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1901.] “BATTLE OF THE STEEL GIANTS.”’ WALL STREET STOCK JOBBERS AND THE SENSATIONAL DAILY PRESS DO NOT SEEM TO HAVE BROUGHT If ABOUTr AS YET—RELATIONS OF THE BIG INDUSTRIAL ORGANIZATION, In an editorial of considerable length the Iron Age of New York re- views the sensational reports that have appeared in the daily press during two or three weeks past regarding ‘‘the steel war.’ The “battle of the giants,” repeatedly referred to in reports from Wall street, has certainly not materialized as yet. The editorial, which follows, reviews in a con- servative way, the relations existing between the large steel industrial organizations: “The steel trade has had the misfortune to attract the attention of the sensational daily press and of the stock jobbers in Wall street, a fact with which the industry must learn to deal as a natural outcome of the floating of so many public companies. It would be idle to deny that this is a factor with which those engaged in the business must reckon to some extent. A good many people utterly ignorant of the industry have become partners in iron enterprises either as temporary holders of stock or as investors in steel securities. They can be worked upon and are influenced greatly by newspaper reports and brokers’ tattle. Nor is it wise to blink at the fact that Wall street quotations on steel stocks do exert an influence on the iron trade proper. Every one knows that.a certain discount must be applied to every statement which appears in the daily press. Generally speaking, the majority of readers do not make it large enough. The difficulty is to discover whether there is a grain of truth in the mass of rubbish of conjecture and of gossip. “We have had an extraordinary outburst lately, in flaming headlines, about the ‘Steel War,’ from which one would infer that the industry is on the eve of the great battle between the giants which every one familiar with the industry expects to occur at some time. It was not long after the great consolidations were formed that two tendencies developed which gave promise of very active competition against them. The first was the creation of new works, some of which were built with the deliberate pur- pose of being sold out to the particular consolidation at which they were aimed. Until now no punishment has been inflicted upon any otf these ‘strikers, while some of the new plants have already been bought up. The second grew out of the fact that the large new concerns determined to go back to the raw material, so as to control their own sources of sup- ply. That was a policy long pursued as to ore by the Illinois Steel Co., as to fuel by the Carnegie and other concerns in Pittsburg, and as to both coal and ore by the 'Cambria Steel (Co. and Jones & Laughlins. Subse- quently, through the influence of H. W. Oliver, the Carnegie Steel Co. began its campaign for the control of lake ore properties. In the easr the Pennsylvania and Maryland companies had years since turned to Cuba, while the Lackawanna company rested upon the supply of the famous Cornwall ore hills. “When the era of consolidations came, the Federal Steel Co. needed only, for rounding up, the purchase of coal property. The National Steel Co. and one of the affiliated concerns, the American Steel Hoop Co., ac- quired importarit ore mines at the time of their organization and strength- ened their position by developing coal lands. The American Steel & Wire 'Co. has taken a similar course, and the Republic Iron & Steel Co. has also become a miner of lake ore. One notable exception has been the National Tube Co., who did not even acquire the important ore prop- erty controlled by some of the directors of one of the constituent com- panies. Another development, of more potent direct influence in shaping the relations between the great producers and incidentally in leading to an expansion of productive capacity, was the desire to control the intermedi- ate materials, so as to become independent of outside supplies. This led to the building of blast furnaces, which we may note incidentally threat- ened the existence of the individual outside pig iron producers, and to the enlargement and construction of steel works. The latter emphasized a condition which had developed through the very act of consolidation. The rolling mills, the consumers of billets and bars, by alliance with steel works were withdrawn from the open market, and those were robbed — of their old time customers who had formerly supplied them. Thus the old American Steel & Wire Co., once the largest purchasers of billets in the market, supplied from their own plants a large proportion of their steel and were working toward complete independence. It was only the danger of inviting competition in their own finished products, which led the concern to renew their large contracts for wire rods with the Illinois Steel Co. The National Steel Co. gathered in practically all the tonnage _of tin plates, sheets, hoops and a large share of the bars in the central west by their identity of interest with the American Tin Plate Co., the Ameri- can Steel Hoop Co. and the American Sheet Steel ‘Co. Relatively the smallest proportion of their own requirements of steel is produced by the National Tube Co., and here, too, the starting of anew open hearth plant in the Wheeling district showed a disposition to reach independence. Special circumstances, which recent developments illustrate, led to a sus- pension of this work. The more recently formed Crucible Steel Co. of America has apparently determined to carry out the plan initiated before consolidation by one of the constituent companies of building a large open hearth ‘steel plant. “It was very early in the history. of the consolidations that ar ange- ments were made to ‘adjust matters in such lines of finished goods in which they overlapped. There are a number of cases in which subsidies have been paid by one consolidation to the other to keep out of its field. Then there are other movements which have complicated the situation. Conspicuous among them is the transfer of the Lackawanna Iron & Steel Co. from Scranton, Pa., to Buffalo, where a very much larger plant will be erected, a part of whose product must find other outlets than rails. Finally we have the expansion of older works, which are now financing for extensive improvements, conspicuous among which are the Pennsyl- vania Steel Co. and the Cambria Steel Co., and, according to unconfirmed reports, the Federal Steel Co. As a last possible influence there are the new projects still in embryo. “That, of course, reveals a somewhat complicated situation, and may explain to some extent the position taken by the Carnegie Steel Co., when the determination is expressed that henceforth there can only be one profit from the ore to the finished material. The situation has not come upon the iron trade in the nature of a surprise. It has been understood for a long time, and has only become more impressive as month after MARINE REVIEW. oe month has added new developments tending in the same direction. As for the building of the tube plant at Conneaut the trade continues in a skeptical condition, The plan of manufacturing steel there from the ore up, using cheaply hauled fuel, looks sound and logical. Its utilization for. producing tubes is accepted with reserve, since it may be aimed as an offset against a large, new structural plant at South Chicago. It is not probably generally understood in the steel trade that the material required for the steel pipe of the largest consuming interest is now made by the Carnegie Steel Co., the National Tube Co. converting it into the finished article. This accounts for upward of 10,000 tons per annum, and it is not likely that the principle of purchasing the steel by the pipe consumer is likely to be abandoned readily. “That the general situation as outlined will become serious, ultimately, unless there is a heavy consumption, at home and abroad, cannot be denied, but it is a very different matter to create the impression that the immediate future is imperiled. As a matter of fact, many of the new under- takings and enlargements referred to cannot be completed under a whole year, and many will not come into play until far into 1902. Nor is it sure that even when that time occurs there will be the great battle of the giants which is pictured so vividly and is discounted so heavily. It must not be forgotten that much of the plant which is now being built and projected is really intended to supplant older equipment no longer efficient. It must not be forgotten that many small individual works will be forced out of existence. Nor,is it certain that a reckless warfare will be inaugurated, in which all must be frightful sufferers. The large interests have shown a dispcsition thus far to act harmoniously. Not one of them has such over- whelming strength that the others can be cowed into submission, whether they are acting alone or in groups. All of them have great financial re- sources, and all, too, have fixed obligations to meet which will put a check upon wanton attacks. : “There is the possibility, too, that an identity of interests may be brought about by large financiers who have carried through more serious undertakings in ether directions. In any case, the result of the formation of the large consolidations of recent years has been to stimulate rather than check competition, and the disposition displayed in some quarters to exact high prices and gather very large profits has invited attacks, Even if there should be a still greater aggregation of interests there will be brought home to them the conviction that there are limits to the lifting of prices, and that in the end costly opposition is created. We cannot help believing that in the long run the interests of the consumer will be pro- tected by the inexorable law of supply and demand, there being no hope of controlling the mineral resources of this country and thus securing an unchallenged monopoly.” ‘ ANNUAL MEETING OF SHIPMASTERS’ ASSOCIATION. During the present week the Shipmasters’ Association is holding its annual meeting at ‘Port Huron. Newspaper dispatches regarding the meeting have intimated that there was a movement on foot looking to amalgamation with the American Federation of Labor. Members of the association know, of course, that there is absolutely nothing true in this report. An organization of lake captains to be connected with the federa- tion has been talked of, but it will never be the Shipmasters’ Association, as the great majority of members of that body are positively opposed to anything of the kind. A dispatch from Washington announced that the rule of the government inspectors requiring shipmasters to take a supple- mental examination every five years had been modified so that only masters who have not sailed for three consecutive years will have to take a re-examination to get certificates. All other masters will continue to get renewals without examinations. This change is due in a very large degree to the untiring efforts of Capt. A. J. (McKay, president of the asso- ciation. It is probable that an age limit of fifty years for members will be adopted before the association adjourns. The membership at present is 725. Since the organization was started $113,000 has been paid out to beneficiaries. The grand lodge has on hand $3,201 and local lodges have - the following balances: Buffalo $410, Port Huron $503, Chicago $350, re ages $2,300, Milwaukee $150, Detroit $600, ‘Marine City $150, Toledo ANNUAL REPORT AMERICAN STEEL & WIRE CO. The annual report of the American Steel & Wire Co. shows that the year has been a profitable one, though the declaration of a dividend upon the preferred and common stock has been deferred until the March meet- ing. The report says: ’ “The outlook for the coming year is certainly favorable, and as prices are now upon a normal level, we have no reason to fear a repetition of last year’s experiences. We are now producing nearly all of our own re- quirements in pig iron and billets, and so are no longer subject to fluctu- ations in the prices of our raw materials. Our net profits for the year ending Dec. 31, 1900, were $7,002,129.14, after marking off for depreciation $1,000,000 and expending large sums in maintenance and improvements and marking down all inventories as required by the market prices of - Dec. 31, 1900. As the company:is:now the owner of-iron ore mines on Lake Superior, it was deemed necessary by the board of directors that we also become independent of possible freight combinations in transporting ore to our furnaces; and looking to this end, the directors have negotiated for the purchase from the American Steamship ‘Co. of twelve’ large steel | boats. of capacity sufficient to carry practically all of the ore used by this - company. This purchase was made by the guarantee on the part of the American Steel & Wire.Co. of twenty-year 5 per cent. sinking fund bonds to the amount of $5,630,000 (this being the entire purchase price), secured by a mortgage on the boats purchased. “Since the organization of the company there has been expended in the purchase of new property and in construction of new works the sum of $13,440,715.76. Finding it unwise and inexpedient to declare dividends payable a full year in advance, the bylaws of the company have been so amended as to enable the board of directors to act upon the question of dividends on both the preferred and common stocks, quarterly, begin- ning next March. The amendment of the bylaws makes it obligatory on the directors to act upon the question of dividends on both the preferred and common stocks of the company, quarterly, beginning with March next. Under this amendment further action on the dividend question on both stocks is therefore deferred until the meeting of the board the coming March. The board voted to advance prices of standard goods $2 per ton, effective at once.”