STEEL: The Daisy Chain

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When he got out of the Army in 1946, Seymour Waldman, 25, had no particular relish for his old job as a letter writer in a Chicago mail-order house. Instead, he "studied up on steel," and with $5,000 saved and borrowed, set up the Emergency Steel Service Corp., a company dedicated to "easing the troubles of businessmen with no established sources of steel supply." In short, he became a grey-marketeer in steel. This year alone, Waldman, whose only sales instrument is the telephone, took in $7,000,000, expects to end 1951 with a profit of $280,000.

Last week Waldman and seven other "steel brokers" told a Senate subcommittee, headed by Michigan Senator Blair Moody, how they managed to pluck so many blossoms from the "daisy chain" between steel mill and steel user.

First link in the chain was Harry Phillips, boss of Steubenville, Ohio's Ohio Valley Tool & Die Co. He bought a 74,780-lb. load of sheet steel from Weirton Steel's West Virginia mill at a price of $5.20 to $5.90 per hundredweight. After the steel was delivered, Phillips obligingly passed it on, at $7.50, to his brother Matthew in New Cumberland, W. Va., who promptly sold it for $9 to Isadore Forman, a Pittsburgh steel broker and "friend of the family."

Broker Forman said he snapped up the steel because he "saw a chance to make a fast buck. There's nothing illegal. Everybody makes a profit, even Uncle Sam. What's everybody screaming about?" When committee counsel asked if he had prepared a ceiling chart for OPS as required by law, Forman answered bluntly: "When they start talking about filling out forms and stuff for a ceiling price, I am not in the steel business."

Forman sold the steel to Cleveland's Martin J. Kutz, who passed it on at twice the mill price to Broker Jay Friedman. The anchor man on the daisy chain was Seymour Waldman, though he managed to get hold of only about half the steel. He sold it to the Daisy Manufacturing Co. of Plymouth, Mich, (air rifles, BB shot, toys) for $12.01. Waldman's price included a freight charge from La Crosse, Wis. (on which there is a 3% federal tax), even though during all six transactions the steel had never moved from Steubenville. The 39,490 Ibs. that Waldman didn't get went in rapid succession to two other brokers before it landed in the hands of Chevrolet's Indianapolis purchasing agent, who paid $15.45 per hundredweight for the steel. As he heard the testimony, he remarked mournfully: "This comes as quite a revelation to me."