The Birmingham age-herald., 1914-11-03

systematic and thorough manner the Steel corporation ventured Into the for eign markets. Its exports in 10 years az Eregated considerably over s1,oo.0oo in money value. The corporation in July of this year was planning extensive advances in the foreign market Its export business had served in great measure to make good the depression in the domestic trade. It Lad perfected an organization called the foreign sales department which, in sym metry, thoroughness and world reaching scope. has ne superior among the fer eign trade organizations Of the world.
 Among the subjects discussed by the n anegeinent of the corporation was thH question of the probable duration of the war. No satisfactory answer to this anes- ton could be given. The impression com monly held was that the duration weuld Do long and that the prediction Of Lord Kitchener that 1t would certainly last ls months would be found to have bean afl accurate prediction. Therefore, there was 8 uenstinEency which was practically certainly that fer year and a half tho foreign markets or some of them would be practically closed to this corporation,
 Another question was carefully eonsid- cred and discussed. This related to the DC stability Of speedy revival of industries by the nations now belligerent after war is ended. What would these nations pos sess in the form of capital or credit with which to pay for commodities of the kind manufactured by the ssteel corpora toni They would have an enormous quantity of old junk. broken down euuip- facnt, useless rifles. the remains of can hon. They would he compelled to devote themselves as far as possible for a time to the production of food and also cioth- Ing. Some years will probably pass before there will be nn apprecabie revival of general industry, This view was not set forth as absolutely correct. but it did set forth contingency possible if not prob- able. which such corporation as tho Steel company must consider especlally when the question Of dividends is under taken.
 What 1t Is Earning
 A careful analysls of the earnings of the corporation and 2 thorough study of business conditions, as there were found to exist for some tme, demonstrated that the corporation Is earning now sufficient 10 justify the payment of dividends at the rate of per cent. Two certainly, probably three, of the dividends recently declared were paid in part by recourse to the reserve fund. Had the dividend at per cent been maintained 1t woudl have been necessary again to apply to the re-
 
 difference between the per cent and the , per cent dividend If that rate were main tained. In view of the conditions created by the European war, supplemented as these are by depressed conditions in the domestic iron and steel trade it was with lnanimity decided that sound business judgment compelled the reduction or the dividend so that the rate agreed upon would represent actual earnings.
 The Value of Reserve Fund
 When discussions were under way which led to the organization of the United States Steel corporation, Norman B. Ream, who then, as now, was one of the commanding influences in the company, e rnestly argued in favor of establishing a reserve fund. MT. Ream stated that in his opinion the organization of any corporation should, so far as the financial feature of it was concerned, be so per- fected that in addition to the working capital and the capital necessary to fur rish the funds for the creation of the or there would be additional cap. ltal, paid up, equivalent to 10 per cent of the total capitalization. In that way-a reserve fund would be provided which would avail to make an institution strong for it would provide against any conceiv- able emergency. Had MT. Reams counsel been 1ully accepted, the corporation would have at it's organization established re- serve fund fully paid up of S1.500.0O0 ap- oI oximately. MT. Ream's recommendation was cut in two so that a reserve fund of s75, ,000,000 was created. It has several times since the organization of the com pany enabled it to meet the emergencies and 1t was the source from which two if not three recent dividends were main- tained at the rate of per cent, although probably not much more than per cent was earned.
 Now the corporation makes no further Iproads into the reserve. but in view Of domestic as well as European conditions It has decided to pay for the dividend what was earned and no more. This, it is will enable the corporation uc- cessfully to cope with any situation which may arise in case the courts decide that 1t Is not corporation organized and op- erated in violation of the spirit and in- tent of the Sherman law.