electric Products Corp. a leading unit in the copper wire industry (TIME, Oct. 6, 1930).

President Gates is 49 but does not look it. He is husky, tanned. At Utah Copper he was Daniel Cowan Jackling's right-hand man. Oldtimers recall the way he inspected the properties on horseback, giving commands from the saddle. He now lives in Manhattan, two or three times a week arises at 6 a. m. for a ride in Central Park with his daughter. During the summer he likes to sail. He is of even temper, listens more often than he speaks. President Gates ranks as a No. 1 Copperman with John D. Ryan, Cornelius Francis Kelley and Daniel Cowan Jackling. But their rise to fame was with bull markets and prosperity; his star has ascended while the price of copper was dropping. If, before the 30-day limit expires, a new sales plan is adopted, curtailment agreed upon, the copper industry may hail him as a Depression-made leader.

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