Evening star., 1932-07-27

ordered. making a total deduction from
surplus for the period of $26, 757 ,092.
But the directors issued a warning
that in view of the huge draft upon
surplus during the improbable opera
tions Of the past several months, 1T
is apparent that improvement In the
business and earnings must in the
future determine dividend action on
the preferred stock"
Wall Street recalled that It was six
months ago that the directors ordered
the last quarterly dividend on the
common stock, with an admonltion
that continuance of common dividends
must depend upon Improvement IN
earnings. Three months ago the COM
mon dividend was omitted.
Losses Continued.
Oficials of the corporation had moth
ing whatever to say as to the outlook
for sufficient improvement to justify
continuance of preferred disbursements.
The unfavorable earnings for the sec
ond quarter occurred despite the fact
that wages were reduced Is per cent,
effective May IS. It had been estimated
by steel experts that this should result
in savings over the remainder OF the
year to the extent of more than the
preferred dividend requirement.
But large part Of the def1clt Tor the
second quarter resulted from the regu-
lar writedowns the value OF the COM
pany's huge properties, and was essen
TALLY q bookkeeping operation not IN
volving actual cash expense; There was
an actual loss from operations OF So
1862 1856, but in addition the write-oH
for depletion, depreciation and obsoles-
cence amounted to S9872, ,733. or almost
half of total deficit before payment OF
the preferred dividend.
Then there was an unusual item,
charge OF Of $5,887, ,160 rejecting over
head charges Of the Lake Superior iron
ore properties and Great Lakes trans
n portation service, of which $4,8Is,3l7
represented taxes alone. Ordinarily
these expenses have been charged
against the value Of the seasons pro-
duction Of ore, buv in view of extreme
curtailment Of ore production this year
1t was considered matter OF good
bookkeeping to make allowance for the
cost Of carrying the almost idle proper
ties.
Preferred First Lien.
It is owing to the foresight of Myron
C. Taylor, now chairman of the board
of directors, that of all security hold
ers, the preferred stockholders have viz
tually the first lien upon earnings OF
the company. It was in 1928 that Mr..
TAYLOR, then chairman Of the Finance
COMMITTEES, decided TO retire the cor
poration's huge funded debt. Bonds to
the extent OF approximately $270 ,00o, 900
were retired at the end Of the year.
There are still some subsidiary bonds
outstanding, and negligible amount
of those of the parent corporation, but
interest charges for the quarter were
only sI.329,544, in contrast to approx
mately S4,50o, 900 In the like quarter
of 1928.
The total charge to surplus for the
quarter of $26, ,757 ,os2 was in contrast
to a deduction of 1e,525, ,46s in the
previous quarter and s7,6l7,656 in the
like quarter Of 1881, after payment OF
dividends in each case, including
common dividend of 81 in the like Pc
rod Of 1891. In the second quarter OF
the boom year 1929 there was carried
TO surplus after payment Of all diW-
dends the sum Of 3S,4s7, ,S92.
The latest balance sheet, as Of De-
cember 81 last, showed that the corpo-
ration had approximately S15o. .ooo. 900
in cash and marketable securities and
a total profit and loss surplus OF S42l,-
600 600. The profit and loss surplus in
cludes non-liquid assets. 1t Is under
stood that the management feels that
corporation Of the magnitude Of United
States Steel should not permit It's cash
account to 60 under 100000 o,0oo.