Logical Merger

Cooking on the financial stove last week was the biggest steel merger since Republic Steel took over Corrigan, McKinney in 1935. The merger: $245,000,000 Jones & Laughlin with $38,000,000 Otis Steel.

This giant-and-pygmy combination would make sense aplenty. Because J. & L.'s mills are bunched in the Pittsburgh district, it has long wanted a Great Lakes plant near big steel-using centers like Detroit and Buffalo. J. & L. owns 900 acres at Hammond, Ind., last year tried to get Government cash to help build a plant, has yet to sign a contract. Merging with Otis would not only put J. & L. on the Great Lakes (Otis' home is Cleveland), but give it a more nearly complete range of products--at least in peace time. Although J. & L. makes almost everything but rails, it has always been light on sheet & strip, has never had much automobile business. Little Otis is a sheet & strip specialist, has sold more than half its output to auto and parts makers.

There are other, more human reasons for the merger. Having bossed Otis for 17 years, Elroy John Kulas, 61, probably wants to retire to a life of philanthropy (college endowments), music, gardening and good living at his sumptuous country estate outside Cleveland. J. & L.'s chief is tough, Wales-born Horace Edgar Lewis, 59, who has no thought of quitting. An out & out steelman who came up from the mills, Lewis got to be total boss (president and chairman) only four years ago, has ambitions about chasing J. & L.'s competitors, U.S. Steel, Bethlehem and Republic. J. & L.'s present 3,944,000 tons annual capacity makes it No. 4 U.S. producer. With Otis, it would have 4,921,000 tons capacity. It would still be No. 4, but in a healthier position to compete.

Kulas and Lewis held a long series of confabs in Pittsburgh, admitted only that ''preliminary discussions have been held . . . whereby the two companies would be united." Meanwhile, in Washington, Department of Justice lawyers cross-checked the deal for possible antitrust violations (probably none); in Wall Street, speculators pushed Otis bonds and preferred stock to new 1941-42 highs.

Dun & Bradstreet's wholesale food price index rose another 2-c- last week to $3.53, highest since 1929. Meanwhile, in an effort to hold down the cost of living, the Department of Agriculture told growers of rice, peanuts and potatoes to plant at least 80% of their acreage allotments this season (for rice: 100%), or take penalty reductions in their benefit payments.

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