The Scrap Czar

Mounted on excavators or other machines mobile shears give scrap processors the cutting edge they need when processing ferrous and nonferrous material.

Railroads and steel dominated the U.S. economy in the 1920s, after World War I, and the robber barons had a wonderful time. The scrap industry also benefited from the booming economy. “The junk man developed into a big businessman after the war,” noted a 1928 Waste Trade Journal article. “The junk shop has given way to yards of great acreage, where thousands of tons of scrap are broken up.”
   As their businesses grew, ferrous scrap dealers learned that political and financial clout were essential tools in running large businesses. These recyclers, outgunned by their well-heeled and well-connected consumers, realized that they had to stop fighting among themselves. The time had come to start working together to address their common concerns.
   That opportunity came Feb. 8, 1928, at a meeting of 19 scrap dealers at the Hotel Astor in New York City. Charles Lipsett, publisher of Waste Trade Journal, organized this first gathering, which led to the founding of the Eastern Scrap Iron Association. Two weeks later, on Feb. 21, scrap dealers in the Philadelphia area held a similar meeting, with the majority of attendees agreeing to join the new group. A central figure at this second meeting was Benjamin Schwartz, a 32-year old Philadelphia attorney and so-called organizing expert who stressed the benefits of joining such a trade association.
   After meeting a few more times, the group’s executive committee members agreed in June 1928 that the association needed some professional help, so they decided to hire a full-time director. At the time, the association’s membership encompassed only the 19 charter members. “We were prompt to admit, as volunteers, we could not do the job,” recounted Herman Moskowitz of Schiavone-Bonomo Corp. (Jersey City, N.J.), who served as the organization’s first secretary. “In spite of all the enthusiasm at the meeting…this was the only practical result we could produce after six months of work and six meetings.” 
   The group offered the post of director general to Benjamin Schwartz. As Schwartz later recalled, the association didn’t so much hire him as offer him a six-month contract and a challenge: If he could expand the association’s membership to 150 firms, each paying $50 annual dues, they would consider giving him an annual contract. Though Schwartz viewed that offer as “one of the toughest assignments then known in the trade association profession,” he took the gamble.
   Wasting no time, he called a meeting of the executive committee in July 1928 and requested three changes: Make the Eastern Scrap Iron Association a nationwide ferrous scrap organization; organize the association into regional chapters; and change the group’s name to the Institute of Scrap Iron and Steel (ISIS). The executive committee unanimously accepted his requests.
   In its July 14, 1928 edition, the New York Times called Schwartz the “Scrap Czar,” a fitting title for this politically astute and tireless individual. In the same article, the newspaper told how Schwartz drew up “a program to bring about better understanding among junk dealers and steel mills; to standardize specifications and otherwise iron out the wrinkles in the industry.” 
   ISIS opened its first office Aug. 1, 1928 at 11 West 42nd Street in New York City. Schwartz would later mark this date as the official start of the ferrous scrap group. On Nov. 14, when Schwartz filed incorporation papers for ISIS, the group already had chapters in New York City, Hartford, Newark, Philadelphia, and Reading, Pa. Plus, it had plans to form additional chapters in Buffalo and Pittsburgh. 
   By Dec. 17, when ISIS held its second official meeting, the group had already formed an arbitration board, a traffic bureau, an insurance bureau, and a trade relations committee. ISIS had also expanded its chapter plans to include Cleveland, Detroit, Chicago, St. Louis, and Boston.
   The institute wasted no time in addressing the industry’s problems. At the group’s meeting in January 1929, which attracted more than 50 members, Schwartz suggested replacing the term “junk” with “scrap” to spiff up the image of the industry and its members. He also announced plans to meet with the Federal Trade Commission (FTC) to establish a code of business practices to eliminate disreputable behavior in the industry. That was a key directive of the new organization—to establish scrap iron dealers as fair, honest, and legitimate businessmen whose industry was vital to the U.S. economy and defense.
   In May of that year, scrap processors and steel mill executives attended a conference held by the FTC in Pittsburgh to address trade practices. The invitation letter set out an ambitious agenda: “Among the practices thus far proposed for discussion are: Doctoring or ‘top dressing’ of cars; defamation of competitors; jockeying of prices; failure to deliver or fulfill a contract; and billing one grade of scrap as a higher commodity… .” Resolutions to eliminate these unfair practices and to establish a basis of cooperation among scrap processors and consumers were adopted by the 200-plus dealers at the meeting, thus establishing the ISIS code of fair trade practices.
   Just as things were looking up, the Depression hit and scrap prices plummeted, threatening the viability of both ferrous scrap dealers and their fledgling trade group. According to minutes from the 1933 ISIS convention, the association had been unable to pay Schwartz’s salary for more than a year. At the convention, a special “deficit fund” was established to cover his back pay. Not surprisingly, Schwartz later noted that he considered abandoning the association during these lean times, but then-ISIS President Herman Moskowitz persuaded him to stay on. 
   Throughout this trying period, ISIS fought a relentless battle to keep credit flowing to the scrap industry. Schwartz appealed to President Herbert Hoover, explaining that lack of credit was endangering thousands of jobs and affecting the conservation of U.S. resources. In 1932, Schwartz even led a delegation of 33 scrap executives to meet with Hoover in the White House. They discussed the plight of small business and, by the end of their meeting, the president promised to get them some credit relief. Even with access to credit, though, business was tough since domestic scrap prices were too low to cover recyclers’ processing and collection costs. 
   Exports proved to be the salvation of the ferrous scrap business. ISIS formed a scrap export organization in 1933 that solicited sales to Japan, Italy, and Poland. Within a year, the success of steel scrap exports had domestic steel mills crying for protection. A LIFE magazine article in 1937 implied that scrap exports by U.S. processors were supporting the Japanese military buildup. A New York Times article in the same period argued that scrap exports saved the U.S. scrap industry and helped counter monopolistic practices of domestic steel companies. (As it turned out, the buildup to World War II and the ensuing conflict brought both export controls and a return to financial health for ISIS members.)
   In the summer of 1938, Benjamin Schwartz tendered his resignation as director general of ISIS. During his 10-year tenure, the association had grown to encompass about 500 firms and 19 regional chapters. About his departure, Schwartz would later explain, “I picked a year when the membership had reached a peak, when the scars of the Depression had disappeared and the scene was peaceful for the first time, to ask the Board to release me from my contract.” Within weeks of leaving ISIS, Schwartz accepted a vice president position with Schiavone-Bonomo, joining the very industry he had worked so hard to improve.
   Little else is written about Schwartz until his address at ISIS’s 25th anniversary convention in 1953, where he was listed on the roster as president of Benjamin Schwartz Co. in New York City. In his talk, he praised the foresight and tenacity of the original association board members. Notably, Schwartz took no credit for the founding of ISIS and wished to be remembered as the “organizer and only living ex-Director General” of the organization.
   More likely, he will live on as the Scrap Czar of America. 

—Tom Mele, Connecticut Metal Industries Inc. (Monroe, Conn.)