VERTICAL AND HORIZONTAL STRUCTURES A __ IN THE COPPER INDUSTRY. Thesis for the Degree, 0f Ph.. D..‘ MICHIGAN. STATE UNIVERSITY STANLEY THO-MAS HARDY. 1 9 69 + ‘im . 1 ‘ M53 ”j /5‘{ 200102; E ABSTRACT VERTICAL AND HORIZONTAL STRUCTURES IN THE COPPER INDUSTRY BY Stanley Thomas Hardy Firms in the c0pper industry are reputed to be linked with one another by a variety of means. Antitrust implications and the relative importance of the c0pper industry to the economy make this an important issue. This study is an attempt to examine these linkages, as they existed in 1962 among the major producers, processors, and sellers of COpper in the free world. Vertical and horizon— tal linkages were recognized and separated so that the inter— connections forming the vertical and horizontal structures were exposed. The hypothesis tested was: in the c0pper industry there exists vertical and horizontal structures consisting of interconnections of ownership, joint membership in two or more vertically integrated groups, contractual relationships, and direct and indirect interlocking directorates. The early part of this study describes the c0pper industry including its resource base, production processes, marketing Operations, and flows of c0pper between major Stanley Thomas Hardy producers and sellers. It is from the study of the copper flows that one is able to separate the vertically integrated groups from one another. Once the groups are separated, the balance of the study becomes feasible. Interconnections between firms were discovered by collecting and sorting information as to ownership and con— tractual relationships among firms in the study. Affilia— tions of the executives and directors of the c0pper firms were investigated and tabulated so that the direct and in— direct interlocking directorates might be revealed. Classification of the interconnections was a problem that had to be overcome. Any two firms might readily be linked by more than one form of interconnection; therefore, to reduce the confusion, interconnections were ranked in order of their potential for control. The linkage was counted as the highest ranked interconnection. This study reveals a vertical structure consisting primarily of ownership and/or contractual relationships. Beyond those associated with ownership, direct and indirect interlocking directorates were almost non—existent. The horizontal structure consisted primarily of indirect inter— locking directorates followed in order of importance by ownership, joint membership, and direct interlocking direc— torates. Further, the industry is interconnected horizon— tally in approximately 60 percent of all possible points of interconnection. VERTICAL AND HORIZONTAL STRUCTURES IN THE COPPER INDUSTRY BY Stanley Thomas Hardy A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Management 1969 Chapter I. II. TABLE OF CONTENTS INTRODUCTION AND RESEARCH GOALS . . . Importance of the Study . . . Copper, an Important Industry for. Study . . . . . . . . . Survey of the Literature . . . . . The Copper Industry . Interlocking Directorates (1951) Definitions . . . . Vertically Integrated Groups . Vertical Structure . . . . . . Horizontal Structure . . . . . Ownership Interconnections . . Direct Interlocking Directorates Indirect Interlocking Directorates Contractual Relationships . . Joint Membership . . . . . . . Specific Research Goal . . . . . . Differentiating the Structures Methodology . . . . . . . . . . . . Advantages . . . . . . . . . . . . Scope . . . . . . . Organization of the Study . . . Description of the Copper Industry Vertical Structure of the Industry Horizontal Structure of the Industry . . . . . . . . . Summary and Conclusions . . . DESCRIPTION OF THE INDUSTRY . . . . . Resource Base . . . . . . . . . . . Production Processes . . . . . . . Production Costs . . . . . . . Marketing Operations . Vertically Integration in the Industry Summary . . . . o . . . . . . . . . Page Chapter III. IV. INTERCONNECTIONS WITHIN VERTICALLY INTEGRATED GROUPS . . . . . . . . . . Adolph Lewisohn Group . . . American Smelting and Refining Group . . . . . . . . . . . . Anaconda Group . . . . . Appalachian Sulphides Group . . British Metal Group . . . . . . Calumet and Hecla Group . . . . Cerro Group . . o . . . . . . . Copper Range Group . . .,. . . . Duval Group . . . . . . . . . . Falconbridge Group . . . . . . . Howe Sound Group . . . . . . . . International Nickel Group . . . Kennecott Group . . . . . . . . Magma Group . . . . . Mitsubishi Meta1 Mining Group . Mount Isa Mines Group . . . . . Noranda Group . . . . . . . . . ‘Phelps Dodge Group . . . . . . . Quincy Mining Group . . . . . o o Societe Generale des Minerais Group Indirect Interlocking Directorates . Summary and Conclusions . . . . HORIZONTAL INTERCONNECTIONS BETWEEN VERTICALLY INTEGRATED GROUPS . Measuring the Interconnections Reading the Tables . . . . The Density Measure . . . Analyzing the Interconnections The Adolph Lewisohn Group The American Metal Climax Group The American Smelting & Refining Group . . . . . . . . The Anaconda Group . . . . o The Appalachian Sulphide Group The British Metal Group . The Calumet & Hecla Group The Cerro Group . . . . . The Duval Group . . . . . The Falconbridge Group . . The Howe Sound Group . . The International Nickel Group iv o Page 52 Chapter The The Kennecott Group . . . . . . . . . Magma Group . . . . . . . . . . . The Mitsubishi Group . . . . . . . . . The Mount Isa Group . . . . . . . . . The Noranda Group . . . . . . . . . The Phelps Dodge Group . . . . . . . . The Quincy Group . . . . . The Societe General des Minerais Group . . . . . o . . Total Density of the Matrices . . . Effect of Contractual Relationships . Summary and Conclusions . . . . . . . . . V. SUMMARY AND CONCLUSIONS . . . . . . . . . . BIBLIOGRAPHY Purpose of the Study . . . . . . . Vertical and Horizontal Structures Defined . . . . . . . . . . Hypothesis to Be Tested . . . . . . . Methodology . . . . . . . . . . Results of the Study . . . . . . . . . Validity of the Hypothesis . . . . . . Implications of the Vertical Structure Implications of the Horizontal Structure . . . . . . . . . . . . . o o o o o o 9 u o o a o o o o a o 98 98 99 100 102 102 103 106 10. 11. 12. 13. LIST OF TABLES Industrial consumers of c0pper . . . . . . Interconnections ranked by potential power of control over interconnected firms . . . . . . . . . . . . . . . . . . World c0pper reserves . . . . . . . . . . Trend of U.S. c0pper reserve estimates . . U. S. c0ppermine productivity——wages and labor cost 1931—60 . . . . . . . . . . . Productivity data of c0pper concentrators in the United States 1943—60 . . . . . . . Productivity of smelters and refiners, combined . . . . . . . . . . . . . . . . . Cost per pound——five year moving averages of some leading c0pper producers . . . . . Principal c0pper producers and the disposition of their c0pper . . . . . . . Principal copper sellers and the source of their c0pper . . . . . . . . . . . . . Indirect interlocking directorates between selling firms and members of the vertically integrated groups . . . . . Ownership and joint membership inter— connections in the horizontal structure . Ownership, joint membership, and direct interlocking directorate interconnections in the horizontal structure . . . . . . . vi Page 26 33 34 37 38 39 4O 43 47 66 69 71 Table 14. 15. 16. 17. 18. Ownership, joint membership, direct and indirect interlocking directorate inter— connections in the horizontal structure . Firms belonging to two or more vertically integrated groups . . . . . . . . . . . . Horizontal interconnections based upon contracts for processing c0pper . . . . . Interconnections ranked by potential power of control over interconnected firms . . . . . . . . . . . . . . . . . . Summary of interconnections existing in the vertical and horizontal structures . . Page 73 76 97 100 101 Figure 1' LIST OF FIGURES International interlocking connections between c0pper producers banks, invest— ment trusts and important American industries . . . . . . . . . . . . . . . . Vertically integrated groups defined by flows of copper . . . . . . . . . . . . . . Three vertically integrated groups . . . . Data card for director or executive . . . . Schematic program for punching direct interlocking directorate interconnections . Sample matrix showing vertically integrated groups interconnected by ownership and joint membership . . . . . . . . . . . . . Sample matrix showing vertically integrated groups interconnected by ownership and direct interlocking directorates . . . . . Sample matrix showing vertically integrated groups interconnected by ownership and direct and indirect interlocking directorates . . . . . . . . . . . . . . . viii Page 10 13 15 23 24 78 79 8O CHAPTER I INTRODUCTION AND RESEARCH GOALS The copper industry is reputed to be interconnected by a variety of means, both vertically and horizontally. The mechanisms utilized to accomplish this interconnection include ownership, contractual relationships, direct and indirect interlocking directorates, and joint membership in two or more vertically integrated groups.l Previous studies of the copper industry have exposed some of the direct and indirect interlocking directorate interconnections and, for the most part, have ignored the other forms of interconnec— tion.2 This paper presents a study of all five intercon- nections existing in the copper industry in 1962. The vertical and horizontal structures are examined to determine the interconnections that are attributable to each type: ownership, joint membership, contractual relationship, lJoint membership is a special case of contractual relationships. See later section in this chapter for definitions. 2Federal Trade Commission, The Copper Industry (Washington, 1947), pp. 174—176. See also, Federal Trade Commission, Interlocking Directorates (Washington, 1951), pp. 173-175. ABSTRACT VERTICAL AND HORIZONTAL STRUCTURES IN THE COPPER INDUSTRY BY Stanley Thomas Hardy Firms in the c0pper industry are reputed to be linked with one another by a variety of means. Antitrust implications and the relative importance of the copper industry to the economy make this an important issue. This study is an attempt to examine these linkages, as they existed in 1962 among the major producers, processors, and sellers of c0pper in the free world. Vertical and horizon— tal linkages were recognized and separated so that the inter— connections forming the vertical and horizontal structures were exposed. The hypothesis tested was: in the c0pper industry there exists vertical and horizontal structures consisting of interconnections of ownership, joint membership in two or more vertically integrated groups, contractual relationships, and direct and indirect interlocking directorates. The early part of this study describes the c0pper industry including its resource base, production processes, marketing Operations, and flows of c0pper between major Stanley Thomas Hardy producers and sellers. It is from the study of the c0pper flows that one is able to separate the vertically integrated groups from one another. Once the groups are separated, the balance of the study becomes feasible. Interconnections between firms were discovered by collecting and sorting information as to ownership and con— tractual relationships among firms in the study. Affilia— tions of the executives and directors of the c0pper firms were investigated and tabulated so that the direct and in— direct interlocking directorates might be revealed. Classification of the interconnections was a problem that had to be overcome. Any two firms might readily be linked by more than one form of interconnection; therefore, to reduce the confusion, interconnections were ranked in order of their potential for control. The linkage was counted as the highest ranked interconnection. This study reveals a vertical structure consisting primarily of ownership and/or contractual relationships. Beyond those associated with ownership, direct and indirect interlocking directorates were almost non—existent. The horizontal structure consisted primarily of indirect inter- locking directorates followed in order of importance by ownership, joint membership, and direct interlocking direc— torates. Further, the industry is interconnected horizon— tally in approximately 60 percent of all possible points of interconnection. VERTICAL AND HORIZONTAL STRUCTURES IN THE COPPER INDUSTRY BY Stanley Thomas Hardy A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Management 1969 ACKNOWLEDGMENTS This publication is the result of a study made under a fellowship granted by the National-Association of Purchasing Management. The statements and conclusions in this publication are those of the author and not neces— sarily those of the National Association of Purchasing Management. A note of thanks to my dissertation committee members, Professor John Hoagland, Chairman, Professor Stanley Hollander, and Professor Richard Gonzales. Their guidance, encouragement, and many hours Spent on behalf of this study are greatly appreciated. Finally, a note of appreciation and gratitude to my wife, Barbara, for her encouragement and patience during the research and writing of this dissertation. ***** ii TABLE OF CONTENTS Chapter I. INTRODUCTION AND RESEARCH GOALS . . . . . Importance of the Study . . . . Copper, an Important Industry for Study . . . . . . . . . . . . . Survey of the Literature . . . . . . . The Copper Industry . . . Interlocking Directorates (1951) . Definitions . . . . . Vertically Integrated Groups . . . Vertical Structure . . . . . . . . Horizontal Structure . . . . . . . Ownership Interconnections . . . . Direct Interlocking Directorates . Indirect Interlocking Directorates Contractual Relationships . . . . Joint Membership . . . . . . . . . Specific Research Goal . . . . . . Differentiating the Structures . . Methodology . . . . . . . . . . . . . . Advantages . . . . . . . . . . . . . . Scope . . . . . . . . . Organization of the Study . . . . Description of the Copper Industry Vertical Structure of the Industry Horizontal Structure of the Industry . . . . . . . . . . Summary and Conclusions . . . . . II. DESCRIPTION OF THE INDUSTRY . . . . . . . Resource Base . . . . . . . . . . . . . Production Processes . . . . . . . . . Production Costs . . . . . . . . . Marketing Operations . . . . . . . Vertically Integration in the Industry Summary . . . . . . . . . . . . . . . . Page Chapter III. IV. INTERCONNECTIONS WITHIN VERTICALLY INTEGRATED GROUPS . . . . . . . . . Adolph Lewisohn Group . . . . American Smelting and Refining Group . . . . . . . . . . . Anaconda Group . . . Appalachian Sulphides Group . British Metal Group . . . . . Calumet and Hecla Group . . . Cerro Group . . . . . . . . . Copper Range Group . . . . . . Duval Group . . . . . . . . . Falconbridge Group . . . . .. Howe Sound Group . . . . . . . International Nickel Group . . Kennecott Group . . . . . . . Magma Group . . . . Mitsubishi Metal Mining Group Mount Isa Mines Group . . . . Noranda Group . . . . . . . . Phelps Dodge Group . . . . . . Quincy Mining Group . . . . . Societe Generale des Minerais Group Indirect Interlocking Directorates Summary and Conclusions . . . . . . HORIZONTAL INTERCONNECTIONS BETWEEN VERTICALLY INTEGRATED GROUPS . . . Measuring the Interconnections . . Reading the Tables . . . . . . The Density Measure . . . . . Analyzing the Interconnections The The American Metal Climax Group Adolph Lewisohn Group . . The American Smelting & Refining Group . . . . . . . . . . The The The The The The The The The Anaconda Group . . . vAppalachian Sulphide Group British Metal Group . . . Calumet & Hecla Group . . .Cerro Group . . . . . . . Duval Group . . . . . . . Falconbridge Group . . . . Howe Sound Group . . . . International Nickel Group iv o a o Page 52 Chapter The The The The The The The The Kennecott Group . . . . . . Magma Group . . . . . . . . Mitsubishi Group . . . . . . Mount Isa Group . . . . . . Noranda Group . . . . . . . Phelps Dodge Group . . . . . Quincy Group . . . Societe General des Minerais Group . . . . . . Total Density of the Matrices . . Effect of Contractual Relationships Summary and Conclusions . . . . . . V. SUMMARY-AND CONCLUSIONS . . . . . . . BIBLIOGRAPHY Purpose of the Study . . . Vertical and Horizontal Structures Defined . . . . . . . Hypothesis to Be Tested . . . . Methodology . . . . . . . Results of the Study . . . . . . Validity of the Hypothesis . Implications of the Vertical Implications of the Horizontal Structure . . . . . . . . . . o o o a o o o o o o o o o a o o 0 Structure 10. 11. 12. 13. LIST OF TABLES Industrial consumers of c0pper . . . . . . Interconnections ranked by potential power of control over interconnected firms . . . . . . . . . . . . . . . . . . World c0pper reserves . . . . . . . . . . Trend of U.S. c0pper reserve estimates . . U.S. c0ppermine productivity——wages and labor cost 1931—60 . . . . . . . . . . . . Productivity data of c0pper concentrators in the United States 1943-60 . . . . . . . Productivity of smelters and refiners, combined . . . . . . . . . . . . . . . . . Cost per pound——five year moving averages of some leading c0pper producers . . . . . Principal c0pper producers and the disposition of their c0pper . . . . . . . Principal copper sellers and the source of their c0pper . . . . . . . . . . . . . Indirect interlocking directorates between selling firms and members of the vertically integrated groups . . . . . Ownership and joint membership inter— connections in the horizontal structure . Ownership, joint membership, and direct interlocking directorate interconnections in the horizontal structure . . . . . . . vi Page 26 33 34 37 38 39 4O 43 47 66 69 71 Table 14. 15. 16. 17. 18. Ownership, joint membership, direct and indirect interlocking directorate inter— connections in the horizontal structure . Firms belonging to two or more vertically integrated groups . . . . . . . . . . . . Horizontal interconnections based upon contracts for processing c0pper . . . . . Interconnections ranked by potential power of control over interconnected firms . . . . . . . . . . . . . . . . . . Summary of interconnections existing in the vertical and horizontal structures . . Page 73 76 97 100 101 Figure 1. LIST OF FIGURES International interlocking connections between c0pper producers banks, invest— ment trusts and important American industries . . . . . . . . . . . . . . . . Vertically integrated groups defined by flows of copper . . . . . . . . . . . . . . Three vertically integrated groups . . . . Data card for director or executive . . . . Schematic program for punching direct interlocking directorate interconnections . Sample matrix showing vertically integrated groups interconnected by ownership and joint membership . . . . . . . . . . . . . Sample matrix showing vertically integrated groups interconnected by ownership and direct interlocking directorates . . . . . Sample matrix showing vertically integrated groups interconnected by ownership and direct and indirect interlocking directorates . . . . . . . . . . . . . . . viii Page 10 13 15 23 24 78 79 8O CHAPTER I INTRODUCTION AND RESEARCH GOALS The copper industry is reputed to be interconnected by a variety of means, both vertically and horizontally. The mechanisms utilized to accomplish this interconnection include ownership, contractual relationships, direct and indirect interlocking directorates, and joint membership in two or more vertically integrated groups.l Previous studies of the copper industry have exposed some of the direct and indirect interlocking directorate interconnections and, for the most part, have ignored the other forms of interconnec- tion.2 This paper presents a study of all five intercon- nections existing in the copper industry in 1962. The vertical and horizontal structures are examined to determine the interconnections that are attributable to each type: ownership, joint membership, contractual relationship, lJoint membership is a special case of contractual relationships. See later section in this chapter for definitions. 2Federal Trade Commission, The Copper Industry (Washington, 1947), pp. 174—176. See also, Federal Trade Commission, Interlocking Directorates (Washington, 1951), pp. 173—175. direct interlock, and indirect interlock. The analysis of patterns of corporate interconnections may provide a basis for more clearly understanding the structure of the copper industry. Further, the implications raised by the findings of the study may provide future researchers grounds for examining the social and economic effects of corporate interconnections. lgportancp of the Study This study is important because of its approach to the study of corporate interconnections. The vertical and horizontal structures are examined separately so that the potential of the implications of each may be seen. Further, contrary to past studies, interconnections other than just direct and indirect interlocking directorates are studied so that more of the total network of corporate interconnections may be exposed. Past studies of this type have been justified solely on the importance of the interlocking directorates. .Argu— ments both for and against the practice of sharing common directors have been presented for some time.3 Some claim that business benefits from common directors because the quality of management is raised, selling expenses are 3Louis D. Brandeis, "Breaking the Money Trusts," Harper's Weekly, November 22, 1913 to January 17, 1914. See also U.S. Senate Committee on the Judiciary, Unlawful Restraints and Monopolies, Staff Report No. 698, 63d Congress, 2d Session, July 22, 1914. reduced, and business investments are protected.4 Others argue that such practices are objectionable and that they fall into three different classes: (1) conflicts of inter— est; (2) debasement of the quality of leadership; and (3) matters of antitrust significance.5 The following para— graphs summarize the arguments. The arguement that the quality of management is raised by the use of common or "outside“ directors6 is based upon the idea that these men have wider experience. Quali— fied management talent is scarce, and, by making the ser- vices of competent managers available to more corporations the scarcity is partially overcome. The experience gained by these directors in handling the problems of one firm, it is asserted, becomes an advantage to the others. It is also argued that common directors may reduce the selling expense between interlocked corporations by pro— viding an avenue of advantageous dealings between the firms. 4Outside Directorships for Key Executives?" Egg Conferencp Board Record, October, 1965, p. 713. See also “What It Takes to Make the Board," Business Week, March 12, 1966, pp. 93—94. See also A. R. Towl, ”Outside Directors Under Attack," Harvard Business Review, September—October, 1965, pp. 135—147. 5U.S. Congress, House, Antitrust Subcommittee of the Committee on the Judiciary, Interlocks in Corporate Manage— ment, 89th Congress, 1st Session, 1965, pp. 7—8. 6 . . Common directors are often referred to as outSide directors in many business publications. Common directors also can be beneficial, and at the same time not afford sufficient control to prevent independent operations, where investments in the other firms need to be protected and the common director can act as an avenue of information. Conflicts of interest may arise when the interests of the stockholders are subordinated to personal gain afforded to a common director because of opportunities for inside dealing. Also, the common director has divided loyalties to the stockholders of the respective corporations. Should two companies have business dealings with each other and the interests of the two companies are in conflict, a common director faces a dilemma. Debasement of management stems from the fact that opportunities to gain management experience is limited to only a few by a common management structure. Furthermore, a director serving several corporations may find his time limited so that he serves none well. The antitrust implications of interlocking director— ates deal with the possible reduction of competition. Com— mon directors can serve as a liason between firms and assure that the pursuit of the best interests of one firm is not detrimental to the other. In competing firms, if the pro— portion of common directors is sufficient, competition may be eliminated entirely. Common directors of firms in closely related industries may forestall competition by preventing the firms from expanding into competing lines. Further, common directors in firms having supplier—purchaser relationships may result in preferential treatment during periods of short supply and in preferential treatment in access to markets. .Also, interlocks between manufacturing firms and financial institutions may result in favorable credit and capital supplied to one firm and in the withhold— ing of credit and capital from competitors. The government's interest in interlocking director- ates stems from the antitrust implications. Legislation, in the form of the Clayton Act,7 prohibits certain types of interlocks. Section 8 of this Act, in particular the part dealing with industrial and commercial corporations, pro— vides the following: No person at the same time shall be a director in any two or more corporations, any one of which has capital, surplus, and undivided profits aggregating more than $1,000,000 engaged in whole or in part in commerce, other than banks, banking associations, trust companies, and common carriers subject to the Act to regu— late commerce, approved February fourth, eigh— teen hundred and eighty seven, by virtue of their business and location of operation, competitors, so that the elimination of compe— tition by agreement between them would consti~ tutue a violation of any of the provisions of any of the antitrust laws. There are several apparent loopholes in this law. It should be noted that this law pertains only to directors and not to officers or employees. Furthermore, only direct horizontal interlocks are affected. The prohibition affects 7Clayton Act, Public Law 212. only corporations that are presently, or were in the past, competitors. Potential competitors are not affected. Hence, competition may never develop. Recent critics8 of the law point to still other loopholes. Indirect interlocks between competitors, vertical interlocks between suppliers and customers, and interlocks between industrial and financial institutions are all legal under the Clayton Act. Yet, all have antitrust implications as previously discussed. Coppery an Important Industry for Study Copper, itself, is an important basic raw material. Sales of semi—fabricated copper to American industries exceeded one and one half million tons in 19629 and custom— ers for this copper represented a broad spectrum of indus— tries as can be seen in Table 1. Furthermore, the copper industry is reputed to have a long history of noncompetitive behavior. Throughout the latter half of the 19th century and the first half of this century, at least until World War II, the industry formed many international cartels to control price and production and to share the available markets.lo 8Interlocks in Corporate Management, op. cit., pp. 12-13 and 26—27. 9Metal Statisticsy 1964 (New York: American Metal Market, 1965), p. 293. 10W. Y. Elliot et a1., International Control in the Non—Ferrous Metals (New York: The Macmillan Company, 1937). \\\ , l Table 1. Industrial consumers of coppera Percentage of Consumers Consumption Electrical Equipment 19% Light and Power 18 Building Construction 16 Industrial Equipment 10 Motor Vehicles 9 Communication 6 Military 6 Household Appliances 3 Railroad and Marine 3 Electronics 3 Scientific Equipment 2 Miscellaneous __5 Total 100% aCopper and Brass Research Association, Copper, The Cornerstone of Civilization Research Association, Copper and Brass The industry has engaged in several overtly collusive actions.11 It is known for its high degree of concentration of control over its ore reserves and production capacity.12 Also, the industry is reputed to be highly interconnected via interlocking boards of directors not only among firms in the industry, but also with potential suppliers, custom— ers, and sources of financial support.13 The importance of a study of the interlocking directorates with specific reference to the copper industry can readily be accepted. The task ahead, then, is to deter— mine what has already been studied and to determine the structure of the present study. Survey of the Literature Although many studies of the copper industry have been made, few were concerned with, or even mentioned, inter— locking directorates. Two studies, though, stand out from all the rest. One is the 1947 Federal Trade Commission Report, The COpper Industry,14 and the other is also a 11O. C. Herfindahl, Copper Costs and Prices: 1870- 1857 (Baltimore: Johns Hopkins Press, 1959), pp. 73-142. 12Federal Trade Commission, The Copper Industry (Washington, 1947), p. 1. l3Interlocking Directorates, op. cit., pp. 173—175. 14The Copper Industry, op. cit. 15 Federal Trade Commission Report, Interlocking Directorates, published in 1951. Egg Copppr Industry (1947) The first study is one of a series by the Federal Trade Commission on basic industries exhibiting a high degree of concentration of control over their raw materials and production capacities. .A part of this report deals with interlocking directorates in the copper industry as they existed in 1944. The Commission claimed that its study inCluded firms producing 66 percent of the world output of primary copper in 1944, and that most of the firms were interconnected. Its findings are summarized in Figure 1. Here the direct and indirect interlocking directorate interconnec- tions of 15 copper corporations are exhibited. One can see that American Smelting and Refining is directly interlocked with Noranda with one common director. One can conclude that, through this direct interlock with Noranda, American Smelting and Refining is indirectly interlocked with Granby, Phelps Dodge, and Hudson Bay. Similar relationships of American Smelting and Refining, as well as the other 14 copper corporations, can be determined in a like manner. 15Interlocking Directorates, op. cit. 10 JOHNS CONSOLIDAYED AMANVILLE A EDISON co WESYINGHOUSEA HUDSON BAY (Canada) I RHODESIAN GROUP RHOKANA " 4 AMERICAN IELEPHONE GENERCALR MOTORS BELL YELEPHONE C0 of CANADA nNODESMM AMGLO _ '- ‘ ; mmun .. N . . U S. . ' . T - . ‘ 2 [EL _ ,- 6 AMERICAN to a r lEGEND Copper Producers Investment Trusts American Bank DOOD Important American Industries w .. to - . _. J ROAN ANYELOPE + Represents cases where the interlocking dirgeztor is also the “P "Y # prim: cipal officer of the copper pr ruodc NOTE- Inoterconnactians shown or e only than at directors —-- Indicates that the connection is other than9 as an officer or director 0 J P Mar an 6. Co on to the copper companies, produce son ' ' 9 ' iniestment trusts represented on the chart eand Numerals on the interconnecting lines indicate number of banks and' mpor Intdus tries in the United States; ks numerous interlocking relationships between ban sawh 2-9 directors common to bo th companies, where no numeral d and industries are not is shown one common dIrectar Is indicate Figure 1. International interlocking connections between copper producers banks, investment trusts and important American industries. (Federal Trade Commission, The Copper Industry, l947, opposite p. 175.) ll Interlocking Directorates (1951) The second study, started in 1948, is an attempt by the Commission to trace the important interlocking relation- ships stemming from the 1,000 largest manufacturing corpora- tions in the United States, as measured by total assets. The study reports on interlocks existing as of 1946. Although all manufacturing groups are included, the study is broken down into separate industry studies. The non-ferrous metals industry includes the eight largest copper firms. The evidence developed in this study indicates that the eight copper firms were all inter—connected through inter- locking directorates. The commission concludes that the significant inter; 1ocks in the non—ferrous metals industry appeared to conform to three patternsl6—-access to markets, access to supplies of raw materials, and alliances with strong financial inter— ests. The predominant pattern appeared to be the alliances with strong financial interests. This in turn supplied a substantial degree of interconnection, through indirect in— terlocks, between competing producers of non—ferrous metals. These two studies have common shortcomings: (l) the samples were small, (2) there was no differentiation between a horizontal and vertical interconnection, and (3) interlock- ing directorates were considered to be the primary source of interconnection. l6Ibid., pp. 173-175° 12 Definitions Certain terms recur frequently throughout this study. The most common of these terms are defined below in order to minimize any confusion that might arise from their use. Vertically Integrated Groupg Vertically integrated groups are defined as a group of firms all processing copper for sale through a single selling firm. The group includes the selling firm. All firms involved with the flow of copper to a single seller are defined to be a vertically integrated group as exhibited in Figure 2. The first type is a single channel group where all copper processed and sold by the group comes from a single source. The second type is a multiple channel group where the copper processed and sold by the group comes from two or more sources. Vertical Structure The vertical structure is defined as the intercon— nections between a member of a vertically integrated group and the selling firm of the group. These interconnections can be in the form of ownership, direct interlocking direc— torates, indirect interlocking directorates, or contractual relationships. l3 Vertically Integrated Group Vertically Integrated Group Type I Type II T Indicates flow of copper Figure 2. Vertically integrated groups defined by flows of copper. l4 Horizontal Structure The horizontal structure is defined as the intercon— nections that exist among vertically integrated groups. The interconnections can be in the form of ownership, joint membership in two or more vertically integrated groups, direct interlocking directorates, or indirect interlocking directorates. Groups are considered to be horizontally interconnected even though the interconnection is between firms in different stages, such as an interconnection between a smelter from one group and a mine from another group. Ownership Interconnpctions An ownership interconnection is said to exist between Firm A and Firm B if any of the following conditions exist: Condition 1. A owns all or part of B. Condition 2. B owns all or part of A. Condition 3. C owns all or part of A and B. Examples of ownership interconnections in the verti- cal structure can be seen in Figure 3. If any of the above conditions exist between any member of Group I and Seller "A", such as Seller "A" owns Refiner "A", Refiner "A" owns Seller "A", or some firm "X” owns both Seller "A” and Refiner "B", the two firms, Seller "A" and Refiner "B", are said to be vertically interconnected by ownership. 15 :Q: OCHE :Q: kuHmEm =¢= “mgflmwm =Q= “ml—”Hmm HHH msono poumumoucH maamofluum> .mmsoum popmumopcfl MHHmoHDMo> mouse .m oHdem — :0: OCHZ _ _ =m: mgflz “ =¢= was“: fi:0= HODHmEm_ _ :m: L _:O: HOGHMOM_ _:m: A HODHOEW; :<: kuHwEm A Magnum _ 2.. $5.3m :m: “mt—”Hmm HH msouo poumumoucH maamuauuo> :d: HmHme H msouw UmDMHmouGH MHHmoHuHo> 16 Examples of ownership interconnections in the hori- zontal structure can be seen in Figure 3. If any of the three conditions exist between any firm in Group I and any firm in Group II, such as an ownership interconnection between Refiner "A" and Seller ''B", the two groups are said to be horizontally interconnected by ownership. Direct Interlocking Directorates A direct interlocking directorate is said to occur between Firm A and Firm B if any of the following conditions exist: Condition 1. A and B share one or more common directors. Condition 2. An executive officer of A sits on B's board of directors. Condition 3. An executive officer of B sits on A's board of directors. Examples of direct interlocking directorate intercon- nections can be seen by referring to Figure 3. If any of the three conditions exist between Seller "A" and any other member of Group I, the two firms are said to be vertically interconnected by direct interlocking directorates. .Also if any of the three conditions exist between any member of Group I and any member of Group II, such as Refiner "A" and Smelter "B”, the two groups are said to be horizontally interconnected by direct interlocking directorates. 17 ,. Indirect Interlockin Directorates An indirect interlocking directorate is said to exist between Firm A and.Firm B if both Firm A and Firm B have a direct interlocking directorate with Firm C as illustrated here. Firm C ‘\ Direct Interlock Direct Interlock Firm A Firm B Examples of indirect interlocking directorate inter- connections can be seen by referring to Figure 3. If any member firm of Group I is indirectly interlocked with Seller "A", the two firms are said to be vertically interconnected by indirect interlocking directorates. .Also, if any firm in Group I is indirectly interlocked with any firm in Group II, the two groups are said to be horizontally interconnected by indirect interlocking directorates. Contractual Relationships Contractual relationships for processing copper can exist among members of a vertically integrated group. These contracts normally are one of two types; (1) the copper is treated on toll by a smelter and/or refiner and (2) the copper is sold directly to a smelter and/or refiner. In the first case the copper remains the property of the producer (mining company) and is brought to the market by the producer 18 or his agent. In the second case, the copper becomes the property of the smelter and/or refiner and they or their agents bring it to the market. Both types of contracts specify all conditions of settlement, such as the percentage of total metal to be paid for or returned to the producer, the basic smelting and refining charges, penalties for impurities, bonuses for ~ higher grade, payments for gold and silver, and time and rate of payment.17 Further, these contracts are used to obtain minimum and maximum quantities of ores and concen- trates.18 Joint Membership Joint membership is a special case within the hori— zontal structure which is formed by the flow of copper from two or more vertically integrated groups moving jointly through a single processing unit. For example, in Figure 4, Group I and Group III use the same refiner, "A". Therefore, the two groups are horizontally interconnected by joint membership. Refiner "A” interconnects with Group I by ownership and Group III by contract. 17A. D. McMahon, Copper, A Materials Survey (U.S. Department of the Interior, Bureau of Mines; Washington, D.C.: Government Printing Office, 1965), pp. 255—259. lBIbid., p. 256. 19 Specific Research Goal The Specific research goal of this study is to examine the vertical and horizontal structures of the c0pper industry as of 1962. The c0pper firms in the sample include those said to be the principal producers of the free world copper.19 The accomplishment of this goal necessitates the determination of the interconnections in both the vertical and horizontal structures that are attributable to each of the five forms of interconnection. The purpose is to test the hypothesis stated below: In the c0pper industry there exists vertical and horizontal structures consisting of inter- connections of ownership, joint membership in two or more vertically integrated groups, contractual relationships, and direct and indirect interlocking directorates. Differentiating the Structures Why is it necessary to study the vertical and hori- zontal structures separately? The answers to this question lie in the different implications as to potential effects upon competition inherent in each structure. The vertical structure is defined by the intercon— nections between members of a vertically integrated group 19Yearbook——1962 (New York: American Bureau of Metal Statistics, 1963), p. 2425. The 69 firms in the sample produce, process, and sell 90 percent of the free world c0pper (H..Fasting, Director, American Bureau of Metals Statistics in private conversation with the author). 20 and the selling firm of the group. Each member of the group has a strong working relationship with the other members of the group. They all participate in the output and pricing policies for their group. The group is tied together by its flow of copper. Usually, no member is free to act alone. The mine needs the smelter to process its copper. The smelter needs the mine as a source of supply of raw mate— rials; the smelter also needs the refiner to process its out— put. The refiner needs the smelter for raw materials and the seller as an access to the market. The seller in turn needs the refiner as a source of copper. Under most circumstances it would be folly for any member to bolt the group. Either, or both, supplies of raw materials or access to markets for products would be non— existent. Capacities of outputs and throughputs are rela— tively evenly balanced throughout the entire chain of production processes.20 No other producer has the excess capacity to supply the renegade, nor does any other proces- sor (smelter or refiner) have the capacity to take on the output of a new producer. Since each member of a vertically integrated group needs each other there must be some negotiation, coordina- tion, and agreement on output and pricing policies among the 20R. H. Page, Secretary and.Chief Agent, Rhodesian Selection Trust, in correspondence with the author indicated this to be true. 21 members. Therefore, one can say that such a group operates as a single firm. The implications as to the potential effects upon competition have to do with barriers to entry. A new firm desirous of entering the copper industry must either start its own vertically integrated group or join an existing group. Capital requirements may be a very effective barrier in the first case. In the second case, the new firm is at the mercy of the already established groups. If the new firm is to join an established group, the members of the group must adjust their capacities to accommodate the new member. The group may be unwilling or unable to make this adjustment. The horizontal structure is defined by the intercon- nections among the vertically integrated groups. The impli— cations of this structure as to potential effects upon competition relate to output restrictions, market sharing, and price—fixing. This does not mean that an industry that has a large number of horizontal interconnections engages in non—competitive activities. Instead, it indicates that the industry has a potential to do so. The differences, therefore, are that firms related vertically have the potential to restrict entry and firms related horizontally have the potential to restrict output and agree on market shares and prices. 22 blet_ho_do_l<291 Three major problems arise as one attempts to study the vertical and horizontal structures of an industry. The first deals with determining where the interconnections exist. The second deals with identifying the interconnec— tion as to whether it is vertical or horizontal. The third deals with classification of the interconnections. The first problem, pertaining to the determination of the existence of interconnections, is one of collecting and sorting information. Data sources used were Poor's Register of Directors and Executives, Moody's Industrial Manual, Who's Who, and copper companies annual reports. All executives and directors of the copper firms in the study were listed along with their company affiliations on IBM cards. These data cards were then run through a computer program. The output of this program listed all direct inter— locking connections of the copper firms both inside and out— side the industry. The format of the data cards and the flow chart of the program are illustrated in Figures 4 and 5. By properly sorting the output cards, the direct and indirect interlocks can be determined. Ownership information available from the same sources was tabulated. Therefore, all ownership intercon— nections of the firms in the study were listed for later use. 23 Director Director Company Affiliations Code Name of Director 1 i i i / l 0531 Evans, Charles L. 13 42 556 ‘ I \ / Figure 4. Data card for director or executive. 24 START READ . . C FIRM Read in coded c0pper firms READ Read in director and all of DIRTOR' his affiliations AFFIL If no more director cards stOp DIRTOR — 0 If director is affiliated with c0pper Firm (I) then c0pper Firm (I) is directly interlocked with all director's affiliations No (I) PUNCH C FIRM (I) AFFIL Figure 5. Schematic program for punching direct interlocking directorate interconnections. 25 The second problem requires separating the industry into its vertically integrated groups. Using data supplied in the American Bureau of Metal Statistics Yearbook for 1962, one is able to determine that the industry consists of 21 distinct vertically integrated groups. These groups can be seen in Table 10 which appears in Chapter II. The third problem requires ranking the various types of interconnections according to the potential control the interconnected firms might be able to exert on one another. It is quite likely that two firms could be interconnected by two or more types of interconnections. If there were an ownership interconnection, the two firms might readily share one or more common directors. If there were a direct inter— locking directorate interconnection, it can be easily seen that this might also lead to an indirect interlocking directorate. Table 2 displays the ranking of interconnections both in the horizontal and the vertical structures that were used in this study. The rationale for this ranking is based upon the potential power and control of one firm over another that the interconnection might provide. Power and control by type of interconnection is discussed below. Ownership carries the right to decide upon courses of action and the ability to control the action of the owned firm. Because of this, ownership must be classed as having the highest potential for power and control over an inter- connected firm. 26 Table 2. Interconnections ranked by potential power of control over interconnected firms Type of Interconnection Ranka Horizontal Structure Ownership Joint Membership Direct Interlocking Directorate Indirect Interlocking Directorate th—H‘ Vertical Structure Ownership Direct Interlocking Directorate Indirect Interlocking Directorate Contractual Relationships IPWNl—l aRank depends upon number of directors involved. A contractual relationship may be stronger than either direct or indirect interlocking directorates. Joint membership in two or more vertically inte- grated groups for the purpose of this study has the same potential in the horizontal structure as ownership. In this case a single firm interconnects two vertically integrated groups and it obviously controls its own actions. It should be noted that in all cases at least one of the vertical structures has a contractual relationship with the horizon— tally interconnecting firm. Contractual relationships for processing copper exist only in the vertical structure. The firm is a member of a vertically integrated group and its power with the firms it interconnects depends upon the negotiating 27 capabilities of the members of the group. Similar to other members of the group, the firm with contractual relation- ships participates in output and pricing decisions. It is committed to the group on a long term basis as per the pre— vious discussion on vertically integrated groups. Further, the contract usually controls maximum and minimum quantities of copper flows. (See definition of contractual relation- ships.) Direct interlocking directorates have a potential power of control based upon the number of directors involved. One or two directors may do little other than act as an avenue of information. This, itself, may have serious implications to the state of competition. On the other hand, a large number of common directors in proportion to the size of the individual boards may be able to cause the two firms to act in consort and reduce competition. Indirect interlocking directorates have potential power similar to direct interlocking directorates which depends upon the amount of directors involved. .Advantages Advantages of this study are many. The examination of the structure of the industry, first for vertical inter— connections and second for horizontal interconnections.of vertically integrated groups, provides new insights to the significance of the interconnections. Also previous studies 28 are out of date and were based upon smaller samples than this study. Many interconnections missed by the previous studies may be discovered in this study. Further, the results of this study may lead other researchers to apply a similar methodology to other industries to determine if the industry structuring practices found to exist in the copper industry are universal. Scope This study is confined to the 69 firms listed by the American Bureau of Metal Statistics as the major producers, smelters, refiners, and sellers of copper in the free world. Although the copper industry consists of several hundred firms, this study was limited to the above mentioned firms because they produce more than 90 percent of the free world copper. Therefore, this study will be concerned with the interconnections, vertical and horizontal, of these 69 major copper firms. Certain potential limitations in the findings of this study derive from the nature of the sample and the analytical procedures followed. 1. Not all the significant interlocking relation— ships may have been found. The sources are not always complete, especially with respect to foreign corporations. 2. Interlocking relationships have not been traced through all of the subsidiary and affiliated companies. The reason being that the number of such companies is large and 29 information is not always available publicly. In View of some of the large holding company systems that are to be found in the copper industry, this omission may result in a substantial understatement of the prevalence of interlock— ing relationships. 3. Business associates and familiar relationships have not been identified and traced as sources of interlock— ing relations unless they happen to be members of the same corporation. The gap is probably important, for relatives by blood or marriage and close business associates may be important links among the firms in the industry. Organiggtion of the Study The study consists of four sections: (1) descrip- tion of the copper industry; (2) the vertical structure of the industry; (3) the horizontal structure of the industry; and (4) summary and conclusions. Description of the Copper Industry The copper industry is described so that the reader may have a better understanding of the importance of the findings of this study. The description includes the firms in the industry sample and the flows of their copper. 30 vertical Structure of the Industr The vertical structure of the industry is analyzed to determine the basis for the structure. The intercon— nections examined are ownership, direct and indirect inter- locking directorates, and contractual relationships. Horizontal Structure of the Mr The horizontal structure of the industry is analyzed to determine the basis for the structure. The interconnec— tions examined are ownership, joint membership in two or more vertically integrated groups, and direct and indirect interlocking directorates. Summary and Conclusions The study is summarized and conclusions are drawn as to the validity of the hypothesis. .Furthermore, a case for additional research is presented. CHAPTER II DESCRIPTION OF THE INDUSTRY This chapter presents a description of the copper industry including its resource base, production processes, marketing operations, and the flows of copper between the major producers, and sellers. This description may provide wit the reader with some insights to understanding the industry V structure exposed by this study. Resource Base Copper is a fund resource, which means that even— tually we will have used up all naturally occurring copper. Fortunately, copper is also a recycling resource, with a use cycle considered to be approximately 40 years with a recov— ery of 60 percent. Currently, 25 percent of the total consumption of copper is produced from old scrap.1 of the 51 million tons of copper produced in the United States since 1845, 32 1A. B. McMahon, Copper, A Materials Survey (U.S. Department of Interior, Bureau of Mines, Washington, D.C.: U.S. Government Printing Office, 1965), p. 7, Cited here- after as Copper, A Materials Surygy, 1965. 31 32 million tons are still in use, and 16 million tons have been recovered and reprocessed.2 .Commercial deposits of copper are being worked on every continent, but 90 percent of the known deposits are located in five areas. These areas, listed in order of importance are: (l) The Rocky Mountains and the Great Basin area in the United States; (2) the Andes in Peru and Chile; (3) the Central Plateau in Africa; (4) the Pre—Cambrian area of Central Canada and Northern Michigan; and (5) the Urals in Russia, Siberia, and Turkestan.3 The total stated reserve of copper in the world is estimated at 212 million tons. According to the current rate of consumption, of four plus million tons per year, this should be a 40 to 50 year supply. A tabulation of reserves, continent by continent, and country by country can be found in Table 3. All quantities are measured or indi- cated reserves based upon the cost—price conditions of 1960. In other words, stated reserves are those which can be pro— cessed economically. Should the costs rise or the prices fall, the reserves will decrease, and should the costs fall or the prices rise, then the reserves will increase. It is interesting to note the changes in copper reserves in this 2;p;g., p. 76. 3Copper, The Cornerstone of Civilization (New York: Copper and Brass Research Association, 1962), p. 8. 33 Table 3. World copper reservesa Ore Ore Reserves Reserves Copper Copper Content, .Content, Thousand Thousand Country Short Tons Country Short Tons North America: Asia: Canada 8,400 China 3,000 Cuba 200 Cyprus 200 Haiti 75 India 100 Mexico 750 Israel 250 United States 32,500 Japan 1,200 Total 41,925 Philippines 1,000 Turkey 580 Total 6,330 South America: Africa: Bolivia 55 .Angola 40 Chile 46,000 Republic of Peru 12,500 the Congo 20,000 Total 58,555 Northern Rhodesia 25,000 Southern Rhodesia 475 Europe: Kenya 20 Austria 60 Mauritania 460 Bulgaria 300 South—West Finland 750 Africa 525 East Germany 500 Uganda 210 Ireland 280 Republic of Norway 500 South Africa 900 Poland 11,400 Total 47,630 Spain 4,500 Sweden 700 Oceania: U.S.S.R. 35,000 Australia 1,200 Yugoslavia 2,750 - Total 56,750 Grand Total 212,000 aCopper, A Mgterials Survey, op. cit., p. 44. country over time. 34 Production has increased, yet the reserves have more than kept up (see Table 4). Table 4. Trend of U.S. copper reserve estimatesa Annual Rate of Tons Production Used Recoverable Price, Life, to Estimate Year Copper Cents Years Life, Tons At Least 1931 18,500,000 9 31 600,000 1931 18,800,000 9 31 600,000 1934 18,900,000 10 32 600,000 1935 16,000,000 10 22 750,000 23,500,000 12 32 1936 23,700,000 12% 33 725,000 1944 20,000,000 13 25 800,000 1945 29,200,000 13 36 800,000 1960 32,500,000 32 30 1,100,000 aCopper, A Materials Survey, op. cit., p. 45. The ore is generally low grade, between 0.4 percent and 10 percent copper, the balance being worthless gangue. The bodies of ore must be large in order to make operations profitabl e. The recently opened Palabora project in South Africa has reserves of 350 million tons of 0.69 percent ore and a smelter capacity of 80,000 tons of copper per year.4 4 Wall Street Journal, February 11, 1963, p. 21. 35 Generally other metals or minerals are found with copper, which permit the mining of low grade ore. Ownership and control of the free world reserves of copper are highly concentrated. Three countries, United States, Britain, and Belgium, control approximately 83 per— cent of these reserves. Further, 70 percent of these reserves is in the hands of 10 corporations or financial 5 groups. Production Processes ,, JI‘ f. Wt Mining.—-The ore is mined either by open pit or . underground mining operations. The underground operations are considerably more costly than open pit. A higher grade ore is required for profitable operation, 0.7 percent or more, while it is profitable to mine 0.4 percent ore in open pits.6 Extraction.-—Copper is generally extracted by one or two methods: 1. Heat (concentration, smelting, and refining) or 2. Wet (flotation, leaching, smelting, and refining). Where ore is low grade or has a poor composition, economy usually dictates the use of a wet process. Oxidized, mixed 5The Copper Industgy, op. cit., pp. 37-38. 6Copper, The Cornerstone of Civilization, op. cit., 36 oxide—sulfide, and low grade native ores are commonly treated by this method. Very little copper is fire refined today. Michigan ores are fire refined, but this amounts to approximately 70,000 tons per year, or only 6 percent of the United States production. other fire refineries are found in New Jersey, New Mexico, and Texas, and their capacity is 230,000 tons per year. The balance of the domestic produc— tion is electrolitically refined. Fabrication.-—Much of the copper continues on in the processing or fabricating plants of the copper and brass industry. Some of it is made into wire, some into sheets, plates, and rods, some into tubing, some into brass and bronze casting, and very little (10 percent) goes for ini- tial fabrication outside the industry.7 Therefore, indus— trial consumption starts with fabricated forms. Production Costs The industry is capital intensive and a great per- centage of the costs are fixed as land, buildings, machinery, and equipment. Improved technology and substitution of capital for labor held costs per pound down in the face of rising wages for labor. Tables 5, 6, and 7 show productiv— ity data for the mining, concentrating, smelting, and refin— ing stages of the industry. 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NAN. mm.~m HS.¢ 0mm.0m0.a Hmm.mm omw.ma mnm.m mama Noaao. mom. mm.mm HS.¢ omN.0m0.H Hmm.mm Ham.mH Hmm.m mama HHHHO. 0HN. mm.mm hn.v Nmm.mN0.H mmm.om v0H.mH mmm.w coma moaao. mam. no.0m 00.v Nmm.¢mh.a hcm.mm hm>.ma mmo.h mcma Mammoo pwaaaz 0H0 noonIcmz unonlamz mpcmmsoaa monomaona mpcmmsocs manna “mow manmuw>ooom mo :09 Ham and Hammoo Hum poaaaz .ucaucov .pmaaaz .pwxuoz maaxuoz canon Moorlaaz manmno>ouom ono mace Hammoo wuo mo mace mudonIanz :0: Hum HSOEIGME mo monsom wanmumxyoumm mmmuw>< umoo Monmq >ua>auu=poum soHuUSpOHA undemonEm moolmvma moumum pwuacb gnu on mucumuucmocoU voodoo wo sump >ua>auospouo .0 manna 39 Table 7. Productivity of smelters and refiners, combineda Smelter Pounds Average Men Man-hours Production Copper Working Worked, of Copper per Year Daily Thousands Thousands Pounds Man—hour 1939 9,234 21,643 1,424,350 65.8 1940 10,743 25,092 1,818,168 72.5 1941 10,927 27,848 1,932,144 69.4 1942 10,286 27,911 2,175,982 78.0 1943 10,153 28,533 2,185,878 76.6 1944 7,728 21,733 2,066,758 92.3 1945 10,420 28,947 1,565,452 54.1 1946 10,187 23,573 1,199,312 50.9 1947 12,393 31,038 1,725,744 54.0 1948 12,419 32,496 1,684,954 51.9 1949 11,626 28,395 1,515,862 53.4 1950 11,756 30,402 1,822,704 60.0 1951 11,928 31,198 1,861,548 59.7 1952 10,629 27,508 1,854,730 67.4 1953 11,177 28,943 1,886,782 65.2 1954 11,244 27,316 1,668,762 61.1 1955 11,691 29,661 2,014,622 67.9 1956 12,194 31,497 2,235,160 71.0 1957 11,826 30,583 2,162,110 70.7 1958 10,801 26,966 1,985,836 73.6 1959 11,204 23,516 1,598,658 68.0 1960 12,009 29,445 2,285,696 77.6 aCopper, A Materials Survey, op. cit., p. 304. 40 Table 8. Cost per pound——five year moving averages of some leading copper producersa (cents per pound, U.S. equivalent) 1958 Copper Production, Thousand Producers 1949—53 1950—54 1951-55 1952-56 1953—57 1954-58 Pounds Kennecott Before Taxes 11.103 12.027 13.078 14.475 15.862 16.346 637,464 After Taxes 16.779 18.319 20.685 23.169 24.314 24.216 Phelps Dodge Before Taxes 12.240 13.460 14.600 15.810 16.230 15.690 437,148 After Taxes 17.140 18.920 21.010 23.020 23.540 22.840 Greene Cananea b b Before Taxes 17.659 19.307 21.429 24.824 "b "b 61,188 After Taxes 19.899 21.674 24.449 27.959 .. .. Andes Coppgr c c Before Taxes 19.976 20.975 22.536 23.689 24.162c 23.697c 71,962 After Taxes 21.334 22.225 24.763 27.430 28.590 28.395 Chile Copper Co. c c ‘ Before Taxes 14.497 15.375 15.969 16.780 17.115C 16.977c 469,198 After Taxes 18.737 19.695 21.961 24.134 25.154 24.983 @952 Before Taxes 16.315 17.318 18.004 18.885 19.262 19.107 383,156 After Taxes 16.315 17.318 21.933 24.039 25.045 24.874 Mulfulira Before Taxes 12.186 13.198 14.987 17.393 18.773 18.636 199,017 After Taxes 19.141 19.949 22.058 24.518 25.127 24.076 Average Before Taxes 14.854 15.953 17.229 18.837 18.567 18.409 After Taxes 18.888 20.147 22.408 24.894 25.295 24.897 Total,7Companies..........................2,259,133 Total World, Including U.S.S.R. . . . . . . . . . . . . . . . . . . . 7,200,000 Percentage of World Trade . . . . . . . . . . . . . . . . . . . . . . 31.38% aCopper Factbook, Supplement to an address before the Copper and Brass Research Institute at the 38th Annual Meeting, Hot Springs, Virginia, May 17, 1960, by Alvin W. Knoerr, ed., Engineering and Mining Journal and E. & M. Metal and Mineral Markets, p. . bNot available. cEstimated. 41 In 1960, labor costs, calculated from these tables, were approximately 8.5 cents per pound against the total produc- tion costs of approximately 18.5 cents. Marketing Operations The marketing operations in the copper industry usually are not apparent until the copper has been refined. The exceptions to this are those small mines that are not integrated with the major producers. They must sell their ores to custom smelters, often one of the major producers, or have the ore treated on the toll. The ores and concen- trates are purchased based upon a contract between the mining company and the smelting company, which provides a schedule of prices to be paid depending upon the recoverable copper, the amount of gangue, and the impurities in the ore. If the ores are not treated on the toll basis, they become the property of the smelter who further refines them and sells the refined product at the most favorable time. Ores treated on the toll remain the property of the mining com— pany and usually are sold immediately on the open market. The typical marketing operation begins with the refined metal. In the United States, 50 percent of this metal goes directly to the wholly owned fabricators and no published prices are recorded for this exchange. The inde— pendent fabricators and the large electrical manufacturers buy directly from the large refiners, their selling agents, or on the open market. The copper typically is sold on a 42 30 to 90 day delivery from the refineries and priced in the month of shipment.8 Vertically Integration in the Industry There are several hundred firms engaged in producing and selling copper throughout the free world. Most major producers are vertically integrated (via ownership) from the mining stage of operations through the smelting, refining, fabricating, and marketing stages. Other large firms are integrated through the smelting and refining stages; still others only mine and concentrate, shipping the concentrates to custom smelters and refiners. Table 9 depicts this structure by showing the principal copper producers, the mining companies, and the disposition of their copper through the smelting, refining, and selling companies. The vertical integration of the industry can be seen more clearly if the information shown in Table 9 is reorga- nized. If, instead of grouping the industry by producers, the industry is grouped by selling firms, a pattern of 21 vertically integrated groups will appear as in Table 10. It should be noted that all but two of the producers are members of a vertically integrated group. The Chilean government sells the output of Mantos Blancos (21,000 tons in 1962). 8Copper, A Mgterials Survey, op. cit., p. 45. 43 hammeoo amaom Mmmmoo nodumuomuoo anoma3mq nmaopc asmmaoo mcoafiz apogee .ocH .xmanao Hmumz cmoauos< :oHumuomuoo 0000a mmflazm acaumuomuoo manna: a manhood: anneaumauoucH hammaoo ummmoo mama: .muoo Hommoo uuoowccox mammaoo mucoumcd one .00 madcawom w mcauaofim .Hwfid asmmfioo omcmm 000000 .ucH .mauwm o unEsHmU .00 mcacawom d manuamam .HdEd .00 madcauom a maauawfim .umfid .ucH .moownmadm Cmanomammmd >=aflfi°0 monoumcfi one .00 mcacwuam a mdauaofim .u05¢ .ocH .xdEAHU amums cmuauoE¢ .00 nommoo deem mung: .00 ummmoo moan mums; Godumuomuoo wmpon mmamnm acmmaoo Monaco pauppaaOmcoo :oAumuammcu coMumuomHOU ampoo madman mommaoo opcoomad one hammfioo muflnaz monaso mammeoo madam: wunflso .00 mcwnawom a mcauamam .umfid acaumuomuoo ammon mmaacm ceaumuomuoo omuoo mmaonm ceaumuomuou ompon mmaonm mammsoo nommoo mama: mcacawmm w mcauaofim .u084 .muoo Hommoo uuoumccwx .muou 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.0050 .00 00000000 0 0000005m .0054 .00 m00aww0m a 0000005m .0050 m50000> .004 .0000000000 000000 00002 m50000> .000 .0000: 000000 000000052 m50000> .000 .0000000000 000000 00002 .000 .00002 000000 000000002 .00 00000000 0 00000050 .0050 .00 002002 0000000000000 .000 .005000 00002 00000050 00000000000 0m0on 000000 0000500 00000004 009 0000500 00000000 009 00000000000 0000000 00000000000 0000000 .000 .00002 0050002 00000000000 0000000 m000005m a m00002 000 00m050 0000500 000000 0000 00003 0000500 000002 0000000m 0000500 000000000xm 00000 0000500 000002 000000 0000< 0000000 00 000002 00000500 000000 000000000000 00000000000 0000500 00000000 009 .00 m000000m a m00000Ew .0050 .00 m0000wom 0 m000005m .005< .00 00000002 0 0000005m .0050 .00 00000000 0 m000005m .0050 .00 m0000u0m w 0000005m .0050 0000000 00 .00002 .000 .000 0000500 000000 00000.0 .000 .0000: 000000 000000052 50000> .000 .mma0z 000000 00000005: .00 m0000w0m w m000005w .0050 .00 00x002 0000000000000 .00 m0000u0m a 0000005m .0054 00000000000 00000 000000 000000000000 00000000m00 00000000000 000000009 00000000000 0000000 00002 000000000000 0000002 .000 .0000: 0050002 .000 .00002 00000000 m000005w a m00002 000 000050 .000 .m0000005m.0000000000¢ 0000500 000002 om00000m 0000500 000000000xm 00000 0000500 m00002 000000 00004 0000000 00 000002 00000000 000000 000000000000 00000000000 0000500 00000000 009 000000000000 0000004 .00 000000 a 050005m 00>00 0000500 m00002 000000 00000000000 000000 000m00 .00 @0000000 0 0000005m .0054 00000000000 005509 .000.m0002 000000 00000000 0000 0000500 000000 00030.0 .000 .mmn02 000000 00000005: 050000 .000 .00002 005050000 0000500 000000 0000002 .00 000002 0000000000000 0000500 m00002 0500 000M UNHOQ HOU Ommnwflnufls 00000000000 00002 0000000 .000 .00000005m 00000000000 0000500 00000000 009 .00 00000000 0 m000005m .0050 .000 .005000 00002 00000050 00000000000 000m0304 00000< 0000000 uou0mfim 00050000 000000 0000000 00000 no 000500 000 000 0000000 000000 000000000 .00 00009 48 00000000 000000 00000000 00000000 000000 00000000 00000000 000000 00000000 00000000 000000 00+00000 00000000 000000 00000000 00000000 000000 00000000 0000000000 000000 0:000: 00002 0000050005 00000000000 00000 000000 .0000 000000 000000000 2000500 000000 000000 .00 m0000000 0 00000050 .0054 .0000 000000 000000000 2000500 000002 0000000000000 .00 m0000000 0 m00000Em .0Q54 .004 .00002 000002 000000000000 000000000000 00 0000000 2000000 000000 0000 00003 2000500 000000 0000 00003 00000000000 00000 00 00000 .000 .00002 0 0055000 .004 .00002 0000002 .004 .00002 0000002 m000005m 0 m00002 200 000052 .004..m0002 0000002 .004 .00002 0000002 .004 .00002 000000 00000 .004 .00002 000 00502 0:0:05 00005 00m0nsmu0z 2000500 000000 05002 2000500 000000 000000 .0000 000000 000000002 2000500 000002 0000000000000 .00 m0000000 w m000005m .0054 .004 .00002 002002 000000000000 050000> 2000500 000000 0000 00003 2000500 000000 0000 00003 00000000000 00000 00 00000 .000 .00000 0 0055000 .004 .00002 000554 00003 .004 .00002 000005m .004 .00002 000000 0000000m 00002 5050m5om000.000£0500 .0000 .000000 00000 00000004 .004 .00002 000 00502 000000000000 00004 2000500 000000 05002 2000500 000000 000000 .0000 000000 000000002 2000500 000002 0000000000000 .00 0000005m 0 000002 000000000 .004 .00002 000002 000000000000 .004 .00002 0000 2000500 000000 0000 00003 2000500 0m000 000000 00000000000 00000 00 00000 .000 .00002 0 0055000 .004 .00002 0000002 .004 .00002 000 00502 0:000: 00000 0000050000 02000500 000000 05002 .0000 000000 000000000 02000500 002002 0000000000000 2000500 00500 0302 .004 .00002 000002 000000000000 .oo 000000 0 0500050 00>:0 2000500 0m000 000000 00000000000 00000 00 00000 .000 .00002 0 0055000 0000000 0000050 00050000 00000m 00::0ucooluo0 00000 49 .0500m 000» 000 00000 0000 00000000000 000002 000 00000002 000000000000H0 .05o0m 0000 000 00000 0000 .00H .x05000 00002 000000500 .000000000x0 000 m 0090a 00 00000 005m 0000 000 .00050000 000 00000000000 000000 5000 00000500 000 0000000 000002 “0002 .0 00309 0005 000000 0000002 00 0000000 0500 50 000002 0000b 0000000 0502 50 000002 00002 00000002 000 0000000 .000 0500005000002 0000000 .000 2000500 m00002 200050 2000500 000002 200050 2000500 000002 200050 2000500 000002 200050 00000000000 0m000 000000 00000000000 0m000 000000 00000000000 00000 000000 00000000000 0m000 000000 0000000 0000050 00050000 000000 0055. 558:3 0300. .54" A“ V \ I fig ”0 50 The other firm, Southern Peru Copper Corporation, is owned by several major copper producers, each taking their share of the copper output. The significance of this vertical integration has been expressed by the copper industry itself. Industry leaders have indicated "it would be folly to enter the smelting or refining business without a source of material to be treated; from a practical standpoint, there is not much possibility of this."9 Further, they have indicated that to open a mine without contracting for or constructing adequate smelting and refining capacity would be equal folly. Vertical integration is a necessity according to the copper industry. S_um_m_a_£x From the foregoing, it can be seen that the copper industry has a high concentration of ownership and control over the naturally occurring resources. The major produc- tion processes of mining, smelting, and refining are capital intensive and each production unit is large in order to take advantages of economies of scale. The industry has been organized into vertically integrated groups because of this. ‘Each element needs to be insured of either sources of sup— plies or markets for its output. 9The Copper Industry, op. cit., pp. 32—47. 51 It is this vertically integrated structure that is to be examined in the next chapter. The questions to be answered have to do with the type of structure of each of the vertically integrated groups. xAre they based upon ownership, interlocking directorates, or contractual rela- tionships? CHAPTER III INTERCONNECTIONS WITHIN VERTICALLY INTEGRATED GROUPS The purpose of this chapter is to describe intercon— nections existing within the vertically integrated groups in the copper industry. The Federal Trade Commission indicated that significant interlocking directorates would be found in these groups insuring access to supplies of raw materials and access to markets.1 Each group from the preceding chapter, identified by the selling company, will be examined for the apparent expla— nation for the organization of the group: ownership, direct and indirect interlocking directorates, or contractual relationships. If ownership exists, it is assumed to super- cede the other three forms of organization. If a direct interlocking directorate exists, it is assumed to supercede an indirect interlocking directorate. Similarly, an indi— rect interlock supercedes a contractual relationship. Finally, if neither ownership nor an interlocking directorate lInterlocking Directorates, op. cit., pp. 173-175. 52 ._...J 53 exists, it is assumed that the interconnection is based upon some contractual relationship. The interconnections within groups are discussed below.2 Adolph Lewisohn Group Producers Smelters Refiners Tennessee Tennessee Corporation Anaconda Company Corporation Inspiration Consolidated Phelps Dodge Copper Company Corporation Phelps Dodge Corporation The Adolph Lewisohn Company is a wholly owned sub- sidiary of the Tennessee Corporation, the producer. Some of the smelting and refining is performed by the Anaconda Com- pany and the Phelps Dodge Copper Corporation on toll.3 The relationships in this case are contractual. The Tennessee Corporation is also vertically inte— grated into the fabrication stage with its wholly owned 2All information presented in the remainder of this chapter can be found in the following sources: Poor's Register of Directors and Executives, Moody's Industrial Manual, Who's Who, and the individual copper companies annual reports. 3Metal smelted and refined on toll remains the property of the producing company. subsidiaries, 54 Chester Cable Corporation. Producers Pima Mining Company International Nickel Co. Mazapil.Copper Company Chibuluma Mines, Ltd. Cyprus Mines Corp. Mufilira Copper Mines, Ltd. O'Okiep Copper Company Roan Antelope Copper Mines, Ltd. Tsumeb Corporation §_melt_ers Amer. Smelting & Refin- ing Company International Nickel Company Amer. Smelting & Refin— ing Company Mufilira Copper Mines, Ltd. Various Mufilira Copper Mines, Ltd. O'Okiep Copper Company Roan Antelope Copper Mines, Ltd. Amer. Smelting & Refin— ing Company Societe General Metal— lurgique de Hoboken the New Haven Copper Corporation and the Refiirs American Metal Climax, Inc. International Nickel Company American Smelting & Refining Co. Mufilira Copper Mines, Ltd. Ndola Copper Refineries,Ltd. Various Mufilira Copper Mines, Ltd. Various Ndola Copper Refineries,Ltd. Various American Metal Climax and its wholly owned subsid— iary, the Anglo Metal Company, sell the copper produced by several firms in which the company has considerable owner— ship interests: Chibuluma Mines, Mazapil Copper, O'Okiep Copper, Tsumeb, Mufilira Mines, and Roan Antelope Copper 55 Mines. Ownership in the last three are derived from the company's 43 percent ownership of their parent company, Rhodesian Selection Trust. American Metal Climax,has similar ownership interests in the smelters and refiners of the copper from these companies with the exception of the American Smelting and Refining Company and the Societe Generale Metallurgique de Hoboken. The company also sells some of the copper produced by the International Nickel Company probably on a contrac- tual basis, even though the two companies share one common director. A similar situation exists with the copper pro— duced by Cyprus Mines and its wholly owned subsidiary, Pima Mines. Cyprus Mines and American Metal Climax also share a common director, but their relationship is probably contrac— tual. The smelting of Pima Mines copper is performed by the American Smelting and Refining Company on toll. American Smelting and Refining Group Producers Smelters Refiners Amer. Smelting Amer. Smelting & Refining Amer. Smelting & & Refining Company Refining Co. Bagdad Copper Amer. Smelting & Refining Amer. Smelting & Corporation Company Refining Co. Banner Mining Amer. Smelting & Refining Amer. Smelting & Company Company Refining Co. Duval Sulphur Amer. Smelting & Refining Amer. Smelting & & Potash Co. Company Refining Co. Lepanto Con— Amer. Smelting & Refining Amer. Smelting & solidated Company Refining Co. ._-.-.._J 56 All facilities for smelting and refining are owned by American Smelting and Refining as is the producing com— pany by the same name. ,Sulphur and Potash, Bagdad Copper, Banner Mining, Duval and Lepanto Consolidated all sell their copper to American Smelting and Refining and their relation— ship to the company is contractual. American Smelting and Refining is also vertically integrated into the fabrication stage. It wholly owns Federated Metals and has a 36 percent interest in General Cable and a 35 percent interest in Revere Copper and Brass. Anaconda Group Producers The Anaconda Company InSpiration Consolidated Copper Co. Compania Minera de Cananea Andes Copper Mining Co. Chile Explora— tion Company Santiago Mining Company All of the firms of this group, producers, and refiners, are owned by Anaconda. w The Anaconda Company Inspiration Consolidated Copper Company Compania Minera de Cananea Andes Copper Mining Co. Chile Exploration Co. Santiago Mining Company Further, Refiners The Anaconda Co. InsPiration Con- solidated Co. The Anaconda CO. Cobre de Mexico The Anaconda Co. The Anaconda Co. Shipped as Concentrates smelters, Anaconda is 57 vertically integrated into the fabrication stage owning .Anaconda Wire and Cable and Anaconda-American Brass. Appalachian Sulphides Group Producers Appalachian Sulphides, Inc. Mr; White Pine Copper Company M White Pine Copper Company Appalachian Sulphides owns the producing company and the ore is treated on toll by the White Pine Copper Company. The interconnection is contractual. British Metal Group Producers Hudson Bay Mining & Smelting Co. Bancroft Mines, Ltd. Kilembe Mines, Ltd. Nchanga Consoli— dated Copper Mines, Ltd. Rhokana Corporation M Hudson Bay Mining & Smelting Co. Rhokana Corporation Kilembe Mines, Ltd. Rhokana Corporation Rhokana Corporation Mimi Canadian Copper Refiners, Ltd. Shipped as Blister Shipped as Blister Nchanga Consoli— dated Copper Mines, Ltd. Rhodesia Copper Refineries Rhodesia Copper Refineries British Metal sells copper in England and Europe for several sub-groups. Anglo-American Corporation. One of these sub-groups is owned by the It consists of three producers, 58 Bancroft, Nchanga, and Rhokana; one smelter, Rhokana; and two refiners, Nchanga and Rhodesia Copper Refineries. .A second group, Hudson Bay Mining and Smelting, has its copper refined on toll by Canadian Copper Refiners. The third group, Kilembe Mines, smelts its own copper and ships the blister c0pper4 to British Metals. Calumet and chla Group Producers Smelters Refiners Calumet and Hecla, Calumet and Hecla, Calumet and Hecla, Inc. Inc. Inc. All of the firms in this group, producers, smelters, and refiners, are owned by Calumet and Hecla. Further, Calumet and Hecla is vertically integrated into the fabrica— tion stage with its ownership of the Flexonics division and the Wolverine Tube Division. Cerro Group Producers Smelters Refiners Cerro de Pasco Cerro de Pasco Cerro de Pasco Corporation Corporation Corporation All of the firms in this group, producers, smelters, and refiners, are owned by Cerro. 5Blister copper refers to copper that has been smelted and not refined. 59 Copper Range Group Producers Smelters Refiners Copper Range Co. White Pine Copper White Pine Copper Company Company White Pine Copper White Pine Copper White Pine Copper Company Company Company All of the firms in this group, producers, smelters, and refiners, are owned by Copper Range. Further Copper Range is vertically integrated into the fabrication stages with its ownership of the C. G. Hussey Company. Duval Group Producers Smelters Refiners Peko Mines Various Shipped as Concen— trates Peko Mines, the producer, mines and concentrates only. The concentrates are then sold by contract by the Duval Company, Ltd. Falconbridqg Group Producers Smelters Refiners Falconbridge Nickel Falconbridge Nickel Falconbridge Nickel Mines, Ltd. Mines, Ltd. Mines, Ltd. All of the firms in this group, producers, smelters, and refiners, are owned by Falconbridge. 6O HOWe Sound Group Producers Smelters Refiners Britannia Mining & American Smelting & American Smelting & Smelting Company Refining Company Refining Company The producing company, Britannia Mining and Smelting, is wholly owned by Howe Sound. American Smelting and Refin— ing smelts and refines the copper on toll and the relation- ship to Howe Sound is contractual. Howe Sound is also vertically integrated into the fabrication stage with its ownership of the Stamford Rolling Mills and the Electric Wire Company. International Nickel Group Producers Smelters Refiners International International International Nickel Company Nickel Company Nickel Company ‘I All the firms in this group are owned by Interna- tional Nickel. A part of the copper produced by Interna- tional Nickel is sold by the American Metal Company, a wholly owned subsidiary of the American Metal Climax Company. The relationship between American Metal Climax and Interna- tional Nickel is probably contractual; although, the two companies share one common director. 6l Kennecott Group Producers Smelters Refiners Kennecott Copper Kennecott Copper Kennecott Copper Corporation Corporation Corporation American Smelting & Refining Co. Braden Copper Co. Braden Copper Co. Braden Copper Co. Kennecott Copper Company All firms in this group are owned by Kennecott with the exception of the American Smelting and Refining Company. The relationship between American Smelting and Refining and Kennecott is contractual (this relationship was dissolved in the mid—1960's). Kennecott is also vertically integrated into the fabrication stage with its ownership of the Chase Cepper and Brass Company. Magma Group Producers Smelters Refiners Magma Copper Co. Magma Copper Co. Phelps Dodge Corp. Magma owns its producing and smelting companies and has its copper refined on toll by Phelps Dodge. Magma and Phelps Dodge are interconnected by contract. International Minerals and Metals Corporation, a metals wholesaler, sells some of Magma's copper. The relationship between these two 62 companies is probably contractual, even though they share one common director. Mitsubishi Metal Mining Group Producers Smelters Refiners Atlas Consolidated Mitsubishi Metal Mitsubishi Metal Mining and Devel— Mining Corp. Mining Corp. ment Corporation Mitsubishi buys on contract the concentrates of Atlas Consolidated Mining and Development Corporation. Mount Isa Mines Group- Producers Smelters Refiners Mount Isa Mines, Mount Isa Mines, Copper Refineries Ltd. Ltd. Pty., Ltd. Both Mount Isa Mines and Copper Refineries are owned by American Metal Climax.5 SAlthough this group is owned by American Metal Climax, it is included as a separate group because of a different selling agent. Noranda Group Producers Atlantic.Coast Copper Corp. Campbell Chibou— gamau Mines, Ltd. Gaspe Copper Mines, Ltd. Geco Mines, Ltd. Maritimes Mining Corp., Ltd. Noranda Mines, Ltd. Normetal Mining Corporation Opemiska Copper Mines, Ltd. Patino Mining Corporation Quemont Mining Corporation Sherritt Gordon Mines, Ltd. Sullico Mines, Ltd. Waite Amulet Mines, Ltd. Noranda owns Mines, cent of Waite Amulet ship interest in the 92 percent of 63 Smelters Gaspe Copper Mines, Ltd. Noranda Mines, Ltd. Gaspe Copper Mines, Ltd. Noranda Mines, Ltd. Gaspe Copper Mines, Ltd. Noranda Mines, Ltd. Noranda Mines, Ltd. Noranda Mines, Ltd. Noranda Mines, Ltd. Noranda Mines, Ltd. Hudson Bay Mining & Smelting Co. Noranda Mines, Ltd. Noranda Mines, Ltd. Refiners Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. Canadian Copper Refiners, Ltd. directly 100 percent of Gaspe Copper Canadian Copper Refiners, Mines. and 95 per— Through Waite Amulet's owner- Mining Corporation of Canada, Noranda 64 indirectly owns 55 percent of Quemont Mining, 26 percent of Geco Mines, 50 percent of Normetal Mining, and 2 percent of Hudson Bay Mining and Smelting. The remaining producing companies sell their ores and concentrates to Noranda on contract. Noranda is also vertically integrated into the fabrication stage with its 65 percent ownership of the Canadian Wire and Cable Corporation. Phelps Dodge Group Producer Smelter Refiner Phelps Dodge Corp. Phelps Dodge Corp. Phelps Dodge Corp. This group is wholly owned by Phelps Dodge as are several fabricating companies such as Phelps Dodge Copper Products Corporation and Habirshaw Wire and Cable Corpora- tion. Quincy Mining Group Producer Smelter _ Refiner Quincy Mining Co. Quincy Mining Co. Quincy Mining Co. All facilities are owned by the Quincy Mining Company. 65 Societe Generale des Minerals Group Producers Smelters Refiners Union Miniere du Union Miniere du Union Miniere du Haut Katanga Haut Katanga Haut Katanga Societe Generale Metallurgique de Hoboken Union Miniere owns controlling ownership in both the Societe Generale Metallurgique de Hoboken and the Societe Generale de Minerals. Indirect Interlocking Directorates The role of the indirect interlocking directorates also was examined in the structure of the vertically inte— grated groups. The findings were such that one might con- clude that contractual relationships were the stronger interconnection between the selling firm and members of the group. Table ll displays these findings, showing the firms interlocked, the total numbers of directors from the two firms meeting on other company boards, and the number of companies indirectly interlocking the two firms. For example, American Metal Climax and American Smelting and Refining are indirectly interlocked having common directors with three other firms. There are a total of eight direc— tors from the two firms sitting on the boards of the other three firms. .American Metal Climax shares one director with each of the three other firms. American Smelting and 66 Table ll. Indirect interlocking directorates between selling firms and members of the vertically integrated grOups Number of Selling Member Directors Companies Firm Firm Involved Interlocking American Metal Amer. Smelting Climax & Refining 8 3 Amer. Smelting Banner Mining & Refining 4 2 British Metal Hudson Bay Corporation 2 1 British Metal Kilembe Corporation 2 l Howe Sound Amer. Smelting & Refining 4 2 Refining shares two directors each with two of the other firms and one director with the third firm. The potential for control is rather weak. Summary and Conclusions The copper industry exhibits a definite tendency to organize itself into a set of vertically integrated groups. These groups generally consist of a set of producers, smelt— ers, refiners, and a selling company. Many of these groups have carried vertical integration one step further into the fabrication stage. As previously discussed in Chapter II, the reason for such integration is to insure access to sup— plies of raw materials and markets for the products. 67 The vertically integrated groups appear to be orga- nized on an ownership or contractual basis. Interlocking directorates were apparently not used as a vertical organi— zation device. The isolated cases of direct interlocking directorates found to exist within groups consisted of firms sharing a single common director. Therefore, the relation— ships were considered to be too weak to be claimed as a basis for organization. The next chapter will present an examination of the horizontal interconnections in the copper industry. CHAPTER IV HORIZONTAL INTERCONNECTIONS BETWEEN VERTICALLY INTEGRATED GROUPS The purpose of this chapter is to present the results of an examination of the horizontal structure of the copper industry emphasizing interconnections between verti— cally integrated groups. The ined include ownership, joint vertically integrated groups, locking directorates. A problem arises when there are 420 possible points the vertically integrated groups.l connections, firms must be analyzed. pairings must be examined for interconnection, ownership, indirect interlocking directorates. Further, joint membership, interconnections to be exam— membership in two or more and direct and indirect inter- one begins such an analysis; of interconnections between To analyze these inter— 6,642 possible pairings between individual each of these possible one of five conditions: no and direct and This problem was solved by constructing a set of matrices displaying all possible interconnections as in Tables 12, 13, and 14. 1There are 21 groups and each group has 20 possible interconnections. 68 69 in the horizonlal structure. IONS ierconnect' up In rmembersh .oin Table 12 -- Ownership and a de Hoboxen (C) up O4 C \I I ( h w \r s \1 . . c 1 l s D I /\ t on (\ x) a; \l n U k a s D C M . ) . c .. P n ( 3 ( . . ) C S t 1 H .a N c u. s R .. .1 C ( e .\. i a . . K C ( L R . R ( t c J L . r. r A o .I - 1x A x/ e 1 t u a S .u ‘1 S e 41 e m S 3 > e m s ) P d m e k r r n ( S C L R o P m I r. C n v ,\ ) S .1 o M h ) e o a ) ( A ) ( .J ) D. i ( o d K S ( S l ) .1 o . ) P C D. 1 v.. w. «w r e 1 m a ( ) < e s c 1 . r c 1 ( v v e m u .. e a t V a a S t 1. 1\ t u L /\ u o x e . W s d a L u l r ( a. a a e E S a C E d n s n r s C 1 1 1 e u a n S H d r x e o 1 P M u v 1 a 1 e u t S n l n a a p , n c P 1 b n 1 l x n m r e . d a a e 1 r w A m e E m z r. a Q a P m C 5 V D. d mu b .n a u d . o I o a . 2 T n 1 P m c K M N O R w. m. I S m m L m 3 J oncaax roan: “my nulonom on .uux .nmu .ucm maflzg ac . 1 “and mfimxm 8. 31.25 8V .538 223% An“ oaauum .3 A3 wag“: 2331:: 8c 3.33225 SEE-ac on vn-ou ouuua~u< “my uoaza< uaaun Amy uaoacso Amy Huaoauo: time i .335 .2 35 Am. unnuu k2 dog :28 .5” .5303 Amy ooauouauem unnnoo «mm .5308 2: .tn « .3: .38 ”:1 EmmHmnmnmx .p any «moon aaaonm A3 nauuo: m wanumnar. Jam 04.: 3 dam «. Jinn Amv nwumum .3“ 55: H32, .. .56; x 8 dam « .Swam :3 .223 a 61... 950m A": 25?. uflmv onam on ma... If. EH33. . AWL xx.) nerd: a: unCnrunwu. G. 39...: Tn“ 83:... as an,“ Amv negating: .3. Fm Amv Lonnnu mac": . 1:4224 An}, cases...“ A: manna « 2.533 :25 Any Lona-m ,3 anew-m m3 nomoaom so $1.). :.. , seam fiAUV Hugo...” Hanoauscumu—LH .3 5.3.8 .Luv .mu: m ... ram .5 :3 swing. pm; 337.22. cram Amv maul/o A: £32 I; 3.3:: 3. 3232.) 1.130 2.2.9:... ”23%.: T: 363 mitt .. an; nodwneanmnu .S J C v) C (x n C ( J h. S v v . s v ”w o ( \l n J l a \II I s b c L c a D s J u J o . ( E n ( t ( S a C H 'v K (A e ‘ L. (\ \I II\ \I l . C l . H . a C C E e e r. I 3 I J . e . J ( 8 ( N d n m e h e k C n 1 f 5 me n Wu J J S R l H In m r e Ix t o n . . S C a s a R s b m o t ( ( a k t l e n t a 1 1 d e e a a 8 l r e o h M r d N e a . A r d t e l C C o u e r. e m a P u G . m n 1 m a p a w e o . m . n . c .. .3 D. . l . Y— e C n h o I P S unveil. noun... “.3 nunopom 3. Jay 6...... .08 mgng on .amm .00m 8an0 t mono» mfimmm A3 83.25 A3 «3300 A3 $55: By 5153820 ”3 3:8 Amy .335 F; €326 Amv «Humano- Iamv at» ,3 oo- am? “my .uom unnnoo n 10750..“ ”3 nods-uses“. :38 «mm .530: no; .59 4 .5: .300 :31 HmmHmbmhrx 1A3 ”anon 2335 A3 33-: a Sign... Jam 1.104: L3 45 m. Siam .5. E 9.53 .RV :53” «32. x SUSS 2A0; .wom a .5..an Ame .235 a .39, Jim SHOW mxom 2: 5nd,. 9v urn: Rmv cauueunbnxm 411.,» :3 Logan” :3: 3 can»; a 523% 1350 any Lonnam 7O A: .ucx m .uaasm .5 Ar; cacao mafia—kw I PA. 2.341: 73 unoMLEr cram Amy A: «mu 10 6 Ta, U .m i. o. n . .13.. .:.. O Naurudr .4....nr 740:3)... C . 3; 235215 Table 12 71 Table 13 -- Ownership, ioint membership,ond direct interlocking directorate interconnections in the horilontol structure. ,« z) 'm r A D n (i )r‘ I) u n ,, :1 H .. V 3 i 5 I. n 1.: 3 m ‘A . '1 > V ° ,_ 0 m " . r. ,. x ,\ A 0 '~ m D 1 u A ff: e '0 m A . o .1 e I) ‘ ‘2‘ ”7 ’“ 5 "‘ ° ,_ 7, N ._ ,, i. a ,, ,x “ y F} H _, u .4 m g r) a n: ,. Q . ,. . 'n H 7, m u .4 d w ; q .4 ,r .. it ,4 . o c ’ n. r. .4 ‘3; a: ,4 o .—4 _ I a o 5 0 Fl a; u w) s. .1 v: a. , o h. . u u ,, ‘4 A . o . l A V m V 7. v I) . , , 3: _, I; .3, r) .4 8 ,3 , “ h u u I}: o .11 r ) a E s. m g a 51 c . . ., _, .2 ,, . I m g r r. , . . v v A v v u < - ,. . - i . - .. . . . . ,, . . ,, g ,, m U . g . . 2 . .. m . z a . * ., 7 _ t ¢ 9 m a g + 1 h L N , g i / .. h , n p u o H o a V a 4 a a a v m w a A > .7. ,_ , , o n >. x. A I n f , .1 1 - . L y m 0 A m a l '7- - a k ,.. v o c a: o L. c x I. , .. 1, a, ”1 r. i A a . , ». n ( . . xi 74 . n, H a i: . 1 , U r, , a. _ u o 14 n u a- >, m .4 o r) u A o u 8 v . c .4 r3 : 4 , w c m, .) u ,. . i. n n A c. o . .. :1 z: ‘ ‘ ' 9 0 8 .r a 1 a a v 3 r'] .1 o i . r .1 .. r- n _, A .- s 1 4 r! , n ,_4 n In 0 m a: n. r3 r4 ‘ T , , . =. . . ,. , . , . H . . . a .. r . A l L ~ 0 n x n u n a p n a , < L ., ,0 n r. w o u a h . a a h - A z a - a a a k cg .4 u v ,, II :3 n r: u L. o e r. a s n n o o a a o g -< 7V H >4 5. ‘ U () I! I g ’A .2 vISOZ'ETI Anaconda (C). Inspiration (CJ‘ Pfielns Dodwe (C) AMERICL‘J MEAL Cum 3m buluaa is) Mazapil (SJ Mufilira (S) , Male (3) O'Jrzea (3) Ron: anrfilope (S) ‘Asiuleu (S) u. Smelt. a: :(ef. (C)- Cyprus (C) International Sickel (CI)$ Pima (3) Gen. Met. de Hoboxen (0‘) AM. SHEET. & REP. Bagdad (C) Banner (3) Duval Sulphur A: Potash (C) Lepanto (C Linux“ ' Andss :opper (5) mile Exploration (3) 1:52“ de stance (S) 51314.5 L ‘) 72 Table 13 .- Continued J S u) C W C ( J m. J v u ( .. s v C k 6 J x J 1 o J . ( o f c L a C e D S J u J S b . rt 5 m ( n ( S I 3 .w t K 1 y L. ( J ( J .. n L C M L M n) . u . C u C E e . m e m e k c n 1 r. a N ( m. M ( a d J J S R l R s ( w... r 2 J ( t o n A u . S C a l e e R S s b m o . r ( l a .a u L. e R . on. r r. 9 u u M 1. Mn d S e e e e a D . . A J . n d H a r e v. l S 1 C a v. ( J M mu: m d v. u u e N a c S t n m .S. n A e P J a ( u C .u 0 . . u l n .J A l /\ l o S R o. S 1 a . D N. n 1 P 0 v e e u s M 2 I o ( a t . E e I. m s n I . r C c n G G . .m a s P U s T e e e o n c . l 5 a N P . u. m m . . a t e T 1. U P u a r e c .. a h J c 0 o a e o n m 3 v. P v. A I. C 3 G H m J chug; roan... Army nelonom an Sex .55 .uom mawznr. mu .zmo .nom xozmno ( unfion .05me 8V 03.23 A3 aocuoo yahoo—Mm L3 83: 8c 5:338 8c mags "outta: A3 353218 Eugen-o .3 wagon 0.393.: “my $.35 «31. TE 3326 Amy :qu2. u ”my men node—am .3 0000 A2 3.20 lam” .«um gouge”. .ndu tnvémo: "my eeahoaCum Lonaoo 1mH .5301 T3 .>oq a in: .nuon “13¢ gmumamnnx 3 A8 238 mason» An; 31.3.. a 3:34;. Jan :31... 28 Joe S Siam Tn; A3 :53 43.... .. .. «BBQ .13 .yom a .523 Ame .2on a an). ambom A”: mend). An; 3 .num Leann”. fine if. mztrrx. mm. up 36 inc 8:9... Amy nodurcnanxm Anv Leann” are: nn-unm a 9:53 :36 0 mg Leaner. 73 gums» arm... .., 21.. Any anyone... v6 Sex can i ,H. SHAW An; 1x2... Annuities: t 3 1:33 I n; .wor. % .naaam l4 Tn. 333: v 0&3:an nrnm LS 3:35... i.. {:55an VIDM u. m7 — rt... 004.. 73 ”‘0 L I ‘ 's'ructure. In ‘. Table 14 .. Ownership, joint membership, direct and indirec’ interlocking 4’ .c c. n C J e ( u c x ) ( o h C \II b I \I ( . C l a a S S . . ( a a r ( J 5 ) . u x . a s z c s , J . c e . P n ( 3 ( e ’ \I c :- f 1 d F ) 0 .F R m J C ( e .\. E e 5 l o F . n C ( & R . R ( v c J 2 . I r J O J t ( J e 1 r. u a S L J S e J e r S S J 9 w. a J P k m e A. r r n ( S c L K J D C I ( C n v. _ ( J S J o M h J e a a J ( A J ( J J p B . ( o d H S ( S l J . J a . J J P C .. P 1 M J 5 . M1 3 r : 3 o J H r. e 2 M a /\ J ( n. S t C .1 . r. C 3 1 ( D. D. S \ e h ( .n v. ,\ ( J C L e a L .\ a a S t r\ 1 (x t. u 1‘ u D x e : x, w u (x k s d e L u 1 r ( e a e S o C E d L n .. .n s n r a C l 1 1 u n a n 3 d t Y n a . J e o i P M u P 1 n e S u r a 1 n 5 e a _ n . v n c D. l b e 1 l u M r a . d a a e 1 r n A n a a e E 1 z .1 a a. . P on c 6 V v. d 1 b k U u u u h m n a u d a I M v. n o R u o m h 3 o L. T I P O M M N R ..L a I S D L 3 l M m whnflar. Coin»). m3 5.2% on .22 .50 56w way/Hr 3U .zmw .nom wozwpo ( “Boa mmdmmm By 8:33 A3 nouuoo uauuonm 5 83: A3 33303 E 9352 355:: E 359.820 13950 A": 9.100 Amy $.35. 23 anon-3 ”my gunsho- I A3 >5 ,3 ouuo A3 3.8 name .uum uunnou .nun «nvéoz A3 uofioudom .238 «mm .530: 2: ion a .5: .38 :31 gmambmw: 543 £qu 252; : a .123: JS 2:: A3 dam a 4.2% Amv any “-5.8 H33. 1 #382 L3 .uum a 5.35 A3 .23..“ a .51). nunnow E 3nd,. Lmv uni A3 .nmm guano” A: Tnv eon-y. nu :53 ”my coirunfiaxm :18 A3 gonna.) run: I «anemia. H3 Banana “3 Autumn m Macadam “Ewan A3 houcom A3 2315 Hmmm « .u: 8V Humane: an .um: .ceu u 13V Hugo: HannsgtanH A: azunho I 0v .uor. a $1.5m .Id 73 333:. T3 23,55. atom A3 nmunb "my manvz «my 1.79:1; Am; Hangar 2: 323:: xixmao dank: zdwmmwxa. A3 ‘2qu ESER .3. 23933:” in; 5:594 E in???“ rmom T a? «35004.. 74 Table 14 —- Continued J 6.; J c ( u) c ( n c t . m .. Muv( _ a v ( a (Ju J 1 a J 1 Sb CL C a D S J u) o .(Lm ( av 5 ( 3 as W": utcm L H> u Cm W Lu e r J . . J( ( . . men e &C n 1 I n S w“ W“ J J SR 1 R s( m r 9 J (tom n a .. S C e la a R S 5b 0 t l l && t A. n (J tail) d 5 enme e 5R . 1 r SJeohMC er dvlr e a .. 1.. rd“: f e V.(SlCC (JoC e n e at “manAe P) m (u s 30(0 ..n 1 u 41 oSR PS 1 meleal D 5n: P Me 1 ICI Ao( at.1lnk Lo Eel m m M55 rDC ntn teisaics G s finsTeY e oeoeubtinrivm n .ISIHPM.P elntaplmirl. .a nunuwwoM“ M".u1uunumnu cm L IPM-KCN G HHWVACHOPSSP w... unondr. “714nm. A‘mv Honchom mu .uuy. .nwm mam—mg on .amu MquDG e mung 245: An; A3 noouoo Stonm 8V 2.; 8v wag“: E 355635 33950 A3 3.8 Amy 31:5 :3 weal-.6 ”my Hugo-Eo- I Amy bum nouuzm ,mv coco Ame cameo Lmv .uom uannou .ann (ago: “my noun-nanny. Lennon 1m~ .530! fig ion a .nd. .uuon naaut Emmmbmnwx £on 3:60 ESE» 8; Java: a 3:qu $5 334$ A 3 .uox a .913 .nl Amy nmumh nuoom 18V 5.53». :2: : «56E jzofifnm “,3 ‘13 .3m 4 .Smam .5 Hmv .Zunm a .n? Jim 930m m...om magmanoaé A3 $34... 3.: Anv Crow guano“, mifix .31 . fin ”my nojmpgaxn it.“ Am; gunman mac“: 4.3.4415. A: nunnnm a unnaflnm 41:30 AC Luanda A3 in; ..mm- a .Hi: 73 nuvooom wv .uzx . seen .23 .35? 2:323:95 A: 3:23 L3 .2: a Siam .5 73 awamr ewe 33:22“ n7, Am” $4.530 Ame 332 ,,m, .vLuucnx G, 23:: 3; 333 Eu, 3;.” Q1“: zdnuxmré n04 thOQ mnfiwzm ncgrnanmnu 75 Measuring the Interconnections Tables 12, 13, and 14 represent a means of display— ing and measuring the horizontal interconnections that existed in the copper industry in 1962. Table 12 portrays ownership and joint membership interconnections; Table 13 portrays ownership, joint membership, and direct interlock— ing directorates interconnections; and Table 14 portrays all four types of interconnections, including indirect interlock- ing directorates. Vertically integrated groups are separated by the heavy horizontal and vertical lines. The selling firm in each group is capitalized. Firms in the group having owner— ship connections with the selling firm are listed alphabet— ically after the selling firm and identified with an (S) following their name. Firms in the group having contractual relationships with the selling firm are listed alphabetically following the ownership firms and are identified with a (C) following their name. Each vertical group in the diagonal summarizes the information from Chapter III. Ownership interconnections are represented by a blackened square. Firms interconnecting groups by holding joint membership are identified with an asterisk following their names. Joint membership in two or more vertically inte— grated groups can be seen in Tables 12, 13, and 14. .For easier comprehension, these interconnections have been 76 displayed in Table 15. Here it can be seen that 10 firms of the 69 in the study interconnect two or more groups by joint membership in two or more groups. In fact, joint membership accounts for a total of 24 interconnections between groups. Table 15. Firms belonging to two or more vertically integrated groups Groups Interconnected Firm by the Firm Anaconda Adolph Lewisohn Anaconda Inspiration Adolph Lewisohn Phelps Dodge American Metal Climax International Nickel Soc. Gen. Metal. de Hoboken American Smelting & Refining White Pine Canadian Copper Refiners Hudson Bay [Anaconda Adolph Lewisohn Magma Phelps Dodge American Metal Climax International Nickel American Metal Climax International Nickel .American Metal Climax Soc. Gen. des Minerais American Metal Climax American Smelting & Refining Howe Sound ‘ Kennecott Appalachian Sulphides Copper Range British Metal f Noranda ; British Metal Noranda 77 Reading the Tables Figures 6, 7, and 8 are samples of the matrices found in Tables 12, 13, and 14, respectively. These were designed to help the reader better understand the larger tables. Figure 6, representing Table 12, shows vertically integrated groups interconnected by ownership and joint membership. It can be determined, then, that Seller A and Mine B are interconnected by ownership. Also, Mine A and Mine B are similarly interconnected. Hence, Group A and Group B are said to be interconnected by ownership. Further, Group A and Group C are interconnected by the joint member- ship of Refiner A. Vertically integrated groups interconnected by direct interlocking directorates are exhibited in Figure 7. The direct interlocks between Group D and Groups E and G are not counted as direct interlocking interconnections because the ownership interconnections supersede them. Group D and Group F are said to be interconnected by direct interlocks because of the three common directors shared by Seller F and Seller D and Refiner D° Further, Seller D and Refiner D each share one common director with Refiner F, Smelter F, and Mine F. Vertically integrated groups interconnected by indirect interlocking directorates are exhibited in Figure 8. .manmuonfimfi usaofl pom manmuosso an wouoossoosousa mmooum popmumousa maamofluum> msfizofiw xHHumE mamfimm .o mnsmflm marmnmnsms “snow mmpmonecH * magmnmszo mmumuaosH I mmsouo pmumumwucH maamoflpuoxw AllllllllllMMHH\\ Amv < was: 78 Ave m emuamsm *on < stflmom fl mmqqmm * * C C S S C C C C S S C C D D D C C A L G B B A .A A L L L L e r r E e r r E e r r E e r r E n e e s n e e S n e e S n e e S .l t n .1 t n .l t n .1 t n M l .l M l .l M l .l M l .l e f e f e f e f m e m e m e m e S R S R S R S R n .mw#MHOpomHflo msaxooauousa pomuflp pom magnumsso m9 pouuossoouousfl mmsoum pwumummusfl maamoauum> msasoSm xHHumE onEmm .h wusmflm muouooufln GOEEOU mo “$9852 moumoflosH l mflsmnoGBO mmumoang . E a men: 79 ADV Q no”: 25 Amv Q Hmsflmwm Q mmqqmm S C C S S S S C C C C S G G G F F F E E E D D D L L L L e r r E e r r E e r r E e r r E n e e S n e e S n e e S n e e S .1 t n .1 t n .1 t n .1 t n M l i M l i M l .1 M l i e f e f e f e f m e m e m e m e S R S R S R S R .mmuMHouoouflv mafixooaumucfl uowuflccfl.©qw uomuflw Ucm mflnmnmczo an wmuomccoonwucfl mmsogm Cmumumwuca maamofluum> mcflsonm xfluumfi mHmEmm .m mudmflm mconoHkucH mEHHm mo Hwnfisz IIHouququwQ\©w>Ho>cH mHouomHHD ampOBIIHO#mumEDZ MUOHHmucH powHHCGH mmumUchH xooaumucH uomnfln mmumoflwcH mflsmeGBO mmumoHUGH H I Amv m 92.2 80 BC m “8;” 25 ADV m chflmmm m mmqflmm C S S C C C S S S S C C K K K J J J I I I H H H L L L L e r r E e r r E e r r E e r r E n e e S n e e S n e e s n e e S i t n .1 t n .1 t n i t n M l .1 M l .1 M l .1 M l .l e f e f e f e f m e m e m e m e S R S R S R S R 81 Only the interconnection of Group H and Group K is counted as an indirect interlock. Seller H and Mine K being indi— rectly interlocked with a total of seven directors from the two firms meeting on an outside board. Group H and Group I are interconnected by direct interlock and Group H and Group J are interconnected by ownership. The Density Measure Although one can examine the three tables and get some idea of the amount of interconnections between groups, one lacks a yardstick for a real measure. On the other hand, if one views these tables as matrices showing all possible horizontal interconnections between groups, then one could use the density of the matrix as an effective measure. Keeping in mind that it is the horizontal intercon— nections between vertically integrated groups that one wishes to measure, then each of the matrices contains 441 possible interconnections. Given the construction of the matrices, one would expect the diagonal to be filled° It represents the interconnections of each group with itself. Therefore, by removing the diagonal, the matrix contains 420 possible interconnections and the density can be expressed as a fraction or percent of 420° On the other hand, if one were interested in examining the interconnections of a single group with the rest of the groups, the density would be measured a fraction of 20. 82 Analyzing the Interconnections The discussion of the horizontal interconnections between groups will proceed in the following manner. First, the horizontal interconnections for each of the vertically integrated groups will be presented. Second, the density of the entire matrix will be discussed so that the significance of each type of interconnection is exposed. The Adolph Lewisohn Group Adolph Lewisohn interconnects with the following - groups in the following manner: Groups Interconnected Interconnection American Metal Climax Ownership British Metal Corp. Ownership International Nickel Ownership Noranda Ownership Anaconda Joint Membership Magma Joint Membership Phelps Dodge Joint Membership Amer. Smelting & Refining Indirect Interlock Appalachian Sulphides Indirect Interlock Calumet & Hecla Indirect Interlock Cerro Indirect Interlock Falconbridge Indirect Interlock ‘ Howe Sound Indirect Interlock , Kennecott Indirect Interlock The ownership density is 4/20 or 20 percent and, i when joint memberships are added, density is 7/20 or 35 per— cent. Finally, when indirect interlocks are added, the density is increased to l4/20 or 70 percent. There were no direct interlock interconnections. 83 The American Metal Climax Grou American Metal Climax is interconnected with the following groups in the following manner; Groups Interconnected Interconnection Adolph Lewisohn Ownership ,Appalachian Sulphides Ownership British Metal Corp. Ownership Cerro Ownership Copper Range Ownership Magma Ownership Noranda Ownership Phelps Dodge Ownership Amer. Smelting & Refining Joint Membership Howe Sound Joint Membership International Nickel Joint Membership Kennecott Joint Membership Soc. Gen. des Minerais Joint Membership Anaconda Indirect Interlock Calumet Hecla Indirect Interlock Falconbridge Indirect Interlock Quincy Indirect Interlock The ownership density is 8/20 or 40 percent and, when joint memberships are added, density is 13/20 or 65 per— cent. Finally, when indirect interlock interconnections are added, density is increased to l7/20 or 85 percent. There were no direct interlock interconnections. The American Smelting & Refining Group American Smelting & Refining is interconnected to the following groups in the following manner: 84 Groups Interconnected Interconnection Kennecott Ownership Mount Isa Ownership American Metal Climax HmmSmmd Cerro Joint Membership Joint Membership Direct In terlock Adolph Lewisohn Indirect Interlock Appalachian Sulphides Indirect Interlock British Metal Corp. Indirect Interlock Calumet & Hecla Indirect Interlock Copper Range Indirect Interlock Falconbridge Indirect Interlock International Nickel Indirect Interlock Magma Indirect Interlock Noranda Indirect Interlock Phelps Dodge Indirect Interlock The ownership density is 2/20 or 10 percent and, when joint memberships are added, density is 4/20 or 20 per— cent. When direct interlock interconnections are added, density is increased to 5/20 or 25 percent. Finally, when indirect interlock interconnections are added, density is increased to 16/20 or 80 percent. The Anaconda Group Anaconda is interconnected to the following groups in the following manner; Groups Interconnected Adolph Lewisohn W Joint Membership American Metal Climax Indirect Interlock Amer. Smelting & Refining Indirect Interlock Appalachian Sulphides Indirect Interlock British Metal Corp. Indirect Interlock Calumet & Hecla Indirect Interlock Cerro Indirect Interlock Copper Range Indirect Interlock Falconbridge Indirect Interlock Howe Sound Indirect Interlock International Nickel Indirect Interlock 85 Groups Interconnected Interconnection Kennecott Indirect Interlock Magma Indirect Interlock Noranda Indirect Interlock Phelps Dodge Indirect Interlock Quincy Indirect Interlock The joint membership density is l/20 or 5 percent and, when indirect interlock interconnections are added, density is increased to l6/20 or 80 percent. There were no ownership or direct interlock interconnections. The Appalachian Sulphide Group Appalachian Sulphide is interconnected to the fol— lowing groups in the following manner; Groups Interconnected Interconnection American Metal Climax Ownership Copper Range Joint Membership Adolph Lewisohn Indirect Interlock .Amer. Smelting & Refining Indirect Interlock Anaconda Indirect Interlock British Metals Indirect Interlock Falconbridge Indirect Interlock Howe Sound Indirect Interlock International Nickel Indirect Interlock Kennecott Indirect Interlock Magma Indirect Interlock Noranda Indirect Interlock Phelps Dodge Indirect Interlock The ownership density is l/20 or 5 percent and when joint membership interconnection is added, density is increased to 2/20 or 10 percent. Finally, when indirect interlock interconnections are added, density is increased to 13/20 or 65 percent. There were no direct interlock interconnections. 86 The British Metal Group British Metal Corporation interconnects the follow- ing groups in the following manner: Groups Interconnected Interconnection Adolph Lewisohn Ownership American Metal Climax Ownership Falconbridge Ownership Magma Ownership Soc. Gen. des Minerais Ownership Noranda Joint Membership International Nickel Direct Interlock Amer. Smelting & Refining Indirect Interlock Anaconda Indirect Interlock Appalachian Sulphides Indirect Interlock Calumet & Hecla Indirect Interlock Copper Range Indirect Interlock Howe Sound Indirect Interlock Kennecott Indirect Interlock Phelps Dodge Indirect Interlock The ownership density is 5/20 or 25 percent and, when joint membership is added, density is 6/20 or 30 per— cent. When direct interlock interconnections are added, density is increased to 7/20 or 35 percent. Finally, when indirect interlock interconnections are added, density is increased to l6/20 or 80 percent. The Calumet & Hecla Group Calumet & Hecla is interconnected to the following groups in the following manner: 87 Groups Interconnected Magma .Adolph Lewisohn American Metal Climax Amer. Smelting & Refining Anaconda British Metal Corp. Cerro Copper Range Howe Sound International Nickel Kennecott Noranda ‘Phelps Dodge The ownership and joint membership density is 0/20 or 0 percent indicating no ownership or joint membership interconnections. are added, density is increased to l/20 or 5 percent and, when indirect interlock interconnections are added, density is increased to 13/20 or 65 percent. The Cerro Group Cerro is interconnected to the following groups in the following manner: Groups Interconnected American Metal Climax International Nickel Amer. Smelting & Refining Magma Adolph Lewisohn ‘Anaconda British Metal Corp Calumet & Hecla Copper Range Howe Sound Kennecott Noranda Phelps Dodge Interconnection Direct In Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect terlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock When direct interlock interconnections Interconnection Ownership Ownership Direct In Direct In Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect terlock terlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock 88 The ownership density is l/20 or 5 percent and, when joint membership is added, density is 2/20 or 10 per- cent. When indirect interlock interconnections are added, density is increased to 15/20 or 75 percent. There are no direct interlock interconnections. The Duval Group2 There were no interconnections of any kind with any group. This is a Japanese and Australian group with annual production of 8,000 tons of copper or less than 2/10 of 1 percent of the world copper production. The Falconbridge Group Falconbridge is interconnected with the following groups in the following manner: Groups Interconnected Interconnections British Metal Corp. Ownership Noranda Ownership Adolph Lewisohn Indirect Interlock .American Metal Climax Indirect Interlock Amer. Smelting & Refining Indirect Interlock Anaconda Indirect Interlock Appalachian Sulphides Indirect Interlock Copper Range Indirect Interlock Howe Sound Indirect Interlock International Nickel Indirect Interlock Kennecott Indirect Interlock Magma Indirect Interlock Phelps Dodge Indirect Interlock 2Duval, Mitsubishi, Mount Isa, and Quicny, all 1 relatively small producers, were included in this study because they were listed by the American Bureau of Metal Statistics. when indirect interlock interconnections are added, density is increased to l3/20 or 65 percent. The ownership density is 2/20 or 10 percent and, There were no direct interlock or joint membership interconnections. The Howe Sound Group groups in the following manner: when joint membership is added, density is 4/20 or 20 per— cent. Howe Sound is interconnected with the following Groups Interconnected Mount Isa American Metal Climax Amer. Smelting & Refining Kennecott Adolph Lewisohn Anaconda Appalachian Sulphides British Metal Corp. Appalachian Sulphides British Metal Corp. Calumet & Hecla Cerro Copper Range Falconbridge International Nickel Magma Noranda Phelps Dodge Quincy Interconn Ownership Joint Mem Joint Mem Joint Mem Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect ection bership bership bership Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock Interlock The ownership density is l/20 or 5 percent and, When indirect interlock interconnections are added, density is increased to 17/20 or 85 percent. no direct interlock interconnections. There were 9O Eh§_International Nickel Group International Nickel is interconnected with the fol— lowing groups in the following manner: Groups Interconnected Interconnection Adolph Lewisohn Ownership Cerro Ownership Magma Ownership Phelps Dodge Ownership American Metal Climax Joint Membership Amer. Smelting & Refining Direct Interlock British Metal Corp. Direct Interlock Noranda Direct Interlock Anaconda Indirect Interlock Appalachian Sulphides Indirect Interlock Calumet & Hecla Indirect Interlock Copper Range Indirect Interlock Falconbridge Indirect Interlock Howe Sound Indirect Interlock Kennecott Indirect Interlock The ownership density is 4/20 or 20 percent and, when joint membership is added, density is 5/20 or 25 per— cent. When direct interlock interconnections are added, density is increased to 8/20 or 40 percent. Finally, when indirect interlock interconnections are added, density is increased to 15/20 or 75 percent. The Kennecott Group Kennecott is interconnected with the following groups in the following manner; 91 Groups Interconnected Amer. Smelting & Refining American Metal Climax Howe Sound Adolph Lewisohn Anaconda Appalachian Sulphides British Metal Corp. Calumet & Hecla Cerro Copper Range Falconbridge International Nickel Magma Noranda Phelps Dodge Quincy Interconnection Ownership Joint Membership Joint Membership Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Interlock Interlock Interlock Interlock Interlock Interlock Interlock 'Interlock Interlock Interlock Interlock Interlock Interlock The ownership density is l/20 or 15 percent and, when joint membership is added, density is 3/20 or 15 per- cent. density is increased to 16/20 or 80 percent. direct interlock interconnections. The Magma Group When indirect interlock interconnections are added, There were no Magma is interconnected with the following groups in the following manner: Groups Interconnected American Metal Climax British Metal International Nickel Noranda Phelps Dodge Adolph Lewisohn Calumet & Hecla Cerro Amer. Smelting & Refining Anaconda Appalachian Sulphides Copper Range Interconnection Ownership Ownership Ownership Ownership Ownership Joint Membership * Direct Interlock Direct Interlock Indirect Interlock 2 Indirect Interlock Indirect Interlock Indirect Interlock /‘ / f’ t 40 . I “.3 II. 92 Groups Interconnected Interconnection Falconbridge Indirect Interlock Howe Sound Indirect Interlock Kennecott Indirect Interlock Quincy Indirect Interlock The ownership density is 5/20 or 25 percent and, when joint membership is added, density is 6/20 or 20 per— cent. When direct interlock interconnections are added, density is increased to 8/20 or 40 percent. Finally, when indirect interlock interconnections are added, density is , increased to l6/20 or 80 percent. The Mitsubishi Group Mitsubishi has no interconnections with any other group. This is a Japanese and Phillipine group producing 25,000 tons of copper annually or approximately l/2 of l per— cent of the world production. The Mount Isa Group Mount Isa is interconnected with the following groups in the following manner: Groups Interconnected Interconnection Amer. Smelting & Refining Ownership Howe Sound Ownership The ownership density is 2/20 or 10 percent. There are not joint membership, direct or indirect interlock interconnections. Z 93 The Noranda Group Noranda is interconnected with the following groups in the following manner: Groups Interconnected Interconnection Adolph Lewisohn Ownership American Metal Climax Ownership Falconbridge Ownership Magma Ownership Phelps Dodge Ownership British Metal Joint Membership International Nickel Direct Interlock Amer. Smelting & Refining Indirect Interlock Anaconda Indirect Interlock Appalachian Sulphides Indirect Interlock Calumet & Hecla Indirect Interlock Cerro Indirect Interlock Copper Range Indirect Interlock Howe Sound Indirect Interlock Kennecott Indirect Interlock Quincy Indirect Interlock The ownership density is 5/20 or 25 percent and, when joint membership is added, density is 6/20 or 30 per- cent. When direct interlock interconnections are counted, density is increased to 7/20 or 35 percent. Finally, when indirect interlock interconnections are added, density is increased to 16/20 or 80 percent. The Phelps Dodge Group Phelps Dodge is interconnected with the following groups in the following manner; 94 Groups Interconnected Interconnection American Metal Climax Ownership British Metal Corp. Ownership International Nickel Ownership Magma Ownership Adolph Lewisohn Joint Membership Amer. Smelting & Refining Indirect Interlock Anaconda Indirect Interlock Appalachian Sulphides Indirect Interlock Calumet & Hecla Indirect Interlock Cerro Indirect Interlock Copper Range Indirect Interlock Falconbridge Indirect Interlock Howe Sound Indirect Interlock Kennecott Indirect Interlock The ownership density is 5/20 or 25 percent and, when joint membership is added, density is 6/20 or 30 per— cent. When indirect interlock interconnections are added, density is increased to 15/20 or 75 percent. There were no direct interlock interconnections. The Quincy Group Quincy is interconnected with the following groups in the following manner. Groups Interconnected Interconnections American Metal Climax Indirect Interlock Anaconda Indirect Interlock Howe SOund Indirect Interlock Kennecott Indirect Interlock Magma Indirect Interlock Noranda Indirect Interlock The ownership and joint membership density is 0/20 or 0 percent indicating no ownership or joing membership interconnections. .Also there were no direct interlock 95 interconnections. When indirect interlock interconnections are added, density is increased to 6/20 or 30 percent. The Societe General des Minerais Group Societe General des Minerais is interconnected by ownership to British Metal Corporation and by joint member- ship to American Metal Climax. It has no other intercon— nections. Total Density of the Matrices Examining the ownership matrix, one finds that the density is 48/420 orll.6 percent. There are 48 ownership interconnections between groups, not explained by the diagonal or, one could say that the average group has 2.3 ownership interconnections. There are 24 joint membership interconnections. The average grOup had 1.1 joint member- ship interconnections. The direct interlocking directorate matrix has a density of 83/420 or 19.7 percent. There are 11 cases of direct interlock interconnections not explained by ownership. The average for each group is 0.5 direct interlocks. The indirect interlocking matrix has a density of 250/420 or 60 percent. In this matrix there are 167 cases of indirect interlock interconnections not explained by ownership or direct interlocks or an average of 8 for each group. I» ll. 96 Effect of Contractual Relationshi s Some of the horizontal interconnections among the vertically integrated groups might not exist if all verti- cally integrated were based strictly upon ownership. The firms processing copper on contract were the basis for the 24 joint membership interconnections. Further, these firms also were the basis for 31 other interconnections, 6 owner- ship and 25 indirect interlocks. These interconnections can be found in Table 16. Summary and Conclusions The copper industry has what appears to be a strong horizontal structure. Approximately 60 percent of all pos- sible points of horizontal interconnection show some form of interconnection existing. The most common form of intercon- nection is indirect interlocking directorates. Ownership is second, joint membership is third, and direct interlock is fourth. The next chapter will summarize the entire study and attempt to draw conclusions about the vertical and horizontal structure of the copper industry. (7 :—_ ' Table 16. 97 for processing copper Horizontal interconnegtions based upon contracts Group Groups Interconnected Adolph Lewisohn American Metal Climax Amer. Smelting & Refining Appalachian Sulphides British Metals Calumet and Hecla Copper Range Howe Sound Kennecott Magma Mount Isa Quincy Amer. Smelting & Refining Appalachian Sulphides British Metals Calumet and Hecla Copper Range Howe S ound Quincy Adolph Lewisohn Appalachian Sulphides Copper Range Adolph Lewisohn Amer. Smelting & Refining British Metals Adolph Lewisohn Appalachian Sulphides Calumet and Hecla Howe Sound Kennecott Magma Adolph Lewisohn British Metals Adolph Lewisohn Amer. Smelting & Refining Magma Adolph Lewisohn British Metals Mount Isa British Metals- British Metals Howe Sound American Metal Climax aDoes not include joint memberships (see Table 15). b . . . . . . . . (I) indicates indirect interlocking interconnecti< (0) indicates ownership interconnection. CHAPTER V SUMMARY AND CONCLUSIONS This chapter will summarize the study and present a discussion of the potential implications of the findings. Purpose of the Study The purpose of this study was to examine the verti— cal and horizontal structures of the c0pper industry in 1962. Particular emphasis was to be placed upon determining the interconnections attributable to each of the following types: ownership, joint membership, contract, and direct and indi- rect interlocking directorates. Vertical and Horizontal Structures Defined One of the first tasks was to define the vertical and horizontal structures. The vertical structure was defined as the interconnections existing between members of a vertically integrated group and the selling firm of the group. A vertically integrated group was defined as a group of firms all processing c0pper for a single selling firm. The selling firm was also a member of the group. The hori— zontal structure was defined as the interconnections exist- ing among the Vertically integrated groups. 98 99 H othesis to Be Tested The hypothesis to be tested in this study related to the interconnections that formed the basis for the structure of the c0pper industry. The hypothesis is stated as follows: In the c0pper industry there exists vertical and horizontal structures consisting of inter- connections of ownership, joint membership in two or more vertically integrated groups, contractual relationships, and direct and indirect interlocking directorates. Methodology The problems encountered in studying the vertical and horizontal structures of the c0pper industry were: 1. determining where interconnections exist. 2. determining whether the interconnection is vertical or horizontal. 3. classifying the interconnection by type. The first problem, determining the existence of interconnections, was one of collecting, sorting, and tabu- lating information. A part of this, dealing with direct and indirect interlocking directorates, was computerized because of the vast amount of data to be processed. Secondly, the 69 firms in the study were found to be organized into 21 vertically integrated groups. This permit— ted one to determine whether an interconnection between any two firms was vertical or horizontal. lOO Thirdly, because any two firms might be intercon- nected by more than one type of interconnection, the types of interconnections were ranked by their potential for con- trol. Therefore, one could classify the interconnection by type even though more than one type existed. These rankings can be seen in Table 17 as follows: Table 17. Interconnections ranked by potential power of control over interconnected firms Type of Interconnection Ranka Horizontal Structure Ownership Joint Membership Direct Interlocking Directorate Indirect Interlocking Directorate le-‘H Vertical Structure Ownership Direct Interlocking Directorate Indirect Interlocking Directorate Contractual Relationships .P-wle—a aRank depends upon number of directors involved. A contractual relationship may be stronger than either direct or indirect interlocking directorates. Results of the Study The vertical structure is interconnected primarily by ownership and contractual relationships. Of the 61 inter- connections with the selling firms, 27.are ownership and 34 are contractual. Further, there were fiveJdirect and five E. lOl indirect interlocking directorates found to exist in the vertical structure. The horizontal structure is interconnected primarily by indirect interlocking directorates with 167 interconnec— tions. Ownership is the next most common interconnection with 48 interconnections between groups. Joint membership in two or more vertically integrated groups is next in prev— alence with 24 interconnections. Direct interlocking direc— torates are the least most common device with only ll inter— connections. These results are also summarized in Table 18. Table 18. Summary of interconnections existing in the vertical and horizontal structures Net Number of Interconnections Vertical Horizontal Type of Interconnection Structure Structure Ownership 21 48 Joint Membership dnab 24 Direct Interlock 5 ll Indirect Interlock 5 167 5 Contractual Relationship 34 dnab a . . . These are net figures. Interconnections ranking high in potential of control superceded all other intercon— nections; i.e., Firms A and B are connected by both owner- ship and direct interlocking directorates; only the owner— ship interconnection is counted. bDid not apply. 102 Validity of the Hypothgpip The results appear to support the hypothesis. The c0pper industry is interconnected in the vertical and hori— zontal structures by ownership, joint membership, contrac— tual relationships, and direct and indirect interlocking directorates. Implications of the Vertical Structure More than 90 percent of the free world copper produc— tion is produced and sold through 21 vertically integrated groups. Further, these groups are structured either by OWnership or by contractual relationships. Because of economies of scale, all units within the groups generally are large and possess large capital investments and fixed costs. Further, because of the high fixed costs, it is reasonable to assume that individual firms desire to band together in such vertically integrated groups to assure themselves of continuity of supplies of raw materials and markets for their products. Negative implications arise when one considers the potential effects of this vertical structure on new entires into the copper industry. Firms desiring to enter in any stage of the industry, mining, smelting, refining, or sell— ing, might find themselves limited either by sources for raw materials or by markets for their products. Mines need smelters and refiners to process their ore. Smelters and 103 refiners need ore for processing and sellers for markets for their blister and refined c0pper. Hence, entry at any single stage requires that certain other c0pper firms adjust their capacity to accommodate the newcomer. The question arises, will they do it? If the horizontal structure dic- tates a policy of restriction of output it is not likely that any group will make such an accommodation. .Entry to the industry by a fully integrated firm might also be limited. Capital requirements to Open new mines, smelters, and refiners are large due to the need for large scale Operations. gmplications of the Horizontal Structure As previously stated, more than 90 percent of the free world c0pper is produced and sold through 21 vertically integrated groups. Further, these groups are interconnected in approximately 60 percent of all possible interconnections between groups. On the average, each group is intercon- nected with 11.9 other groups. .A breakdown of these inter— connections follows: Type of Group Average Interconnection Interconnections Indirect Interlock 8.0 Ownership 2.3 Joint Membership 1.1 Direct Interlock 0.5 Total 11.9 104 Implications of the above might lead one to hypothe- size some overall design. It is hard to believe that such a structure is accidental. .Also, it is equally hard to prove that the structure is anything but accidental. Given such a structure, existing because of accident or design, the impli- cations as to potential effects upon competition are the same. The structure, considering the worst conditions,l provides the basis for interaction and control throughout the industry. Output, pricing policies, and market shares can be planned and coordinated. Further, the structure pro— vides a method for feedback and control of the total struc— ture. In effect, the industry could act as a giant monOpoly with marginal, non—integrated firms to give lip service to competition. At best, the structure provides an excellent device for full information flow throughout the industry. Such information in a system of cooperating oligOpolists could be used so that each vertically integrated group could adapt . itself to the actions and plans of the other groups. The adaptations would be such that the best interests of all groups is served. lWorst conditions refer to the state of competition. . 105 .Although the implications for competition in the c0pper industry are negative, there are substitutes for c0pper which should provide some competitive pressures. Unfortunately, the main substitutes for c0pper are other non-ferrous metals. Government studies have indicated that strong ties exist among the producers of most non-ferrous metals.2 This study, showing the vertical and horizontal structure of the c0pper industry, has perhaps developed more questions than it has answered. It is hOped that this approach to studying industry structure will be useful to the study of other industries. Further, it is hOped that this study may act as a starting-off place for future studies of the copper industry. 2Interlocking Directorates, op. cit., pp. 147-175. , ”—1-“... BIBLIOGRAPHY BIBLIOGRAPHY Books and Major Works American Bureau of Metal Statistics, Yearbook, 1920-62. New York: American Bureau of Metal Statistics, 1920—63. American Metal Market, Metal Statistics. Yearbook, 1930—69. New York: American Metal Market, 1930—63. Barbour, Percy E. Secondary Copppr, Its Production, Consumption, and Market Effect. New York: Mining and Metallurgical Society of America, 1936. Barger, Harold, and Schurr, Sam H. The Mining Industries, 1899-1939, A Study of Output, Employment and Productivity. New York: National Bureau of Economic Research, 1944. Bray, John L. Non—Ferrous Production Mptallurgy. New York: J. Wiley and Sons, 1941. Campbell, R. F. The History of Basic Metals Price Control in World War II. New York: Columbia University Press, 1948. COpperl The Cornerstone of Civilization. New York: COpper and Brass Research Association, 1962. Elliott, William Y., et al. International Control of Non— Ferrous Metals. New York: The Macmillan Company, 1937. Finlay, James R. The Cost of Mining. New York: McGraw— Hill Book Company, 1920. Herfindahl, Orris C. Copper CQ§ts and Pricps: 1870-1957. Baltimore: Johns HOpkins Press, 1959. Knight, C. L. Secular and Cyclical Movements in the Production and Price of COpper. Doctoral Dissertation, University of Pennsylvania, 1935. 106 107 Leith, C. K., Furness, J. W., and Lewis, Cleona. World Minerals and World Peace. Washington: The Brookings Institution, 1943. McCarthy, James L. "The American Copper Industry," Yale Economic Essays. New Haven, Connecticut: Yale University Press, 1964, Vol. 4, No. 1, pp. 64-130. Metallurgy of Lead and Zinc. Transactions of the American Institute of Mining and Metallurgical Engineers, Vol. 121, 1936. Mines Register. Vol. 20. New York: 'Atlas Publishing Company, 1940. Moody's Industrial Manual. New York: Moody Investors Service, 1963. Moore, Frederick T. Industry Organization in Non-Ferrous Metals. Ph.D. dissertation on file at the University of California, Berkeley, 1951. Newton, Joseph, and Wilson, Curtis L. Metallurgy of COpper° New York: J. Wiley and Sons, 1942. Parsons, Arthur B. The Porphyry Coppers. New York: American Institute of Mining and Metallurgical Engineers, 1933. ' Poor‘s Register of Corporations, Directors, and Expcutives. New York: Standard and Poor's Corporation, 1963. Rickard, T. A. A History of American Mining. New York: McGraw—Hill Book Company, 1932. Roush, G. A. (ed.). The Mineral Industry During 1941. Vol. 50. New York: McGraw—Hill Book Company, 1942. Spurr, J. E., and Wormser, F. (eds.). Marketing of Metals and Minerals. New York: McGraw—Hill Book Company, 1925. Standard and Poor's Corporation, Meta1——Non-Ferrous. Industry Surveys, June 13, 1941. Stone and Webster Engineering Corporation. Report on Productive Capacity of the Brass Mill Industry. Report for COpper and Brass Research Association, October, 1942. Tryon, F. G., and Eckel, E. C. (eds.). Mineral Economics. New York: McGraw—Hill Book Company, 1932. 108 Wallace, Donald H. Market Control in the Aluminum Industr . Cambridge: Harvard University Press, 1937. Who's Who. London: A. and C. Black, 1963. Shi Yen Wu. The Determination of a Price, Output, and Sales Equilibrium in the COpper Industry. Ph.D. dissertation on file at Northwestern University, Evanston, Illinois, 1961. .Articles Adelman, Morris A. "integration and Antitrust Policy,“ Harvard Law Review, November, 1949, pp. 27-77. "Anaconda COpper: I," Fortune, XIV (December, 1936), 83 et seg. "Anaconda Copper: II," Fortune, XV (January, 1937), 71 et seg. Bain, J. C. "The Normative Problem in Industrial Regulation," American Economic Review, Supplement, March, 1943, pp. 54—70. Bain, Joe S. "Workable Competition in OligOpoly: Theoret— ical Considerations and Some Empirical Evidence," American Economic Review, May, 1950, pp. 35—47° Barbour, Percey E. "United States and World Production and Costs of Copper," Proceedings of the Mining and Metal— lurgical Society of America, 1934, p. 85 et seg. Clark, John M. "Toward a Concept of Workable Competition," American Economic Review, June, 1940, pp. 241—256. Croston, John J. "Recent Trends in Copper Production, Ore Reserves, and Costs," Transactions of the American Institute of Mining and Metallurgical Engineers, 1937° Joralemon, I. B. "Have—Not Theory and Metal Prices," Mining Congress Journal, XXXII (June, 1946), 34—37. Keiser, H. D. "Production Costs-~Prorated on Basis of Metals Comprising Output," Engineering and Mining Journal, CXXXV (May, 1934), 207-212. . "Composite Pound Analyses——Va1ues Based on Various Metals Produced," Engineering and Mining Journal, CXXXV (July, 1934). 109 Olund, H. E., and Gustavson, S..A. ”The Premium Price Plan—— Its Cost and Its Results," Engineering and Mining Journal, CXLIX (December, 1948). Tzach, S. ”Scrap and the COpper Market," Engineering and Mining Journal, CXXXIV (July, 1933), 293-295. Public Documents Arizona, Department of Mineral Resources, Production Possibilities of the Marginal Copper Mines in Arizona. (Processed) August 1, 1941. Department of Interior, Bureau of Mines, Concentration of COpper Ores in North America. Bulletin 392, Washington: Government Printing Office, 1936. Department of Interior, Bureau of Mines, Copper Mining in North America. Bulletin 405, Washington: Government Printing Office, 1938. Department of Interior, Bureau of Mines, Lead and Zinc Mining and Milling in the United States——Current Practices and Costs. Bulletin 381, Washington: Government Printing Office, 1935. Department of Interior, Bureau of Mines, Metal Mining Practice. Bulletin 419, Washington: Government Print- ing Office, 1939. Department of Interior, Bureau of Mines, Metallurgical Treatment of the Low Grade and Cgpplex Ores of Utah. Technical Paper 90, Washington: Government Printing Office, 1915. Department of Interior, Bureau of Mines, Minerals Yearbook, 1930—47. Washington: Government Printing Office, 1930-47. Department of Interior, Bureau of Mines, Recent Trends in Design and Construction of COpper Concentration in the Southwest, Information Circular 6866, Washington: Government Printing Office, 1938. , Economic Cooperation Administration, Nonferrous Metals: World Production-Consumption Situation Background Analysis. Washington: Government Printing Office, 1949. 110 Federal Trade Commission. Interlocking Directorates. Washington: Government Printing Office, 1951. Federal Trade Commission. COpper: Report on Cost of Production. Washington: Government Printing Office, 1919. Federal Trade Commission. Report on the COpper Industry. y Washington: Government Printing Office, 1947. McMahohon, A. D. Copper, A Mgterials Survey. U.S. Depart- ment of the Interior, Bureau of Mines, Washington: Government Printing Office, 1965. Morgan, John D. The Domestic Mining Industry of the United States in World War II. Washington: Government Printing Office, 1949. National Recovery Administration. The Waste Materials Trade. Evidence Study No. 41. Washington: Government Printing Office, 1935. National Research Project, Works Progress Administration and Bureau of Mines (joint project), Grade-of Ore. Mineral Technology and Output per Man Studies, Report No. E—6. Washington: Government Printing Office, 1938. National Research Project, Works Progress Administration and Bureau of Mines (joint project), Copper Mining. Mineral Technology and Output per Man Studies, Report No. E-12. Washington: Government Printing Office, 1940. Office for Emergency Management, Civilian Production Admin- istration, Copper Policies of thg War Production Board and Predecessor Agencies, May, 1940—Novemberl 1945. Historical Reports on War Administration, War Production Board, Special Study No. 29, Washington: Government Printing Office, 1947. Office for Emergency Management, Civilian Production Admin— istration, Evolution of the Premium Price Policy for COpper, Lead, and Zinc, January 1940-November, 1943. Historical Reports on War Administration, War Production Board, Special Study No. 4, Washington: Government Printing Office, 1943. Office for Emergency Management, Civilian Production Admin— istration, Lead and Zinc Policies of the War Production Board and Predecessor Agencies, May, 1940-March, 1944. Historical Reports on War Administration, War Production Board, Special Study No. 8, Washington: Government Printing Office, 1944. 111 Public Law 899, 81st Congress, Chapter 1184, 2d Session, Amending the Clayton Act, Approved December 29, 1950. Securities and Exchange Commission, Survey of American Listed Corporations. "Non—Ferrous Metals and Their Products, Assets Over $20,000,000," Vol. 2, No. 11. Washington: Government Printing Office, June 30, 1939. Securities and Exchange Commission, Surveypof Apprican Listed Corporations. "Non-Ferrous Metals and Their Products, Assets Under $20,000,000,” Vol. 7, No. 50. Washington: Government Printing Office, June 30, 1940. Securities and Exchange Commission, Survey of American Listed Corporations. “Non—Ferrous Metals," Report No. 8, Washington: Government Printing Office, December 31, 1940. U. S. Bureau of Mines. 1952 Materials Survey, Copper. Washington: Government Printing Office, 1952. U. S. Congress, Temporary National Economic Committee, Investigation of Concentration of Economic Power. Hearings, Part 25,"Cartels," Washington: Government Printing Office, 1941. U. S. House of Representatives, Antitrust Subcommittee on the Judiciary, Interlocks in Corporate Management, 89th Congress, lst Session, 1965. U. S. House of Representatives, Committee on Public Lands, National Resources Division. Hearings before a Sub— committee on Mines and Mining on H. R. 2455, 80th Congress, 1st Session. Washington: Government Printing Office, 1947. U. S. House of Representatives, Committee on Public Lands, Stock Piling of Strategic and Critical Materials and Metals. Hearings before the Subcommittee on Mines and Mining, 80th Congress, 1st Session. Washington: Govern— ment Printing Office, 1947. U. S. House of Representatives, Committee on Public Lands, Strategic and Critical Minerals and Metals. Hearings before the Subcommittee on Mines and Mining, Part 3, "COpper," 80th Congress, 2d Session. Washington: Government Printing Office, 1948. U. S. Senate, Committee on Finance, Import Duty on Virgin Copper and Metal Scrap,Hearings, Blst Congress, lst Session. Washington: Government Printing Office, 1949. 112 S. Senate, Committee on the Judiciary, Unlawful Restraints and MpnOpolies, Staff Report No. 698, 63rd Congress, 2d Session, July 22, 1914. S. Senate, Committee on Military Affairs, Stock-Piling. Hearing before the Subcommittee on Surplus Property on S. 752, S. 1481 and S. 1522, Washington: Government Printing Office, 1945. S. Senate, Special Committee Investigating the National Defense Program, Investigation of thp National Defense Program. Part 10, "NOnferrous Metals," Hearings, 77th Congress, lst Session. Washington: Government Printing Office, 1942. S. Senate, Special Committee to Study and Survey Problems of American Small Business, Report of the Subcommittee — on Mining and Minerals Industry, Premium Price Plan for COpper, Lead, and Zinc. Senate Subcommittee Print No. 8, 79th Congress, 2d Session. Washington: Government Printing Office, 1946. S. Tariff Commission, Report to the U. S. Senate on COpper, Report No. 29. Washington: Government Printing Office, 1932. ...._ I “911111 "I111111111111“ ,