American Smelting and Refining Company

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AMERICAN SMELTING AND REFINING COMPANY

Meyer Guggenheim (1828–1905) a man of humble beginnings, arrived in Philadelphia from Switzerland in 1847. Struggling to support his family, he sold household goods in the coal towns of northeast Pennsylvania. Peddling goods led Guggenheim to manufacture a polish for stoves. Realizing the profits to be made from manufacturing, Guggenheim began to produce and sell lye, a synthetic coffee, and other goods. Guggenheim eventually built a prosperous wholesale business in household goods. By 1868, Meyer Guggenheim had fathered seven sons, whom he trained to become one of the best management teams in the nation.

Sending two sons overseas, Guggenheim established machine-made lace factories in Switzerland, which enabled him to import and sell fine laces and embroideries into the United States under the firm name of "M. Guggenheim's Sons." In 1879, at the age of 51, Meyer Guggenheim had amassed a fortune. After acquiring interests in Colorado lead and silver mines in 1881, Guggenheim invested $20,000 for operational costs. These proved to be some of the richest mines in the area. By 1888 they were producing approximately $750,000 a year. The Guggenheim metal empire had just begun.

Meyer Guggenheim became aware that smelters generated more profit than the mining of ore. In 1888 he built a smelter in Pueblo, Colorado, and started the Philadelphia Smelting and Refining Company. With his next step, Guggenheim consolidated some of his various businesses, including his share of Philadelphia Smelting, under the name of "M. Guggenheim's Sons." Guggenheim then delegated various duties among his seven sons.

The Guggenheims had been importing ore from Mexican mines for their Pueblo smelter. With the introduction of the McKinley Tariff Act of 1890, this proved to be a far more expensive venture. The Guggenheims went on to build two smelters in Mexico, taking advantage of the cheaper Mexican labor rates, and they were able to avoid the tariffs. With the passing of the Sherman Silver Purchase Act (where the U.S. Treasury Department agreed to buy four million ounces of silver every month) in 1890, the price of silver rose sharply. In 1895, in addition to being one of Mexico's largest industrial giants, the Guggenheim smelter operations were producing in excess of $1 million a year.

In an attempt to dominate the nonferrous metal industry, Henry H. Rogers (1840–1909) along with William Rockefeller and brothers Adolph and Leonard Lewisohn formed the United Metals Selling Company in the 1890s. The even larger launch of the American Smelting and Refining Company (officially renamed ASARCO in 1975) was assembled in 1899. This included the amalgamation of 23 other smelters. The Guggenheims refused an invitation to join the American Smelting and Refining Company. Instead, they formed the Guggenheim Exploration Company. With the assistance of son Daniel Guggenheim (1856–1930), the Guggenheims had mining operations in all parts of the world by the end of the nineteenth century.

Problems arose for American Smelting in 1900; mineworkers were striking against 12-hour days and the company's capital was estimated at too high an amount. American Smelting began to flounder. Daniel Guggenheim's strategy to drive the price of lead and silver down by flooding the market, worked. As ASARCO stock prices fell, Daniel Guggenheim bought it up. In April 1901, under the Guggenheim's terms, American Smelting and Refining Company and the Guggenheim family, merged. With the Guggenheims having controlling interest, Daniel Guggenheim became chairman of the board and president of ASARCO; Solomon Guggenheim became treasurer; and Isaac, Murray and Simon Guggenheim were named as members of the board. Expansion and acquisitions continued as Daniel Guggenheim increased the family business holdings to include mines in Bolivia, Chile, Alaska, and the Congo. When Daniel Guggenheim resigned as president in 1919, Simon Guggenheim assumed leadership of American Smelting and Refining Company. Murray and Solomon Guggenheim, also gave up their board positions, at that time.

At the start of the Great Depression (1929–1939), American Smelting and Refining Company was the largest refiner of nonferrous metals in the world with a net income of about $22 million. Business declined though, and by 1932 ASARCO had suffered a $4.5 million deficit. ASARCO continued to expand, despite hard times, and acquired a huge source of scrap metal with the purchase of Federated Metals Incorporated. In 1934, ASARCO invested $8 million in a mine at Mount Isa, Australia, which supplied copper during World War II (1939–1945). The huge extent of the mine's copper deposit was not known until 20 years later.

Upon the death of Simon Guggenheim in 1941, ASARCO's bylaws were changed to make the of chairman of the board into the chief executive officer. Francis H. Brownell, already chairman in 1941, was in charge until Roger Straus, son-in-law of Daniel Guggenheim, took over in 1947. A member of the Guggenheim family was always at the helm of ASARCO until 1958, when John D. MacKenzie became the chief executive officer.

A prolonged copper strike in 1959 kept ASARCO's 13 U.S. smelters and refineries shut down for one hundred and thirteen days. Due to the decline in lead and zinc prices, ASARCO focused on copper mining, entering the 1960s still the world's leading custom smelter. By 1963, ASARCO was the forth-largest copper producer behind Kennecott, Anaconda, and Phelps Dodge. Copper comprised nearly two-thirds of ASARCO's revenue in the early 1970s, with aggregates, lead, molybdenum, silver, specialty chemicals, and zinc taking up the balance. From 1974 to 1978, labor problems, market fluctuations, and anti-pollution regulations, impeded the growth of ASARCO. Despite the high demand for copper in the early 1980s, the price was dropping due to a copper glut on the market— ASARCO lost $304 million in 1984. Richard J. Osborne stepped in as CEO and chairman of the board in 1985. Osborne restructured, renegotiated, and redeveloped ASARCO's financial health, and by 1987, ASARCO had bounded back.

ASARCO increased its copper holdings and continued to diversify with the purchase of two more chemical companies. The mining operations were suspended at two silver mines in 1992, due to a drop in the price of silver. In 1994, ASARCO sold its gold-mining operations in Australia. A leader in mining, refining, and smelting of nonferrous metals, ASARCO's interest in mined copper reached one billion pounds, for the first time in 1996, indicating that this company's firm hold on the copper industry would continue well into the 21st century.

See also: Daniel Guggenheim