Evening star., 1950-06-05
Big Steel Faces Suit
To Strip Subsidiaries
From lis Structure
Justice Department Will
Move in New Campaign
Against 'oIieopoIy'
By David Laurence

SOTp. 10 QlVcSt lLScII VI fdlIOus
subsidiary companies engaged ir
coal mining, shipping, and fabri-
eating of steel products.
Although for several weeks in
vestigators have been at work or
the office files of U. S. Steel
Bethlehem Steel, and Republic
Steel and other companies. in.
cluding customers, no news oi
this has leaked out.
1t has been conjectured inside
the industry that the objective
was to force the dissolution o1
the big Three" as an initial ster
In the campaign against "oli-
gopoly," which is the term giver
to concentration Of a preponder-
ant volume Of sales in the hands
Of three or four major producers
in an industry.
The truth, however, is that the
suit will be brought solely against
U. s. Steel at this time. although
information gathered during the
inquiry from all the major COM
panies will have a bearing on
the evidence presented at the
trial.
Department Won't Comment.
In accordance with custom, the
Department of Justice would
neither confirm nor deny today
what suits, If any. will be brought
the comment simply being made
that the industry is, of course
entitled to draw whatever infer
ences it pleases from the presence
Of investigators at the various
company Offices concerned.
Naturally the different lawyers
in the steel industry are suspi-
cious that the coming suit is just
a sequel to the crusade under
taken by the House and Senate
investigating committees under
the sponsorship of Representa-
tive Celler, Democrat. of New
York and Senator O'Mahoney
Democrat, of Wyoming. and the!
see all this as a pattern of po-
litical assault against "bigness'
timed to coincide with the 1856
congressional campaign and as {
prelude to the 1852 presidential
campaign.
The Department Of Justice
however, denies these implica-
tions and points to the fact that
its work on the pending case
began almost a year before the
congressional committees insti.
tuted their inquiries. Further
more, the congressional commit
tee hearings have rather pointed
to- the charge that the antitrust
laws are in need of strengthening
in order to get at the activities
of "oligopolies" whereas the De-
partment of Justice is planning
it's suits on the assumption that
relief in the public interest can
be achieved by prosecutions under
the present laws.
"Integration" Defense Seen.
The defense of the steel com
panies no doubt will be that in
tegration" of fabricating plant:
and related facilities from iror
ore supply to finished products i:
a virtue and tends to keep dowr
building costs. The Department
of Justice argues, on the othel
hand, that it has never attacked
and does not intend to attacl
"integration" or "bigness" as such
but solely the abuse of such power
. as a preventive of real competition
The lawyers will have a battle
royal on this point. Back in 1921
when the U. S. Steel Corp. wol
out in the Supreme Court of th'
United States against a sui
aimed at its dissolution, the cour
held that the then existing g.
per cent Of the volume Of bust
ness done in the steel induStr.
did not make q. S. Steel monop
oily. Today. when U. S. Stee
holds only SO per cent OF tn
volume, the Department Of Jus
tice will doubtless argue that /
is the potential use of any pro
portion-whether it is 80 per cen
or less-which constitutes tn
danger of price fixing and othe
collusive practices that are SAT-
to retard the rise of new com
petitors in the industry.
Will Charge Monopoly.
The Department will point t.
the ownership by U. S. Steel O
certain types of coal mines, bias
furnaces, iron ore reserves ant
shipping facilities as comprising
monopoly power as against com
panies which do not have such al
'integration" of resources and &C
tivities. Efforts will be made t.
cite instances of actual discrimi
nation and misuse of power il
the treatment of their own fabri
eating plants and other customers
The Supreme Court ruled re
Gently, 5 to 4. in favor of the &C
QUESTION by U. S. Steel of certain
fabricating plants on the Pacifi
Coast which. it was contendeC
were needed for integratior
While the issues presented ther
were somewhat different fror
those about to be posed, the publ
will be hearing a great deal abou
the advantages or disadvantage
of "integration."
Prof. George j. Stigler of Co
lumbia University. who testifle
recently before the Celler Com
mittee and whose economic philos
ophy is believed by the industr
to be guiding the Department G
Justice. says frankly that some
time we shall face the hard choic
between oligopoly with lower pro
duction costs and competitio
with higher production costs" an
in these eases he still favorS dis