While the first order was for 200,000 shells, additional orders were placed by the War Office with the Committee at various times between September, 1914, and November, 1915, aggregating in all $345,222,870.24. The contract prices were in most cases named by the War Office. In some cases the prices were the result of compromise arranged by cable between the Committee and the War Office. In other cases the prices were those suggested by the Committee and were accepted by the War Office.
As already stated, every order was covered by a contract between the War Office on the one hand and the four civilian members of the Committee on the other, for the carrying out of which the civilian members were collectively and individually responsible. When they resigned office a statement, which was prepared and duly audited showing the total cost, together with the surplus based on prices agreed upon and covered by contracts between the War Office and the four civilian members, showed that the contracts entered into amounted in all to $345,222,874.34. Approximately 87½ per cent. of these orders were then completed, and the surplus—the difference between the contract price and the cost of production—was $42,097,584.57, less overhead charges, cost of inspection, guages, etc., of $737,400.31. If 12½ per cent. be added to this overhead charge to meet similar expenses incidental to the completion of the contracts, $92,175.03 would require to be added, making the total overhead expenditure $829,575.34, or a total net surplus to the credit of the Committee on November 30, 1915, of $41,268,009.23. The total overhead cost, covering inspection, cost of guages, accounting, and office expense of the Committee, worked out at .17, or less than one-fifth of one per cent. of contract prices.
In this connection it may be stated that the prices paid by the War Office to American makers in many cases were considerably higher than those paid in Canada for shells and other material. In other cases, where the prices were approximately the same, the volume of orders entrusted to the United States makers were very much greater than the corresponding orders placed with the Canadian Shell Committee, and the American prices should have been considerably lower. Further, the orders placed in the United States were entrusted to an agent, who is reported to have received a handsome commission, whereas the services of the Canadian Shell Committee were freely given.
In the early stages the executive work of the Committee was carried on by General Bertram, whose time was largely taken up in co-ordinating the machining of parts, and the placing of orders for components among Canadian manufacturers, while Thomas Cantley undertook to carry out experiments, both chemical and physical, looking to the production of open hearth basic steel to meet the specifications and tests called for by the War Office. Experiments were also carried out later in regard to steel discs, base plates, nose plugs, alloy steel armor plating, etc. Later Colonel Bertram, Thos. Cantley and G. W. Watts collaborated in fixing prices for component parts and machining and assembling of the different size shells. Later they devised a complete system of records, inspection sheets, transfer and shipping forms, store and stock forms, and a complete system of accounting was worked out and inaugurated by them.
Late in September the Minister of Militia, on the suggestion of the Committee, approved the appointment of David Carnegie as Ordnance Adviser to the Committee, in view of the fact that he had had considerable experience in munition work at Woolwich Arsenal.
When the War Office first appealed to Canada for assistance in supplying munitions, little was known of shell manufacturing in Canada. This being the case the Canadian Government decided that a Committee of Manufacturers could better serve the War Office than could the Government through any of the Departments; and then followed the formation of the Shell Committee as originally outlined. The Committee had before them three problems: First, that of securing steel of the requisite character; secondly, the forging of the steel into shell bodies, together with the supply of other component parts, comprising brass, copper, tin, zinc and antimony; and thirdly, the machining and assembling of these various component parts.
Up to the time that the request came from the War Office practically no men in Canada, with the exception of those employed at the Dominion Arsenal, knew anything about the manufacture of shells, or the material required for same. The steel hitherto used at the Dominion Arsenal had been supplied by the Crucible Steel Co. of America, and the War Office had stipulated that only Acid Open Hearth Siemens-Martin steel could be employed in shell forgings. As no Siemens-Martin steel was produced in Canada, and if the War Office adhered to their stipulation in that respect the entire steel supply would have to be obtained in the United States, the American makers, feeling sure that this would be done, promptly advanced their prices approximately forty per cent.
At this juncture the Minister of Militia appealed to Thomas Cantley, then President and General Manager of the Nova Scotia Steel and Coal Co., as to whether the Scotia plant could not produce steel which would meet not only the chemical but physical requirements of the War Office shell specifications. He at once expressed the belief that they could do so, and immediately proceeded to carry out exhaustive experiments, both chemical and physical, which proved conclusively that the Scotia Company could produce steel as called for by the War Office, and offered to supply it at a price as low as the original price asked by the American works, and indeed below the American price. Within a few days of receipt of the first order by the Shell Committee from the War Office, the Scotia Company supplied the Committee with steel for 200,000 shrapnel shells. The difference in price paid to the Scotia Company and the price asked by the American Co. for the steel supplied on this small order amounted to over $40,000.
As regards forging of shells, the cost of producing the various component parts, the labor involved in finishing and assembling these—the Committee were supplied with the cost of these various operations as carried on at the Dominion Arsenal, but the difficulty involved was that the work, having been done there by a class of machine not in general use in Canada, and with the comparatively small order in hand, manufacturers could not be found who would purchase and install plant for this work and turn out shells within a reasonable time and price.
Manufacturers throughout the country were invited to visit the Dominion Arsenal at Quebec, where they would be shown the various operations involved, and given all information re cost, methods employed, etc. Quite a number responded to this invitation. Some offered to undertake the work; others declined to undertake it on any basis whatever.