The Portland cement industry from a financial standpoint

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Preface

THERE is at present every indication that the first broad improvement in the general business situation will be the signal for the attempted flotation of an unprecedentedly large mass of cement securities. Some of the enterprises against which these securities are issued will ultimately prove successful and profitable; some, though exploited honestly, will prove to have been mistakenly planned; a third and not inconsiderable group of projects will be exploited for the sole purpose of defrauding the investor.

The Portland Cement Industry is of great and growing importance. Cement plants, when properly financed, located, constructed and managed, have made very satisfactory returns to their stockholders. There is still room in the industry for honestly and intelligently managed new enterprises, but competition is now so keen that there is no room for weak plants — for plants that are poorly located or designed, for companies that are dishonestly promoted or carelessly managed. The manufacture of cement is a legitimate industry, and the methods of mining promoters have no place in it.

The present little volume attempts to discuss certain features connected with the financial side of the Portland Cement Industry. It is hoped that it will prove of service both to the banker, who is invited to aid in the flotation of cement securities, and to the investor, who is invited to buy them. It will have served its purpose if it aids either banker or investor to differentiate between securities offered against successful existing plants or sound projects, with reasonable prospects of success, and those issued against foolishly planned or fraudulently promoted propositions.

EDWIN C. ECKEL

209 Munsey Building, Washington, D.C.

October SI, 1908.

Contents

CHAPTER PAGE

I. THE HISTORY OF THE PORTLAND CE- MENT INDUSTRY. 9

The early English natural cements 10

Chapter I The History Of The Portland Cement Industry

IN spite of the present and growing importance of the industry, the history of Portland Cement manufacture covers a relatively short period of time, as compared with that of the iron industry, for example. Contrary to a somewhat popular idea, the ancients do not seem to have been acquainted with cements of the type which are now so widely employed. The " cements' ' used by the Romans, for example, were not burned products similar to the Portland Cement now used, but were made by mixing slaked lime with a powdered volcanic ash, called pozzuolana. These pozzuolanic or "puzzolan" cements still survive, though not of the greatest industrial importance.

During the Middle Ages even the use of the puzzolan cements seems to have been discontinued for large structural work. In those periods the material used for holding masonry together was a plain lime mortar, though by using time and great care in the preparation of the lime, the mortar and the masonry, structures of great strength and durability were finally developed. This use of lime as the only mortar material persisted down to near the close of the Eighteenth Century, when a new series of cementing materials, of essentially modern type, was developed through careful experiment, almost simultaneously in France and England.

THE EARLY ENGLISH NATURAL CEMENTS

In 1756 or thereabouts Smeaton, the English engineer, began a series of experiments on lime mortars, the point at interest being the selection of a lime calculated for use in marine construction, and the immediate necessity for the experiments being the construction of the Eddystone lighthouse. No record of these experiments was published until 1791, so that they had no immediate influence on engineering practise. Smeaton soon found that the property of hardening under water, known to be possessed by some limes, was not due to the purity of these particular limes, as had been long supposed. In fact, the truth of the matter was quite the reverse, for the very impure, clayey limestones, when burned, would harden under water, while the pure limes would not. Though the experiments of Smeaton were apparently not carried to the point of making a true cement, his conclusions regarding the effect of clay in limestone opened the way for further investigation and research.

The next step marked a great advance in practise. This was the invention in 1796 in England, and almost simultaneously in France, of a cement like our present-day natural or Rosendale cements. Parker, who took out an English patent in 1796, later termed his new product "Roman" cement, which was clearly a misnomer, for he had invented a product never known to the Romans. The Parker patent contemplated the use, as a raw material, of certain concretions common in some of the English coastal formations, and consisting of a natural mixture of clay and limey matter. These concretions were to be burned "with a heat stronger than that used for burning lime." When so burned, the product would not slack naturally when water was applied to it, as would an ordinary lime, but it required to be first powdered. After powdering, however, the resulting "Roman cement" would harden when mixed into a paste with water, and this paste would harden not only in air, but also when placed under water.

HISTORY PORTLAND CEMENT INDUSTRY

Parker's cement soon came into general use in England, while a series of similar products were manufactured in France and in other portions of the Continent. The introduction of natural cement manufacture into the United States took place in 1819, the discovery of the native raw materials in central New York being due directly to the construction of the Erie Canal. From that date on, the manufacture of natural cement spread rapidly in the United States. Mr. R. W. Lesley has pointed out the direct relation of our early natural cement industry to the canal construction which was then so prevalent. "The first large public works built in this country were the canals, and the most necessary thing to build a canal was mortar that would hold the stones together at the locks, or walls, under water. Consequently, wherever canals were to be built, there was a search for cement rocks, and all the earliest works in this country were established on the lines of canals. Thus, on the Chesapeake and Ohio Canal are the Cumberland and Round Top Works ; on the Lehigh Canal the works at Siegfrieds and Coplay, Pa. ; on the Richmond and Allegheny Canal the works at Balcony Falls, Va. ; on the Delaware and Hudson Canal the large group of works at Rosendale and Kingston ; and on the Falls of the Ohio Canal the large aggregation of works about Louisville. From this same fact grew the early package used in shipping cement in this country, the barrel, which was the package best adapted to water transportation; and it took many years, ever since the railroads came, to overcome the prejudice for this form of package and to substitute the paper or duck bag for the barrel."

The natural cement industry grew rapidly in the United States, reaching a maximum production of not quite ten million barrels in 1899. From that date onward, however, it began to suffer heavily from the competition of domestic Portland Cement, and in the last decade the output of natural cement has shown an almost continuous and quite rapid annual decrease, until now it has become a relatively unimportant factor in the cement situation. This matter will be noted later, in discussing the statistical growth of the American Portland Cement industry.

II The Invention And Early History Of Portland Cement

In following out the growth and decline of the American natural cement industry we have overrun considerably the course of events as regards Portland Cement, but it seemed advisable to complete a sketch of the earlier product before taking up the newer and more important material.

The history of Portland Cement begins a quarter-century after that of Parker's "Roman" cement. In 1824, Aspdin took out an English patent for an artificial cement, which he named "Portland" cement, because of a rather fanciful resemblance between the set cement and a favorite English building stone — the oolitic limestone of Portland.

Aspdin's patent specification covered the general method of Portland cement manufacture, though it omitted to mention certain important factors or limitations in the process. He specified that a pure limestone was to be burned into lime. This lime was to be mixed with a specific quantity of "argillaceous earth or clay," and the mixture was then to be pulverized in a wet state. The wet mix was to be dried, broken into lumps, and calcined in a kiln ; and finally the burned product was to be powdered. The only serious omissions in this statement are that the relative amounts of lime and clay are not specified, and that no mention is made of the fact that it was necessary to burn the mix at a temperature considerably above that of an ordinary lime kiln. But that these omissions were not due to lack of knowledge, but to carelessness or caution, is evidenced by the facts that Aspdin was actively engaged in Portland Cement manufacture within a year of the issuance of his patent, and that the Aspdin family long continued to be prominent in the English Portland Cement industry.

The English Portland Cement industry showed for many years a very slow rate of growth, and, though manufacture of the new product was taken up on the Continent quite early, the total production was not very large. About 1850, however, a distinct increase in output, both in England and in Germany,

HISTORY PORTLAND CEMENT INDUSTRY

appears to have taken place, and from this time on Portland Cement began to displace the older natural cements in all European markets, while it gradually became an important article of import into the United States.

EARLY AMERICAN PORTLAND CEMENT MANUFACTURE

In spite of the growth of the Portland Cement industry abroad, it was not until the third quarter of the Nineteenth Century that the manufacture was taken up in this country. Then, as in many similar cases, it arose almost simultaneously in several parts of the country, experiments being carried on almost or quite independently at a number of small plants. In 1872 an attempt was made to utilize marl and clay in the manufacture of Portland Cement near Kalamazoo, Mich., but this first project seems to have been entirely unsuccessful commercially, and it is certain that it exerted no influence on later experiments. In 1875 a true Portland was being made at a small plant in Western Pennsylvania, the materials there used being limestone and clay. This plant, at Wampum, Pa., is still in existence. At about the same date small experimental plants were erected in New York State, but these did not result in immediate returns.

In the meantime, the basis for the great Portland Cement industry of the Lehigh district was being laid, the start being made from rather unpromising conditions. Natural cement had long been manufactured in the Lehigh region, and in the early seventies attempts were made by Mr. D. O. Saylor and his associates to select from the natural cement quarries the beds which might on burning furnish a Portland Cement. The result, though always variable and usually unsatisfactory, was that a certain small tonnage of good Portland Cement began to be produced annually in this district, really as a sort of by-product of the natural cement industry. The present Coplay Cement Co. is the outgrowth of the first successful attempt to manufacture Portland Cement in this district.

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It must be borne in mind that at this stage in the industry the wet process and stationary kilns were in use in America as well as in Europe. This involved reducing the raw materials to powder, mixing to a paste with water, forming the mixture into bricks or balls, charging into and burning in a stationary kiln, and again reducing the clinker ed masses thus formed to powder. When naturally soft and wet raw materials were used, like marl and clay, the earlier stages of this process were of course considerably simplified, but with the hard, dry raw materials of the Lehigh district the cost was almost prohibitive. Under American conditions as to high-priced labor, it was evident that the cement industry, if carried on in such a fashion, stood little chance for growth in this country. This indeed proved to be the case and for a number of years little or no increase in American production could be noted, while the margin of profit as against foreign cements cheaply laid down in our coast cities was too small to encourage the American manufacturer to increase his output.

THE ROTARY KILN AND ITS EFFECTS ON THE INDUSTRY

It was early recognized that the relatively dear labor and cheap fuel of America, as contrasted with the cheap labor and dear fuel of Europe, would necessitate serious changes in Portland Cement manufacture if that industry were ever to be established on a firm footing in this country. In the general effort to cut down the excessive labor-cost of the product, two points of attack were obvious. In order to fit the industry into American conditions both the burning and the grinding processes must be cheapened, and this was effected when the old stationary kilns and millstones were displaced, respectively, by the rotary kiln and b}^ modern grinding machinery. Of the two changes, the substitution of the rotary for the stationary kiln was the more distinctively American in its development, and demands further attention because of the important effects which it had upon the general course of the industry.

HISTORY PORTLAND CEMENT INDUSTRY

The Ransome Patents (Great Britain, 1885; United States, 1886) are looked upon as the basis on which later developments in the use of the rotary kiln were founded, since the kilns now in use are direct successors of those of the Ransome type.

It had been expected that the fuel used in the Ransome kiln would be producer gas, but as a matter of fact, when the rotary was first successfully used in the cement industry — at South Rondout, N.Y., in 1889 — petroleum was used as fuel, and for a number of years this continued to be the usual American practise. At the South Rondout plant it was found possible to charge the mixed and ground raw materials directly to the kiln, without wetting, so that another step was made in the industry. In 1891, at Montezuma, N.Y., naturally wet raw materials were charged into the kiln without preliminary drying. The two main types of present American practise were thus in existence — the dry process, used with limestone or cementrock, and the wet process, used with marl.

The next step in the development of the rotary came when powdered coal was substituted, as a fuel, for petroleum. This took place about 1895, and soon became standard practise throughout the United States. This change brought about long and costly litigation regarding the patent rights involved, and it is probable that this condition will continue for some time. The matter will again be referred to later in this volume, in discussing the effects of patents on the cement industry.

The latest development in the rotary kiln has been purely a matter of dimension. Five years ago American rotaries had arrived at a practically standard length of sixty feet, with a nominal capacity of two hundred barrels of cement daily. Since that date, both size and capacity have been largely increased, the kilns now installed being from one hundred to one hundred and fifty feet in length, and giving an output of from three hundred to five hundred or more barrels daily.

IMPROVEMENTS IN GRINDING APPARATUS.

Running on parallel lines with the improvements in the rotary process of burning cement came the great changes in crushing and grinding machinery, which have enabled the industry to deal with its enormous tonnage of raw and finished material. From the cracker crushers and mill stones of the early "80's" to the great Gates & McCully crushers, and the Griffin, Fuller, Huntingdon tube and other iron mills of the present day, was an immense step forward. Many of these changes were worked out at the mills of the American Cement Company at Egypt, Lehigh County, Pa., by Messrs. Eckert and Lesley, old associates of Saylor and also at the Lehigh, Alpha and Atlas mills in the same region .

Each of the steps above briefly outlined has had a marked effect on the industrial status of Portland Cement manufacture in the United States. The most obvious result, of course, has been the rapid growth of the industry as regards total annual output. Coincident with this, however, has come a cheapening of the product, and this steady fall in prices is often overlooked when new developments are planned. Both of these phases of the cement industry are best illustrated by long series of comparative statistics, and the following chapter will therefore be devoted to a statistical consideration of the growth of the American cement trade.