The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1921-10-27
STEEL EARNINGS
CONTINUE TOSHOW
DOWNWARD TREND
Rails Sold at Less Than
Present Cost of Pro-
duction.
FEAR TAX MEASURE
Business Men Believe Bill
Threatens Industrial
Recovery.
FEAR TAX MEASURE

NEW YORK. Oct 2s.-Steel-trade
conditions have shown little change
over the last two weeks. reports
indicate. The progress made Since
the Improvement began has been in
accordance with expectations of
producers At no time have they
looked for a rapid recovery. The
most optimistic look for so per cent
operations around the first of next
year. with a gradual increase to
around so per cent by spring.
There have been sufficient rea-
Sons for the hesitancy in steel buy
ing. as well as general business.
Maanfacturers realize that the
world Is going through an extraor-
binary period OF adjustment and
that recovery must necessarily be
slow. The threatened railroad strike
has given industry a slight chill.
but this is one of the easiest prob
lens.
Dspreciating European currency
and the belief Of many that certain
countries are heading for a crisis
have helped retard business growth
anaacheck a more rapid advance in
security values.
-sH Tax Bill Hurts Trade.
Tax revision. as adopted by the
Senate. Is another development that
will go a long way toward check
ing industrial expansion. Such a
law. would tie up capital that would
otherwise seek investment in new
mills and factories, railroads and
a general development of the coun-
try's resources. With a so per cent
surtax, capital will seek investment
in ,tax-exempt securities at the ex-
penss OF industry.
Itrrequired a short time only for
the steel industry to solve the
wage and price Questions. Steel
prices are about as low as they are
expected to go, and wages of COM
mon labor are down to IS cents
an hour in some districts. Steel
companies have been losing from
IS to- SIS a ton on every ton Of steel
produced, notwithstanding the
sharp cut in wages. Increased
production alone will permit a
change from deficits to surpluses
But. consumption Is Increasing very
slowly. one reason being the fall
ure Of railroads. the greatest con-
supers of steel, to buy. Outside
interference Is no doubt respon-
sible for this. There has been no
reasonable adjustment of wages
and rates, as in the case of steel
wages and prices. The outcome of
the controversy between the unions
and-s the railroads may have an
important bearing upon the course
of business
Steel Rails ut Loss.
Action of United States Steel Cor
poration In cutting steel rail prices
to $40 a ton was not caused by the
wide. margin of profit at the higher
level and the belief that a reduc-
ton was justified. Steel companies
will no doubt lose money on every
ton of rails sold. The railroads
no doubt realize that $40 is a very
low price and will contract for the
delivery of a large tonnage. This
will give employment to thousands
of steel workers But the railroads
cannot go on making normal pur-
chases of equipment unless they
are assured a reasonable return. A
reduction in freight rates without
proportionate drop in wages
would mean disaster for the rail-
roads as well as many branches of
INDUSTRY that are dependent upon
the railroads.
Few. il any. steel companies will
get out of the deficit class in the
current quarter. notwithstanding
the Improvement in operations.
Cost of production is too high. The
Steel Corporation might be able to
Al =
cent operations, but the indepen-
dents would lose. Another six
months of poor earnings would
force a still further reduction in
disbursements to shareholders by
the independent steel companies.