New-York tribune., 1918-03-24
| rice Fixing the
Dominant Factor
In Steel Trade
lndustry's Volume Is Ex-
pected to Reach New
Maximum

PITTSBURGH, March 23.-The steel
industry is dominated by three fac
tors which will be of continuing
influence as long at the war lasts.
These are government-fxe prices.
raw materials supply, and labor and
transportation.
At the moment the matter of price
fixing is Of paramount interest be-
cause the existing scale expires on the
last day of this month, and confer
ences are now being held in Wash
ington over the new scale, which will
become effective April /. This matter
Of maximum price directly affects
more persons than either or both of
the other factors. All producers are
affected, and virtually all consumers.
Incidentally, the owners Of stocks
representing the capitalized value of
though they may not be directly af-
fected, for this reason; except in the
case of those steel companieso which
have not yet declared an initial divi-
dend on common stocks, the impress
sion is strong that stockholders as a
whole will not receive a larger per-
centage of earnings from this time
forward than they received out of the
earnings of 1917, no matter what gross
and net earnings may be. On the con-
trary, it is believed here that the price
of United States Steel common fore
shadows reduction of the rate of ex-
ira dividend some time this year, and
possibly next month. The ground for
the belief that holders of steel stocks
have already received the maximum of
profits under war conditions is the OBJ
vious difficulty of even some important
companies in putting 1917 profits in
liquid shape for the payment of Fed
eral taxes, due not later than June Is
next.
Need Larger Capital
An additional reason for this view
Is that the need for larger capital to
carry inventories is much greater than
calculated even six months ago. and
besides this the experience of the ship
building industry in the matter of
government-tiXcd wage scales is suG-
gestive of possibilities in the general
steel industry If the emergency should
arise. Therefore, forward looking
manufacturers are more disposed than
ever to increase the item of cash in
current assets.
Where any expression of opinion is
l. >to,, III Ii s
the government in the matter of price
fixing next week there is pretty gen.
eral agreement that there will be a
moderate advance in some kinds OF
steel, more particularly on nonwar
material, if such exists. This is not
SO much because the manufacturers
need the money as because the govern
ment needs the war taxes which the
manufacturers must pay. In the last
quarter Of 1877. operating under the
pricefXing policy, the earnings of the
Steel Corporation were large enough
to warrant a deduction for taxes of
S244 100000 year. That sum is suffi-
cient to meet annual interest require
ments on more than S4,oOo,o00,o00
4 per cent Liberty bonds-a pretty
generous contribution for single in
dustrial concern. On the assumption
chat the Steel Corporation represents
so per cent of the industry in this
country, and the further assumption
that the other so per cent enjoyed rel
atively as large excess profits, then
it may be said that the steel trade of
a sum sufficient to carry our war debt
to date, including advances to our
allies. That is the argument one hears
in support of the view that in fixing
prices the government will do nothing
to impair earnings or discourage man
ufacturers from taking the larger
risks nseparable from doing business
during war times.
The problem of obtaining an ade-
quate supply of raw materials is
serious one for all steel makers who
do not own or control such materials
from the ground up. While there has
been notable recovery, in production
from the low mark touched in January
larger if makers could obtain sufficient
raw and semifnished material
This question of supply is still
largely a matter of adequate trans
portation facilities. In this respect
also there has been improvement, but
conditions are far from normal, and
they affect different products from the
same mill. For example, the Steel
Corporation is furnished fairly salts
factory shipping facilities for forward
ing tin plate to Gamers, but from the
same mill in which tin plate is shipped
there is a virtual embargo against
shipping steel plates not directly in
tended for the completion of some
kind of government contract.
Labor Factor Third
The labor factor, while important, is
ranked third in it's prospective infiu-
ence upon the industry because of the
belief that if the necessity arises the
government will handle the steel trade
labor situation as it did similar sit
uation in the shipping industry last
month. This belief or hope was ex-
pressed recently by President F. N.
Hofstot of the Pressed Steel Car Com
pany. Last year this company was
compelled to hire four men on the
average for every job. That is to say,
each employe averaged only three
months service. President Hofstot
said this matter is of the gravest i'm
portance in the present crisis and ex-
pressed the hope that "our government
may promptly correct" the migratory
disposition of workingmen. Thus lar
the only method of correction has been
in advancing wages and improving
working conditions. This remedy has
increased the migratory disposition of
labor by attracting the latter from
concerns not distinctively engaged on
war orders to those under the actual
or quasi control of the government
AS far as the volume of business in
c&1 Il