The Basic Industries of Great Britain by Aberconway: Chapter XII
CHAPTER XII. THE HEAVY IRON AND STEEL TRADES OF DURHAM
The development of the iron and steel trades of the North-east Coast provides one of the most remarkable chapters in the recent history of British enterprise. While in 1740 the total make of pig iron in the United Kingdom was a little over 17,000 tons, in 1913 the quantity made on the North-east Coast alone, by which is meant the county of Durham and the North Riding of Yorkshire, reached the total of 3,869,000 tons, together with steel ingots and castings to the amount of 2,031,000 tons. In 1925, in the depth of the recent trade depression, the respective figures were 1,905,000 and 1,468,000 tons, while the output of local ore, which in 1913 was 6,010,800 tons, fell in 1925 to 2,284,200 tons. But foreign and Midland ores have to a large extent replaced the Cleveland stone for steel-making purposes.
The course of this manufacture has not, however, been a smooth one. From small beginnings it has risen slowly, and often in the face of circumstances of the utmost difficulty. Indeed, it is doubtful whether any other staple trade of the country has had to face so many changes, amounting almost to revolutions, or has been obliged to adapt itself — at great expenditure of capital — to such entirely altered conditions. But these changes have worked uniformly for the good of the trade, inasmuch as their trend has been towards the reduction of costs. The result is that the cheapness of the product has created new uses, and has not only been largely the cause of the expansion of the Cleveland iron trade, but has assisted the development of kindred trades and increased the general prosperity of the nation. Improvements in metallurgical processes have in many instances been brought about of necessity rather than by choice, and with a view to meeting the fierce competition of other countries.
In the early half of the nineteenth century there were thirty-three small blast furnaces at work in the Middlesbrough district, obtaining their ore from the coal measures in Durham, and to a small extent from Cleveland in the North Riding of Yorkshire. The latter was called Whitby stone, and was picked up in nodules at the foot of the cliffs near that town, having fallen from the outcrop on the cliff sides. An old authority, Bewick, says in his book that, "with a view to turning the mineral deposits, freestone, whinstone and ironstone in the vicinity of Grosmont to a good and profitable account and create traffic for the railway, twenty-four of the leading gentlemen of Whitby originated the Whitby Stone Co., and commenced working mines and quarries." In 1836 the first consignment of ironstone from Grosmont was sent by the Whitby Stone Co. to the Birtley Iron Co. In the following year serious mining operations were commenced which, with few interruptions, have continued until a few years ago. In 1837 the Wylam-on-Tyne Iron Co took ore royalties from the Marquis of Normanby; in the following year it began working at Kettleness and Staithes, and in 1839 at Grosmont. Up to 1843 there were but five furnaces in the Durham district using only Cleveland stone. In that year another firm, Losh, Wilson and Bell of Tyneside, began to use that ore. In the year 1846 Ferdinand Bolckow and John Vaughan (founders of the great firm of Bolckow, Vaughan and Co) became large consumers of the Grosmont stone, and as much as 30,000 tons were raised there in one royalty alone. After 1846 the whole of the iron works in the neighbourhood of Newcastle, as well as those of Bolckow and Vaughan on the Tees and at Witton Park, were supplied with the ironstone they required almost entirely from the Grosmont district and the Valley of the Esk, until the discovery of the much thicker and somewhat richer beds of the North Cleveland district.
About this time Ferdinand Bolckow and John Vaughan, who had taken ironstone mines near Skinningrove, transferred them to Losh, Wilson and Bell, and proceeded to apply their energies to the north side of the supposed ironstone field—that is, Upleatham, Eston and Normanby. On June 8th, 1850, John Vaughan and John Marley the engineer actually found the full outcrop of the main seam. Its discovery is recorded by John Marley in his own language as follows:
"Mr. Vaughan and myself, having gone to examine the hills for the most suitable place for boring, we decided to ascend to the east adjoining Sir J. H. Lowther's ground, and so walk along to Lady Hewley's ground on the west. In ascending the hill in Mr. C. Dryden's ground we picked up two or three small pieces of ironstone. We therefore continued our ascent until we came to a quarry hole, from whence this ironstone had undoubtedly been removed for road-making, and next on entering Sir J. H. Lowther's grounds to the west a solid rock of ironstone was lying bare upward of 16 feet in height, and we need scarcely say that, having once found this bed, we had no difficulty in following the outcrop in going westward without any boring, as the rabbit and foxholes therein were plentiful. As we went we also examined the place in Lackenby Banks squared down in 1811 or 1812 by the late Thomas Jackson of Lackenby. The period from June 8, 1850 to the middle of August following was occupied in completing arrangements for opening out this ironstone, and the first quarry was begun on August 13, 1850. A temporary tramway was soon laid down, and by September 1850 the first lot of 7 tons of ironstone was brought down in small tubs to the highway, from thence carted to Cargo Fleet, and thence again by rail to Witton Park Ironworks, being about three weeks after actually seeing the ironstone, and by this method 4,041 tons were sent away by the end of the year."
The Derwent Iron Co was then the leading iron firm in the North, and owned fourteen furnaces. It had been financed from the year 1840 by the Northumberland and Durham District Bank to the extent of nearly £1,000,000, and when the Bank, whose finances were crippled by the advances, went into liquidation in 1857, these works were disposed of to certain of the Bank's shareholders, and were in 1864 formed into the present Consett Iron Co, with a capital of £400,000, under the Chairmanship of Sir David Dale, Bart. 
The newly-found supplies of good and cheaply worked ore gave a great impetus to the blast-furnace industry. Numerous iron works were established whose fortunes are traced on a later page. Large profits were earned by the Cleveland iron firms until the late seventies of the nineteenth century. In 1876, at a time when the demand for iron rails at home, and for America and our Colonies, was enormous, the substitution of steel for iron was a rude shock to the Cleveland manufacturer, whose malleable iron trade was reduced by half. But the advent of the iron and of the steel-built ship helped him through his difficulties. Forges and mills for rolling iron were demolished and converted into plate and steel-rail mills, whilst Bessemer furnaces were afterwards erected to meet the demand for steel, which had, in its turn, supplanted iron in the construction of ships. The net result of these transformations, however, was to wipe out the existing capital of most of the iron-making companies as represented by assets, and by 1880 they again had to face a crisis, the worst that had up till then afflicted the steel trade in this country. Money and energy, however, even in those depressed years, did not fail them. The rail mills of Middlesbrough are now among the finest in the world, while the development of the mild steel trade for shipbuilding material was rapid. Appliances were improved to such an extent that steel, undoubtedly a better material for shipbuilding, roof and bridge work, is produced to-day at far less cost than the iron which it has superseded. It is remarkable, as showing the economies recently achieved in the steel trade, that in the years 1923 and 1924 molten iron to the amount of 820,000 and 837,000 tons was sent direct to the steel works, the largest quantities in the history of the Cleveland trade, and this at a time when the output of the pig furnaces had fallen 1,500,000 tons below that of the year before the War. To this cheapness of production the great expansion of shipbuilding on the North-east Coast has been largely due. Though the total number of firms now engaged in the steel trade in the district is smaller than the number of iron manufacturers who preceded them, the gross output is greater and the trade is much more firmly established.
The prosperity of the iron trade on the North-east Coast during the first quarter of the twentieth century has been conditioned largely by the developments of steel-making. These developments comprise the displacement of the basic Bessemer processes, involving the use of the Bessemer converter, by the open-hearth basic process, and the replacement of the pneumatic process by one requiring continuous high temperature. This has involved the expenditure of very heavy capital sums in the installation of high-capacity furnace plants and their appurtenant heat units. Meanwhile the need for heat economy and for quick working of metal has rendered the blast furnaces rather an auxiliary to the steel furnace than independent producers of market material. As to the steel furnaces themselves, there is some difference of opinion among experts. Some favour the 60/80-ton nominal capacity open-hearth furnace, producing from 45 to 60 tons of steel per charge and working in conjunction with a 400-ton gas-fired mixer. Others prefer the Talbot continuous furnace (the invention of Mr. Benjamin Talbot). Modern practice is tending to the elimination of the mixer by better control of the material charged into the blast furnace and of the metal leaving it. The Talbot furnace claims to have a higher output per man employed, but has the disadvantage that the laying off of a furnace for repair is more crippling to capacity.
The firms engaged in the Cleveland section of the North-east Coast iron and steel trade, all of which own or control collieries, coke oven and ironstone mines, are:
- Bolckow, Vaughan and Co
- Dorman, Long and Co
- Furness Group (consisting of the Cargo Fleet Iron Co, the South Durham Iron and Steel Co, and the Weardale Steel, Coal and Coke Co)
- Pease and Partners
- Consett Iron Co
These Companies, which are more fully referred to on a later page, have absorbed others producing the raw materials they require, and again others which use their finished products. Many firms have extended their interests into other districts, with a view to secure supplies in replacement of wasting areas in Durham and Cleveland, and to create new markets for steel by fostering industrial development in new districts. In the various works owned by these great firms the range of operations covers the manufacture of mild steel of practically all known sections and for all purposes. Their capacity for production, however, is greater than the demands of the market, and, with the exception of the years 1889, 1890, 1899 and 1900, profits per ton of output cannot have been large. Prices and output in the steel rail trade were for years regulated in this country by a pool to distribute orders and maintain prices on a reasonable level.
There has been another complete change in the Cleveland iron trade since the disappearance in 1915 of the Glasgow "Ring" and the speculative Warrant Market to which reference is made in the chapter on the Scottish Iron Trade. There are no public stocks of Middlesbrough iron and no warrants. The Cleveland iron trade is now in the hands of Bolckow, Vaughan and Co, Dorman, Long and Co, Pease and Partners, and Palmer's Shipbuilding and Iron Co, and for some time past there have been no other makers. The demand for steelworks iron has limited the tonnage of iron which could be graded as "Cleveland," and the foundry trades make less use of Cleveland than they did. For cheap castings, Midland (i.e. Derbyshire, Lincolnshire and Northamptonshire) iron-makers are severe competitors, and abroad there are large supplies of cheap native iron available. The tendency in the foundry trades is to use iron lower in phosphorus than Cleveland, and to use Cleveland only as a mixture.
The steel output of the North-east Coast is normally taken up by the shipbuilding trade, by railways and tramways at home and abroad and by structural engineers. Shipbuilding has been stagnant since October 1920, and for nearly six years the North-east Coast has had to carry on minus a market which normally absorbed 30 to 40 per cent of its output. The recent demand for ships does not materially relieve the situation, since the tonnage is mostly of a special type, and not of the "tramp" variety usually built by the North-east Coast yards. The export demand for heavy steel has been seriously restricted since the War, and that for railway material has only been filled from this country where conditions were imposed upon the expenditure of the capital involved, as in the case of Colonial and some Indian orders. Structural work has been, in the main, confined to home enterprises. Not much more than 20 per cent of the output of the North-east Coast has gone directly into the export trade in the last few years.
There is still a considerable divergence of practice as to the siting of coke-oven plants, but the balance of opinion is in favour of concentrating all appliances which produce surplus heat or gas at the iron and steel works. The best practice to-day is that no fuel should be used in the iron and steel works except the coal which goes into the oven. The coke ovens are situated alongside the blast furnaces at Dorman, Long and Co's Clarence Works, Newport Works and Redcar Works, and at the works of the Cargo Fleet Iron Co. On the other hand, the Consett Iron Co's new steel works, only just reaching completion, have adopted the policy of concentrating on a large coke-oven plant detached from collieries or steel works. The coke-oven plants belonging to the firms on the North-east Coast are not of the most up-to-date type. They have not kept up with the rapid advance in coke-oven design and equipment of the last five years, which is represented chiefly in shorter coking time and in the more uniform quantity of coke produced in the oven. The use of the gas engine driven by blast-furnace gas as prime mover has not made such great progress as the steam turbine-driven generators and blowing engines, although the two methods are almost equally divided among the firms on the North-east Coast.
The actual capacity of many steel furnaces has been increased by improvements in the mechanical means of handling charges and product. The substitution of electrical lifting and traversing gear in place of machines operated by hydraulic power has greatly increased the speed of handling. The "casting pit" has now almost disappeared on the North-east Coast. Ingots are cast on movable cars. Improvements in the ingot mould by better foundry practice account in part for the practicability of car casting. The increase in ingot output has necessitated considerable speeding up of cogging and finishing plants.
Electrical drives are steadily replacing the steam engines which formerly drove the rolling-mills, and many improvements have been made in the way of power-driven auxiliaries for the rolling-mills and handling plant. Generally speaking, the metallurgical or furnace side of steel-making is better developed than the mechanical side or manipulative portion of the work.
Individual iron and steel plants vary considerably in efficiency. There is no doubt that in many respects the North-east Coast works are not so well equipped as those of Continental competitors, whose blast furnaces and coke ovens are particularly successful in the use of inferior material and in the economic utilisation of fuel. To make the knowledge of these subjects available in practice would call for costly equipments and a highly skilled personnel to work them. But it would not be true to regard as inefficient all the North-east Coast plants. Most of them are in some respects inefficient, but there has not been the opportunity for radical reconstruction which ideal efficiency would require.
Labour conditions are good in the sense that the machinery of conciliation in the trade has always worked well. Wages are governed by sliding-scales, which make earnings more or less dependent on the state of trade. The sliding-scales adjust wages automatically, and arrangements exist for the settlement of basic rates by means of neutral committees. It is probable that these arrangements work well because many of the more highly paid grades, particularly in the furnaces and rolling-mills, fear lest any disturbance of labour conditions should result in the loss of their existing favourable position. Many of the basic rates, particularly on steel and on furnaces and rolling-mills, were settled under low output conditions, and the wages paid are probably today out of all relation to the actual value of the man's services as compared with those of the lower-paid grades. This applies likewise to the Yorkshire and the Scottish furnace men. In the case of blast-furnace men the percentage is based on the quarterly ascertained selling price of No. 3 Cleveland pig iron. With regard to ironstone mines and limestone quarries a sliding-scale was inaugurated in September 1887, based on the selling price of No. 3 Cleveland pig iron. This scale terminated in 1889, since which date there has been no sliding-scale actually in operation, although the old scale has been the guiding factor in settling wages up to the present time. Steel workers' wages are governed by a sliding-scale based on the quarterly ascertainment of the average net selling price of plates.
Having regard to the severe and continued competition of Belgian and German steel manufactures with our own in all neutral markets, it seems strange that our makers have not responded to the invitations which from time to time these producing nations have extended to us to join their trusts or cartels, both in the steel and in the coal trade. The Continental Steel Trust founded in Germany owns 151 coal mines, with the possible output of 37,000,000 tons a year; seventy-one coking plants; sixty-three blast furnaces, with an output capacity of 9,000,000 tons; steel furnaces with a capacity of over 7,007,000 tons and shares in other companies and syndicates. The French Comite des Forges, now allied with this Trust, has much less wealth and authority. The same applies to the organisation of the Belgian Iron and Steel Masters. But the three nations together are now showing a solid front to our poorly-organised coal, iron and steel firms. The object of the cartel is to limit production and to prevent competition in trade in foreign markets. Its members retain full possession of their home trade. Taking 27,600,000 tons as the present average annual production of the cartel partners, this output is apportioned in agreed shares. Germany takes 43.5 per cent and France 31-19 per cent. If any country produces more than its share, it is bound to contribute to the Trust a percentage of the excess. The members are also entitled to draw from the Trust half that amount for every ton by which their actual production may fall below their several shares. Poland and Czecho-Slovakia will probably join the Trust, and we can enter when we choose. In a country like Great Britain, where individualism is the firm basis of all our industry, an organisation of this kind has so far not appealed to our producers. Our colliery, iron and steel trades are not organised at all, and every suggestion of organisation has a bad reception in the trade. The Rt. Hon. Sir Alfred Mond, Bart., M.P., recently called a conference of the leading coal-masters in this country to consider a scheme for pooling their sales for foreign export, a comprehensive and able statement of the case and of the essential economic remedy for the ills of which the individual British coal-owner complains. But the proposal was so coldly received that it has already fallen to the ground. The underground colliery manager still controls the sales department in spite of the object lesson given by our German competitors. In the steel trade from time to time similar combinations have been attempted in this country, but they have been generally broken up as the conditions of trade altered from time to time. This applies particularly to rail-makers on the North-east Coast. An understanding, however, has now been arrived at with Continental rail-makers, and a European Rail-makers' Association has been formed to obtain a more stable level of prices and a fair return to the producers. A valuable and interesting Memorandum has been issued in May 1927 by the Economic and Financial Section of the International Economic Conference at Geneva under the auspices of the League of Nations, dealing with the iron and steel industry in its international aspects.
- This became a very prosperous concern, but its large dividends are understood to have been due less to its success in steel-making — for which it is not so well situated as works on the Coast — than to its fine coal royalties, and to its having been fortunate enough to invest jointly with the Guests of Dowlais, Krupp of Essen and a Spanish firm in the Orconera Hematite Iron Mines near Bilbao in Spain.