A comparative investigation of the preparation and structural properties of carbon nanoclusters was carried out by having the transition metals Fe, Co and Ni react with carbon using three different methods, with the focus on single-walled nanotubes and encapsulated nanoparticles. Carbon nanoclusters were synthesized first by the high temperature (similar to 3000 degrees C) and high carbon-content process of the conventional are-discharge, secondly by the high temperature but low carbon-content process of the modified are discharge, and finally by the relatively low temperature (similar to 500 degrees C) process of catalytic decomposition of carbon monoxide (CO). The samples were characterized with respect to morphology, internal structure, and related properties. The carbon nanoclusters prepared by the three different methods appear quite different on the surface, but have features in common that this report emphasizes. The same element can apparently serve different functions: (1) serving as catalyst under one set of conditions; and (2) being encapsulated into the growing cages in a different environment. The elements of the iron group (Fe, Co and Ni) were known as catalysts for growing the single-walled nanotubes and strings of spherical particles in conventional are-discharge, but could be encapsulated into the graphitic particles in the modified are discharge and the CO disproportion that this study demonstrates. It was found that variation of the metal to carbon ratio is required to make these elements assume the double roles of either catalyst or encapsulant. (C) 2000 Elsevier Science Ltd. All rights reserved.