Evening star., 1936-06-28
BY BLAIR BOLLES.

Steel. the giant of American in
dustry. enjoying better business than
at any time since 1929, again is clash
ing with the Federal Government,
and a Government victory may raise
the price of beds, box cars, automo-
biles. bridges and thousand other
steel products.
Government VS. steel is an old fight,
and the New Deal and steel are natu-
raj enemies. Since March 4, 1888, the
battle has been so constant that on
May % last Eugene G. Grace. presi-
dent of the American Iron and Steel
Institute and of the Bethlehem Steel
Corp, told some of his industrial col
leagues:
Il am conscious that our most seri-
Gus problem is the problem of all busi-
ness-indeed of the American people
at large. I refer to the menacing at
tempts to exercise a political control
of our economic and personal lives"
Since Grace spoke, new problem
has arisen for steel, threatening H.
year-old pricing system set up by the
industry itself after the Federal Trade
Commission outlawed the old Pitts
burgh plus method of setting the SELL
ing value of steel.
CoIlusive Bidding Charged.
For, at the behest of the Federal
Trade Commission and President
Roosevelt. the Department Of JUS
ie iy,n, NJ
allegations of collusive bidding on
the part of four huge steel con-
cerns-Bethlehem United States Steel,
Inland Steel and Jones g. Iaughlin.
The commission suggested that the
antitrust laws may have been violated
in the bids, submitted last Summer
for sheet piling to be used on the Tri-
borough Bridge, New York City; a
harbor project at Miami, Fla, and an
ocean terminal at Morehead City, N. c.
But identical bids for steel products
is nothing new. In fact. the steel
pricing system makes anything else
uncommon. Two factors contribute
to this situation, and if a change
were ordered, steel men say chaos
would engulf the s5,000,o0O,00O in
dustry, with it's 465, 900 employees. and
prices of everything in steel, from
bicycle sprockets to buildings, would
Jump toward the sky.
Factor number one is the baSing-
point system. Under its workings the
automobile manufact who buys
sheet steel from a Detroit steel plant
has to pay the price of the steel plus
the freight from Pittsburgh. Or, on
the other hand. Cleveland plant bid
ding on a skyscraper in Chicago. has
to sell at the same price as the Chicago
steel maker, without being repaid for
the freight charges.
Priced Based on Production Points.
The system provides that the price
Of steel be the price at the nearest
major point of production, plus the
freight charges from that point to your
plant. For example," writes Robert
Duncan in Today. Ito sell alloy-steel
bars in South Bend, Ind.-where
.Studebaker cars are made-Detroit,
Cleveland, Canton and Pittsburgh steel
producers must meet the delivered
price from Chicago, the nearest basing
point" The use of this hypothetical
freight charge is handy gauge for
stabilizing prices and widening COM
petition, at the same time making it
possible for small manufacturer to
sell against the big producer.
THE consumers side Of the picture"
continued Duncan, "is that if the
basing- point system were abolished,
South Bend steel users would simply
have to buy from Chicago, and Chi
cago steel mills could hike their prices
up to the point just below the freight
rate from Detroit. the nearest basing
point for alloy bars"
This Spring Congress, armed with
the Wheeler anti-basing point bill, be-
gan an attack on this method of price
quotation. But Donald Richberg, who
studied the basing-point carefully
when he was chief of the N. r. A.,
told Senate committee that investi-
cation had convinced him that the
majority of freight charges were in
favor of the customer. He said:
IF you attempted, by any legisla-
tive act or by any sudden action,
to establish an entirely different COM
petitive system, you would have an
enormous dislocation of employment
and an enormous waste of invest
ment."
Steel Industrial Backbone.
And dislocation in the steel industry
would reverberate all through America.
For steel is the backbone of industrial
civilization. Until Bessemer perfec-
ted his converter to turn iron into
steel, in the middle of the last CEN
tury, induStrialization of the world
went slowly. But now the Depart
ment of Commerce figures 5S3 pounds
OF steel per capita was used in the
United States last year.
Automobile bodies are made of sheet
steel. Railroad rails are steel. The
new streamline trains are alloy steel.
Bridges are steel, skyscrapers are
steel, the Texas Centennial Exposition
is constructed on a shell of steel,
SO per cent of each tin can is steel,
oil and gas pipe lines are steel
desks, refrigerators, mattress springs,
furnaces, stoves. frying pans, stadiums,
watches-they all require steel.
Prosperity on the farm aids the
steel maker. A building boom is re-
f1ected In the steel mills. Pittsburgh
smokes when automobile assembly
plants whir. A travel increase. on
busses or trains, is good news for
steel, Air conditioning means money