Evening star., 1941-11-02
Defense Effects
Stand Out in
Steel Reports
Lorge Part Of Output
Absorbed; Big Taxes
Taking Profits
BY FRANK MacMILIEN.
Associated Press PusineSs Vrri+er

industry, producer of the primary
sineWs of war, put on view ample
evidence this week of the ccm-
pletely dominant role the arms ef-
fort has assumed in basic prcduc-
ton. and interesting sidelights on
the relationship of profits to output
in this emergency period.
United States Steel Corp. and
Bethlehem Steel. first and second
in the country's production ranking
and together accounting for well
over half of all steel turned out,
made quarterly reports which re-
vealed such facts as these:
l. Bethlehem reported II per cent
of its order book for steel w9s Tor
defense or lease-lend purposes md
virtually 100 per cent Of lis sap
buildinq-it is the largest snip con-
st-uCtor in the country-Was also
for the arms drive.
2. United States Steel credited 80
per sent of its orders to defense or
lease lend and said 30 Per cent OF
its production in the past three
months had been for that purpose.
Jobs at New Peaks.
3. Both steel giants revealed they
had more men at work and were
handling bigger pay rolls than ever
before. The two companies together
for the third quarter Of this year
averaged approximately half mil
lion employees who were paid about
S256. 600 900.
4. United States Steel's profits for
the latest three months. reporting
period we're but a bit better Than IN
the same part of 1910; Bethlehem's
were sharply lower; yet both we're
doing a record dollar and tonnage
volume of business.
). Both companies reported great
" increased Federal income and
/ excess profits taxes, which offset the
gains in profits normally expected
1 from greatly expanded gross volume
| of business.
6. Directors of both concerns.
DESPITE huge totals of production
and orders on hand. stuck conserva-
tivelv to the same common stock
dividend rates paid in three preced-
ing declarations this year; U. :.
Steel. 81: Bethlehem, sl50.
The attitude of directors OF both
outfits, which together contain some
of the shreWdest buslness-trend
guessers in the country, appeared
TO emphasize how far old ways OF
thinking about volume and profits
had been modified by close-to-war
conditions, especially taxes, present
and prospective.
Taxes Boosted Sharply.
In the third quarter of this year
U. S. Steel paid out s37 $685. 500 in
| Federal income and excess profits
| taxes. against s11 ,533, ,349 in the like
period last year. Net profit for the
period this year was s34,3l3, ,345,
compared with s33,103,067 in the
like period of 1910.
For Bethlehem the figures for the
latest quarter ran this way: Net
profit. S7.910,569; Federal taxes
about S2l,l30,000; for the same part
of 1910 the profit was sl2,462 ,288.
Federal taxes were not calculated
on a quarterly basis ct that time,
but for the full year 1910 the total
was S23,429, ITO, only a little larger
than for the third quarter this year
Significant appeared the state
ment of Eugene G.. Grace. Bethle-
hem president, that in the third
quarter. this year, his concern had
billed customers for 1858, 100000 of
business and earned Approximately
S24 900 900, which represents 36 per
cent profit"
Also interesting in its implications
was the disclosure by both concerns
that new orders were running a little
behind shipments of finished prod
ucts.
BacklOgs Cut Slightly.
While executives of neither con-
Germ commented specifically on this
phase of operations, it appeared to
indicate that. for the moment at
least, the steel companies were man
aging to gain little headWay
against the flood of orders pouring
IN as a result of the defense drive.
Most steel men here agreed the
condition was probably temporary,
especially with Washington authori-
ties ordering a doubling of tank pro-
duction and with much talk OF wide
further expansion of production IN
all sorts of defense materials.
The offset to such rising prospec-
tive demand which might be pro-
vided by recent Washington
decreed 10000, ,O0O-ton lift in steel
making capacity seemed likely to
come along too late to allow the
steel mills to stay, for long, ahead of
their orders.
The steel expansion program Is
expected to take at least two years
to accomplish and will in itself re-
quire several million tons of steel for
buildings and machinery.
Most steel men seemed reconciled
to the idea that there would be
further restriction in the amount OF
the metal available for civilian con-
sumption.
The cut announced this week in
the number of refrigerators which
Federal authorities will allow to be
built in the coming year appeared
another indication the Government
was going ahead on the same theory