Business & Finance: Corporations

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Last week the following newsworthy corporations made the following news:

Date. Charles Gates Dawes is on record with a flat-footed prediction that Depression will end next May or June. The General would have been on safer ground if, instead of predicting the time, he had—as a pressagent said he would— named the precise date. That date would undoubtedly have been the day that U. S. Steel restores its full preferred dividend.

From 1901, when Steel sprang full-fashioned from the thunderous brow of John Pierpont Morgan the Elder, until 1933, it paid its $7 preferred dividend on the quarterly dot. Then the dividend was cut to $2, and arrears now amount to $36,000,000. A restoration of the dividend would mean only one thing: the presumably sagacious Steel directors were convinced that Steel can earn it and earn it steadily.

And when the biggest unit in the heaviest of heavy industries can earn a steady profit, the other 60% of steelmakers are prosperous. Big Steel's operations are generally lower than the average for the industry as a whole.

Last week Steel operations advanced for the 14th consecutive week, reaching about 50% of capacity. General Dawes, like many another student of steel, believes that rated capacity is far too high, that obsolescence and technical developments in the past five years have eliminated perhaps 15% of the equipment still included in the theoretical 100%. And he says that the industry is operating at about 60% of actual capacity to produce. Fact remained, nevertheless, that the country's most basic industry is in the black today.

Mounting orders from the automobile industry have accounted for most of the blast furnaces blown in during the past few weeks, but demand from other sources is also swelling. Carnegie Steel last week received a 24,000-ton rail order, equal to nearly 15% of all the rails it rolled last year.

Brightest Steel news of the week was that U. S. Steel had restored a 10% salary cut to its 20,000 white-collar workers by returning, after six months, to a full five-and-one-half day week. Just as Big Steel always cuts dividends before wages, so it raises wages before dividends. All that Steel's eminent directors needed now for favorable action on the preferred was conviction that Steel would not relapse.

From the Blue. Just a month ago President David Sarnoff and Board Chairman James G. Harboard of Radio Corporation of America announced in a joint statement that their directors had abandoned all ideas for a capital readjustment. Since a recapitalization plan would presumably deal largely with accumulated dividends, Radio's preferred stockholders slumped back for another patient wait and their stock slumped with them.

Last week from the blue came news that Radio's directors had voted to clear up the $9.62½ arrears on the Class A preferred in one $4,500,000 distribution. Having taken pains to set at rest the speculation on their findings, Radio's directors laid themselves wide open to criticism for their sudden reversal. And they got it.