Magazine article Financial History

The New Iron Age

Magazine article Financial History

The New Iron Age

Article excerpt

Two hundred years ago, the industrial age in the United States got off to an early start along a brook in a ravine tumbling into the Hudson River opposite the Military Academy at West Point, New York. The West Point Foundry (WPF), actually in Cold Spring, grew to be a major manufacturing complex, vertically integrated from raw materials to finished goods, the likes of which would not become common in North American heavy manufacturing for decades.

Very little is left today on the site of the once-mighty WPF, but that which remains has been conscientiously preserved by a coalition led by the Scenic Hudson Land Trust. And while the WPF site makes for a charming and informative day trip by train from New York City, its wider legacy comprises a historical diaspora:

* WPF made the first locomotive manufactured in the United States, the Best Friend of Charleston, in 1831, as well as many other early locomotives.

* Both combatants in the epochal Battle of Hampton Roads during the American Civil War, the first-ever clash of ironclads, used WPF manufactured materials. The company made the engines for the steam frigate USS Merrimack that was rebuilt by the Confederacy as the CSS Virginia. WPF also made the XI-inch Dahlgren guns in the turret of the revolutionary USS Monitor. (Roman numerals are used to designate smoothbore naval artillery; rifled guns are designated in Arabic numerals.)

* WPF made many of the building fronts in New York City's historic Cast Iron District.

* WPF made cast-iron components for several surviving historic lighthouses, including Cape Canaveral, Florida; and Bodie Island, Cape Hattaras, North Carolina.

Ground was broken for WPF at the ravine outside Cold Spring in 1817; operations began in 1818. That was 34 years after the end of the War of Independence and just two years after the end of the War of 1812. All of the big guns in North America had been brought by colonizers, primarily British and French. Indeed, Parliamentary prohibitions on manufacturing in the colonies were one of the grievances that led to the revolution.

The second conflict, notably the invasion of Washington, DC and the burning of the Executive Mansion (called the White House after the smoke damage was painted over) were painful lessons that the young republic needed a well-organized and robust armaments industry. To that point it had relied upon a scattering of government and commercial foundries - none very large or standardized - that had sprung up during and after the revolution.

Three existing foundries - in Pittsburgh, Pennsylvania; Georgetown, near Washington, DC; and Richmond, Virginia - were put under War Department supervision. The fourth, WPF, was an entirely private commercial venture.

According to Mark Forlow, historian for the Village of Cold Spring and the Town of Philipstown, "there was an association of 10 men, led by Gouverneur Kemble, a successful businessman. They raised start-up capital of $100,000, which was a big chunk of money in those days. It was an early example of a collaborative effort to organize and fund a business. That makes it compelling."

On a strictly inflationary adjustment, that capital would be worth close to $2 million today, but liquidity was extremely rare in those days. Indeed, the lack of seed capital to start new businesses led to the rise of the shares system and stock markets to trade them.

Still, the initial stake was not quite long-shot venture capital. First there was the stated federal need for hardware. The initial partners included munitions expert Brigadier General Joseph G. Swift. There was also the location, with ample supplies in the region of iron ore, coal and wood for fuel and construction. There was a fastrunning stream for water power and sand in the lagoon for making molds. River transport for large, heavy objects made shipping easy in an era of bad roads. Rail access came by 1848.

WPF flourished with government contracts, as well as supplying commercial machinery, engines, consumer goods and tools. …

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