Bethlehem Steel Corporation

“ To speak of Bethlehem's profits as only 22% is in any event misleading. The profits are 22% of 'cost', and not 22% of what might fairly be described as Bethlehem's capital investment in these contracts. For under these contracts Bethlehem took absolutely no risk of loss; in addition, the Government agreed to advance all sums necessary to finance the construction of the vessels. Even in usurious transactions the lender takes the risk of the borrower's insolvency. Here Bethlehem took no risks at all. ”

“ But the United States was at war. It needed ships-and it needed them at once. The shipyards and plants of a recalcitrant shipbuilder would not produce the necessary tonnage, at least not in the needed time, without an organization able to operate them at maximum efficiency. The Master found that 'A failure to induce Bethlehem to undertake the shipbuilding program covered by these contracts, followed by the taking possession by the Fleet Corporation of the Bethlehem plants, could not have accomplished the desired result. ”

“ It was Bethlehem's existing shipbuilding organization that was necessary to insure success to the program of the Fleet Corporation. Consequently the Government representatives, feeling as they did that Bethlehem's organization was necessary to their program, were obliged to accept the terms offered by Bethlehem. This they did with full knowledge, as we have said, that the estimated cost figures included in the contracts did not represent close approximations but were so prepared as to assure to Bethlehem substantial additional profits by way of the bonus of savings. ”

“ It is equally clear that Bethlehem insisted upon assuring itself a margin of profit which in view of the necessities of the Government was so large as to indicate an attitude of commercial greed but little diluted with patriotic feeling. There is no doubt that this attitude on the part of Bethlehem was deeply resented by the Government representatives but the latter were faced with the alternative of either agreeing to Bethlehem's terms or taking possession of its shipyards and having the Government itself construct the vessels. ”

“ The figures on which the government relies demonstrate that at least in the past competition in structural steel products has been conducted on a national scale. Five out of the ten structural fabricators having the largest sales in the Consolidated market perform their fabrication operations outside the area, including United States Steel and Bethlehem Steel. ”

“ Under a regime of regulated combination, each producing unit is still under strong pressure to cut down its expenses of [Pg 412] production, and to make its profits by that much larger. Is there any real evidence that improvements in methods have not been introduced as rapidly since the steel trust was organized in 1901, as they were before? In that period the open hearth process has been substituted on a vast scale for the Bessemer process. The Steel Corporation has spent millions of dollars in developing its plants at Gary to the highest efficiency yet known in the industry. ”

“ So great an operation cannot be considered merely as a matter of finance. The biggest of trusts must of necessity contain enormous potentialities affecting the general welfare of industry and of the State. Its organizers and managers, in consequence, cannot resent fair-minded investigation into the use it makes of its powers. Has the Steel Corporation’s existence been prejudicial to the interests of its competitors, its customers, its employees, or the general public? ”

“ The hissing, roaring volcano is easily handled by one man. As he watches the flame that pours from its mouth change from red to yellow and finally burn white, he touches a lever which turns the huge caldron on its axis, while workmen quickly shovel into it the required amount of carbon, silicon, etc. The converter is then further tilted and its contents emptied into a ladle which swings away with its load while the converter is charged afresh with iron.
Open-hearth steel, more popularly used nowadays than the Bessemer product, is made by a different process. ”

“ Perhaps there is no other great industry that has been so subject to fierce and unrestrained competition as steel making once was. To understand why this is so it is necessary to get an idea of the conditions influencing it. The discovery of the Bessemer process—about the middle of the nineteenth century—by which steel could be made cheap enough to permit of its general use found a world more than ready for it, and the demand for the metal grew by leaps and bounds. The Age of Steel did not dawn ”

“ Lehigh University (q.v.) , a non-sectarian institution opened in 1866, occupies a site overlooking the borough. Noteworthy are the Bishop Thorp Seminary for Girls and Saint Luke's Hospital. South Bethlehem is known for its iron and steel manufactures. The total capital invested in the various industries in the census year 1900 was $8,713,185, and the value of their output was $10,964,911. There are the large establishment of the Bethlehem Iron Company, and brass works, zinc works, and manufactories of silk, knit goods, brick, etc. ”

“ They are constantly nervous about competition, and they are constantly buying up new competitors in order to narrow the field. The United States Steel Corporation is gaining in its supremacy in the American market only with regard to the cruder manufactures of iron and steel, but wherever, as in the field of more advanced manufactures of iron and steel, it has important competitors, its portion of the product is not increasing, but is decreasing, and its competitors, where they have a foothold, are often more efficient than it is. ”

“ It is also shown by the testimony that, acting independently and relying alone upon its power and wealth, great as they were, the corporation has never been able to dominate the steel industry by controlling the supply of raw materials, restraining production of finished products, or enhancing and maintaining the prices of either.'
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105) . ”

“ They were, until recent years, content to leave the foreign markets to European exploitation and only to enter these markets when dull business at home forced them to seek new outlets for their product. In the earlier days of the industry American steel, at such periods, was thrown on foreign markets at prices often below cost of production, the loss being considered preferable to unemployment at home or the disruption of company organizations which a continuous decline in sales would have brought about. ”

“ The desire for justice, for fair and full recognition of fair and full service, is deep grounded in every man, and the management of United States Steel, by giving each worker the assurance that he will get just what is his due, has secured for itself the entire coöperation of most of its employees and has, as a result, an organization that probably could not be equalled elsewhere in the industrial world.
The Steel Corporation is a true democracy. No position in it, however high or responsible, is beyond the reach of any employee who proves his ability to handle the job. ”

“ At these times competition, always fierce, became more ruthless than ever. The old adage regarding love and war was stretched to include the steel industry, and everything was considered fair that might help to keep the mills running full. Prices were cut—and wages with them; steel was “dumped” on foreign markets at less than manufacturing cost, and steel makers resorted to every means that offered to divert orders from competitors to themselves. It was case of dog eat dog, and failures, with their unavoidable accompaniment of unemployed labor, were all too frequent. ”

“ All these are men of unusually high ability, nearly all of whom have worked their way to their present positions from the bottom of the ladder. They have for years devoted all their energies to building up, each in his own sphere, the business and resources of the big company and may justly and proudly claim the right to be reckoned with Gary, Morgan, and the others, as “Men who made United States Steel.” ”

“ Gary is growing rapidly. Two Corporation subsidiaries, besides the Indiana Steel Co., already have plants there. These are the American Sheet & Tin Plate Co. and the American Bridge Co. The American Locomotive and American Car & Foundry companies both big railway equipment manufacturers, not connected with the Steel Corporation, are said to be planning the erection of plants in that vicinity. The Gary Screw & Bolt Co., one of several local enterprises, has a plant for making bolts, nuts, and screws, and employs 800 men. ”

“ So obviously beneficial to American industry had been the Corporation’s activities in the export trade that even the Government’s attorneys did not attack it on this score, in fact, they suggested that the export organization should be preserved. On this point the Supreme Court majority opinion said:
We do not see how the Steel Corporation can be such a beneficial instrumentality in the trade of the world and its beneficence preserved, and yet215 be such an evil instrumentality in the trade of the United States that it must be destroyed. ”

“ If the present situation continues, it may place the American steel industry at risk by undermining the ability of American steel producers to continue investment and research and development, and by reducing or eliminating the jobs needed to maintain a pool of skilled workers essential for the continued development of advanced steel manufacturing. ”

“ The frequent and prolonged periods of depression had forced upon steel makers the conviction that some way of combining to prevent their recurrence was desirable, even necessary, if the United States was to keep and increase its lead in the manufacture of the metal most needed by the age. ”

“ All those who during the World War were in touch with what was being done by the Government to meet the enormous new manufacturing needs created by the war know that the Steel Corporation, in the great emergency, invariably put patriotism above profits and that its hearty coöperation helped materially in bringing about the desired end. ”

“ Between the conflicting claims from all sides it is impossible to say just how many men went out in the steel mills, voluntarily or through intimidation, but it is certain that at many centres, such as Youngstown, where the Corporation and some of the larger independents—Republic Iron & Steel, Youngstown Sheet & Tube and Brier Hill Steel—have big plants, operations were practically suspended in toto. ”

“ Its resources, strength and comprehensive ownership of the means of production enable it to adopt measures to do again as it has done in the past, that is, to effectually dominate and control the steel business of the country. ”

“ There is every reason to believe that the world still needs steel in immense quantities for the myriad uses in which the metal is employed, not only for future expansion but for replacement which should have occurred during the war years. ”

“ Before the advent of the United States Steel Corporation, there were many isolated steel manufacturing plants, each being equipped for the making of a number of kinds of steel products—for instance, steel railroad rails, structural steel, merchant bar steel, steel boiler-plates, steel tank-plates, and so on. ”

“ He saw that, if his dreams were ever to be made realities, the Federal Steel Company must be enlarged and expanded, must provide itself with plants able to export steel in competition with Great Britain and Germany, the countries which ruled the international markets, and must so strongly entrench itself that it would not be too greatly affected by periods of stress. ”

“ Another factor of the highest importance in considering United States Steel stock as an investment is that of production costs. Here again the Corporation is in an enviable position. That its production costs are lower than those of most, probably all other manufacturers, is not challenged even by competitors themselves. It is indisputable. Presuming the possibility of a bitter trade war, the Corporation would unquestionably emerge the victor. But a trade war seems out of the question. The Corporation could not, for politic reasons, initiate it, and its competitors could not afford to. ”

“ He had become, and still is, a walking encyclopedia on all matters relating to the exportation of steel, carrying in his head details of freight rates, steamship facilities, duties, and so on, at and between all important and many unimportant points. His facility in reeling off from memory these facts and figures, as displayed when he was called as a witness for the defence in the Federal suit since dismissed by the Supreme Court for the dissolution of the Steel Corporation, earned him the soubriquet of “the man with a head full of figures,” a not inept title. ”

“ But there are a number, backed by conservative and financially strong interests, that are in the business to stay, and practically every American steel manufacturer, either directly or through one of these agencies, to-day exports part of his product and expects to continue to do so. The steel trade at large now realizes, what the Corporation did from the beginning, that a permanent export business is of major importance in assuring stability in trade conditions. ”

“ The fact that the Corporation has at times sold abroad cheaper than at home has been used as a weapon against it by its critics. Apart from the fact that its doing so afforded labor to many American workers and thus reduced unemployment, it seems plain that a seller must make his price to suit the market in which he is operating, that had such price concessions not been made the Steel Corporation’s export business would never have shown the remarkable growth it has. Europe would have undersold it in all markets. ”