AbstractsBusiness Management & Administration

In the foregoing chapters we have seen the position of the steel industry in the last war, its behavior in the intervening period and its situation so far in the present conflict. It is difficult to present an analysis of steel securities without going into the factors of production. Without a knowledge of the bearing of these items unon the industry no reliable analysis can be made. An investor must at least be familiar with and know the operations of an industry – not necessarily in detail but at least to have a general picture in order to comprehend the effect of fluctuating business conditions. This is the main reason why production, capacity, prices, taxes, labor, and earnings were discussed. In the last World War and the present, business conditions are similar. The year 1913 was a prosperity year followed by the depression - a severe steel depression in 1914. Then war prosperity took the lead. Similarly, 1937 was a prosperity year followed by the depression year of 1938. In 1939, the present conflict began with an artificial war prosperity here. Just how long it will last no one can definite say, but we know that this artificial prosperity will thrive until we have two naval fleets and a huge mechanized army. The long term trend of steel production is synonymous with the industrial growth of the nation and coincident with the business cycles. Since steel is the raw material of other industries, general business conditions are effective to the industry's ups and downs. This is the foundation for the belief in industrial circles that if a barometer of business is wanting, watch steel production. The United States Steel Corporation, formed in 1901, dominates the steel industry in America and ranks first as a steel producer in the world, Bethlehem is a close running second. Both are heavy steel producers, but Bethlehem has also munition and ship-building plants which explain why she had a running start in business in the last war in comparison with the bigger United States Steel. Steel production proved to be adequate for the needs of the last war proves that steel masters know how and can produce volume. This is still true. With prices set at a level which insured profits, coupled with a free rein to produce, the steel industry made tremendous profits in the last war and, consequently, have its investors handsome returns. It was very profitable to hold steel stocks in the last war. Iron and Steel ingot capacity has seen a shift in emphasis. In the early days of steel making, pig iron was used. As time went on engineers found a way to use scrap iron and thus preserve iron ore deposits. Where once the normal furnace charge was 100% pig iron, it is now 50%, with steel scrap constituting the remaining 50%. The cheap price of scrap has been the incentive to an increased use for scrap and, consequently, the less money is absorbed in fixed charges. However, the percentage of both consumed varies moderately in their ratio to each other. Price fixing or price stabilization has been the policy of the steel industry…