March/April 2000
In its 111 years, Luria Brothers has survived the Depression, been the largest scrap company in the country, faced a federal antitrust suit, been sold four times, and lived to tell its story. This is it.
By Andrew Claster
Andrew Claster is a great great grandson of Hirsch Luria, founder of Luria Brothers and Company, Inc., and a grandson of Joel Claster, former chairman of the company. He lives in Arlington, Va.
It was once the mightiest scrap company of them all.
Luria Brothers and Company, Inc. was born, like so many scrap firms, from an immigrant’s dream for a better life. Unlike other scrap companies, however, Hirsch Luria’s humble dream grew into the largest scrap company in the United States and perhaps the world.
That success came with a price, however, in the form of an antitrust suit by the federal government. This suit ended the firm’s golden era and forced it to give up its monopolistic position in the industry.
Despite that setback, Luria Brothers continued to succeed and, in fact, remained one of the top two scrap processors and brokers (along with David J. Joseph Co.) into the 1990s. And it continues to operate today as part of Philip Services Corp.
This chronology tells the tale of this scrap giant.
1882-1884: Hirsch Luria, a wheat dealer, emigrates from Joniskis, Russia (Lithuania today), following pogroms and facing a growing threat that the Russian Army would draft his sons. Russian restrictions on Jewish emigration convince Hirsch to smuggle his eldest son Levi out first. Levi makes his way to Reading, Pa., where the family has relatives or friends. A year later, Levi sends word to the family to come to Reading. Hirsch and the rest of the family leave Russia via Poland from the port of Gdansk by bribing border guards during a nighttime crossing. The family travels to America in steerage.
1889: Hirsch Luria establishes a scrap business in Reading that later becomes known as Luria Brothers. He starts the business because he’s amazed at the waste he finds in America. He begins by buying and selling old machinery, pots, and pans from the yard of the family home on Robinson Street. Hirsch buys a horse and wagon. He and his sons sell rags to paper- makers, bones to fertilizer and button factories, bottles to glassmakers, and pots, pans, and other metal goods to the local foundry. In a good week he makes $25 to $30.
1895: Hirsch Luria dies at age 58.
1899: Hirsch’s sons—Max, Alex, and Abe—form a partnership in Reading with Louis Hermann under the name Luria, Hermann and Company Limited “for the purpose of buying and selling iron, steel, rags, bones, and other articles of commerce.” Hermann, a wealthy gentile who has no children, considers the Luria brothers as his sons, according to family lore. Each partner puts up $1,070 in capital for a total of $4,280, according to court records. They declare $6,395 in assets, including $4,622 in Reading, $393 in Lebanon, Pa., $632 in Lancaster, Pa., and $748 in New York. The asset list includes office furniture in all four locations, suggesting that the partnership is built on a substantial existing business.
Early 1900s: Luria Brothers signs its first major deal to scrap the collapsed Baltimore & Ohio wrought-iron bridge over the Susquehanna River at Havre de Grace, Md.
1900s-1920s: Max, Alex, and Abe travel the 28 miles from Reading to Lebanon every Sunday to discuss business over lunch at the home of their brother-in-law and partner, Max Silberman. Silberman, who is married to Rose Luria, apparently replaces Hermann as partner early in the 20th century. Silberman hosts the lunch because his wooden leg makes it difficult for him to travel. He lost his leg after falling off a railcar inspecting scrap. The three Luria brothers prepare their sons for involvement in the business by allowing one to ride with them in the extra seat in the car on a rotating basis and join in the lunch. Alex, also known as A.L., is president and in charge of trading. Max serves as treasurer. Silberman handles yard operations. Abe also trades and runs the Reading facility.
1901: Luria Brothers grosses $100,000.
1905: Luria opens a branch in Lebanon, Pa., the largest steel center in the world.
1909: Luria reaches $1 million in gross sales.
1916: Luria buys 20 acres of metal left by the French during their failed effort to build the Panama Canal.
1918: Max Silberman joins Max, Alex, and Abe Luria in filing incorporation papers in Reading to formally establish Luria Brothers and Company, Inc. The partners report a capital stock of $1 million. Max Luria, Alex Luria, and Max Silberman each have 3,000 shares. Abe Luria has 750 shares and Fred Hertwig (presumably an employee) has one share. The corporation is formed for the purpose of “manufacturing, buying, selling and dealing in iron and steel and other metals, rags, waste paper, scrap, rubber and similar products.” Luria Brothers is apparently out of the bone business.
1919: Joel Claster joins the firm after marrying Max Silberman’s daughter, Dora.
1919-1922: After World War I, Luria Brothers buys prodigious amounts of abandoned artillery shells. The company also purchases numerous U.S. Navy ships after the government agrees to scrap them under the Washington Disarmament Conference Treaty.
1924: Abe Luria dies. The Reading Eagle reports his estate is worth $295,000. His family retains his share in Luria Brothers.
1932: The Depression causes Luria Brothers to lose money for the first and only time while under family ownership. The company loses $50,000 by grossing only $3.4 million on 500,000 tons. Salaries are cut. For example, William Luria—son of Abe—sees his weekly paycheck fall to $12.50, down from $17.50 in 1931 and $35 in 1928. Depression layoffs leave Luria Brothers with just six people in the main office, down from 60 in 1928.
Luria Brothers moves its headquarters to Philadelphia to be closer to major markets.
Max Silberman convinces the Lurias to buy out his shares after the Depression causes him to lose large amounts in Philadelphia real estate investments. While it’s unclear how much the Lurias pay, Silberman avoids bankruptcy, pays off his debts, and his estate is worth $750,000 when he dies in 1945. Joel Claster, vice president, begins running much of Luria Brothers’ operations despite his father-in-law’s pullout.
1933: Luria Brothers buys 15,000 antiquated freight cars and 486 locomotives from Southern Railroad. Alex and Max Luria are only able to borrow the $130,000 (some reports place the value at $500,000) from a bank to finance the deal by convincing Abe’s widow, Anna, to put up her stock and bonds as collateral. The deal turns the company around, and the main office again has 60 employees.
1934: Joel Claster is elected president of the Institute of Scrap Iron and Steel for a two-year term.
1935: Luria Brothers grosses $21 million handling 1.8 million tons of scrap.
1936: Soaring domestic and export business boosts Luria Brothers’ gross revenues to a record $32 million on 2.2 million tons of scrap.
1937: Fortune reports in May that Luria Brothers is the biggest name in scrap, handling slightly more than 10 percent of U.S. scrap steel.
1939: Ralph Ablon, Alex Luria’s son-in-law, joins the firm. Luria Brothers pays large annual bonuses to executives, including $15,000 to William Luria.Max Luria dies.
Late 1930s: Columnist Walter Winchell accuses the scrap industry of supporting the Japanese military effort by exporting scrap to Japan. Luria Brothers maintains that it’s up to the government to ban such exports, not the private sector.
1944: The net worth of Luria Brothers reaches $2 million.
1945: Alex Luria buys out the shares of the Max Luria family for an undisclosed amount. Then Alex sells his shares in Luria Steel & Trading Corp. to the Max Luria family. That firm was a separate steel export business established by Luria Brothers in the 1930s. The Abe Luria family, which was never involved in Luria Steel & Trading, retains its shares in Luria Brothers.
1946: Luria Brothers becomes the exclusive supplier of scrap to CF&I Steel in Pueblo, Colo. Carl Ablon, Ralph’s brother, joins the firm.
1947: Luria Brothers and Lipsett Inc., a competing scrap broker, pay $161,000 for the huge French ocean liner, Normandie, which had sunk in its New York berth in 1942 after a fire broke out while it was being converted to a troop ship. They pay $16,000 in towing charges to move the world’s second-largest liner.
1948: Luria Brothers buys Lipsett Inc.
U.S. Steel agrees to buy all the scrap for its Geneva, Utah, mill from Luria Brothers About this time, Luria Brothers starts having some steel mills send out notices that all sellers of scrap to the mills should deal through Luria.
1949: Fortune reports in January that Luria Brothers should easily handle $100 million in scrap this year. The article describes the company as having a “modest Philadelphia headquarters, fourteen branch offices, six preparation yards, and a total working force of several hundred hands.” Luria Brothers handles about one-seventh of the U.S. scrap brokerage business, according to the article.
Luria Brothers donates about $400,000 a year to charity in the late 1940s.
1951: Alex Luria dies, leaving an estate worth $8.5 million, according to the Philadelphia Inquirer. The Luria Brothers board of directors elects Joel Claster as president, succeeding Alex. Ralph Ablon is promoted to executive vice president.
Luria Brothers buys Southwest Steel Co., a competing broker in the Youngstown-Pittsburgh area. 1952: Ralph Ablon is elected president of the Institute of Scrap Iron and Steel for a two-year term.
1953: A Luria Brothers advertisement lists the main office in Philadelphia, with additional offices in Birmingham, Ala.; Boston; Buffalo, N.Y.; Chicago; Cleveland; Detroit; Houston; Lebanon, Pa.; Los Angeles; New York City; Pittsburgh; Pueblo, Colo.; Reading, Pa.; St. Louis; and Seattle. The firm lists plants in Detroit; Erie, Pa.; Lebanon, Pa.; Modena, Pa.; Pittsburgh; and Reading, Pa.
1954: After a two-year investigation, the Federal Trade Commission (FTC) charges Luria Brothers with using conspiracies and predatory practices to monopolize the scrap industry in violation of the Clayton Antitrust Act. An FTC study later reports that in 1954 Bethlehem Steel, the largest scrap purchaser in the eastern United States, buys 83 percent of its scrap from Luria Brothers, up from 40 percent in 1950 and 15 percent in 1947. Luria Brothers is supplying one-third of the scrap U.S. mills buy from scrap brokers/dealers. The company has a 99-percent share in the Rocky Mountain states, an 83-percent stake in eastern Pennsylvania, and 75 percent in the northeastern states.
1955: The remaining Luria family owners sell Luria Brothers to Ogden Corp. for $20 million. Joel Claster becomes chairman of Luria Brothers, while Ralph Ablon becomes president. Ablon joins the board of Ogden and moves Luria Brothers’ headquarters from Philadelphia to New York City. The New York Times reports that Luria Brothers earned an average of $2.5 million annually, after taxes, during the 1950-1954 period.
1955-1958: The FTC holds 113 days of hearings on the Luria Brothers case, calls more than 250 witnesses, and collects 25,000 pages of records.
1959: The Democratic majority of the U.S. Senate Small Business Committee issues a report urging the Justice Department to investigate Luria Brothers for possibly violating the Sherman Antitrust Act. The report, filed by Sen. Russell Long (D-La.), accuses Luria Brothers of creating a “dangerous monopoly” by trying to freeze out small competitors. The report states that the firm does $500 million of business a year, including half the nation’s scrap exports and nearly 40 percent of the domestic scrap business.
1961: An FTC hearing examiner rules that Luria Brothers violated the Federal Trade Act by creating a monopoly by entering into agreements with certain steel mills to act as exclusive or substantially exclusive broker for the mills. The company is also ruled to have restrained trade in export scrap, engaged in coercive tactics, and acquired various competing companies. The FTC examiner also rules that Luria Brothers violated the Clayton Antitrust Act by acquiring the stock of Southwest Steel, a competing broker, as well as the stock of six other companies. The FTC commissioners hear oral arguments in the case. The Lipsett division of Luria Brothers buys the U.S.S. Washington battleship for scrap.
1962: The FTC adopts the hearing examiner’s decision against Luria Brothers. The commission prohibits Luria Brothers from acting as exclusive or substantially exclusive broker for any plant, mill, or other buyer of scrap; precludes the firm from acting as exclusive broker or substantially exclusive broker for the export of scrap; forbids the company for five years from acquiring the business of any scrap broker or dealer without the permission of the commission; and orders the firm to divest its ownership of Southwest Steel. The commission also forbids certain mills from buying more than 50 percent of their scrap from Luria Brothers for five years. The Lipsett division of Luria Brothers buys the U.S.S. South Dakota battleship for scrap. Ralph Ablon steps down as president of Luria Brothers to become president of Ogden Corp. Carl Ablon becomes president of Luria Brothers and moves the company headquarters from New York City to Cleveland.
1968: Luria Brothers loses its appeal with the U.S. Court of Appeals, 3rd Circuit, to overturn the FTC order.
1973: Joel Claster dies.
1978: William Blauvelt is named president of Luria Brothers. The firm reportedly sells 6.2 million tons of scrap this year.
1979: Luria Brothers sells 6.7 million tons of scrap, according to American Metal Market.
1980: The firm’s scrap sales decline to around 5.7 million tons, with an additional 2.9 million tons of steel mill home scrap processed.
1981: Luria’s operating profits decline to less than $10 million as the amount of scrap processed falls to about 5 million tons, according to Business Week. The company closes its Port Newark, N.J., export operation due to declining scrap exports from the Northeast.
1983: Luria sells its Brooklyn, N.Y., processing facility, which it began operating in 1951. This is reportedly the firm’s last plant in the Northeast.
1984: Luria Brothers asks the FTC to set aside its 1962 order prohibiting the firm from “entering into exclusive dealer agreements with scrap consumers and from receiving preferential treatments as a ferrous scrap supplier,” according to American Metal Market. In its motion, the company asserts that “the conditions that the order was designed to alleviate no longer exist. Moreover, Luria finds itself at an unfair competitive disadvantage because it is subject to selling restrictions that do not apply to other competitors.”
1985: In February, the FTC decides to set aside its 1962 order, citing Luria’s diminished share in the domestic and export ferrous scrap markets. “In view of the present characteristics of the ferrous scrap industry, and Luria’s inability to exclude competitors through the exercise of market power, the order now serves no pro-competitive purpose and may impede Luria’s ability to compete effectively for the business of scrap consumers that desire exclusive supply arrangements,” the FTC states.
In July, Ogden sells the seven companies in its marine construction and industrial products groups—including Luria Brothers—under an employee stock ownership plan that combines the two groups into a new company named Avondale Industries Inc. William Connell, an executive vice president of Ogden, becomes chairman and CEO of the new company, whose headquarters are in Boston. At the time of this sale, Luria is “the largest and oldest U.S. broker and processor of ferrous scrap, and the only company in this line of business to operate on a fully national basis,” according to PR Newswire.
1987: William Connell spins off six of the seven companies in Avondale Industries—including Luria Brothers—to create a private company named Connell Limited Partnership. Luria Brothers reportedly sells 7.5 million tons of ferrous scrap this year, an increase of 39 percent over 1986. Though the majority of this tonnage is brokered, the firm still operates 12 processing facilities.
1989: Robert Hahn becomes president of Luria Brothers in addition to his duties directing Wabash Alloys, a secondary aluminum smelter that was also acquired by Connell Limited Partnership in the Avondale Industries deal.
1994: John DiLacqua becomes president following Robert Hahn’s retirement.
1997: Philip Services Corp. (Hamilton, Ontario) buys Luria Brothers and makes it the headquarters for its Philip Metals Inc. division. A press release reports that Luria operates 10 processing facilities throughout the midwestern and eastern United States. •
In its 111 years, Luria Brothers has survived the Depression, been the largest scrap company in the country, faced a federal antitrust suit, been sold four times, and lived to tell its story. This is it.