STATE OF BUSINESS: Steelspeakers

Tycoons last week took turns reporting to stockholders on the state of their businesses during the first half of A.D. 1939. Most of them were able to tell a fairly cheerful story by comparing the mediocre first half of 1939 with the terrible first half of 1938. But those businessmen who hope great things for the second half of 1939 hung most on the words of steel industry, both of whose two big units last week reported.

Bethlehem. One hard-headed tycoon who talks (four times a year) is Eugene Grace, whom Charles Schwab brought up to be the thin-lipped king of Bethlehem. Last week Grace declared for the benefit of his stockholders their first dividend (50¢ a share, $1,591,992) since Christmas 1937. This good news was considerably bolstered by his announcement that second-quarter earnings ($3,822,927) were up a whopping 2.443% from the second quarter of 1938. Bethlehem's common stock greeted this by dropping half a point and the stock market as a whole by backing away from the peak it stopped at two weeks ago (144.71 on the Dow Jones average of 30 industrials).

Compared to Mr. Grace's report about the first half of 1939, what he had to say about the last half was bitter. The automobile industry, he pointed out, is covered on its steel requirements until early 1940, lesser users of strip mill products until October. Meanwhile, Bethlehem's 60.4% operating rate is supported by an order backlog—including steel orders for fourth-quarter automobiles of only $184,921,081 (compared to a backlog of $192,040,906 and production at 53.8% three months before), no good omen for fourth-quarter production.

President Grace made some other matters equally clear. He put cost savings on continuous mill production at $6 to $8 per ton of sheet and strip, added that Steel's hard-boiled Detroit customers have now chiseled every last cent of this profit out of the steel price, admitted that the sale of the balance of 1939 auto steel going at May's cut prices (TIME, May 22) was more a pious hope than the gloomy admission it sounded like.

Actually, although Eugene Grace did not say so, the auto industry, knowing that steel is overproduced, is demanding further price cuts as an inducement to order enough future steel to keep steel production going. Steelmen were again cursing their favorite customers from Detroit.

U.S. Steel. Big Steel's stockholders heard from Chairman Edward Stettinius much the same story, minus the sugar-coating common dividend. White-haired, springy, no geranium in the profane steel business, young (aged 38) Ed Stettinius is the kind of man who looks his Corporation's troubles in the eye. He announced: 1) that Big Steel would pay its regular quarterly preferred dividend (again better than 75% unearned); 2) that second-quarter earnings ($1,309,761) were about $650,000 more than the first quarter's—but only because the Corporation decided to cut depreciation charges by $700,000. Three days later Mr. Stettinius had no happier prospects when Montana's Senator Burt Wheeler threw a spanner into steel and other durable goods industries by defeating Mr. Roosevelt's rail equipment plans.