STEEL: A Mad Scramble

"The slow-motion probing of the Administration for a set of 'painless' controls' has turned the steel market into a whirlpool of frenzy and uncertainty," said Iron Age last week. "The race for steel [is] a mad scramble, with no holds barred."

As expected, the first thing to emerge out of the scramble was the grey market. Cold-rolled sheets, which bring $82 a ton at the mills, soared to $180 to $210 a ton in the open market, while grey marketeers reached out as far as Belgium and Germany for new supplies. This happened despite the fact that there had not yet been any big diversion of steel to war production. Everybody who used steel was simply grabbing all the steel that he could find before the supply was allocated.

What was needed, said U.S. Steel's Chairman Irving S. Olds last week, was less paper work and talk of Government intervention in the steel industry, and more direct action to get the orders going.

In the first half of this year, said Olds, military orders' had claimed "less than 1%" of Big Steel's output, and there had been no major boost since Korea. Even if war orders took 10% of the output, he insisted, the demand could be easily met by the industry—which knows its customers —under voluntary allocations. "We think the industry can do a prompter, more accurate, and fairer job than anyone else," said Olds.

Bethlehem Steel's Chairman Eugene G. Grace went even further. With voluntary allocations and freedom from antitrust prosecution, said he, the industry could handle all military requirements without even the necessity of a "drastic reduction" in civilian production.

Grace's claim was not as fantastic as it sounded. In World War II the biggest drain on U.S. steel production came from the simultaneous need to build a whole new Navy and a vast cargo fleet, plus hundreds of new oil refineries, aluminum plants, synthetic rubber plants, steel mills, etc. War in Asia had found the U.S. with most of these facilities in use or in reserve. Thus, even the heavier requirements for aircraft and tank production now would come far from matching the huge needs of World War II.

By all estimates, the $10.5 billion rearmament program would not require more than 10% of the present capacity of 100 million tons. For example, the needed 10 million tons, steelmakers pointed out, could be trimmed out of automobiles and housing alone, and still leave both industries enough steel to keep producing at 60% of current rates. In short, steelmen thought the only thing holding up an adequate supply for all war needs was a clear-cut decision on where the steel should go.