Empire's Steel

In England. Old ladies should not attempt to vie with ironmasters in their own field, yet last week the Bank of England, for generations "The Old Lady of Threadneedle Street," prepared to take control of a large part of England's iron and steel industry. Bank Governor Montagu Collet Norman, famed for his keen maneuvers on the complex field of international exchange, prepared for the new role of Steel Man.

As the ultimate authority on all British financial matters, the Bank of England last autumn decided that British industry, collapsing from its own unwieldy weight, should be rationalized. To accomplish this. Governor Norman in November announced that the bank had formed a subsidiary, Securities Management Trust. Ltd. It was this company which he and his Old Lady used last week to make their entrance into the most basic of all industries.

Mighty in England are the Lancashire coal, iron and steel companies known as the Pearson & Knowles group. Mighty too is Wigan Coal & Iron Co. Under last week's plan the metal units of these two rivals will be grouped as Lancashire Steel Corp. This company will be capitalized at $27,745,000, will be controlled by Securities Management Trust through the purchase of 500,000 voting shares at -L-1 each. Next fall new capital will be brought to the company by selling a large issue of 7% preferred to J. Henry Shroder & Co., potent international bankers. The coal units will be called Wigan Coal Corp., capitalized at $8,000,000. In Wigan coal, Securities Management Trust will be a large, not controlling, stockholder.

In breaking down the bank's traditional policy of isolation. Governor Norman has accomplished a brilliant stroke. Yet he does not intend that his Old Lady shall be alone in her industrial adventure. Last fortnight London businessmen were startled by the announcement that the Bank of England had formed the Bankers' Industrial Development Co., whose $30,000,000 capital consists only of 60 shares each having par value of $500,000. Forty-five of these shares were subscribed for by leading British banks, the remainder were bought by Securities Management Trust. While the condition of British industry has demanded unusual steps, few Britishers hoped for as forceful a policy as Governor Norman has started.

In Canada. Canada has no central bank, no Montagu Norman, but it has many able financiers. During the past year these have labored on the same problem--reviving the iron and steel industry. Last week, their plans approved, the mechanism of a tremendous reorganization stirred.

Dean of Canadian financiers is venerable Sir Herbert Samuel Holt. 74, who migrated from Dublin, Ireland, at 19. He is considered Canada's richest man, but his wealth has come from no single accomplishment. It represents his profits from a long association with Canada's industrialization. He was one of the leaders in the tireless group who built the Canadian Pacific. So soon as the last spike was driven, Sir Herbert went to South America and built the Trans-Andean railroad. After this interlude he returned to Montreal, battled for light and gas companies, in 1908 became president of the Royal Bank of Canada, the Dominion's first billion-dollar bank. Equally strenuous is James Henry Gundy, 50, so closely associated with Sir Herbert that they are known as the Holt-Gundy interests.

The steel companies on which the Holt-Gundy group has been working are headed by British Empire Steel Corp., mighty in name but feeble in earnings. Into its pyramid of steel, coal and iron companies many receivers have tried to gain passage, have been halted only by the improvements that followed the purchase of control by Holt-Gundy in 1928.

The reorganization will result in a shake down of inflated assets and liabilities, in a smaller, more compact pyramid. "Besco" will yield its supremacy to a new company. Dominion Steel & Coal Corp., which will absorb some of the old companies, control others. Its shares will probably be listed on the New York Stock Exchange where "Besco" has been an unpopular ''dog," selling below $5 a share.

Vital to Canada has been the need of rehabilitating British Empire Steel. In scope and assets the company is second only to the Dominion's two railroads. Practically the entire industrial life of Nova Scotia depends on it. Yet the task has been tremendous. A great funded debt, some of it with large accrued interest, preferred stock in arrears, receivership suits and bank liens have complicated the problem. And added to this has been the rivalry between the steel and coal interests, each fearful of the other. A pleasing coincidence to Englishmen was the fact that strong hands in both England and Canada should simultaneously come to the rescue of so important an industry.

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