Big Steel, Little Stet

Prime evidence of current business recession are steel operations, last week off 41 points from the year's high of 92.3% of capacity. To this statistic U. S. Steel Corp., world's largest industrial organization, bellwether of steel production and of New York stockmarket prices, last week gave the retort direct, by declaring its first dividend on common stock in five years. It announced net income for the first nine months of 1937 as $90,852,853 (after deduction of $4,500,000 for undistributed profits taxation) which amounts, after preferred stock dividends, to $8.26 for each of the 8,703,252 common shares. So Big Steel's directors voted to pay $1 per share.

Big Steel's third quarter earnings were $30,617,638 compared to $36,173,682 for the previous quarter and $13,636,177 for the third quarter of 1936.* Said the corporation's statement: "Demand for steel products during July, August and September showed a gradual decline in volume each month.... Operations for the third quarter as measured by finished product output averaged 73.6% of total capacity, compared with 88.4% in the previous quarter and 63.6% in the third quarter of 1936.... In recent weeks a rather marked falling off in shipments to customers occurred, resulting in an October average to date of approximately 54% of capacity." Next day, despite this warning, U. S. Steel common, which only a few days before had scraped bottom at $51.12 led the whole market upward with a rush, closing at $62.12.

Of more long-range significance was Big Steel's other announcement last week-- a complete shuffling of officers, the virtual completion of Chairman Myron C. Taylor's ten-year program of reshaping Big Steel. Chairman Taylor, who looked more like an Episcopal bishop than a steelmaster, was an eminently successful lawyer when he became a U. S. Steel director in 1925. Seven years later he succeeded J. P. Morgan as chairman. Head of the finance committee in 1927, he had by 1929 retired most of Big Steel's funded debt, thereby reducing fixed charges some $30,000,000 annually and preparing the company to run the gauntlet of Depression. Second point on Myron Taylor's program was a vast modernization and expansion of plant, now nearing completion. Third point was the merger of two subsidiaries, Carnegie and Illinois Steels. Fourth was the revitalizing of Big Steel with young executive blood.

In accordance with this last scheme, Chairman Taylor four years ago hired young Edward Reilly Stettinius Jr., a vice president of General Motors, made him vice-chairman of the all important U. S. Steel finance committee, succeeding a man twice his age (TIME, Dec. 25, 1933). Since then it has been generally expected that Ed Stettinius would be Myron Taylor's successor as chairman of the board of directors. Last week, announcing that next April he would step down from the chairmanship, Myron Taylor made good this expectation.

Not the least of Myron Taylor's changes in Big Steel came unexpectedly last spring when he made his peace with John L. Lewis, a step regarded by many steelmasters as heresy of the first order (TIME, March 15 et seq.). Reports last week that Myron Taylor had stepped out of office because of such criticism received little credence. Actually Myron Taylor, having taken the chairmanship with the utmost reluctance in the first place, has long wanted to retire. Resumption of Big Steel common stock dividends makes an opportune moment. And four years' training has well groomed Ed Stettinius to take over.

Stettinius has just turned 37, has a big backlog of executive training. Son and namesake of the original Edward Reilly Stettinius, Morgan partner and U. S. director of Allied Munitions' purchases during the War, "Little Stet" craved a career of his own. Already grey-haired and sober as an undergraduate, he was well liked at the University of Virginia. Starting out at the bottom in Hyatt Bearings Division of General Motors, he rose with meteoric rapidity through industrial and public relations to a vice-presidency. During the heyday of NRA he was one of Hugh Johnson's aides until called to Big Steel. Now prematurely white-haired, handsome Ed Stettinius is genial, excessively energetic, has the happy faculty of charming even those whom he defeats, enjoys society with his wife, three children.

Along with Myron Taylor's retirement will come that of U. S. Steel's President William A. Irvin, now a year from the retirement age of 65. To succeed him, Big Steel's directors last week picked 47-year-old Benjamin F. Fairless, who began as a schoolmaster, tried his hand at railroad engineering, joined Central Steel Co. in 1913, eventually became vice president. Through various mergers, Ben Fairless rose to be executive vice president of Republic Steel, left that post to become president of Myron Taylor's Amalgamated Carnegie-Illinois Steel Corp. in 1935. Following him in this berth will be 56-year-old J. L. Perry, now president of Tennessee Coal, Iron & Railroad Co., Big Steel's principal southern subsidiary. Following Ed Stettinius as chairman of Big Steel's finance committee will be 45-year-old Enders M. Voorhees, now vice-chairman.

Somewhat breathless from all this, newly-elected Benjamin Fairless hustled home from the directors' meeting to his suite in Manhattan's Waldorf-Astoria, was so agog he forgot to collect his key at the desk on the ground floor. Finding the door locked and his wife out, Ben Fairless asked a passing maid to let him in. Suspiciously she refused. So did another. "Hell!" snapped President-elect Fairless, "This is a fine pickle. Nobody knows me around here."

*Last week Bethlehem Steel Corp. announced earnings of $27,566,267 for the nine months, 220% increase over last year, declared $1.50 common stock dividend.

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