The Cleveland-Cliffs Iron Co.
List of Deals
- 1935 The Cleveland-Cliffs Iron Company: issue of $16,500,000 first mortgage sinking fund 4 3/4% bonds
The Cleveland Cliffs Iron Company's predecessor, the Cleveland Iron Mining Company, was founded in 1846 by a group of investors led by Samuel L. Mather. The company's first years were trying, as the cost of shipping was extremely high until the completion of the Sault Ste. Marie canal in 1855. The company stayed afloat by issuing "IOUs," dubbed "Iron Money," in one-, two-, three- and five-dollar denominations until it had earned enough cash to adequately meet its financial obligations.
Surface mines in the area were gradually depleted, and the company was forced to begin underground excavations. This new mining process required specialized equipment, such as power drills, hoisting and conveying machinery, pumps, and ventilation equipment. In 1877 Cleveland Iron Mining became one of the first companies to use these types of equipment. The company also pioneered the use of electricity at its mines and established on-site hydroelectric and coal-fired generators. At the end of the nineteenth century, the company diversified into timber harvesting, as timber was used to support mine shafts and as fuel for blast furnaces. Cleveland Iron Mining then became involved in other activities related to timber, such as a venture in paper production with the Munising Paper Company. The company also bought an interest in the Munising Woodenware Company, a manufacturer of wooden bowls, clothespins, and rolling pins.
During the 1890s steel companies began to vertically consolidate by acquiring iron ore properties in the Michigan area. Spurred by these actions, several larger mining companies merged and/or acquired their smaller competitors. In 1891 Cleveland Iron Mining merged with the Iron Cliffs Mining Company to become the Cleveland-Cliffs Iron Company. In the late portion of that decade, the company joined the Pittsburgh & Lake Angeline Iron Company.
As mining became an increasingly expensive venture, the company began to form
partnerships with steel companies to own and operate mines. Cleveland-Cliffs Iron established its first of such partnerships in 1903, when it leased the Negaunee Mine to a company it co-owned with Bethlehem Steel Corporation. In 1929 the company planned to form a top-ranking steel company through the union of several mid-sized competitors. In exchange for financing part of the venture, Cleveland-Cliffs was to become its preferred supplier. This plan called for Cleveland-Cliffs to establish a new entity, Cliffs Corporation, which was to be jointly owned by Cyrus Eaton, a Cleveland financier, and a group of steel magnates. Eaton contributed a portfolio of stocks in Republic Steel Corporation, Inland Steel Company, and Youngstown Sheet and Tube. Cleveland-Cliffs acquired a controlling interest in Corrigan-McKinney Steel Company. The Depression foiled the plans and left Cleveland-Cliffs with a large amount of debt.
In 1932 the company recorded a loss. Around this time, the company began a policy of sacrificing all but domestic iron ore reserves. Cleveland-Cliff's financial condition worsened, and the company sold some of its timberlands and steel stocks. In 1935 the company divested itself of Corrigan-McKinney.