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O n Black Tuesday, October 29, 1929, after a prolonged period of over speculation , stock prices on the New York Stock Exchange began to drop rapidly. Attempts to halt the decline failed. By the time stock prices hit bottom in 1932, the market had lost 89 percent of its value. Financial panic, deflation, and bank failures ensued. As confidence in the economy waned, businesses closed, unemployment climbed to almost 25 percent, and those who still had jobs saved rather than spent, fearing for the future. Consumer demand evaporated and plummeting sales, especially in the growth automobile industry, sent ripples through the American economy. Orders for iron and steel dried up. Orders for iron ore soon followed suit.1 Impact of the Depression: The Mining Regions Like many others, Cleveland-Cliffs’ management initially assumed the economy was entering a short-lived recession, like those of 1907 and 1921. In this belief, Mather consummated the purchase of the McKinney Steel Holding Company in early 1930. Cliffs continued to mine ore at near-normal rates, producing a bit over 3 million tons in 1929 and 1930, above the company average of 2.4 million tons for the previous four years. Actual ore shipments, however, dropped rapidly: from 4.3 million tons in 1929 to 2.5 million in 1930. By 1932 the American economy was in shambles, and the iron ore industry reflected that condition. That year all the companies mining ore in the Lake Superior iron district 4 DEPRESSION, WAR, AND DEPLETION, 1930–1950 140 CHAPTER 4 combined shipped only around 3 million tons, down from the 50-million-ton annual average of the 1920s and significantly less than what Cleveland-Cliffs alone had shipped in 1929. CCI’s share of this sharply diminished pie was a mere 300,000 tons, less than one-tenth of its 1929 ore shipments.2 By 1931 CCI management had begun to sense that this economic downturn might not be short lived and began to curtail operations. That year Stu Elliott, general manager of the company’s ore operations, shut down some mines completely, operating the remaining properties on a two-day-a-week basis “largely for the benefit of our employees and the communities where they are located.”3 The company needed no new ore; stockpiles overflowed with unsold ore. Even at this reduced schedule, the mines produced more ore than Cleveland-Cliffs could sell. Production totaled 400,000 tons in 1932; only 300,000 tons sold. In both 1932 and 1933, as the Depression dragged on, Elliott closed all of the company’s mines in the spring, reopening them in November on a two-day-aweek basis “solely . . . to do our part to help out in the very bad unemployment situation” by providing work in winter when families needed funds the most.4 The superintendent of the Lloyd mine noted in 1933 that his mine was kept open more as “a welfare relief project,” with efficiency being sacrificed “to give as many men employment as possible.”5 The failure of banks holding CCI funds and lack of income complicated matters further; in some instances the company was unable to meet even its now sharply diminished payroll.6 Cost cutting soon went beyond shutting down mines and reducing workweeks. On February 1, 1932, CCI closed the small research laboratory it had established on the Mesabi Range in 1929 to investigate ways of concentrating low-grade iron ores.7 Equipment purchases, exploration, and development work all but stopped.8 In 1935 one of the company’s mining superintendents noted that diamond-drill work in his mine had been shut down for five years.9 Cleveland-Cliffs had no need to uncover new reserves; it could not even sell what it had on hand. The company payroll fell from $6.6 million in 1930 to $1.9 million in 1932.10 Because the communities in which CCI operated were generally one-industry towns, the company’s problems were quickly community problems. Stuart Elliott, for instance, observed in early 1935 that “practically every employee” had gone into debt, and practically every merchant in the mining towns of Ishpeming and Negaunee carried a “very large amount of credit on their books.”11 Those miners who still had at least partial employment clung to their jobs for dear life. As one mining superintendent noted, labor turnover in his mine was zero, with a waiting list of men...

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