The Iron Age 1933-05-18: Vol 131 Iss 20

nited 6,916 cent to a iu of was 3 per pre- was d an pits) with ined tates 1932 tons, se of 3 per with mn of was es at 603,- ) per 1932 » the ears. were . the in tates 932 ESTABLISHED 1855 .. THE IRON AGE... MAY 18, 1933 Deflating the Balance Sheet to Inflate Earnings By WILLIAM R. DONALDSON Miller, Donaldson & Co., Accountants New York Ben desire to show profits has caused many companies to write down the valuation of their plant and equipment. The author, who is president of the New York chapter of the National Association of Cost Accountants, reviews the motives for this action and appraises them from a long-time standpoint. He points out that heavy write-downs do not appeal to established business organizations; they see no purpose in juggling the cost of their fixed assets from decade to decade as the wind happens to blow. Wear, tear, and obsolescence occur each year and properly represent a cost to be considered and weighed in when computing the year’s earnings. If invested capital is wiped out in one fell swoop instead of being apportioned over the years of useful life, later years will not bear their share of the cost of obsolescence If assets are marked down to “mar- ket” value, which today is really distress value, there is no assurance that coming years will not demonstrate that value to be excessively low. v CROSS the financial pages of Az daily newspapers the last few months has appeared a succession of corporation annual statements in which reference is made to substantial write-downs of plant and equipment. Printed reports sent to stockholders amplify and explain these write-downs, some mounting to many millions of dollars. It has be- come the fashion to write down and write off, and the result is this pro- cession along the avenue of corporate accounting practice. And like most fashions, the idea in which they were conceived soon becomes obscured by this twist here or that bow there, so that the mode in millinery goes ca- vorting off on a tangent that has no relationship to the basic design. We read the story of George Ber- nard Shaw’s recent visit to a Califor- nia motion picture studio, during which he remarked to a pretty and 4 well known movie star as she finished the sequence of the picture she was making: “Why does a girl with a nice face like yours wear a hat like that?” The report goes that she hurriedly left the set for her dressing room, there to break forth into tears. So, it can be said of some of the corpora- tions which are following the mode of the hour: “With a nice face like yours and the nice figure you have attained during your successful life- time, why do you rush off in the dark- est, dreariest days of depression to follow a fashion that may well be- come your lean, anemic sisters, but not you.” We surmise in a few years such corporations will regret their impetuous action. It is the purpose of this article to review the reasons for this mode of the hour, what it accomplishes, and the effect it has on present and fu- ture financial statements and operat- 773 Vol. 131, No. 20 ing results of corporations which fol- low it. Everywhere directors of cor- porations and financial and account- ing executives are discussing what should be done with their plant ac- counts. They see their competitors indulging in the write-off practice, and they realize that in some respects advantages appear which would tend to give their competitors the edge during future years. They feel they should proceed along the road to de- flation, and they are right to a cer- tain extent. But when deflating the balance sheet results in inflating fu- ture earnings, they should think twice before taking the step. It is the income or earnings state- ment that tells the real story of the success of the worth of an enterprise. “What are the earnings per share?” is the popular question rather than “What is the book value per share?” And it is toward increasing income, toward raising up the “earnings per share” that management effort is pri- marily directed. During the last sev- eral years, the element of expense ex- isting in every business, which stood out so prominently in the income statement as “Depreciation of Plant and Equipment,” has worried man- agement. It is a fixed charge that rips away a good chunk of the “in- come before depreciation” and turns some nice black figures into vivid red ones. When sales were in good volume, prices high and plants fairly active, depreciation represented a minor part of the total income from sales. But now that the wheels have ceased to whir so evenly and sweetly, there stands the old rock “depreciation” as a formidable obstacle toward attain- ing black figures in the income state- ment. “It’s only a bookkeeping item and means nothing. It should be eliminated,” says one anxious man- ager. “We are running only 20 per cent of capacity and therefore we should have only 20 per cent of the depreciation we had when we were running full,” speaks up a treasurer. “Our plants are all shut down; so we have no depreciation expense,” adds a worried president. And then an- other executive declares: “If we have no values on our books for our plant and equipment, we will have no de- preciation because zero dollars mul- tiplied by 5 per cent equals zero. No- body pays any attention, anyhow, to what we carry our plants at on our balance sheet. We have plenty of cash, owe nothing much, and are in splendid net current asset position with ample working capital. Our stock is without par value and so we can shrink up the stated value, make a capital surplus and, bang, charge off the whole works. Our stockhold- ers will compliment us on how con- servative we are, carrying all our vast facilities at $1, and from now on, hurrah, no more depreciation. We are bound to show good earnings. Also, we shall get a better break on our own profit-sharing bonus.” Is Unfair to Stockholders and Competitors So runs the logic of the enterprises which have entirely written off their plants and equipment, and this is likewise true of those which have in- ordinately slashed plant values below fair worth. It is only natural that in these dark days of corporate earn- ings all kinds of straws should be grasped at to decrease losses and eventually turn toward profits. It is the management’s job to earn profits and this they seek to do by all ac- ceptable means. But it is incorrect and unfair to the corporation’s own stockholders to turn out income state- ments in future years showing no or insufficient expense for depreciation, and it is unfair to competitors to fix prices below cost, which is what is apt to happen when depreciation is not considered an element of cost to be recouped in the selling prices de- termined upon. Of course the old discussion arises as to what is depreciation and why it has to be included as an element of cost of doing business, since it does not represent a cash outlay during the year reported on. However, it is now everywhere recognized that the wear, tear and obsolescence of the plant and equipment (the usage and wastage of capital) which occurs regularly each year does represent a cost to be considered and weighed in when stating the year’s earnings. If the capital invested in plant and equipment is wiped off in one fell swoop instead of apportioned over the years of useful life, these years will not absorb their proper share of this wearing-out process. 774—The Iron Age, May 18, 1933 Out of the whole question comes this dominating consideration. After plant and equipment is written down or otherwise adjusted in value, will the future years’ income account con- tinue to bear fair and reasonable an- nual charges for depreciation of the plant and equipment actually in use during those years? If the plan of adjustment is such as to accomplish this result, then it is not believed any serious quarrel can be picked over the manner or the method or the extent of adjusting present valuations. From the balance sheet viewpoint it is somewhat a matter of whether one prefers vanilla or chocolate ice cream. Plant and equipment accu- mulated over a long period of years is bound to represent heterogeneous valuations, some low because of ac- quisition in days of low prices, some high because purchased or built in times of high prices. An enterprise is presumably in business to stay for many years. It spent money to ac- quire these assets, and as they wear out or tend to become obsolete, it is hoped and expected that the earnings derived from using them will pay back the original outlay. If any part has ceased to be usable, and would be gladly parted with if a buyer ap- peared on the horizon, then the money poured into such part, not yet re- couped by depreciation charge-off, has of course gone for naught other than what such buyer might be will- ing to pay for it. Writing down to market value plant and equipment definitely abandoned as unusable is proper and defensible. The loss in investment has occurred and in the future these assets will not contribute anything toward making the product which is to be sold and from which earnings will be derived. Writing Down to “Market” Value The question will arise, what is the market value to which it should be written down? These days there is no real market for surplus plant and equipment, so that it cannot be ac- curately determined. However, if, based on good business judgment, some round sum value is assigned at which it is believed during the course of the next few years the plant and equipment can be ultimately disposed of, then the enterprise will have acted fairly to adjust its valuations. Thereafter depreciation need not be charged off and when the assets are actually disposed of the difference between the assigned residual value and the price received will constitute the further adjustment one way or the other. There can be no dispute about this treatment of this sort of assets, and perhaps it is owed to stockholders to disclose to them on the balance sheet the unusable plant and equipment available for disposi- tion at a value commensurate only with what it is expected can fairly be obtained, Let us consider the view of those corporations which assembled a group of subsidiaries and plants in the hey- day of corporate mergers and con- solidations and set up on their books these plants and the equipment at their then appraised value. They have had to take each year since a good healthy bite of depreciation, be- cause in those years construction and machinery costs were high and the values on the books reflected this con- dition. Construction costs have tum- bled 25 to 30 per cent since those years, and machinery prices as much, if not more. Such consolida- tions approach this question of reduc- ing depreciation by claiming that, as the present sound replacement value of the assets is substantially below book worth, they should be written down to present worth. They counter the argument that cost must be re- couped through the operating account by stating that it is not cost which must be recouped but an amount suf- ficient to replace the depreciating as- sets when their useful life has termi- nated. Or to put it another way, that since the lowered annual depreciation will eventually deduct out of earnings sufficient entirely to replace the as- sets, it is not necessary, or right, to deduct amounts greater than will be necessary to replace them. They say that if depreciation were continued on the basis of the original high cost or appraisal value, earnings would be charged with an excessive amount. Thus, the two schools of accounting thought and practice: depreciation should be on basis of (1) cost, (2) re- placement value. Do Current Prices Represent Sound Value? At any rate, no matter upon which side of the argument one finds him- self, should a corporation write down its plant and equipment to present sound value less observed deprecia- tion in order to lower the future annual depreciation charge, the action can scarcely be criticized as improper or as tending to inflate unfairly the earnings of future years. But what is sound value is even debatable. It is supposed to be the present cost to build or to acquire new. With a con- struction and machinery market as we have today—or rather lack of any market—we wonder whether currently quoted prices may be said to reflect sound value. But he who seeks to follow some logic. behind his determination to write down his company’s plant, and would like to eliminate future depre- ciation entirely if he dared, advances the thought that it is not sound value which should be the base, but market ort of ed to 2m on plant is posi- » only rly be those group e hey- | con- books nt at They nce a n, be- n and d the Ss con- - tum- ince eS as olida- ‘educ- at, as value below ritten unter ye re- count which t suf- ig as- ermi- , that jation nings e as- ht, to ill be y say inued 1 cost ild be ount, nting ation ) re- ound vhich him- down esent ‘ecia- uture ction roper y the what ee st to con- t as any ently eflect some n to and 2 pre- inces ralue irket value. He points out that if a brand new competitor were to enter the arena afresh this competitor would go out and buy one of the many plants available, set up modern machinery which he can buy used from many dealers, and launch into business at a distinct advantage, because in future the low cost of his plant and equipment would make the deprecia- tion charge very low. Therefore, when asset values are to be adjusted, our “depreciation-saver” contends they should be reduced to the point where future depreciation charges will enable the enterprise to compete with a new entrant into the business. Through such reasoning we have the executive who wishes to cut his as- sets to “market value” in order to increase future earnings. “Distress value” is a better designation; a market presupposes buyers and sell- ers, and for the purchase of plants there are no buyers these days. There are many variations of these approaches. Some believe that plant and equipment actually in use (though perhaps not to capacity) should be written down to sound value; such not now in use but intended and ex- pected to be used in future when activity returns should be reduced to market value to keep it competitive with new manufacturers; and such as is definitely set aside as not usable written off entirely or to a nominal amount. The reasons and the meth- ods are as. variegated as the colors of fashionable millinery. Tax Provisions In the struggle for more and better earnings, the United States Treasury Department stands adamant. The income tax law provides that the actual cost of plant assets constitutes the base for the annual percentage charge-off of depreciation allowable as a deduction in income tax returns. Twist balance sheet values around as you will, slice depreciation to zero or to any amount, and it matters not. When the tax return is prepared the old-fashioned allowance for deprecia- tion must appear on line 22. So as not to be taken too literally it should be added that loss in useful value of plant and equipment may be de- ducted in the year sustained, but to secure this deduction it is necessary almost to establish that the plant has been abandoned to the tax collector and the equipment carted to the dump. Adjustment in values may have some slight bearing on insur- able worth, but whether left high or slashed low the insurance company will be guided by insurable values rather than book figures. In tax dis- tricts where book figures play some part in the judgment of assessors in fixing valuation, writing down assets may result in decreasing taxes. With all this movement toward de- flating plant and equipment values it has not yet taken the form of a grand rush. Many corporations are stand- ing pat, feeling that the slough of the depression is no place from which to view the worth of plant and equip- ment, assets which have served for many years and will continue in future to serve in the quest for prof- its. They reason that as the future dawns they can chart their course toward earnings year by year, alter- ing it when necessary, and analyzing and subdividing depreciation to meet the peculiar accounting and financial problems of the year and pointing out to stockholders the significance of these figures from the competitive an- gle. They feel the balance sheet should always show the cost of plant and equipment and its orderly ex- tinguishment through regular depre- ciation charges. They believe that an established business should act like one and not juggle its cost of fixed assets from decade to decade as the wind happens to blow. Everyone knows that fixed asset ac- count in the balance sheet is not taken literally as expressing the real worth of those assets. It normally presents what they have cost and what so far has been written off for depreciation. When assets go out of service and are no longer of use in the business it seems proper to add to depreciation reserve and deduct in the income ac- count, or even in the surplus account, an amount for extraordinary depre- ciation and loss in value. But other- wise it is not felt by many executives that the gross or net value of assets actually usable, ready for use and in- tended to be used if orders were on hand, should be adjusted upward or downward to reflect changes from year to year in replacement worth or to give effect to lack of use or utility because of insufficient volume. In retrospect we ofttimes wonder why we did the things we did in 1928 and 1929, why we followed practices that more sober thought proved faulty, even vicious. May we hazard the firm conviction that the “writers- off’”’ who join the fashion parade of 1932-1933 will in a few years be moved to tears by the ill-becoming $1 value with which they clothed their plant and equipment. Steel Homes for Cows Cae fabricators in the Cen- \J tral West have completed designs and are prepared to offer steel barns in the full range of sizes ordinarily required. Among these designs is that of the Worden Allen Co., Mil- waukee. All shop connections are made by the welding process and field connections are bolted. Standard shapes are used throughout. By means of various designs of trusses these barns may be had in widths up to 50 ft. and truss spacing varies from 20 to 25 ft. The founda- tion or cow-barn section may be made of masonry or concrete. The floor construction consists of steel beams supported on steel posts. In order to eliminate fire hazard a concrete All shop connections are welded and all field connections are bolted. Two men can erect this barn. slab is poured over the cow-barn. The steel trusses that form the loft are made in convenient sections so that two men with the aid of a tractor or a team of horses can erect the structure without the aid of special tools. Window frames and doors are made of steel and the loft is covered with sheet metal. Insulation is not required in the loft. By grounding the steel frame the lightning hazard is reduced to the minimum. Steel and concrete construction minimizes the fire hazard. Farmers Interested in Possibilities At present the buying power of the farmer is limited but interest in steel barns on the part of the farmer is unquestionably high. He wants se- curity for his stock and freedom from the hazards of lightning and loss by fire. His experience with in- surance is not always to his liking. For instance some insurance compa- nies insist in many cases on patch- ing rather than replacing badly dam- aged barns. In some sections of the country there are as yet no lower insurance rates on steel barns than on those of the older types of con- struction. Here is a problem for the steel fabricator and steel producer to solve. They should combine in their efforts to help the farmer get equitable insurance rates on steel structures so that the farmer will get rates that will be an inducement for him to want the additional advan- tages which are to be had from steel barns. The Iron Age, May 18, 1933—775 mor eer cances ITROGEN - HARDENED castings have been made since 1928 in the British works with which the author is con- nected. They are aluminum- chromium alloys, given a treat- ment akin to that accorded nitr- alloy steel. They have been given the test of time in the form of cylinder liners and are suggested for cams, gears and the like where resistance to wear and corrosive conditions obtain and the required shapes may be com- plicated. The records contributed by the author cover both sand- cast and centrifugally-cast Nitri- castiron, as the product is called. vvyv production of cast iron suitable for nitrogen hardening was undertaken by the companies with which the writer is connected, under the direction of the writer. This work was commenced in the year 1928, and the first castings made com- mercially were oil engine cylinder liners, which were put into service in October of that year. Since this date experiments have been continued which have resulted in the commercial perfection of an alloy cast iron and the manufacturing processes for the production of this material suitable for nitrogen hardening by treatment with anhydrous ammonia gas at a low temperature of 500 deg. C. after the manner of the familiar nitriding process as applied to nitralloy steels. H' XPERIMENTAL work in the An Aluminum-Chromium Cast Iron This alloy cast iron suitable for nitrogen hardening is now known commercially as Nitricastiron. It is essentially an aluminum chromium al- loy. Full details of two typical analyses together with the mechani- cal properties in various stages of treatment are given in Tables I and II. The material described in Table I has been cast by the centrifugal process while that detailed in Table II has been cast in green sand molds. Fig. 2.—Same as Fig. 1, etched with picric acid, 600 diameters. 776—The Iron Age, May 18, 1933 Cast lron Suitable for Nitrogen Hardening By J. E. HURST Technical Director, Sheepbridge Stokes Cen- trifugal Castings Co., Chesterfield, Sheffield, England All the tests have been carried out on annular ring form specimens of the type recommended in British Stand- ard Specification No. 5004 and 4K6 (aircraft material), and all the hard- ness determinations made with a Firth Hardometer using the diamond indenter and a 30-kg. load. The chem- ical analyses given in the tables are typical of Nitricastiron. The lower combined carbon contents of the sand-cast specimens are due to the slower cooling of the metal in sand molds. In the centrifugal cast- ing process metal molds are used, and this would be expected to result in a Fig. 1.—Sand-cast Nitricastiron, unetched, 300 diameters. Fig. 3.—Same as Fig. 1, annealed and etched with picric acid, 600 diameters. higher combined carbon content. The higher combined carbon content in the latter specimens is evidently not destroyed by the annealing to which the specimens have been subjected. The carbon determinations on the materials in the as-cast condition are given in Tables I and II. The slight change in the combined carbon and graphite due to annealing is shown by these results. The centrifugally cast specimens are harder to machine than the sand cast material. The annealed centrifu- gal castings were turned in the lathe at a speed of 70 ft. per min. with a depth of cut of % to 3/16 in. and a feed of 40 cuts per in., using Widia- tipped tools. The machining speed of the sand castings in the annealed condition was 90 ft. per min. with a depth of cut of % to 3/16 in. and a feed of 30 to 40 cuts per in. with the same kind of tools. Castings Annealed for Machining Aluminum chromium cast irons of this composition have distinct air hardening properties. To ensure uni- form machining qualities the castings are submitted to an annealing treat- ment at 950 deg. C., followed by slow cooling prior to machining. After rough machining and prior to finish Fig. 4—Same as Fig. 1, hardened and tempered, 600 diameters. t. The ent in tly not which cted. on the on are slight yn and shown cimens e sand ntrifu- : lathe with a and a W idia- speed nealed vith a and a th the ling ms of t air e uni- stings treat- Y slow After finish and . ‘ x . - ~ Se ‘ = — ot S ‘4 \ ¥ Fig. 5.—Sand-cast Nitricastiron, nitrided surface, etched with picric acid, 100 diameters. machining the castings are preferably submitted to heat treatment by hard- ening and tempering. This treatment is best performed by quenching in oil from 870 deg. C. and tempering at 600 deg. C. The tempering treatment may be prolonged to provide a sta- bilizing treatment intended to re- move internal stresses and thus mini- mize distortion during nitrogen hard- ening. : The nitrogen hardening treatment consists essentially of the exposure of the castings to the action of anhy- drous ammonia gas at a temperature of 510 deg. C. for a period of from 80 to 90 hr. This treatment is car- ried out under conditions exactly simi- lar to the standard nitrogen harden- ing treatment as applied to nitralloy steels. ; The Properties of Nitricastiron In examining the properties de- tailed in Tables I and II, it is clear that the modulus of elasticity (EN value) is considerably higher at all stages of the treatment than that of ordinary centrifugally cast material. Centrifugally cast iron made to the requirements of the aircraft material specification has an average EN value of 16 to 17 million lb. per sq. in. The alloy cast iron has a minimum value of 22.5 and 19.5 million lb. per sq. in. in the centrifugally cast and sand cast conditions respectively. This value changes slightly in the upward direction with each treatment. The nitrogen-hardened specimens have a distinctly higher EN value than the material in the as-cast condition. The strength values have been ex- pressed as tensile strength in the terms of the previously-mentioned specification. For the sake of better comparison, these values are ex- pressed also in terms of the modulus of rupture. Centrifugally cast ma- terial to the 4K6 specification pos- sesses average strength values of 40,000 to 45,000 lb. per sq. in., cor- responding to moduli of rupture of 65,000 to 72,000 Ib. per sq. in. The strength of this aluminum-chromium alloy is therefore considerably higher than that of the ordinary centrifugal- ly cast material. The heat-treatment of the alloy is accompanied by a dis- tinct increase in strength amounting to approximately 25 per cent. The Fig. 6.—Centrifugally-cast Nitricastiron, nitrided surface, etched with picric acid, 200 diameters. nitrogen-hardened specimens show a slight falling-off from the strength level attained as a result of heat- treatment. The permanent set is an arbitrary value commonly used in testing ma- terial for piston rings, cylinder liners and valve inserts, and represents the permanent change in the gap of a gapped rig after stressing at 31,000 lb. per sq. in. (British Standards In- stitution formula). The values, which increase in the hardened and sta- © bilized condition, are definitely low. Standard centrifugally cast material usually shows a permanent set of the order of 8 to 10 per cent. The change in hardness of the material due to the heat-treatment is clearly indicated, annealing being accompanied by a dis- tinct softening. Specimen No. 12 in the series shows a slightly higher value than would be expected, due possibly to some slight irregularity in the treatment. The properties of the sand cast specimens have approximately the same tendencies as those of the cen- trifugally cast material. In magni- Fig. 7.—Centrifugally-cast Nitricastiron at 600 diameters instead of 200, as shown in Fig. 6; the reproduction has been reduced to one-third of the original. tude the values of the modulus of elasticity (EN value) and tensile strength are lower than those of the same material centrifugally cast; but at the same time they are distinctly higher than those of ordinary centrif- ugally cast material, and quite equal to the best results obtainable with ordinary sand cast iron for high-duty purposes. The permanent-set values are higher than those of the centrifu- gally cast alloy and more nearly ap- proach those obtained from ordinary centrifugally cast material. In the as-cast and annealed condition the hardness is lower, but in the hardened and stabilized condition it more near- ly approaches the hardness of the same alloy centrifugally cast. The sand cast material is somewhat less stiff and less strong than the cen- trifugally cast metal. Microstructure Figs. 1, 2 and 3 show the unetched and etched microstructures of the sand-cast specimens in the as-cast and annealed condition. In the as-cast condition the matrix consists of very finely-laminated pearlite and extreme- ly small graphite flakes, together with substantial quantities of free carbides. In the annealed condition (Fig. 3) the pearlite carbide is seen to have coagu- lated in a ferrite matrix. The finely- divided graphite is more clearly visi- ble in this micrograph, and the free carbides are somewhat less in quantity. The hardened and tempered struc- ture is shown in Fig. 4. The matrix containing free carbide and graphite is presumably pearlitic in character, although it was found impossible to resolve this at a magnification of 1500 diameters. It was found to contain a large amount of small specks, which are probably carbides thrown out of solution during cooling. The dark- gray constituent is probably inter- mediate between troostite and pear- lite, and this constituent is almost absent in specimen No. 11 possessing the lower hardness figure. The microstructures of the centrif- ugally cast specimens were similar to those of the sand cast specimens, with somewhat finer graphite and a larger amount of free carbide. For comparison purposes a stand- ard specimen of nitralloy steel LK3 The Iron Age, May 18, 1933—777 Fig. 8.—Sand-cast Nitricastiron, nitrided surface, etched with picric acid, 600 diameters. was subjected to the nitrogen harden- ing treatment along with the speci- mens of cast iron. The hardness and depth of penetration obtained are given in Tables I and II. The alloy, both when sand-cast and when cen- trifugally-cast, gave hardness and depth of penetration values somewhat lower than those of the control-steel specimen; the degree of hardness at- tained and also the depth of penetra- tion in the centrifugally-cast speci- mens were slightly greater than those of the sand-cast specimens. To illustrate the structure of the hardened layer, micrographs have been chosen from several other speci- mens from the same cast of alloy ma- terial. Fig. 5 shows the structure of a sand-cast specimen, and Fig. 6 that of a centrifugally-cast specimen. The nitrogen-hardened layer in both cases etches darker than the core with picric acid. The carbides exist in the hardened case apparently un- decomposed, and an extreme outer layer which etches lighter than the hardened case can be clearly seen un- der the microscope and is visible in Fig. 6. 7 Fig. 7 shows the same specimen as Fig. 6 at a higher magnification. The extreme outer layer is clearly visible in this illustration, as are also the Fig. 9—Diamond hardness impression on nitrided surface of centrifugally-cast Nitricastiron, 110 diameters. specks of deposited carbides and the darker etching of the ground-mass constituents. It is of general interest to note that some of the massive car- bide areas in the nitrogen-hardened portion show one or more rectilinear markings in a direction at right an- gles to their longest axis. None of the carbide areas in the core appears to show these markings. Immediately underneath the ex- treme outer layer is a concentration of specks of a third constituent. This appears to be characteristic, and a further example is shown in Fig. 8, illustrating the extreme outer edge of a sand-cast specimen. The depth of penetration of the hardening effect shown in Fig. 8 corresponds to the depth of the dark-etched case shown on the specimen at the lower magni- fication. In all the specimens examined, the nitrogen hardened surface is quite coherent and is not easily flaked or spalled. Under the microscope the polished surfaces of the hardened specimens show numerous small cavi- ties. These are due to the presence of the free graphite in the surface and are illustrated in Fig. 9, which also shows a typical diamond hard- ness impression. The complete ab- sence of spalling is demonstrated by mens used in the testing procedure are of rectangular cross-section, but in testing them no sign of flaking or spalling occurs even at the extreme corners of the section until stresses closely approximating to the break- ing stresses are attained. Applications of Nitricastiron While the principal applications of Nitricastiron are the manufacture of the various types of cylinders and cylinder liners used in the construc- tion of engines, pumps and compres- sors, there are quite a variety of other engine parts to which the ap- plication of this material might be considered usefully. The fuel pump and parts associated with it, particu- larly the fuel pump body casting, is a typical example in connection with compression ignition engines. Cast- iron skew gears, constant mesh gears, wiper cams and a variety of bushes and collars are among the many other items where it might be expected that the hardened Nitricastiron would give useful service. Many different types of castings in this material of varying degrees of complexity have been produced al- ready by ordinary sand -casting methods, but by far the largest com- mercial application at the present free massive carbides, the small this impression. The ring-form speci- time is the production of cylinder Table |—Centrifugally Cast Aluminum-Chromium Cast Iron Combined Phos- Alumi- Molybde- Tot. Carbon Graphite Carbon Silicon Manganese Sulphur phorus, Chromium, num, Vanadium, Titanium, num, Per Cent Per Cent Per Cent PerCent PerCent PerCent Per Cent Per Cent PerCent PerCent Per Cent Per Cent 2.61* 1.38 1.23 2.58 0.61 0.07 0.096 1.69 1.43 trace nil nil Modulus of Modulus Elasticity Tensile Firth Depth of En Value, Strength, Rupture, Permanent Diamond Penetration 10¢ Lb. Tons Tons Set, Hardness of Nitriding, Spec. No Condition Treatment perSq.In. per Sq.In. perSq.In. Per Cent Numeral In. 3 As cast 22.5 24.5 39.2 2.56 418 4 As cast 22.5 25.9 41.5 Not taken 418 7 Annealed 4950 deg. C followed by 22.5 31.5 50.4 2.78 302 8 Annealed tslow cooling in furnace. 23.7 29.8 47.8 Not taken 302 ( Quenched in oil from 876 1 Hardened and stabilized | deg. C. Reheated to 600 23.0 29.5 47.2 4.75 302 12 Hardened and stabilized | des. C for 1 hr. followed 22.7 31.4 50.4 Not taken 364 by slow cooling in still air 15 Nitrogen hardened 90 hr. at 510 deg. C. 24.8 28.9 6.8 Not taken 962 6.016 16 Nitrogen hardened 90 hr. at 510 deg. C. 23.5 29.8 47. Not taken 982 0.018 17 Nitralloy steel LK3 90 hr. at 510 deg. C. - —_————Control Specimen————_—__ 1066 0.026 *As cast condition; cast No. 147 778—The Iron Age, May 18, 1933 cedure n, but ing or ‘treme resses break- rt ons of ire of 3; and struc- npres- ty of e ap- ht be pump rticu- ng, is with Cast- rears, ushes other ected vould gs in os of 1 al- sting com- esent inder mn 5, liners by the centrifugal casting process. Most of the smaller types of gasoline engines, compression ignition engine and Diesel engine types of liners have been produced and the present experience of the behavior of the material in service is derived from these smaller engines. Fig. 10 shows a charge of 300 small liners before closing the box prior to inserting in the hardening furnace. A large number of Nitricastiron cyl- inder liners have been fitted to vari- ous types of engines and are under close observation in service, some of them operating on services under notoriously difficult conditions inso- far as cylinder wear is concerned. Many of these have now been in ser- vice and under observation for a period of two years and in all cases excellent results are being obtained. The nitrogen hardened surface is definitely corrosion resisting and this property is one which is likely to prove of value in engine cylinder liners. In several cases already liners have been manufactured hard- ened externally as well as internally with the object of providing some re- sistance to corrosion on the cooling Fig. 10.—Charge of 300 Nitricastiron cyl- inder liners prior to closing box for nitrid- ing, water side. A further aspect which is of some importance in considering the applications of Nitricastiron is the ability to reharden parts which have become worn without running any risk of damage to machined sur- faces, keyways and threaded holes. These surfaces not required to be hardened can be protected and as there is no sealing or no reheating and the hardening itself is conducted Single-Stand Continuous Rolling of Hot and Cold Strip HE use of one single four-high reversing stand to do the entire work of the continuous mill in rolling such material as strip was dis- cussed before the Cleveland district section of the Association of Iron and Steel Electrical Engineers by A. P. Steckel, president, Cold Metal Proc- ess Co., Youngstown. In hot rolling, he said, the capacity of such a mill is in excess of 10 tons per hr. per ft. of width, these figures applying to steel rolled to No. 12 gage from an initial slab thickness of 4 to 5 in. The weight of a single piece practical to roll in this type of mill he put at as high as 1 ton per ft. of width, which, he added, is in excess of the weight possible to produce in existing contin- uous hot mills. He touched on the arrangement for keeping the hot strip on coilers in hot chambers close to the mill on either side, so that storage in the hot cham- bers during rolling keeps the edges of the material hotter than the inte- rior. It has been found, he explained, that the maintenance of a high tem- perature on the edges of the strip contributes favorably to preventing at a low temperature, risk of damage is completely eliminated. It is considered that as the prop- erties of Nitricastiron become more widely known its application will ex- tend widely. It places in the hands of the designer and engineer a material with all the advantages of cast iron, ability to cast readily into compli- cated forms and shapes, and wearing surfaces of a superhard character. wear of the rolls at the point where the rolls ordinarily cut out first, that is to say, at the part of the rolls that is rolling the edges of the material. Sufficient work has already been done on this type of mill, he said, to warrant the assertion that on low- carbon steel a pair of rolls will pro- duce a material of good finish after producing 60 tons per ft. of width in No. 12 gage. This would mean in the worst case changing rolls once every 6 hr. when working at normal capacity. Over against this he pointed out that a roll-changing rig may be provided capable of changing rolls in a few minutes. He offered as another argument in favor of his de- sign the fact that it provides for the sharp bending of the material at each Concluded on Advertising Page 12) Table 1|—Aluminum-Chromium Cast Iron, Cast in Green Sand Combined Phos- Alumi- ? zs Molybde- Tot. Carbon Graphite Carbon Silicon Manganese Sulphur phorus, Chromium, num, Vanadium, Titanium, num, Per Cent Per Cent Per Cent PerCent PerCent PerCent Per Cent Per Cent PerCent PerCent Per Cent Per Cent 2.65" 1.80 0.85 2.44 0.60 0.075 0.098 1.58 1.37 trace nil nil Modulus of Modulus 2 Elasticity Tensile of Firth Depth of En Value, Strength, Rupture, Permanent Diamond Penetration 10° Lb. Tons Tons Set, Hardness of Nitriding, Spec. No. Condition Treatment per Sq.In. per Sq.In. perSq.In. Per Cent Numeral In. 1 As cas 19.5 19.8 31.6 6.1 340 2 AS cant 19.4 22.9 36.7 Not taken 340 5 Annealed 4950 deg. C followed by 19.7 : 25.8 41.3 _ 9.7 269 6 Annealed tslow cooling in furnace. 19.7 Not taken Not taken 262 ( Quenched in oil from 870 y sl i $ Hardened and stabilized |) deg. C. Reheated to 600 19.2 28.6 $5.7 Not taken 300 10 Hardened and stabilized ) deg. C for 1 hr. aoeeees 18.2 Not taken Not taken 241 by slow cooling in still air zs 13 Nitrogen hardened 90 hr. at 510 deg. C. 20.1 Not taken asig Not taken 894 9.015 14 Nitrogen hardened 90 hr. at 510 deg. C. 20.3 23.9 33.3 Not taken 904 9.015 17 Nitralloy steel LK3 90 hr. at 510 deg. C. aa ———_———Control Specimen - 1066 0.026 *As cast condition; cast No. 147 The Iron Age, May 18, 1933—779 Each pin is given four passes through the rough grinder. The operator checks his work by means of a micrometer. quired diameter is purchased in 12 to 14-ft. lengths and in diameters ranging from % in. to 2% in. These bars are stored in racks convenient to a battery of 12 Gridley automatics, which drill the solid bar and cut the stock to length a fraction of an inch longer than that desired for the finished pin. The company’s catalog lists thousands of sizes of piston pins for automobile, truck and tractor engines, some of which have not been manufactured for 10 or 12 years. Therefore as a usual thing not more than one Grid- ley automatic is set up at a time to start operations on a pin of given size. Two single-spindle machines are used for pins that are drilled clear through when the depth of the drill- ing operation is too great for the Gridley automatics. S A. E. bar stock rolled to the re- = Some piston pins are specified with a hole that tapers from both ends. These pins, after having been drilled, are taken in baskets to a special double-head reamer made by Hoefer Mfg. Co., Freeport, Ill. This unit is magazine fed to an automatic vise, which grips the pin and holds it securely while reamers automatically 780—The Iron Age, May 18, 1933 advance from both sides. The tools advance the necessary depth, then back out, and the pin is automatically ejected from the machine which re- loads from the magazine. This machine is motor driven, there being a separate motor for each of the two spindles which are driven through gears. The pin holding device is hydraulically operated. As the pins drop from the reamer they fall into metal pans in which they are carried to turret lathes. At this point pins of all sizes and specifications meet to be cut to exact lengths and have the ends chamfered. Limits on the lengths of pins are held to 0.005 in. If specifications call for additional drilling, or milling such as center slots or keyways, the pins are moved across an aisle to machines that are equipped with quick-acting vises. The operations so far described are all in a straight line, at the end of which, in another building, is the heat treat- ing department. The pins are here dumped into a rotary gas-fired carburizing furnace. For the ordinary run city gas, a mix- ture of manufactured and natural gas, is used as the carburizing agent. ReplacemenD: Fe FOr the past three and one-half years, the Elgin Machine Works, Elgin, Ill., has been run- ning close to capacity. The secret of its success in so doing is the combination of a quality product with a constant search for capable dealers. No effort is made to sell manutacturers, the replacement demand, properly cultivated, be- ing sufficient to maintain the production rate. This article deals with the methods employed to secure and maintain high quality of product, which after all is the more impor- tant part of the problem. ie ed However, on large pins, where warp- ing may be a factor the pins are packed in a carburizing compound. The temperature is raised to 1650 deg. F. and is controlled by a Leeds & Northrup potentiometer. The gas used in the carburizing chamber of this American Gas Furnace Co. unit is dehydrated by passing it through two cylinders of calcium chloride. The usual depth of case is 3/64 in. Five times during the carburizing period the furnace is opened and pins are removed for a break test to ob- serve the rate of penetration and also to stop the process when the desired depth of case has been reached. This furnace, operating 24 hr. a day, carburizes 150,000 pins a month. Inside and Outside Scale Removed After carburizing, the pins are quenched and then placed on cast iron racks which are made with fingers so that each rack will hold 17 pins. The loaded racks are piled two high in a gas-fired hardening furnace furnished by the Barkling Fuel En- gineering Co., Chicago. Temperatures range from 1380 to 1460 deg. F., de- pending on the size of the pins and the wall thickness. The pins are then quenched and placed in a rotary blaster in which steel shot is used. By this method all scale is removed from both the outside and the inside. The pins then double back on the other leg of the U production line, the shipping department being opposite the Grid- ley automatics. As received in the grinding department there remains 0.015 in. of metal on the diameter nm ©Ocrrr ee a ee Se 1enDemand Stabilizes Piston Pin Production -half to be removed in three operations, namely, rough grinding, finishing chine . ; grinding and lapping. These opera- run- : tions are performed on three ma- ecret § chines furnished by Cincinnati Grind- s the ers, Inc. duct The rough grinder is fitted with pable = § wheels of 60 grit, and each pin is > sell given four passes. The machine is ment magazine fed. The size of the pins » be- is checked by the operator who uses the a micrometer. When he passes the pins to the finish grinding machine there is 0.0015 in. of metal on the the diameter still to be removed. Three and i to four passes are made through the duct, i finish grinder which is fitted with ipor- wheels of 120 grit. This operation has a working limit of 0.0005 in. After finish grinding, diameters are checked on a Fritz Werner gage. The lapping or ultrafinish opera- tion calls for wheels of 500 grit. Each warp- pin is given two passes. The object Ss are - of this operation is to obtain the de- pound. sired finish and not to remove metal. 1650 The finished pins must measure with- Leeds in 0.0005 in. on the diameter. All e gas pins are then inspected for dimen- yer of sions, hardness and surface, after Piston pin holes are tapered from both ends on this automatic double-head machine. The vise . unit which they are given a hot slush coat- jaws are hydraulically operated. rough e. ing to prevent rusting. They are 64 in. then moved to the packing and ship- rizing ping department. 1 pins to ob- d also New Copper Plating Bath = NEW bath to take the place of day, 44 the cyanide bath in the electro- h. lytic deposition of copper on steel was discussed in a paper presented jointly oved to the Electrochemical Society by Prof. Colin G. Fink, head of the di- 3 are vision of electrochemistry of Columbia cast University, New York, and Chaak Y. with Wong, of Canton, China, who had in- old 17 cluded the subject in a chemical en- d two gineering thesis. A complex copper irnace salt—disodium diaquodioxalatocu- | En- priate—is used, with sodium sulphate itures and boric acid also constituents of the ., de- bath. The development is the result s and of studies to provide for a substitute of the copper cyanide bath because of | and its decidedly poisonous nature. The which sodium compound is used mainly to ethod improve the conductivity of the bath. h the A low current density and a short pins plating period are found to be op- eg of timum working conditions. Ten am- pping peres per square foot for 60 sec. Grid- proved very satisfactory. A good, n the , adherent copper deposit is obtained, mains Five break tests are made during the carburizing period. On the truck are pins placed on cast forming a satisfactory basis for the meter iron racks, piled two high, for placement in the hardening furnace. acid copper bath to follow. The Iron Age, May 18, 1933—781 REHEATING rolls of sheet and Pe plate mills by means of elec- trical induction hasbeen achieved by the Electric Furnace Co., Ltd., London, England. Portable ap- paratus has been developed and the illustrations show how it is used. Meanwhile from a monograph on the subject by A. G. Robiette, of the Elec- tric Furnace Co., some observations may be made on the experience with and the economies of the method. The pair of rolls to be heated, mounted in place, of course, in their stand, are encircled with a coil of cop- per strip or bar wound on edge and braced together and supported on two rods. In one of the pictures the heater is shown being lowered over the pair of rolls and in another it is being fitted into working position. The lower ends of the copper bars are connected by flexible cable and the connecting-up is effected in a matter of 3 min. by tightening up a single bolt. The rolls are covered by a sheet or blanket of asbestos to minimize the loss of heat by radiation, which is also reduced by the fact that the rolls have a planished surface. An alternating current passes through the coil, which is always com- 782—The Iron Age, May 18, 1933 paratively cool, and this generates heat in the roll by eddy currents and hysteresis. The heater is supported clear of the rolls so that the mill can be revolved if another mill in the same train is required to be put into ser- vice. Normally the rolls are station- ary—which is a saving in power— yet the heating is uniform round the circumference. It has been found con- venient to work the heater from a 100 to 120-volt single-phase supply. If two heaters are used these can be operated from a three-phase supply with suitable transformer connections. Three heaters or multiples of three can, of course, be connected to a three- phase supply. For a 30 x 42-in. roll the loading per heater is 50 to 60 k.w., and the time required to raise the HE roll induction heater, comprising a group of conductors to encircle the rolls, is here being lowered into position. HE lower ends of the conductors of the heater are con- nected by flexible cable and the final connecting -up__re- quires the tightening of a single bolt. Preheats