ALUMINUM: Oak into Acorns?

When Standard Oil got too omnivorous for Theodore Roosevelt’s liking, a U.S. court broke it up into 34 competing companies. Last week, Attorney-General Tom C. Clark recommended to Congress that the same thing be done to another titan, the Aluminum Company of America. Said he: only by breaking up Alcoa into several smaller, competing companies can true and permanent competition be brought to the aluminum industry.

Tom Clark’s 140-page brief made one prime point: the $670,000,000 aluminum plants owned by the Defense Plant Corp. cannot compete with Alcoa if they are turned over to private hands. In general, the DPC plants are more expensive to operate as a unit than are Alcoa’s, because they are not as well integrated, i.e., fabricating plants are often hundreds of miles from ingot plants. To get them into production fast, many were built to mesh with Alcoa’s own plants. The DPC plants can compete, said Tom Clark, only with the help of Government subsidies. But if Alcoa is broken up, the “need for subsidies” will be eliminated.

Furthermore, said he, there is now no demand for all the aluminum the nation can make, small chance of finding a market so long as Alcoa occupies its present dominating position. Businessmen, said he, will not switch from brass and steel to aluminum and “risk being at the mercy of a monopoly.” His solution: break up Alcoa and integrate the DPC plants with the several new companies as well as with the two other wartime aluminum producers. Reynolds Metals and Olin Industries. Tom Clark figured that this would bring lower prices, and a market big enough to use up all of the nation’s vast capacity, which is at least triple the prewar demand.

Alcoa, already defendant in an antitrust suit (in which final decision was postponed until the problem of the DPC plants is settled), had a quick reply. It called the whole business a plan to subsidize operators of U.S.-owned aluminum plants. There is no reason, said Alcoa, why “Government-owned plants cannot be successfully operated if they are efficiently managed.” But few outside of Alcoa shared Alcoa’s optimism. Olin Industries has already shut down the DPC plant it operated, made no offer to buy. Reynolds Metals is dickering with the Surplus Property Board to lease some plants, but nothing has come of it yet. No other companies seemed to think that they stood any better chance of competing with Alcoa than Tom Clark thought they did.