The Washington herald., 1921-12-10
INDEPENDENTS SAY
ANOTHER MERGER
IS A NECESSITY
Cannot Compete With U.
S. Steel and Foreign
Concerns.
TO AVOID INITIATION
Promoters Seek Actual Value
AS Basis for New
- Combination.
TO AVOID INITIATION


NEW YORK, Dec. s.-"Practically
every independent steel company in
The country Is losing money on steel
shipped on basis OF present prices.
Every ton shipped means loss.
U3Aed States Steel is the only COM
pany that can show a profit, due to
the great Investigation Of its output,
Its several thousand miles OF railroad,
its hundreds of steamers and oarges,
It's working capital Of close to $780,
900. 900 and the location OF its plants
at convenient shipping points"
This was the reply Of the head OF
one of the largest independent COM
panies to a question put to him by a
banker seeking information in connec-
ton with the independent steel merger.
Every steel manufacturer in the coun-
try holds that a combination Of the
independents Is an economic neces-
sity. Schwab, Corey. Topping, Camp
bell and other independent producers,
with one or two exceptions, say there
VIII eventually be a merger Of the
independent steel companies. although
nothing definite may develop in the
immediate future.
Must Get TOgether.
The independent companies cannot
10 on forever losing money said
one producer. They must get to-
gether and combine their assets and
slip from the nearest plants. High
freight rates and increased labor costs
compared with prewar years compel
such action. We may be in an era
OF consultations similar to that which
started more than twenty years ago
and ended with United States Steel
taking in a dozen OF more steel, ore
and coal companies that were con-
solicitations in themselves"
Certain OF the independent steel COM
panies claim they can make steel as
cheaply as o. S. Steel. This is no
doubt true from the viewpoint Of cost
Of manufacture alone. But when U. s.
Steers vast income from railroads.
steamships, interest on investments
and money loaned, etc. are taken into
consideration, the big company can
show good profit when the smaller
companies are reporting losses.
United States steel may come
within a few million dollars OF
earning its preferred and common
dividends this year after liberal
charges for depreciation. Many Of
the independents show large deficits
even after passing common divi-
dends Bethlehem Steel is an ex-
ception. but a large part OF its
Earnings in 1921 came from ship
building.
schwab Not Mentioned.
II is to be noted that neither the
Bethlehem Steel Corporation nor
Jones and Laughlin are mentioned
in connection with the proposed
steel merger. Schwab was the
leading spirit in the merger nego-
tiations two years ago. An ap-
privaI was made OF the Bethlehem
properties and the price fixed &C
cordingly. Certain Independents
objected to the high valuation and
this caused a rupture. The con-
fIOversy over appraised value OF the
different properties was responsi oil e
for the failure OF the merger nego-
tiations. At that time the chairman
Of one Of the large independent
companies remarked that market
valuations of the stocks were too
high to warrant putting through
a merger.
We must wait" he said, until
steel stocks reach their proper
levels. Some steel manufacturers
have peculiar ideas OF the intrinsic
value Of their respective stocks
when discussing merger possibn-
tiles" He now says the shares of
the independent steel companies are
selling far below the quotations Of
p few years ago and the cash Of
many of them is getting low.
Want Actual value.
Under these conditions" he SAID.
1T will be easter to bring about a
successful conclusion. But we are
IN no hurry. One thing is certain:
no generalization is going to be
placed on the shares of steel COM
panies entering the merger We
want actual value. II there were
innation in capitalization we would
be in a worse condition after mer-
ger than We are now to compete
with Europe and our large COM
petitor.
Il believe that by the latter part
of next year we will be fighting 70
maintain our foreign trade in steel,
due to the advantage Europe holds
over us in labor.
There Is not a steel manufac-
1urer who would endorse a wild
campaign in Independent steel
stocks at this time. It would be the
one great obstacle to a merger The
steel companies will receive for
their shares no more than they are
worth. Market values will be dis
regarded. Steel shares at present
are selling high enough when one
considers that we are all losing
money"