Chapter 37
SCRAP—COUP D’ETAT OF THE Random Element
2Inherent in the new industrial principle, developed most clearly since the War, is the periodic replacement of old forms by new forms. In no more dramatic way does old economics demonstrate its inadaptability to new industry than in the used-car problem of the automobile businessers—what to do about the old cars? Amplify this problem, relative to all activity, and one can understand why politics and business throw up their hands and liquidate ‘‘used’’ product through war’s destruction.
3 Ford, recognizing this liquidation-of-old product problem, set about economically to salvage scrap from old cars, just as telephone companies, unhindered by consideration of second-hand telephone purchase by consumer-users, and railroad companies who had sold transportation service rather than railway cars, found it of high economic advantage periodically to scrap obsolete equipment and refine it into basic materials for refabrication in new-use-forms as INSTRUMENTS of their ABSTRACT ‘‘END-PRODUCT,’’ i.e., WIDER and MORE EFFICIENT SERVICE.
4 In 1927, Ford went so far as to propose RENTING his Lincoln cars rather than to sell them. This was a mistake, for the Lincoln cars went to the cash-paying minority—the property-vain class. He would have done better with Fords. This was also premature. But in effect Fords are today rented transportation service since they are generally ‘‘purchased on TIME’’ and are turned in for another time-purchased new product at about the end of the first contract. Lincolns are for the most part ‘‘sold’’ outright.
5 There is now a consumer tendency toward this ‘‘turning-in’’ of a contract ‘‘purchased’’ house evidencing itself in greater New York, wherein the small down-payment buyer abandons the house for an improved model, but has to go through a legal mess because of which realtors also suffer high depreciation value through loss of the new house premium. This is but one more item of the inevitable trend towards economic ‘‘abstraction’’: ‘‘USE vs. OWNERSHIP.’’
6 It is at last obvious that the recirculation of basic materials, first ‘‘noticed’’ in 1909, through the scrap developed in industrial obsolescence of out-moded products is tending toward greater importance by actual tonnage than the production of NEW raw material, which latter will become progressively of smaller percentage, and simply supplementary to the recirculating scrap materials:—the quantities of new materials mined to be determined by population growth and industrial decentralization beyond the borders of the current leading industrial countries into the lands of high population and current low industrial standards (the Orient, India and Russia representing three quarters of the world’s population) as well as by the final factor of replacement of shrinkage by actual loss in pins, shipwrecks, et cetera. Only 15% of all copper ever produced in the world has been lost. The remainder—27 million tons—is all in use. In 1933 the U. S. consumed for the first time more recirculated copper than new. The U. S., which has virtually no tin ore source, is the largest tin user in the world and has an accumulated ‘‘in-use’’ ore body of 2,000,000 tons which it recirculates at a rate of 25,000 tons annually, supplemented by 67,500 tons (the last ten years’ average) annual import of ‘‘new’’ and ‘‘old,’’ and has now placed an embargo on the export of tin scrap, hitherto a large business—a mobile ‘‘mine’’ above grade.
7 Most interesting of all this recirculation phenomenon is the fact that in the U. S. 256,000,000 tons of steel scrap, equal in every way to new when refined, were consumed in the decade 1925 to 1935, whereas only 200,000,000 tons of new ore, as both iron and steel, were being consumed.
8 The steel, copper, nickel, and aluminum producers, et al., in order to survive by direct economic validity will have to inaugurate regular repurchase of obsolete industrial products, such as automobiles, buildings, railroad equipment, ships, et cetera, directly from those industries, rather than wait for the junking and bankruptcy breakdown in these non-self-liquidating industries; this will be done upon the basis of the quantities of material known accurately to exist in them, extractable at a KNOWN cost, just as they would purchase below grade surmise-quantity ore properties. The basic producers are better equipped at present, and MAY persist, if they have enough foresight (questionable) in remaining so, to refine this so-called ‘‘secondary’’ material.
9 Prior to the World War basic metals producers carried their product from the ore stage only through to elementary forms: ingots, bars, sheets, tubes, wire, et cetera, which in most cases had to be further refashioned to end or intermediate product stages by a fabricating industry. The latter, after the war, suffered high mortality due to the complicated and expensive state to which mechanics had developed as a result of the war speedup, and the lack of ability of the fabricators to purchase competitively essential equipment. This mortality forced the well-funded basic metals producers reluctantly to fill the gap in order to sell basic product to the end-product and service industries.
10 Also before the War, mine ‘‘owning,’’ large or small, was potentially profitable. Today, owners of small mines of common ores unless absorbed by one of the larger ‘‘fabricating’’ corporations have no marketing or earning outlet.
11 The last two decades have witnessed so large an investment by the basic producers in fabricating equipment that it is now equally as great an investment as that of the mines long ago ‘‘written off.’’ Whereas a mine costs little when idle and may increase in value, and is virtually ‘‘money in the bank,’’ the converse is true of fabricating equipment which has high overhead in proportion to rapid obsolescence. For this reason the more rapidly metals are run through the fabricating equipment, the lower will be the unit cost and the higher the profit. Fabricating equipment takes no cognizance of the origin of metals, granting equality of product, and, therefore, high recirculation of ‘‘old scrap’’ is quite as profitable as circulation of the ‘‘new.’’ This creates the paradox of putting the new metals basic suppliers into the business of promoting what they had hitherto considered as their prime competitor—scrap.
12 THE BASIC METALS MONOPOLY, BACKBONE OF CONSERVATIVE FINANCE, IS BEING DRIVEN WILLY-NILLY INTO A POSITION OF FAVORING AND ACCELERATING ‘‘CHANGE’’ IN ORDER TO ‘‘MINE’’ SCRAP BY OBSOLESCENCE OF OCCUPATION TO MAKE PAY THAT VAST INVESTMENT IN EQUIPMENT WHICH IT HAD TO MAKE AND MUST CONTINUALLY RENEW IN ORDER TO JUSTIFY ITS ORIGINAL MONOPOLY AND ITS ‘‘CASH IN THE BANK’’ RESERVES.
13 Originally basic metal monopoly was for minimum end-product change as it was desired that the product stay put so that it could, through production schedule, control scarcity and demand high profit. Now conservative monopoly is favoring change and must patronize science to obtain it and man is thus coming into that inheritance from science which conservative capital has fought to keep from him.
14 This phenomenon explains the new political term in England, ‘‘Radical Tory.’’ In England the ratio of mine to fabrication is even wider and England leads in recirculation, scrapping her Mauretania and buying our Leviathan with its high nickel content, steel, et cetera, for conversion of the same metal into higher use-form and earning ability—a mechanical reincarnation progression of doing more, if not with less, at least with the same.
15 The basic materials producers must come to the realization that they are irrevocably interlocked in their interests, one with the other, rather than opposed, due to the constandy increasing interalloying of their products by the use-industries. There are more than 10,000 alloyed metals in current industrial use. They are multiplying constantly, developed most conspicuously by the automobile and the aeroplane. There were but a handful of alloys before the World War. This fact constantly belittles the basic producers’ ‘‘sales’’ efforts to impose non-functional substitution of their respective pure products for the pure products of other basic producers: copper instead of nickel, et cetera. Nickel made an all-time high in 1935, but primarily in alloyed form. Both copper and steel tonnage was vastly increased by sales developed directly by the nickel people. For instance, ‘‘Monel,’’ an International Nickel Company product, is 70% nickel and 30% copper. A prominent engineer, H. W. Gillete, Chief Technical Adviser to the Batelle Memorial Institute, and representing the steel industry, made the prognostication at the 1936 annual meeting of the A. I. M. E. that the next era in structural steel would be one of low carbon 1.5% copper alloy, a hidden tonnage that may run over 350,000 tons of copper content annually, the equivalent of the entire U. S. domestic output of copper for all purposes in 1934.
16 The basic materials producers will have further to conduct cooperative research to provide ever more advance MATERIALS SERVICE in advantageous alloyed forms and in progressively enriching metals containing small quantities of economically unextractable alloys. Ford has now substituted 1--3% copper alloyed cast steel for forged steel in crank and cam shafts and many other parts, improving his product and simplying his process. The tonnage of copper may run to 100,000 tons annually in these low percentage uses, but is economically non-extractable from the subsequent scrap,.'. a scientific later-day service of distribution of the enriching scrap and its vanishing minority metals must of necessity develop.
17 The inevitable trend involved includes not only the elimination of all economic waste and attendant cost in non-scientifically liquidated product, but also recognition of the fact that any industry, the product of which returns regularly to the market, is an industry of SERVICE THROUGH MECHANICALLY WORKED AND REWORKED MOBILE PROPERTY and is not an industry of STATIC DISSIPATION and IRRESPONSIBLE LIQUIDATION.
18 Once an industry has become one of ABSTRACTED SERVICE instead of physical sale, it must recognize further that its service is based on the efficiency of RENTAL rather than on the sale ofproperty.
19 When the basic materials producers have come fully to realize the expediency of this new industrial cycle and its continuity efficiency, they will eventually and inevitably adopt the new principle of RENTAL OF MATERIALS, as practiced for instance by the renters of radium. This may be a long time off, but I think not. Under the cartel-sanctioning effect of the N. R. A. Copper Code, the producers intuitively provided that they should have priority options on the repurchase of the ultimate scrap of their respective specific sales, in effect a rental proposition.
20 When copper, for instance, in alloyed form, is rented to industrial manufacturers for periods of time consistent with the specific longevities of products in the respective manufacturing industries (eight years in automobiles, twenty years in ships, etc.) the copper refining and materials alloying service industry will be able to accelerate the re-employment of their ever-improving product through their ability, contained in the terms of their leases, to withdraw inferior products to be replaced by more expedient alloys, and by surcharges for overlong use of material. Then FREQUENCY IN RENDITION OF FABRICATION SERVICE will replace TURNOVER AND LIQUIDATION OF NEW PRODUCT as the economic incentive. When this new cooperative, durable materials service has been developed the course of rapid industrial growth will be truly renewed.
21 Herein lies the key to the new world economics; for through it ACCELERATION, rather than retardation, of design improvement in scientific satisfaction of ever-improving standards will PAY. There will then be no question of inflation or deflation of dollars, for the dollar values will be in the terms of the ENERGY INVOLVEMENT in ABSTRACT SERVICE, and FREQUENCY rather than in the terms of the INTRINSICS of RAW MATTER. While the automobile industry suffers from lack of such a service to a vast extent, the mass-production building industry is practically prevented from inception by its non-integrated existence.
22 Scrap is the economic ‘‘straw’’ that is breaking the back of Fincap, to wit: SCRAP is changing Fincap willy-nilly into a good boy, painlessly, as man-evolved, man-prosecuted reform might never do. Fincap Jr. must become a bright-eyed ‘‘yes man’’ to science to save his breeches.
23 The economics of ‘‘scrap’’ as connoting inanimate materials, selectively synthesized by scientific mind, ever more temporarily ‘‘on the shelf’’ in obsolete-to-current-efficient-use-form, progressively enriching in minor percentage alloy constituents and consequently ever improving in weight-strength factor, versatility and noncorrosiveness, and constituting a mobile above-grade mine of high concentrate representing a net efficiency of use availability now in most cases superior to that of raws, makes this resource a floating ‘‘international’’ resource rather than ‘‘national,’’ which below-grade resources must be. Wherefore Science, the central factor that is obsoleting the connotation of SCRAP as meaning ‘‘FIGHT,’’ is forwarding the unromantic inanimate dump heap Scrap to the Sir Galahad role as saviour of man from the sacrificial animate dump heaps of predatorily engendered war. Hail! Humble scavengers and mongers—circle closers of the Industrial Cycle of continuity—Knights of the Random Element!