The Expansion of Blast Furnace Capacity, 1938–52: A Study in Geographical Cost Differentials1

The great expansion of American blast furnace capacity since 1938 has worked significant changes in the geographical distribution of the industry. Many persons have assumed that the furnaces erected at new locations have abnormally high costs for their mineral raw materials, and that their survival, like their origin, is dependent on the boom market of wartime and postwar, Federal financing, and accelerated amortization for tax purposes. This analysis is not correct. From the viewpoint of raw materials cost, the furnaces at relatively new locations in Utah, California, and northeast Texas, are lust as efficient as the furnaces at older locations such as Chicago and Pittsburgh. The data for the cost analysis which follows were collected directly from the firms involved.