Curious, Confident Copper

On the New York Stock Exchange last week copper shares, long since pounded into sprawling recumbence by reduced dividends and vanishing margins of profit, suddenly whipped out of their lethargy, soared in a manner reminiscent of the 1928 and 1929 bull markets. Probably a sleeping short interest added vigor to the move. But ultimately behind it was a curious, daring action on the part of the copper producers.

Unique among commodities has been the turbulent history of copper. Oldsters recall how in 1901 and again from 1905 to 1907 Amalgamated Copper Co. forced the price up in defiance of economic laws, only to see it tumble back. Notable was the rise of copper in 1929, its subsequent, demoralization. Last week the industry, statistically, had recovered not a bit from this last collapse. Stocks of copper in the Americas were at a new high of 605,000 tons. Shipments (deliveries to consumers) had gained slightly over the previous month, were still behind production. African production was running high. The price was at 9 1/2-c-, did not seem secure. But by the end of the week it had jumped to 12-c- and producers still showed no inclination to sell in large amounts.

What makes copper unique is the manner in which its control rests in the hands of a few men. Fortnight ago these men met in Manhattan. Leading U. S. representative was Cornelius Francis Kelley, president of Anaconda Copper Mining Co. and Copper Exporters, Inc., chairman of Copper Institute and spokesman for 25 big U. S. producers. From Belgium there had come M. Fernand Pisart, managing director of the Societe Generale des Minerals, Belgian outlet for the Katanga Mines in the Belgian Congo, and his associate, Camille Gutt.

Two methods of steadying the industry were open. One was to let the price fall lower, eliminate high-cost producers. The other was to cut down production. It was the second that the producers chose, and last week, simultaneously with the price-rise, details of their plans became known.

Copper producers will cut down production proportionately until the cut amounts to 20,000 tons a month, the margin by which production has exceeded consumption lately. In announcing the agreement, careful mention was made of the facts: 1) that the producers are doing this voluntarily, 2) that the agreement lasts only so long as present economic conditions prevail, 3) that no reduction of stocks of copper on hand is included in the plan. In emphasizing the voluntary and temporary nature of the agreement, it was apparent that the coppermen fear the U. S. Government's attitude. The most recent test of anti-trust laws applied to such co-operation was last year when Attorney General Mitchell warned oilmen that enforced curtailment, even for the noble purpose of conserving oil, would be held illegal. But last week Col. William Joseph Donovan, in a speech to the American Petroleum Institute gave a more favorable opinion, and last winter President Hoover hinted to bituminous coal producers that he considered there should be exceptions to the anti-trust laws. The coppermen claimed to have had legal opinion that their plan would not be interfered with, but from Washington came reports that officials had heard of the agreement, reacted unfavorably.

The three swift jerks which jumped copper from 9 1/2-c- to 10-c- to 11-c- to 12-c- came as welcome news to a market weary of bearish developments. This move was of course technically independent of last week's Manhattan meeting, but undoubtedly the coppermen talked informally of price. With tremendous stocks of copper on hand and little prospect of an immediate reduction in them, the new price has yet to meet a real test. But apparently depression and copper chaos have deprived the copper tycoons of none of their willingness to take big chances for big stakes.

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