Socio-economic development from 1924 - 1948
ISCOR

BACK TO LESSON MENU

 

(Source: http://www.gcc.co.za/partners/images/iglcol.gif)

Pouring iron at ISCOR in Pretoria.
(Source: http://www.economyindustrial.com/iscpour.jpg)

The South African Iron and Steel Industrial Corporation, or ISCOR, came into being in 1928 by an Act of Parliament after some disagreement within the government. Taxes collected from mines were used to finance the iron and steel giant and build its manufacturing plant outside Pretoria in 1930.

Iron and steel play a very important role in any economy as it is used in the manufacture of machines for mining companies and engineering works, weapons, cars, stoves, fridges, window frames and railway tracks, to name a few. If a country can produce its own iron it need not import it at great cost or depend on other countries for its supply, especially during wars. The South African government also felt that a ready supply of steel would help the local manufacturing industry expand by providing machinery to build products in factories.

When the government first announced that they were going to build ISCOR businessmen and politicians were against the idea. They said that ISCOR would not make enough profit to justify the cost of a large iron steel works and were worried that South African steel would be more expensive than imported steel. Mine owners were especially worried, as they feared a rise in the prices of machines because there were no tariffs on imported machinery. Secondly, many businessmen and politicians argued that it was not the government’s responsibility to build factories. South Africa was a capitalist society with a system of free enterprise so private industry should not be in competition with government. They argued that the government’s job was to ensure that the system of free enterprise ran smoothly, but should not interfere in the economy for any other reason.

The state argued that the existing private iron and steel works in South Africa did not meet the country’s demands and that factory owners did not have the capital to expand. No provision was made for state control of ISCOR and public participation was encouraged through the availability of shares and the normal activities of the company were to be handled by a board of directors. The government did hold some shares and when the public refused to buy the shares made available it was compelled to take them.

The South African commercial iron and steel production increased rapidly, but was slowed down by the Second World War. ISCOR’s focus shifted to the production of armaments as Britain could not provide the raw materials for weapons. It returned to normal functions after the war and also acquired several mines to provide it with raw iron ore.

The birth of ISCOR marked a new period of economic growth for the country and more plants were built at Vanderbijlpark, Newcastle and Vereeniging, providing employment for thousands of people. South Africa became less dependent on foreign capital and foreign supplies, which meant that local capital became more important. Even the mine owners saw the advantages of ISCOR, and they began to build their own factories to produce machines and goods for the mines.

Click here for ISCOR’s official website