Business: War of Steel

During the long and peaceful reign of Judge Elbert Henry Gary, U. S. Steel and the whole steel industry seemed to have passed forever beyond their fighting days. But last autumn, with Judge Gary two years dead, it was evident that Steel's warlords were rousing for new struggles. Last week there began Steel's mightiest pitched battle for many a year. Bethlehem stood pitted against its new rival, Republic. The prize: Youngstown Sheet & Tube, which, for the first time, was divided against itself.

Not that Republic wants Youngstown. In fact there are good reasons (such as that both make great quantities of pipe) which make such a merger unlikely. BUT Republic's Founder Cyrus Stephen Eaton was determined that Bethlehem should not have Youngstown. Why? Not because Mr. Eaton is a dog-in-the-manger, but because he would like Youngstown to merge with another of his interests, Inland Steel; and because, since he owns or controls some 20% of Youngstown stock, he does not want it taken over by his nearest rival, Bethlehem.

Bethlehem had excellent reasons for wanting Youngstown. Superficially, the formation of Republic threatens its position as No. 2 steel company. Also, superficially. Bethlehem's irrepressible Charles Michael Schwab has never completely forgotten his old ambition to create a steel concern bigger than U. S. Steel.

In the immediate conflict which has given the thrill of a lifetime to the famed old Ohio town of Youngstown, round which muddy rivers pass, three figures are preeminent. Perhaps the truest steelman of them all is Eugene Gifford Grace, president of Bethlehem. Much as the late great Carnegie picked Charles M. Schwab to head Carnegie Steel, so Schwab chose Grace to be the star of Bethlehem. Tall, slender, faultlessly clothed, President Grace went to Lehigh University in Bethlehem, Pa., there captained the baseball team, there became acquainted with the long rows of mills that mark Steel Town. After graduating he became a crane operator at $1.80 a day (12 hours), started a rise that culminated (February, 1916) in his election to his present job. Under him, Bethlehem boomed through the War. Followed the depression of 1921—Bethlehem has never been depression-proof—and a remarkable period of rebuilding that ended last spring with the first dividend in five years. Last week Mr. Grace journeyed to Cleveland to try to keep his company second biggest among U. S. steelmakers.

Second of the figures is James A. Campbell of Youngstown, Ohio, an older hand in the industry than Bethlehem's Grace. In 1900 Mr. Campbell organized Youngstown Sheet & Tube, now fourth largest unit. A ruddy-faced man of 75, indulging in few extravagances beyond bright suits and tipping his barber 25¢, he last winter resigned as president of Youngstown to become chairman. Until last week his word was sufficient to sway the company, was able to block a merger with Bethlehem two years ago. Last week he at first refused to comment on the proposed merger, but finally declared it "ideal," although last December he was quoted as favorable to a merger with Republic. Even the combination of Grace and Campbell did not, however, seem to concern the third figure, Cyrus Stephen Eaton.