The precipitate formed during partial reduction of magnesium ferrite raises the coercive force by setting up high stresses in the ferrite matrix as a result of the difference in thermal expansion of the two phases. The slower the cooling rate, the smaller is the final stress and the smaller the influence on the coercive force. Only the magnitude and not the sign of the difference in thermal expansion is of importance, as is shown by making additions of inert phases with thermal expansions both larger and smaller than that of the ferrite. The maximum radial tensile stress set up in the ferrite by the reduced phase is approximately 40,000 1b. per sq. in. in a specimen air‐quenched from 1400° C. The formation of a reduced phase in magnesium ferrite is accompanied by a fourfold reduction of the residual porosity. It is not known whether this is the result of a change in stoichiometry of the ferrite with the development of an oxygen‐deficient structure and hence enhanced oxygen diffusion rate, or whether the reduced phase prevents grain growth until most of the vacancies have collapsed. The reoxidation of such a two‐phase material gives a polycrystalline material with greatly improved magnetic properties.