THE DENATIONALIZATION OF CARIBBEAN BAUXITE: ALCOA IN GUYANA

Alcoa and the Struggle For The Bauxite of the Guianas.

 The struggle for the bauxite of British and Dutch Guiana can be said to have lasted from 1912 to 1926. At the end of this period Alcoa was in undisputed control of the bulk of the known bauxite reserves of both countries. This process of resource acquisition involved a number of principals. Besides Alcoa itself, there were at least four other metropolitan companies involved in the struggle for deposits. On the selling end, there were the Guianese property owners who with apparent enthusiasm sold bauxite-bearing properties under the lure of the “Yankee dollar bill” Between the buyers and the sellers, there were local people – drawn mainly from the emergent Afro-Saxon class in the early twentieth century Caribbean – who acted either as speculators or as directly employed agents of the companies. Hence these people were instruments for the passage of natural resources into foreign hands. Finally there were the Imperial Governments of Britain and Holland and their administrations in the Guiana colonies. These Governments made no distinction between the economic interests of the Empire and those of each colony, and for reasons which will subsequently become evident, they failed to prevent the incursion of American capital into their traditional spheres of influence.

In 1910 the Geological Survey Department of British Guiana positively identified the widespread occurrence of bauxite in that country. It is a testimony to the wide international spread of the activities and contacts of Alcoa’s executives that A. V. Davis soon came to learn of the discoveries. Davis dispatched Alcoa’s chief engineer to investigate the deposits in the summer of 1911; subsequently George B. Mackenzie was sent with the apparent mission of acquiring as much of the suitable reserves as possible. It should be pointed out that by the time these events were taking place Alcoa had already acquired the bulk of the high-grade, low-cost reserves in the United States. The discovery of the Guianese deposits brought about “a great revolution in the bauxite situation, “in the words of Davis. What then followed was subsequently described by lawyers for the United States Government in the following way:

“The story of Alcoa’s bauxite acquisitions in British Guiana evidences its inflexible determination to allow no potential competitor to obtain a foothold in the aluminium industry through the possession of desirable bauxite deposits. Alcoa’s supremacy in British Guiana was threatened twice. In each of these instances it acted promptly and effectively to remove any threat of competition.”

The first of these threats came from the Merrimac Chemical Company, an American concern with close ties with the Southern Aluminium Co. which was at that time preparing to enter the U.S. aluminium industry in competition with Alcoa. It would appear that Merrimac’s agents and Mackenzie practically collided with one another on the banks of the Demerara River in the summer of 1914, in their eagerness to capture British Guiana’s bauxite. Title to certain properties was disputed by both parties. Then they agreed to split the spoils between them and enlarge the take as quickly as they could: the instrument chosen was a fifty-fifty partnership to hold the disputed property and all others owned by both companies in B.G. and “to acquire additional property just as fast as it can be had at a reasonable price.” Six months later Alcoa bought out Merrimac’s share in the partnership, paying not only in cash but also in the form of a thirty-year contract to supply Merrimac with bauxite.

Thereby left to itself. Alcoa proceeded to accumulate the choice reserves located on both sides of the Demerara River about 60 miles south of Georgetown.

These deposits were not only proven to be of high grade but also ideally located for river transportation. In all a reported 20,000 acres were purchased at an average price of $2.50 an acre, which, together with some 3,500 acres leased from the Government in 1916 were consolidated into a virtually solid block ten to twelve miles long on both sides of the river. Alcoa must have been well pleased with its work as Mackenzie judged as early as the end of 1914 that “we control 95 per cent of the bauxite in the Demerara region tributary to navigation”.

However in 1919 the company was shaken out of its complacency by the appearance of the Uihlein interests on the scene. As recounted earlier in this paper, the Uihlein family firm was at this time attempting to enter the U.S. aluminium industry. As part of its preparations the Uihleins systematically hired away some of Alcoa’s top aluminium and bauxite experts for their knowledge and experience. The affair, (like the Duke-Haskell matter) was marked by considerable intrigue as at least one of these experts was said to have entered into a contract with the Uihleins while still working for Alcoa, and to have surreptitiously shown one of the Uihleins around an Alcoa aluminium plant, unknown to the company. Among the Alcoa experts hired by the Uihleins were Lloyd Emery and Reuben Peotter, former Local Manager and Managing Director respectively of the Demerara Bauxite Co., which had been established as Alcoa’s mining subsidiary in British Guiana in 1916. Emery and Peotter were sent to B.G. m 1919 to seek bauxite for the Uihleins, and succeeded in purchasing two properties on the Demerara River located amongst Alcoa’s own holdings.

Officials of Alcoa however, felt “that we must not let Emery get this tract of land. If it is a question of a fight, let’s fight him to tire last ditch.” Alcoa brought suit claiming title to the properties on the grounds that one of its representatives had previously obtained an option for the property. The case was dismissed in the British Guiana Courts on the grounds that Alcoa’s representative had once been attorney for Mrs. Hubbard, the same person to whom the land had originally belonged and from whom the option had been acquired. Alcoa took the case to the West Indian Court of Appeals and when that failed appealed to the Privy Council, the highest court in the British Empire. One of the U.K’s most distinguished lawyers was employed by the company at a reported cost of $100,000. The Privy Council also dismissed the case, but in the meantime four years had passed, during which time the Uhleins could not proceed with their plans, had been put to a great deal of legal expenses and had apparently become demoralised.

In the anti-trust trial of Alcoa some twenty years later, Arthur V. Davis (the Chairman of the Board) went to great lengths to argue that the company had not claimed the properties in order to exclude the Uihleins from ownership of bauxite and thereby make more difficult their bid to enter the aluminium industry. In the first place Alcoa denied knowing that the Uihleins were “making preparations” to enter the aluminium business – although the Uihlein had hired a way a number of Alcoa’s technical experts and were engaged in a fight with Alcoa for the properties mentioned. Secondly, the company denied that it wanted the disputed properties for their bauxite content, but rather to “control all the property for sanitation purposes in the area in which we were operating.” Mr. Davis explained that ” … the climate and temperature (are) tropical … / remember the first day I went to the mines the thermometer \WIS 125 degrees in the mine … It is very low and marshy … You can sum it all up by saying ii is a very unhealthy country, When I was there the last time, it was all under water. I happened to be there in high ‘Water season. Disease of every nature is very hard to combat and is very prevalent.” So anxious was Alcoa to protect its workers from the effects of these primitive, jungle conditions that it fought for the necessary properties right up to the British Privy Council.

While the legal battle was going on the Uihleins were trying to acquire other deposits both in British and in Dutch Guiana. At that time another company in B.G. by the name of Sprostons Ltd. had a number of outstanding applications for bauxite lands and Alcoa’s local officials had reason to believe that the Uihleins would try to acquire an interest in this firm. Alcoa moved quickly and acquired over 99 per cent of the shares of this company. The Uihleins also tried to obtain leases from the Government in B.G. and in Dutch Guiana. But according to Joseph Uihlein “we found a maze of corporate interests controlled by the Aluminium Company; we found the Demerara Bauxite Company…we found Canadian companies, we found the interlocking situation, the mainspring of which seemed to be in New York in the office of Arthur V. Davis. That mainspring had it tentacles in England, in Canada – it was worldwide.” Uihlein went so far as to claim that Alcoa had control over the British Guiana Colonial Government, the British Government itself, and the colonial and Imperial Governments of Surinam. Uihlein was so positive about this that parts of his testimony on the witness stand bear further quotation.

Q. (Mr. Smith, for Alcoa) Do you mean to say that the Aluminium Company had such control over the British Government or over the British Guiana government that it was able to prevent and did prevent your company from acquiring the Christianburg deposits?

A.(Mr. Uihlein, for the U.S. Government) I do, decidedly. (Later) … They had such a hold upon Dutch Guiana, upon the provincial authorities, that it was impossible to acquire bauxite there … such a stronghold, that if the Uihleins received deposits, it might actually result in war difficulties for Holland.

Q. What?

A. That is my statement.

Q. War?

A. War difficulty in Holland.

Q. W a-r – War?

A. W-a-r. The Dutch Government was afraid of the power, of the strength, of the bigness of the Aluminium Company, to give deposits to a likely competitor. There was such fear of the Aluminium Company and such respect that I left Holland with empty hands … the gentlemen I talked to in Holland feared there might be a rupture, an actual rupture, between two friendly nations, this being one and Holland the other.

The testimony cannot of course be accepted without reservation. Uihlein was unable to support it by reference to the names of persons and the dates and places of the conversations and other incidents which allegedly took place as a result of Alcoa’s influence. So far as British Guiana is concerned, it is a fact that between 1916 and the late 1920’s the Government suspended the issue of rights to explore and mine bauxite. The reason was that exploitation of the remaining reserves of this “great Imperial asset” should be reserved for British companies. By the time this policy was decided upon Alcoa had already secured most of its holdings. Even then, the company was at pains to demonstrate that its operation in B.G. was British in character: the Demerara Bauxite Company (Demba) was incorporated in 1916 as a subsidiary of the Northern Aluminium Company of Canada, to operate Alcoa’s concessions. Demba submitted a statement to the Governor of B.G. in 1919 showing that its Head Office was in Georgetown, that the majority of its Directors[4] and those of its parent company were British Subjects, and that its capital was British capital. In 1924 the Duke-Haskell group set up a dummy company in Canada with Canadian Director: in order to gain influence in London to secure B.G. bauxite. And in the latter part of the 1920 decade a British company became the first since Demba to secure concessions for mining in British Guiana. This evidence suggests that Uihlein ‘s difficulties lay in the fact that he was not sufficiently sophisticated in the arts and crafts of legal and company manipulation to get around Imperial policy.

On the other hand, there can be little doubt about the extent of Alcoa’s influence. Andrew Mellon of the Mellon family, whose interest owned one-third of Alcoa, was Secretary of the Treasury in the Government of the United States in the I 920’s. Thus Uihlein ‘s allegations about the influence of Alcoa over the Dutch Government via the U.S. Government were not that far-fetched. A great deal of Alcoa’s unpopularity in the U.S. in the l 930’s was apparently due to a reaction against the influence associated with its status as a “Mellon monopoly“. And we have already seen the extent to which the company was able to defy and to circumvent the policies of state and provincial Governments in the U.S. and Canada in the area of hydro-power development.

Neither can there be any doubt about Alcoa’s determination to capture as much of Guiana’s bauxite as it could and to keep it out of the hands of competitors.

Having lost the suit for the B.G. properties purchased by the Uihleins, Alcoa disposed of the matter decisively by buying out the Uihlein firm – the Republic Carbon Co. – which owned the B.G. properties, the carbon electrode plant at Niagara Falls, and a bauxite option in Dutch Guiana which Uihlein had succeeded in getting. It appears that by this time the Uihleins had lost interest in the project because, as one explained, it would have required “too much work” possibly their fatigue was related to the struggle with Alcoa.

In Dutch Guiana, the story of Alcoa’s acquisitions is in many respects similar to that of British Guiana. Bauxite had been discovered in the former country very soon after the discoveries in B.G. and Alcoa’s arrival was no less speedy. Between 1915 and 1916 the company apparently succeeded in acquiring by far the bulk of good quality, well-placed reserves, as much to “remove them from the outside market” as for its own raw material needs, as evidence which came out at the anti-trust trial strongly suggested. In 1924 another property was acquired through the purchase of the Uihlein firm, two other properties, which might have been useful in the Duke-Haskell attempt to enter the aluminium industry, were also acquired between 1924 and 1926. So complete was Alcoa’s control in Dutch Guiana that it was not until 1941 that another company began production from deposits it was able to secure there. And in that case the company in question was a Dutch one, with obvious claims to the support of the Government in obtaining bauxite, and with no intention of setting up aluminium facilities in the United States.