Omaha daily bee., 1921-12-20
Steel Profits and Prices
Latest Cut Delayed Too Long.
According 10 New York Editor
(From Daily Financial Ameries.)

Another slump in buying is reported by the
steel trade, and the Steel corporation has AM
nouneed reduction OF 81 ton. or nearly Is per
cent in steel rails, In effort 10 stimulate sales
This reduction is somewhat bealed considering
the plight OF the railroads and the unemployment
OF hundreds OF thousands due TO deferred equip
ment and maintenance This trouble has hit the
steel worker as well as the railroad worker in
the last six months. II has produced idleness
and discomfort for which presidential commits
sion has sought remedies.
The steel industry sunk 10 28 per cent OF ca
pacity in July measured by the tiyc-ycar average.
and rose to IS per cent in September. But rail
prices were firmly maintained all through this
industrial crisis, though il must have been ap-
parent that recovery there, in other lines, de-
pended on price readjustment.
The Steel corporation has waited until the
eleventh hour to cut rail prices and then cut them
at time when few were able to buy. It's net
earnings, however, during this period Of depleted
business were remarkably good. After paying
income and excess profits taxes the company
still had remaining Sl8,9l8000 net profit. That
is not so high as the S43,000000 showing in the
third quarter OF 1920; but with operations reduced
to 80 per cent, it shows large profit still made
in steel manufacturing Regular dividends con-
tinue at the rate OF per cent on the preferred
and 5 per cent on Steel common.
Yet the Steel corporation suggests that the
railroads, which averaged profits of only | per
cut rates. The railroads have been cutting rates
constantly for six months in the readustmen,s
provided by the transportation act But they
sounded no trumpets. Advice to cut railroad
rates is as belated as the reduction in steel rail
prices. These have hindered instead of helping
freight rate decreases.
Bessemer pig. the raw material Of the industry,
for nearly three months has sold at about S22 a
ton, or 81 per cent more than in the fall Of 1918
Steel rails have been selling most of this year at
the price lust reduced or 90 per cent above the
price of 1912, 'l3 and IA, While steel rail prices
were maintained uncut for nine months, struc-
tural steel beams have descended this year from
S54 in the earlier months to less than $50. At
that price beams are 80 per cent above 1918. If
steel rails were reduced in the same ratio their
price would now be 1924, instead of $40
Had the railroads received a concession in
prices like the builders of skyscrapers there would
have been more rails ordered, more men at work
making them, more men laying them and more
freight cars and crews occupied. Steel earnings
indicate that such concession could well have
been made three months earlier, solving much of
of the present unemployment problem. But it is
never too late to mend.
Most of the roads are short of all kinds OF
supplies, including rails. They have confined
buying to the most pressing necessities in year
Of falling incomes and government-hxed wages
and freight rates, along WITH their material prices
held at high levels. They have been undermain-
tanned in the effort to make ends meet. The
bright spot now in this situation is the govern
ment's present effort to pay nearly S400000000
of the rental it has owed the roads for more than
year. This money should and, no doubt will,
provide for much delayed construction work and
for needed rails, locomotives and other equip
ment
The "hope and expectation of still lower
freight rate mentioned by the Steel corporation
deDend chiefly reducing the labor cost, alb
sorbng lately about IS cents of the railroads
dollar of receipts. In that essential the railroads
must depend upon the federal labor board, which
has before it the revision of rules that require
the employment of three to six union members
to do the work once performed by one real me-
chanic