Sun, Feb. 23

Verde Heritage: 1958-1960: Clarkdale Owned by William Zeckendorf.


"'Man in a $100-Million Jam' is the title of a story in the current issue [1960] of Fortune Magazine regarding the financial problems of William Zeckendorf, president of Webb and Knapp, owner of the Clarkdale smelter, and principal property owner of the town of Clarkdale. The Fortune article summarizes Zeckendorf's difficulties by pointing out his need for new sources of recurrent cash income, and sites the proposed steel mill at Clarkdale as a possibility along these lines."

"Zeckendorf bought the smelter site from Bankers Life & Casualty Company for $1,400,000 in 1958, the Fortune article says. He then appointed Robert E. S. Thompson to do some research on the slag. Thompson found the slag theoretically contained $693 million worth of iron, $76 million worth of copper, and $198 million worth of zinc."

"The Koppers Company then entered the picture, the article continues, and with the Strategic Materials Corp., worked out a variation of the Strategic-Udy process that they believe will make steel economically in small quantities where power is relatively cheap."

"Zeckendorf, the article continues, figures he can make steel billets from slag for about $48 a ton, which would be reduced to about $33 a ton when profits from zinc, copper and calcium silicate are credited against it. This, Fortune says, is much less than half the selling price after freight charges, and theoretically would enable Zeckendorf to make a gross profit of $13,500,000 a year on production of 350,000 tons."

"The plant would cost $43 million, says Fortune, and Zeckendorf feels the money will be easy to raise. 'It is just remotely possible that the Zeckendorf steel venture may yet be counted as a valuable asset --- if he doesn't sell it to expand into something else,' says Fortune."

"Zeckendorf is now talking of locating his 'first' plant at Anaconda, Mont., where he has an option on another large slag pile, the Fortune article says."

"Fortune describes Zeckendorf as, '... perhaps the biggest and most ambitious dealer in real property in U. S. history, controlling more than $300 million in assets and more than $500 million worth of construction planned or underway."

"The article also points out that Webb & Knapp has never paid a dividend on its common stock, lost $9,700,000 before tax credit in 1958, and made only a little in 1959."

"His short term debt at the end of 1959, Fortune says, mounted to $104 million, or around 40% of his total liabilities. Interest payments and other expenses connected with the short-term debt alone come to $10,700,000. Zeckendorf has remarked, the article continues, that he probably has paid bankers and money-lenders $50 million too much in a decade of his dealings."

"'What Zeckendorf seems to relish more than money is the publicity that goes with his projects, and he has frequently announced them in considerable detail as "faits accomplis" when they were fully accomplished only in his mind,' the article continues."

"Zeckendorf is aware, says Fortune, that he must curb his passion for expansion and big deals, and pay more attention to current dollars and cents. 'That he will go down in one heroic debacle seems unlikely,' the article continues."

"Zeckendorf's success has been partly due to his uncanny ability to generate capital or realize future earning power here and now by mortgaging or otherwise encumbering his properties, says Fortune. 'Any good property without an encumbrance, to him, was an opportunity unexploited; the more you borrow and the smaller your equity, the better off you are; cash, in his view, is not something to be saved or invested, but a lever to move the world,' says Fortune."

"Fortune quotes Zeckendorf as saying, 'I've been betting on an expanding economy. I still am, but now I'm changing my approach. I've nothing more to prove except that I'm solvent.'"

"Fortune says this is what he is going to do about it: (1) reduce expenses; (2) refinance; (3) sell more physical assets (in dollar terms) than he buys; and (4) build up assets that can earn recurring income."

"'If Zeckendorf can scrape through his current crisis, he must make the changes he has promised so many times, and tailor his ends more closely to his means. The time has come for him to deviate into a more conventional style of operating --- to improvise less and plan more --- and to undertake perhaps half the deals he now gets into. Most of his properties are chosen for the long pull, but even so there is the possibility that the real estate business is attracting so much capital and increasing its 'Values' so swiftly that supply may well overtake demand,' the article said."

(The Verde Independent; Thursday, July 7, 1960; pages 1 and 12.)

Phelps Dodge Corporation sold the Clarkdale townsite, smelter and the Upper Verde Utility Company, etc., to W. L. Allison, an individual, on October 14, 1953. The salvage operation at the smelter was expected to take 5 to 10 years. W. L. Allison sold the properties to Erle P. Halliburton on June 1, 1954. He continued the salvage operations, and sold homes and properties before he died during October on 1957.

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