Tungsten in Peace and War, 1918–1946

Chapter 6. STRATEGIC METALS AT THE START OF WORLD WAR II

The situation is very unsettled and no one knows what is going to happen in the next few weeks. The lid may be blown off the whole thing in Europe if Germany starts in with Poland and then we don’t know what will happen.”1 The Blitzkrieg that launched World War II was still six months away when Joseph J. Haesler, sitting before the teletype in his New York brokerage, pecked out that message to his friend and client Charles Segerstrom in Sonora, California . Both were seasoned professionals. Regardless of what course a European war might take, Haesler knew it would unsettle international metals markets. Segerstrom needed little reminding of the consequences. Remembering the lessons from the first global conflict, he recognized the symptoms of instability early enough to plan a flexible mining and marketing strategy that could readily adjust to changing conditions. As we have seen, during the midthirties the boss of the Nevada-Massachusetts Company had implemented an ambitious tungsten exploration, development, and acquisition program. He actively acquired properties and leases but waited until the demand rose to invest the capital necessary for full-scale mining and milling. As international tension increased he anticipated a metals boom, but the conflicting domestic and foreign market signals after 1936 upset his plans. During the most turbulent times he moved cautiously, keeping costs down and avoiding speculative long-term capital investments. But the yellow light turned green as Germany blasted its way across Poland, and then turned to take on the West. Conflict in Europe did what the Sino-Japanese war could not do—weaken isolationist sentiment in America and strengthen the voices calling for mobilization . Like a chilly autumn breeze, rearmament was in the air, and that was good for miners producing strategic minerals.2 STRATEGIC METALS AT THE START OF WORLD WAR II 6 “ 120 T U N G S T E N I N P E A C E A N D W A R THE METALS INDUSTRY ON THE EVE OF WAR The metals industry in the interwar years provides a good behavioral model to compare business words with deeds. Before the 1960s, studies of business attitudes, based largely on trade publications, concluded that business opinion mirrored views of the larger society. Despite a generation of accusations after World War I, no causal connection was ever proven between profiteering and influencing war policy. Most business leaders opposed war as an unpredictable disruption of the normal business cycle. Following from the discredited Nye Committee hearings of 1934–36, late in 1939 McGraw-Hill executives asserted the business viewpoint in an indignant denial: “To say that Industry and Business want war or will encourage, directly or indirectly, our participation in the present war, is a vicious and deliberate lie.”3 Opposition to war did not mean opposition to the commerce of war or its preparation. In a study of the business press during the 1930s, Gabriel Kolko concluded that American businessmen hated totalitarianism but drew a disconnect between its moral and economic implications. Patent and licensing agreements drawn during the prewar years remained in force even after America entered the war. These collaborative arrangements, along with export quotas, territorial divisions, and other arrangements, document the close relationship between German cartels and leading American corporations. We have already noted the 1928 agreement between Krupp and General Electric that fixed tungsten carbide prices at five times higher than the cost of production . Antitrust prosecution, started in 1940 but set aside during the war, ended with a district court decision in 1948 finding ge and its collaborators guilty on all counts.4 Arms merchants may not have promoted wars, but wars promoted arms sales. Italy’s war on Ethiopia in 1935 drew arms dealers from Belgium, Germany , Czechoslovakia, Switzerland, and Japan. During the Spanish civil war, despite a nonintervention agreement among the advanced European powers, the Soviet government, Germany, Italy, and Portugal, all rushed in with arms and aid. In 1937, with superior aircraft that easily penetrated weaker Nationalist defenses, Japan in five months of savage warfare controlled Shanghai and much of Northeast China, and threatened the mines and markets of the Southeast . American missionaries in China, witnessing Japanese atrocities firsthand, condemned Japan but also blamed American business interests for supplying the aggressors with military equipment and supplies.5 Strategic Metals at the Start of World War II 121 The missionary appeal to Christian morality helped change both American...