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FeedThe Great Marcus Hook Swindle
In 1941, Lend-Lease meant life for beleaguered Britain—and big bucks for the banks.
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One way or another, bankers always get paid. Of the banks taxpayers bailed out a year ago, 20 paid their top-five executives an average of $32 million each from 2006 to 2008.
An anomaly? Consider the Great Marcus Hook Swindle of 1941. That was the year the Roosevelt administration demanded that England—defeated in Europe and “blitzed” by Germany at home—give up some asset to prove to a skeptical U.S. public that it really needed help. The White House chose Britain’s largest, most profitable U.S. holding: American Viscose Company of Marcus Hook. It was quickly appraised and sold to U.S. bankers for $54 million.
That was a fraction of its worth. American Viscose had grossed, on average, $6.2 million annually for the previous 10 years. In 1940, it grossed $7.9 million, up 60 percent from 1931.
In any case, U.S. bankers then turned around and resold the company for $62 million. Never mind that its assets alone were worth $128 million.
“Some Britons—most notably Winston Churchill—thought they’d been fleeced,” wrote business historian Ron Chernow.
The story begins with rayon, the modern term for an artificial fiber invented in 1855 by a Swiss chemist. First called “artificial silk,” rayon is produced from processed wood pulp. Other inventors tinkered with the invention until, in 1894, a group of English chemists patented a process that produced a commercially viable fabric they called viscose.
“Viscose” was a derivation of viscosity, the scientific measure of a fluid’s thickness. The wood pulp from which the fabric was spun was viscous, or thick. Among artificial fibers, rayon was the pioneer—far ahead of nylon (first produced in 1935), Dacron (1941), olefin (1949), polyester (1953) and others. The textile industry adopted the name rayon in 1924.
Rayon was primarily used in clothing, furnishings, industry (medical products and automobile tire cord), and personal disposables like tampons and diapers. Today, its use has declined because its production generates large amounts of sulfurous waste.
The British rights to American Viscose were bought by Courtauld & Co., an English textile manufacturer. The market grew steadily and, in 1908, Samuel Agar Salvage knocked on the door.
A 32-year-old English immigrant who’d come to America in 1893, Salvage started out selling china and glass in Cincinnati, then worked for two different textile companies in New York. He started his own fabric importing business in 1897.
Among the imports was “artificial silk” from Germany. Salvage sold it to braid and trimming manufacturers, but found no other interest. Still, he was impressed with the product.
Salvage became Courtauld’s U.S. sales representative in 1908. A year later, he proposed that Courtauld purchase the American manufacturing rights for rayon and open a plant here. He recommended a site in Marcus Hook, probably because the Delaware River locale was convenient for shipping, and costs would be less than at similar sites near New York.
