American Steel Makers in favor of Disarmament
THE PATH TO DISARMAMENT, they used to tell us, would be blocked by the makers of munitions
Yet we now hear the Gunpowder King of America declaring, as quoted in these pages two weeks ago, that the war business of the DuPont's does not pay. "I am at the head of the largest war materials manufacturing works in the world, but," said Charles M. Schwab, the other evening, "gladly would I see the war-making machinery of the Bethlehem Steel Company sunk to the bottom of the ocean," if the burden of armaments could be lifted from the nations. Judge Gary, of the United States Steel Corporation, declares that disarmament would be a good thing for all business, the steel business included. Leading organs of the iron and steel trade, too, welcome the Hughes program for naval reduction, denying loudly that the continued piling up of armaments is a good thing for the steel business. And the statements from steel men and steel journals are echoed and applauded in the daily papers of New York, Boston and Philadelphia.
But since we fight with steel guns, steel bayonets, steel projectiles, and since our battleships are 85% steel and iron, the steel business can not be entirely unaffected by what is going on at Washington, and that unsentimental recorder of values, the New York Stock Exchange, witnessed a drop from one to four points in steel stocks on the first business day after the Hughes announcement. It is explained in the New York Times that the selling of steel shares was based on the belief that the disarmament; plans would compel a readjustment in the industry and would bring lower prices as a result of the release of additional manufacturing capacity for industrial purposes. But steel men were heard to say that while there will be more or less troublesome readjustment, in the long run the industry will benefit, as there is very little profit in armament business; they also called attention to the fact that while the consumption of steel for armament purposes during war is naturally large, such consumption during peace time is of small proportions as compared with the production of steel in general.
As our greatest private maker of warships and war munitions, the Bethlehem Steel Company looms large. But the importance of this war business to the Company is grossly exaggerated in the public imagination, The Wall Street Journal is convinced, and it goes on to explain in detail why this steel concern and others face the prospect of arms-limitation with equanimity:
"In the first place Bethlehem's total investment in war-material plant is less than 5% of its total property investment.
"Of a total property investment of about $232,000,000 at the close of 1920 Bethlehem's investment in shipyards was under $21,000,000, less than 10%. Only one of its shipyards is engaged in the building of warships. Finally, except during the period of the war, Bethlehem has not depended on war material production for its profits. It is to-day largely independent of it.
"What is true of Bethlehem, the loading producer of war material in the country, is true of other steel companies. While no exact figures on the amount of steel going into war uses can be obtained, it is estimated at about 250,000 tons annually in peace time, or but little over one-half of 1 % of the country's output!
"Against this loss of 250,000 tons, or one-half of 1% production annually, must be reckoned the gain that the steel companies. would obtain from reduced taxes following lessened armament, the diversion of labor to productive rather than destructive work, and other benefits of reduced war preparations.
"War material represents probably less than 1 % of United States Steel's output. Republic Iron & Steel, Lackawanna, Youngstown Sheet & Tube, Inland, Jones & Laughlin—none of those are producers of war material. They diverted part of their mills to make shell rounds, etc., during the war as an emergency measure, but they are purely and simply commercial steel producers.
"Crucible and Midvale steel companies are important producers of war material, but their managements have bent every effort in recent years, even during the war, to increase production of commercial steel rather than munitions. In fact, all armament producers in this country have foreseen that their future profits must come from the products of peace and not of war, and have so made their plans."
Reckless assertions about the steel trade's interest in continuing naval programs on the present scale are disproved, insists The Iron Age (New York), by the citation of a few facts. Of course, "plant requirements are not inconsiderable, and many thousands of men are given work in the shops of the steel and shipbuilding companies which contract to do naval work." But, continues this important steel trade journal:
"Careful computation shows that the 30 ships the United States would scrap, under the Hughes program, required for their construction 582,703 net tons of steel of all descriptions, including armor-plate, plates, shapes, bars, pipe, rivets, forgings and castings. The finished steel output of the country in 1920 was 32,347,860 gross tons. Thus all the steel represented in the 30 vessels that are to be cut off is but 1.60 per cent. of the country's production last year.
"To build these 30 warships would be a matter of seven or eight years if all the eight yards in the country capable of building such vessels were to concentrate upon the work. In other words, the steel required for a year's naval program, in terms of tonnage, is only a fraction of 1 per cent. of the output of American steel works."
This spokesman for steel men then points out that the steel included in the entire three-nation scrapping program, together with construction which it is proposed to abandon and that not yet laid down, approximates 1,132,000 net tons, divided as follows:
United States, 582,703; Great Britain, 350,000; Japan, 200,000. Now, we read, this tonnage represents only about 3.5 per cent. of the finished steel output of the United States of last year, and reflects further what a relatively small item peace-time military activities are to steel production.
In common with every big business, the steel business is obliged to shoulder a large part of the burden of taxation for armaments, observes another organ of the industry, The Iron Trade Review (Cleveland), and it declares that the naval and military contracts are not even "profitable or desirable."
"It is often stated that the iron and steel industry profits handsomely from this piling up of armament. Nothing is farther from the truth. Any reduction in the 1917 building program of the Navy would not injure the steel industry one particle."
Source: The Literary Digest - December 3, 1921