The year 1927 was a year of crisis for the town. To Vereeniging the steelworks on the Vaal bank was vital, and in 1927 its existence was threatened when Parliament passed the Act which led to the establishment of Iscor. It was feared that Usco would perish in competition with the Government sponsored steelworks which was to be built in Pretoria.
The passing of the Act had climaxed years of endeavour by men who had sought to establish a steel industry founded on smelting South Africa's native ores. At Usco's works, steel was produced by melting scrap metals.
For years Cornelis Delfos had sought financial backing for his scheme to establish in Pretoria a blast furnace company equipped to produce steel from ore on a grand scale. It happened fortuitously that both he and Louis Marks were in London in the depression years of the early 1920's soliciting financial support for their respective companies. Delfos had failed in his mission and General Smuts, who was then Prime Minister and anxious that the Pretoria scheme should succeed, cabled the South African High Commissioner in London instructing him to contact Lewis and Marks Limited and enlist their support in raising capital for the Pretoria project. Smuts realised that Lewis and Marks had considerable influence on the London money market.
Marks invited Delfos to participate in negotiations with Sir W. G. Armstrong Whitworth and Co. Limited; and when the British steel firm had been satisfied that it was economically sound to establish a large steel industry in South Africa, the company agreed to contribute £800,000 at 10 per cent interest for ten years, provided the Government guaranteed the interest. In effect, this meant that the return of the company's capital, at least, was guaranteed. However, Armstrong Whitworth's support had been gained for a somewhat amended project which visualised firstly the expansion of Usco's production at its Newcastle blast furnace and at Vereeniging. If this was successful then the British company would be prepared to consider the Pretoria scheme.
Delfos and Marks returned to South Africa and informed Smuts of the terms, but Smuts' position as Prime Minister was uncertain and he would not commit himself. Armstrong Whitworth, in consequence, withdrew from the negotiations.
Smuts invited Gutehoffnungshutte of Oberhausen to investigate the feasibility of the Pretoria scheme and the German company's report, completed towards the end of 1924, favoured the Pretoria scheme. However, before Gutehoffnungshutte could conclude an agreement to participate in the venture, the Ruhr was occupied by France.
Delfos concentrated on gaining Government support for his scheme and when Hertzog's National and Labour Party coalition government took over from Smuts some Labour Party members applied pressure to the Government and two motions calling for the establishment of a State steel industry were proposed in the 1925 and 1926 sessions of Parliament.
In March 1926, the Minister of Mines, Advocate F. W. Beyers, asked the Board of Trade and Industries to comment on the German report. Dr. A. J. Bruwer, the Board's chairman, entrusted the work to Dr. Frikkie Meyer, then the Board's chemical engineer, and he commented favourably on the conclusions drawn in the German report. However, a certain group in the Government wanted fresh opinions sought overseas, and General Hertzog, H. C. Havenga, Bruwer and Delfos visited Britain and consulted Sir Ernest Bury, who had been consultant to Delfos' firm. These and other interviews with overseas steel experts encouraged the Government in its resolution to proceed with the Bill.
Early in 1927, the Government intention to introduce the Steel Bill was announced in a speech from the throne. It was a signal for one of the most hotly contested political battles of the times and the main arguments hinged on State control.
After the unsuccessful negotiations with Armstrong Whitworth, the directors of Usco had expected the Hertzog Government to proceed with its endeavours to establish a steelworks in Pretoria, and it came as no surprise to them when the Steel Bill was introduced in the Assembly on February 10, 1927.
A special meeting of the Town Council-in-Committee was held on February 25 at which Mayor Dickinson reported that he had discussed the proposals contained in the Bill with Mr. Mallinson, one of the directors of the Union Steel Corporation.