The Chicago Bridge and Iron Company
Unlike many other companies, the Chicago Bridge and Iron Company (CBI), was able to make ends meet and successfully overcome the rough times of the Depression. The demand for steel declined after World War I because the federal government no longer needed weaponry and ships. There had been large increases in government purchasing and steel reserves during the war, especially from about 1916 to 1920, but statistics show industry-wide declines in 1921, 1922,1924, 1927, and 1931.
During the Depression, a great many businesses and individuals were financially ruined. The big consumers of steel had been the automotive industry, construction, railroads, and the machine/tool industry, especially shipbuilding and agricultural machinery. All of those industries were troubled, and their need for steel was reduced. The 1930s, for example, brought a sharp drop in railroad operations and also in the amount of steel they needed to purchase. Railroads had been the biggest buyers of steel. In 1923 railroads consumed about one-fourth of all finished steel. By 1938 railroads consumed only slightly more than six percent of the hot rolled steel produced in the United States.
Steel industries that survived the Depression generally altered their product mix. The demand for metal containers and appliances remained high, so many shifted from other kinds of production to these. Later, World War II caused another shift because heavier steel was needed for ships and tanks.
The oil industry's demand for steel containers did not slow during the Depression, nor did bridge construction, another bright spot for the steel industry. The CBI formed in 1889 to make bridges and later oil tanks, roofs, and equipment. Those prod-
Chicago's Century of Progress Exposition in 1933 showcased the technology
ucts allowed the company to weather the Depression relatively easily.
The Depression affected CBI and other businesses not only in the United States but also outside of the country. Latin America, for instance, was devastated by the condition of the United States economy. The CBI had virtually no work in Latin America from 1930 to 1937. Fortunately, Europe and Africa were not hit quite as hard by the economic devastation. In addition, Europe worked to rebuild itself from World War I and continued to need steel. CBI representatives made many trips to those countries during the Depression, and work there helped keep the company solvent.
Another great help was that the Standard Oil Company of New Jersey asked CBI to build a large floating-roof tank in France in 1930 and 1931. The floating-roof tank was a very important device because it kept oil from evaporating. Other foreign oil companies requiring large quantities of steel were located in places such as Atelier et Chantiers de la Seine Maritime, Saudi Arabia, Bahrain, the Dutch East Indies, Belgium, Italy, Kuwait, and Palestine.
Even in the United States the Depression did not have a devastating effect on the business and sales of CBI. The company received contracts to build the famous Hortonspheres—the CBI trademark—and a contract tor 87 hemispheroids to be used in building the San Francisco-Oakland Bridge. CBI also supplied two penstocks for the building of the first hydroelectric power plant. In addition, the Horton Steel Works, a subsidiary of the company, built two turn-screw oil-engined tankers. The work of CBI was recognized at the 1933 World's Fair in Chicago, where it exhibited various types of tanks and steel plate structures.
Overall, then, the Depression did not seem to have a vast negative effect on the company. In fact, it may have had a positive effect because of the demand for new and more efficient technology to keep the firm competitive and well known. "Chicago Bridge has passed the economic test of the Great Depression and remained in the forefront of its industry," were the words printed in the company's centennial publication. CBI controlled its expenses and production so it would not overrun the income. In 1931 and 1932 CBI, unlike many other businesses, was not in debt. The company stayed in business because it was able to pay its bills, complete its contracts, conduct research, and develop new and more efficient methods of building and welding.
Since work was so scarce, management tried to provide work for as many people as possible. Hiring was done rotationally to reduce lay-offs. All CBI employees kept their mortgages on their homes at the Beverly Bank near the plant. During the Depression people did not have enough money to pay their mortgages so the company paid them (on the terms of working them off or paying them back). Not one house was foreclosed. Working at CBI was like being part of a family; everyone looked out for each other.
Life for the CBI during the Depression was not glamorous. The company hit its most difficult times just after 1932. Not much money was made and it was at the low point of its income. In 1933 the number of shareholders decreased by one-third because personal financial problems forced many shareholders to sell their stock. At the annual meeting in 1932 the company reported that the total tonnage for that year totaled only one-half of what it had been the year before and one-fourth of what it had been two years before. The sales total for 1932 was less than $3 million, compared to $11 million and $14 million the two previous years.
To boost company profits, George Horton, president of the company, announced a design contest seeking new concepts for elevated water tanks. About seven hundred entries were submitted, and 160 were presented to the judge. The first place prize was $2,000, with lesser amounts for second and third place.
During the Depression the main interest of George Horton was technology and new development. That focus may be the most important reason why the company outlasted the Depression. "The entire decade starting in 1920 was a period of prolific development of the company's products, "according to the company's centennial publication. New technologies improved welding, elevated tanks, breather roofs, the hortonsphere (named after my great-great grandfather, Horace Ebenezer Horton, the founder of CBI), and flatbed roofs, all of which were essential to the health of the company and industry. All of those technologies were vastly cheaper and more efficient than those that were available before, and the impact of the inventions was great.
Since the CBI served the oil industry, which grew during the 1930s, since it had markets outside the United States, and since it continued to research and develop new, more efficient products and ways of building, the company was successful at a time when many companies failed. Those tough economic times left an imprint on the firm, but in many ways, the CBI grew stronger and more innovative because of the challenges of the Great Depression.— [From Herman Chapman, Iron and Steel Companies in Years of Prosperity and Depression; Chicago Bridge and Iron Company, The Bridge Works; William Hogan, Economic History of the Iron and Steel Industry in the United States; student historian's interview of Graham Harper (CBI public relations), Nov. 24, 1992.]