Evening star., 1950-11-07
Sawyer Raises Issue
On Justification Of
Steel Tonnage Rise
Secretary Declares
Many Fail TO Consider
Time Element in Work
Bv David Laurence

more steel at this time-but will
the demand continue, and is there
a justification for a 100 million
ton annual capacity?
This very question has been
tackled openly for the first time
by the Secretary of Commerce,
Charles Sawyer, who raises the
pertinent issue as to when the
extra capacity is needed.
Mr.. Sawyer revealed that the
Nation can have a 100 million
ton capacity by 1854 and 110
million-ton by 1852 if the present
commitment for expansion by
4 million extra tonnage annually is
maintained. On this all-import-
ant problem, which directly or
indirectly affects defense produc-
ton as well as manufacturing in
many lines of business, the sec
retary disclosed quite informally
the crux of the difficulty as he
responded to QUESTIONABLE
answer interview in "U. S. News
and World Report" copyrighted
by that weekly Newsmagazine.
Element of Time.
He said:
IT want to make it very clear
that I am on the side of those
who believe strongly that we
should have an increase in steel
capacity. AS a matter of fact,
the day William Henry Harrison
was sworn in as Administrator
of the National Production Au-
thority, I had called in the steel
people and asked them to give me
q statement as to what they were
prepared to do in the way of in
creasing their steel capacity. AS
q result of that, they did give
me a commitment Of 9.4 million
tons by the end of 1852.
There's been some comment
that that wasn't enough. 1t is not
enough for the future. However
scme people fail to take into con-
sideration an important element
the element of time. They say
we ought to have capacity of
100 million tons, but they don't
say when
cts proper to point out that
If this increase in capacity of over
4 million tons year-and I think
1t will be even greater than indi-
cated-if that's maintained. in
five years we'll have 100 million
tens capacity. In other words
we're to have 110 million by the
end of 1852. So for those who say
we must have 120 million, the
question is when? Do you want
us to have 120 million at the END
Of 1852 or do you want it at the
end of 1854? If we're to get 12C
million at the end of 1852, we
must face the problem, first, as to
what disruption will occur to our
present process, and also whether,
II we have that capacity, we will
have an equal supply of manga
nese or ore boats-other things
that go into the final process of
making steel. I don't want the
Commerce Department to be un--
der any inputation of trying to
hold down capacity when our de-
sire Is exactly the opposite"
The dilemma, to be sure, isn't
a bit different than it has been
all alcng whenever the question
Of expansion of steel capacity has
been raised by the Government.
Flow much steel shall be used
UP in making new plans and
how much manpower can be SUBJ
tracted from regular requirements
in order to build the expanding
plants? It's a case of not being
able to have the cake and eat it,
too.
Impact On Economy.
Much more fundamental is the
question of the impact on the
economy for years to come. If a
120-million-ton capacity is to be
the normal maximum instead OF
30 million, as it was until recent
years, then what happens when
capacity is idle and yet interest
and other charges must be met
on sums borrowed to pay the pre-
vailing high costs of construc-
ton? To build plant today costs
ever so much more than it did a
decade ago. Yet the price of steel
cannot be brought down mater
tally If demand falls because there
must be some way to cover the
costs of the expanded plants.
The issues raised by idle ca
pacity are brushed aside by some
Government officials as emanating
from fear of recession-as il
American producers must become
pollyannas and never think about
the possibility of a drop in steel
capacity. Unfortunately, those
with a responsibility to creditors
who have furnished borrowed
money for bond issues or to stock
holders for their equity money
want to know that there is some
solicitude about building excess
capacity which in some future
time will become idle.
How long will the war emer-
gency last? How long will the in
flation be maintained? And how
long will automobile production
be unrestricted? All these ques-
tions. If answered, could have q
bearing on whether America ir
some years will see its steel plants
with a demand of only 72 million
tons and an idle capacity of AZ
million tons. That's about a so pei
cent operating ratio-which woule
be far below the break-even poin-
for many companies.
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