The Great Molasses

The views expressed here are those of the author and do not necessarily reflect the views of Morningstar.

History shows that companies can experience one bad event after another and still survive. Take United States Industrial Alcohol Co., which 100 years ago was involved in one of the most fascinating industrial accidents in history.

On Jan. 15, 1919, a giant steel tank containing 2.3 million gallons of molasses disintegrated in Boston, sending a tsunami of molasses flowing in all directions. It killed 21 people and wounded 150. Many horses died, and there was large-spread property damage. The supports for the elevated trains were knocked out, and an approaching train barely managed to stop before it would have plunged to the street. Rescue forces appeared immediately—police, firemen, nearby workers, and 100 sailors from a Navy ship in the harbor. Pulling living and dead bodies from the sticky molasses was very difficult, but the rescuers’ work was heroic and kept the death toll from rising even higher.[1]

There are many reasons to mark the centennial of this grisly catastrophe. Its scale and severity were great, and its location right in the middle of the city attracted much more attention than it would have had it taken place in Peoria. There was a class-action lawsuit against the tank owner. The suit spent three years in the courtroom and resulted in damages that were a record for the time.

A positive result from the disaster was a revision of building codes and engineering standards. I corresponded with Al Romig, executive director of the National Academy of Engineering. Romig knew all about the Great Molasses Flood. It is a classic tale taught to materials engineers and mechanical engineers in their first course on fracture. In cold weather, steel becomes brittle and can snap. The same thing that collapsed the molasses tank caused many Liberty ships to break in half during World War II. Structures still can collapse, as proved by the bridge collapse in Genoa, Italy, in August, but such disasters are less frequent.

When I was a freshman at MIT in 1951, one of the first topics we covered was hoop stress. The formulas were not very complicated, and the topic was over in two days. I idly wondered why it was in the curriculum at all. Later, of course, I realized that it was a relic of the Great Molasses Flood that took place only two miles from campus. In 1920, an MIT professor’s testimony proved to the judge that the tank was built in the wrong place and without proper engineering.

Who Was the Villain? The company that was responsible for the disaster was the United States Industrial Alcohol Co., or USIA. Its subsidiary, Purity Distilling Co., produced alcohol from molasses in an East Cambridge, Mass., distillery. The molasses arrived in ocean tankers from the Caribbean sugar refineries. (Molasses is a byproduct of sugar refining.)

When the Great War cannons opened fire in 1914, the need for high explosives required immediate expansion of munitions factories. Companies like DuPont and Hercules Powder had orders for all of the explosives they could ship. One of the ingredients for these explosives was ethyl alcohol, so USIA had every reason to expand its distillery capacity. Because the cheapest feedstock for alcohol is molasses, USIA authorized the construction of a large molasses storage tank located in the port of Boston and near its distillery. USIA decided to put it in the North End of Boston, which was geographically suitable, although the North End was a residential area primarily occupied by poor Italian immigrants. Today, large industrial storage tanks would be built in unpopulated areas, for reasons that became obvious after the disaster.

The giant tank was made of steel plate fastened with rivets, the standard technology of that time. The tank was built by a reputable steel company, but USIA had not authorized serious engineering studies before construction and did not even properly test the tank after it was finished.

The Anarchists Even as the Boston hospitals were overflowing with victims, everyone wanted to know the cause of the tank failure. USIA obviously did not want to accept the theory that it had built a defective tank. The company insisted that it must have been an anarchist's bomb.

This was not a far-fetched thought for the time. The best remembered of the anarchists, Nicola Sacco and Bartolomeo Vanzetti, were convicted of murders that occurred during an armed robbery in the Boston suburb of South Braintree in April 1920. In December 1916, there had been a bomb attack on the Salutation Street police station, which destroyed the station house but didn’t kill anyone. It was about a half mile from the molasses storage tank. The biggest anarchist attack of all was Sept. 16, 1920, on Wall Street, when a giant bomb killed 38 people. However, the defense attorneys’ claim that an anarchist attack destroyed the molasses tank ultimately failed.

What Became of USIA? Because most of you readers of this lurid tale are in finance, you may be interested in the history of USIA before and after 1919. It involves lots of M&A events.

The origin of USIA was the Whiskey Trust. After the Civil War, U.S. industry expanded rapidly. Many industry leaders formed cartels to control production and prices, including the Oil Trust, the Sugar Trust, and the Barbed Wire Trust. The Whiskey Trust was founded in Peoria, Ill., in 1887. It was a holding company in which individual distilleries swapped their distillers for stock in the trust. The trust only lasted until 1895, when state and federal antitrust laws broke up all trusts. The holding company spun out the individual properties, and one of the largest pieces became USIA.

By 1916, USIA advertised itself as the “largest producer in the world.” But no sooner did it achieve this status when Prohibition became a major political issue. The 18th Amendment passed in 1919 and went into force in 1920. Prohibition lasted until 1933. This resulted in the reshuffling of lots of corporations, and a company called National Distillers Products became one of the four major distillers after Prohibition was repealed in 1933. USIA changed its name to U.S. Industrial Chemicals and was ultimately acquired by National Distillers in 1951.

In 1987, National Distillers changed its name to Quantum Chemical Corp. They were still the largest producer of alcohol. Quantum was then acquired by

USIA went through all these bewildering changes of name and acquisitions and still retained its basic business. It may have been blamed for being a tool of the Whiskey Trust, excoriated as a rum-maker by the Prohibition crusaders, picketed as a merchant of death for being part of the munitions industry, or faulted for its culpability in the Great Molasses Flood, but USIA just went quietly about its business and survived.

The moral? A profitable company can stand a lot of bad publicity.

[1] The metaphor “slow as molasses in January” is often attributed to the Great Molasses Flood, but the phrase was in print in 1872.

This article originally appeared in the December/January 2019 issue of Morningstar magazine. To learn more about Morningstar magazine, please visit our corporate website.