ARTICLES

Will Germany’s Krupp become Canada’s biggest mining man?

After the war, Alfried Krupp was ordered to sell his steel mills but didn’t. Now, to feed his hungry smelters, he's on the brink of an iron-ore project in Ungava so huge that it could change the trading patterns of this country

Peter C. Newman October 10 1959
ARTICLES

Will Germany’s Krupp become Canada’s biggest mining man?

After the war, Alfried Krupp was ordered to sell his steel mills but didn’t. Now, to feed his hungry smelters, he's on the brink of an iron-ore project in Ungava so huge that it could change the trading patterns of this country

Peter C. Newman October 10 1959

Will Germany’s Krupp become Canada’s biggest mining man?

After the war, Alfried Krupp was ordered to sell his steel mills but didn’t. Now, to feed his hungry smelters, he's on the brink of an iron-ore project in Ungava so huge that it could change the trading patterns of this country

PETER C. NEWMAN

In a world becoming constantly more prone to uncertainty and revolution, Canada is one of the last lands where a rich man can plant a few million dollars and expect them to grow toward a billion. About to join the many financiers and industrialists who have committed a major part of their wealth to this country is a convicted war criminal few believed would now be at large, much less in command of one of the world’s great fortunes.

He is Alfried Felix Alwin Krupp von Bohlen und Haibach, current ruler of the firm which armed Otto von Bismarck, Kaiser Wilhelm and Adolf Hitler. There exist larger enterprises than Krupp’s, but none are wholly owned by one individual. Krupp is today the wealthiest man in Europe, perhaps the world.

At the end of the Second World War, the Allies pledged they would break up the House of Krupp forever, and threw Alfried in jail. But now, fourteen years later, the West German industrial complex of a hundred and twenty factories that turn out everything from complete bridges to “guaranteed tasteless” steel false teeth, is bigger, richer and stronger than at any time in its bloodstained 148-year history.

Krupp has not irrevocably committed himself

to the Canadian project. If he does, the deal he has been negotiating with Cyrus Eaton, the Canadianborn U. S. steel and rail magnate, may become one of the greatest industrial undertakings in Canadian history.

If the scheme goes ahead, it will transform a wrinkle in the frowning west coast of Ungava Bay, on the edge of the earth fifty miles above the treeline, into one of the world’s most extensive ironore workings. Expenditures might eventually exceed the cost of the St. Lawrence Seaway. In its engineering audacity, the project would match the great Aluminum Company of Canada development at Kitimat, B.C.

Site of the proposed undertaking is Hopes Advance Bay, a thousand air miles north of Montreal and nearly three hundred miles north of the Iron Ore Company of Canada pits at Schefferville, brought into production in 1954 by Jules Timmins and his partners. Around the Hopes Advance Bay mine is planned the largest Canadian community north of Edmonton. The eventual expenditures involved in the many stages of the scheme are expected to total well over three hundred million dol-

lars—at least twice the amount of money spent so far on commercial developments in the Northwest Territories.

Krupp’s expected entry into Canada is unusual mainly in its mammoth dimensions. Most Canadians are aware of the large and growing share of the economy bought up by U. S. investors. But far fewer Canadians realize that the best business brains of every other continent have also been shuffling their investments into this country, at the rate of twenty million dollars a month since 1949.

This invasion of foreign money has remained largely hidden behind the mask of vaguely named corporations which control mines, oil wells, factories and real estate through layers of even more vaguely named holding companies. The Suez Canal Company, its main asset nationalized, is currently a partner in the Candiac Corporation which is pushing up a $250-million satellite community nine miles from downtown Montreal. Antemor Patino, a wealthy Bolivian tin king, is quietly acquiring an astonishingly large stake in Canadian copper, asbestos and uranium mines. Top Swiss, Dutch, Belgian and French financiers direct surprisingly in-

fluential holdings in Canadian banking, insurance, cement and oil.

While the investment of foreign funds in Canada is no novelty, the Eaton-Krupp development promises to become an undertaking with an impact significant enough to alter the country’s economic trading pattern. Alfried Krupp has predicted that completion of the project would result in a transAtlantic flow of iron ore to the hungry furnaces of the Ruhr so immense that West Germany might replace Great Britain as Canada’s most important overseas customer.

Current plans are that nearly all of the ore will initially be used by German steel mills, with Krupp retaining the greatest share, although he is putting up only twenty percent of the development cost. Three other German steel companies each have a

ten-percent interest. The Cyrus Eaton companies hold half the partnership. There is no provision, under present financing arrangements, for any direct participation by Canadian investors but common shares probably will be offered eventually.

The Eaton-Krupp partnership is planning to develop the iron ore located on the 136-squarc-mile concession granted Cyrus Eaton under a special bill passed by the Quebec legislature in 1956. The legislation prohibits anyone else staking claims in the area, in return for a commitment by Eaton to begin commercial mining operations by July, 1962. “It is now' a matter of when, not if,” says Clare White, the president of Ungava Iron Ores Limited, the company set up to undertake the development. “There is no question that w'e will go ahead, but a project of this magnitude takes a lot of setting up.”

“No project that hasn't started has had as much w'ork done on it as this one,” claims White who was picked to head the operating arm of the partnership after a brilliant record of twenty-six years as top mining engineer with Consolidated Mining and Smelting, at Trail. B.C., the world’s largest producer of lead-zinc-silver ore. White and his staff have spent three million dollars to establish the feasibility of the imaginative undertaking.

A navigable channel and a safe anchorage have been charted into the ore docks to be put up at Hopes Advance Bay which lies in the path of the forty-foot tides that roll out of Hudson Strait. Although the port will be clamped in by S'/i-ft.thick ice much of the year, for four months it will accommodate four vessels. An airport capable of landing DC-4 continued on page 79

continued on page 79

Will Germany's Krupp become Canada's biggest mining man? continued from page 17

In ore ships as big as the Queens, the Ungava iron will be ferried to Rotterdam harbor

freighters has already been completed on the site. A twenty-five-mile railroad has been designed to connect the docks with the pits, where the ore will be mined, crushed and compressed into pellets containing sixty-five percent iron. Eventual annual output is planned at five million tons of concentrate. The two thousand men required to work the project will live at a new townsite off Hopes Advance Bay, already designed down to every house, school, church and shopping centre for an eventual population of five thousand.

So that iron ore can be available on a year-round basis, a $25-million harbor is now being surveyed at Rype Island, four miles southeast of Godthaab, the capital of Greenland. It is planned to set up installations in this sheltered, ice-free area for transshipping the ore brought out during the four months when Hopes Advance Bay is navigable. Ore ships will spend the balance of the year shuttling the 2,340 miles between Rype Island and Europort, an extension of Rotterdam harbor.

The ships with blunt, ice-breaker-like bows expected to be used in this trade will be the largest ore carriers ever built —99,000 tons deadweight and just 130 ft. shorter than the giant Queen Elizabeth. Each of the $ 16-million vessels will be designed to contain its own automatic loading and unloading equipment, an innovation in bulk transportation. It is hoped that the mine and town at Hopes Advance Bay will eventually operate on nuclear power, but until this energy source becomes economical, a 60,000kilowatt generator will be run on bunker fuel brought in on tankers from Venezuela.

“Back to Nureinburg!”

The beginning of the Hopes Advance Bay development will be the culmination of a world-wide search launched by the principal German steel mills in the early 1950s to obtain long-term substitutes for the ore sources cut oil by Russia s occupation of East Germany. At about the same time, Cyrus Eaton was looking for customers large enough to participate with him in the exploitation of the Ungava deposits which his prospectors had been developing as a future replacement for the iron-ore mines at Steep Rock Lake, Ont., now feeding his U. S. steel mills. Dr. Edwin Krzywicki, a Krupp geologist, examined the find during the summer of 1954 and reported eventual reserves amounting to billions of tons. Krupp himself came to inspect the site in the fall of 1957, but his mother's death interrupted the visit. He stayed briefly at the Ritz-Carlton Hotel (registering merely as “Alfried von Bohlen und Haibach”) while pickets representing the Montreal Labor Council paraded outside bearing placards with such slogans as "Back to Nuremberg, War Criminal!” and "Krupp —Enslaver!”

None of the pickets and few other Canadians were aware that one of Krupp’s subsidiaries had been operating a million-dollar factory called Ardelt Industries of Canada Limited at Kitchener, Ont., since 1954. The thirty-acre plant manufactures cranes, hydraulic gates, structural steel bridges, shiploading conveyors, mining equipment and ski tows. The company’s customers have included

the Hydro Electric Power Commission of Ontario, the St. Lawrence Seaway Authority, the Aluminum Company of Canada and the city of Lethbridge, Alta., which ordered a powerhouse crane. The Krupp enterprises in Germany are also

selling an increasing number of industrial machines directly to Canada. “We feel that this is a politically stable, sound and big country with a lot of growth potential." says Rolph Stol ting, a Montreal businessman who is Krupp's personal

representative to Canadian business.

Stolting’s boss is in the fifth generation of the dynasty which has provided the prime source of armaments for Prussian militarism since 1847. Alfried Krupp is a shy, melancholy man with a Bob Hope

nose set between probing steel-grey eyes. He speaks very slowly (his French and English are heavily accented), chainsmokes Lucky Strikes, and issues most of his orders from a bare office at Essen, with the preamble: ‘T think perhaps if we . . The emotionless detachment of his management method fits less the image of a corporation executive than that of a hereditary monarch.

Alfried Krupp was born in 1907, the year that his family works completed its fifty thousandth cannon and first U-boat. The family album proudly records that young Alfried measured twenty - one inches at birth and could, at the age of one, stand up alone in bed. He was first allowed to breakfast with his parents on his sixth birthday, and four times a week, for an hour before supper, his father joined him for play which consisted of operating electric trains. Alfried left home at twenty-one to get an engineering degree. In 1934 he became a deputy director of the family firm and joined the Nazi Party in 1936.

He.nearly lost the Krupp crown the following year by marrying Anneliese Bahr, the daughter of a Hamburg importer. For reasons which still remain secret, his father opposed the marriage so strenuously that he did not make Alfried a full director until he obtained a divorce, in 1941. He was married again in 1952 to Vera von Hossenfeldt, a GermanAmerican movie actress, who described Alfried as “the only man I ever loved,” but divorced him four years later. She now lives on a 400,000-acre ranch in Nevada.

Alfried took over direction of the Krupp enterprises, by then Hitler’s chief source of armaments, in 1943. A quarter of a million men and women toiled in Krupp workshops fashioning such weapons of destruction as “Tiger” tanks, the versatile “88” guns, submarines, and “Fat Gustavs,” the railway - mounted eightycentimetre artillery pieces that shattered the defenses of Sevastopol. As part of their torch-lit indoctrination rites, fledgling Hitler Youths vowed to become as “tough as leather, as quick as greyhounds, and as hard as Krupp steel.”

The Allies dropped more than two thousand tons of bombs on the Krupp works at Essen in fifty-five attacks. Finally the great raid of March 11, 1945, halted the production lines. Krupp was arrested by the U. S. Ninth Army a few weeks later.

“He took his arrest calmly, as if he expected it,” recalls Col. A. N. Burgess, a coal-company executive in Saint John, N.B., who was at the time military commander of the Ruhr. "Krupp was not a bit arrogant with me, but he didn’t think much of the American troops who arrested him.”

Krupp’s indictment covered fifty-one pages, detailing sixty-five charges, including the exploitation of slave labor. His trial lasted six months, one of the longest at Nuremberg. “As a member of the fifth generation which forged weapons, 1 should like to say that never in my parents’ home did I hear one word or experience one act which welcomed or promoted any war,” declared Alfried. One of the firm’s directors replied more bluntly when asked whether the company had made arms for Hitler. "It is obvious,” he said, "that during the war we didn’t just produce chamber pots.”

“This huge octopus,” charged the presiding U. S. judge, “swiftly unfolded one of its tentacles behind each new aggressive push of the Wehrmacht and sucked back into Germany much that could be of value to Germany’s war effort and to the Krupp firm in particular

... it was one of the chief beneficiaries of Nazi invasions and wars.” Krupp's offenses were not limited to his association with the firm he headed. It was established that he took part in violating all the pertinent provisions of the Geneva Convention. The prosecution proved that most of Krupp’s seventy-five thousand workers, including twenty-five thousand prisoners of war, were brutally treated as part of the Nazi “extermination through work” campaign. More than five hundred Hungarian Jewesses were brought to Essen from nearby concentration camps, shorn of their hair and most of their clothing, then forced to labor outdoors and made to live in bare cells on starvation diets. Krupp was found guilty of exploiting slave labor and plundering the industries of conquered countries. He was sentenced to twelve years in the fortress of Landsberg, the same prison where Hitler wrote Mein Kampf, following the failure of his "Beer Hall Putsch” in Munich in 1923.

John J. McCIoy, the U. S. High Commissioner for Germany, freed Krupp under the amnesty provisions of 1951. Most of his pre-war holdings were returned to him, but he had to pledge to divest himself of all his steel mills and coal mines by January 31, 1959. The deadline date passed without Krupp’s fulfilling his promise. He maintains that no one has stepped forward with the $550 millions in cash required to buy the disputed properties. It's now virtually certain that Krupp will keep all of his prewar assets, as there is no authority left to enforce the order to sell out—the West German government has never identified itself with the sales directive, and the occupation authorities who issued it no longer exist.

“We don’t want arms business”

Aided by generous tax-write-off provisions from the West German government. Krupp began to rebuild the family empire on the afternoon of his release from prison. Six million cubic yards of rubble at the Essen works, including seven hundred unexploded bombs, were replaced by gleaming new structures that housed modern equipment able to produce faster and more cheaply than the relatively unbombed heavy industry of Britain and France. The firm turned its first postwar profit in 1954.

The Krupp family has never released earnings figures, but German financial experts have estimated that the firm’s 1959 turnover will exceed a billion dollars. Krupp engineers, metallurgists and salesmen roam the globe for new markets. When customers are short of cash Krupp accepts raw materials, or lends them money. The firm is currently concentrating on a long-term development program in the Middle and Far East. Krupp engineers are installing a giant steel mill in India, a vegetable-oil processing plant in Pakistan, and an entire new harbor at Bangkok, in Siam.

A Krupp subsidiary at Bremen is turning out jets for the new German air force, but no other weapons are currently contracted for. Krupp says he doesn't want defense business. "An armaments period." explained one of the firm's directors recently, “lasts about ten years —six years needed for arming, four for war. Then the war is lost, and you sit there with a lot of useless machinery.” Two fifths of Krupp’s current earnings are derived from the steel mills and coal pits he promised to sell as a condition of his release from prison. Instead of selling, Krupp has added to both his steel and coal holdings in a typically

roundabout and complicated deal.

He started to comply with the Allied decree by selling a large section of his coal pits to Axel Wenner-Gren. the longstanding associate of the Krupp family who now holds development rights over one tenth of British Columbia, The Swedish millionaire then acquired control of Bochumer Verein, Germany’s largest producer of specialty steels. Bochumer bought the coal mines. Then Wenner-Gren sold the majority of shares in Bochumer to Krupp, giving him back the ownership of his pits, and boosting

Krupp’s steel-making capacity to four million tons a year—more than that of all Canadian mills combined.

To celebrate industrial coups of this nature, Krupp holds receptions at the two - hundred - room Villa Hügel, the family’s monstrous, cheerless ancestral home overlooking the plant at Essen. Alfried now lives in a ranch-style, fifteenroom bungalow on the estate’s grounds and cows graze among the once precise hedges of the Villa’s gardens, but the mansion was, for seventy years, the nerve centre of the Krupp empire.

“It’s a magnificent home,” recalls Col. Burgess, the Canadian officer referred to earlier, who used the Villa as his headquarters after World War II. “The dining room can seat one hundred and eighty-seven guests. The ballroom has no windows, but lights, shining through a dome ceiling made of painted glass, give a magnificent picture.” The mansion’s fantastically elaborate trimmings include bell pushes fashioned of precious stone. Recessed into the wall of a basement billiard room is a symbolic representation of the Krupp family tree, back to 1587.

The dynasty’s first identifiable member was Arndt Krupe, a sixteenth - century Rhine wine merchant whose son married into a patrician family engaged in the manufacture of armor. The Krupes prospered briefly as armorers during the Thirty Years’ War. but the family’s industrial history begins with Friedrich Krupp, who put up the continent’s first cast-steel foundry when Napoleon’s blockade of England cut the continent off from supplies of high - quality British steel. His son, Alfred, assembled one of the first Krupp cannon for the 1851 International Exhibition in London’s Crystal Palace. It was a six-pounder that substituted an inner tube of cast steel for the bronze or heavy iron used up to that time, making it easier to load, more durable and more accurate.

The 1860s ushered in the first era of competitive modern armament. Krupp guns eventually became standard weapons of the British, French, Prussian and Russian armies, symbolizing this age of blood and iron. In his efforts to expand the heavy-gun market, Alfred Krupp even had drawn up the preliminary designs for an “armor boat” which would mount a single gun firing in two directions simultaneously. One shot was to be aimed at the enemy, the other into the water behind the vessel, thus absorbing the recoil which then prevented the use of the large cannon at sea.

The House of Krupp established a private artillery testing range near Essen with shell-proof observation posts for visiting ordnance purchasing agents. Alfred seldom allowed his private interests to be affected by national animosities, even if his own country was involved. When Germany defeated Austria in 1866 and France in 1871, Krupp cannon fought on both sides. Krupp was ordered by the German government to arm his factory workers with rifles during the War of 1870, as there was a possibility of French troops advancing across the Rhine.

“Nonsense,” he snorted. “If the French come to Essen, we’ll offer them roast veal and red wine, otherwise they will destroy the factory."

Krupp salesmen were “ambassadors”

Under Alfred's inspired stewardship, 24,576 guns were produced—only 10,666 of them for Germany. By the time he died in 1887, the works were employing twenty thousand. In a bedroom closet kept locked during his lifetime was discovered a collection of fifty-three medals and decorations, awarded the arms-maker by the grateful governments of twentyone countries. Many of them were shooting Krupp cannon at each other at the time of their presentations.

Alfred’s son, Friedrich, preferred amateur zoology to making guns, but the momentum implanted in the Krupp enterprise by his father doubled employment during the next three decades. The firm, under Friedrich, appeared as the creator of original designs on both sides of the flourishing rivalry between guns and armor. Krupp designers would alternately announce the supremacy of one over the other, reaping large orders and enormous profits from both. Salesmen, who called themselves “Plenipotentiary Representatives of The House of Krupp,” were accredited to all of the world's important governments in the manner of ambassadors. By 1902, the year Friedrich died, his private fortune was estimated at two hundred million marks, increasing at the rate of twenty-five million marks a year. As there were no male heirs to follow

Friedrich, the Krupp empire passed to Bertha, his eldest daughter. When she married Dr. Gustav von Bohlen und Halbach. a Prussian Councillor of the German Legation at the Vatican. Kaiser Wilhelm II issued an imperial edict allowing the groom to assume the Krupp name. The couple managed the burgeoning enterprise together, working on opposite sides of an oak desk the size of a pingpong table. Four trains were kept occupied running ammunition to the works’ artillery ranges, where tests sounded like a continuous private war. New weapons were developed with little regard for Germany’s own armaments policy. When, in 1906, Graf von Zeppelin, a German army officer, demonstrated the defense applications of his dirigible, Krupp's designed guns with projectiles especially fitted to pierce the airships, and sold them to Germany’s enemies. By the outbreak of World War I, the House of Krupp had sold more than sixty thousand cannon to fifty-two countries.

German economists have estimated that Krupp's made a profit of $200 million from World War I—the equivalent of twenty good peacetime years. The firm’s workers, more than a hundred thousand, turned out most of the Kaiser's U-boats, guns and shells, as well as all of Germany's barbed wire. The best known product was Big Bertha, the fortytwo-centimetre mortar that helped to clear the way for the German advances into Belgium and France. Its name was also applied to the mammoth 150-ton gun that shelled Paris at a range of eighty miles. The weapon's 112-foot barrel had to be slung from special blocks, to be "straightened” after each round. Its crew of sixty seaman-gunners was commanded by a full admiral. Every shot was accompanied by a simultaneous salvo from the ninety guns of adjacent batteries to render the task of Allied flash-detection detachments more difficult. Forty aircraft guarded the weapon from the sky. A chain of wireless-equipped spies, distributed from Paris to Switzerland, transmitted reports of the gun’s effectiveness. Between March 23 anti August 26, 1918, the monster fired a shell at Paris every twenty minutes, killing a thousand people. The University of Bonn recognized Gustav Krupp’s achievement in fashioning the deadly superweapon by awarding him, of all things, an honorary Doctor of Philosophy Degree.

The Allies ordered the destruction of Krupp’s gun-making capacity as a term of the Versailles Treaty, but its provisions were poorly enforced. With the help of his friend Wenner-Gren, Gustav Krupp soon obtained control of the Swedish Bofors munition and steel works, where armaments could be made which Germany was forbidden to manufacture. He greatly strengthened the company by purchasing the eastern European iron mines that gave the firm full control over ail stages of the steel-making process.

Although Germany’s defeat in two world wars has damaged the Krupp empire hardly at all, its major current weakness has been the loss of most of the eastern European mines to Russian occupation. Alfried Krupp must now buy eighty-five percent of his raw steel from outside suppliers. Present plans call for the ore from Hopes Advance Bay to provide this final link in Alfried's longterm objective of making the House of Krupp the world’s largest industrial concern. "All the properties of Krupp belong together,” says Berthoid Beitz, the firm’s general manager. "Without mines, Krupp's is without all its limbs, like a circus frogboy.” ★