Price of Billets

The president of United States Steel Corp., James Augustine Farrell, concluded his remarks amid icy silence. He turned to the press table and said: "This is not to be printed. . . . I'm talking here to a bunch of friends as if I were in a mill, and this is not for publication." Then, 1,000 steelmen cheered.

Mr. Farrell had just made the most dramatic speech in the history of the American Iron and Steel Institute which, last week, gathered in public session in the ballroom of the Hotel Commodore, Manhattan. Before him, in front row chairs, were sitting the presidents of other steel companies. Chairman of the meeting was Bethlehem's Charles Michael Schwab. He opened the proceedings with a magnificent piece of the optimism for which he is famed. Then Mr. Farrell got up and began "... I was thinking as I was sitting in the chair here whether I ought to talk about the desulphurization of oxygen or have something to say about the present price of billets. The latter appealed to me."

And that was a fighting matter. The Farrell talk was honest fight-talk to the end. His last words were: "I am not going to give the industry, Mr. Schwab, the sort of benediction that you have given them and say, now, you are all fine men and you are all doing good jobs. I say that we are not doing a good job, and until we do a good job we should not indulge in fulsome praise."

When it was pointed out to Mr. Farrell that he had spoken in public session, he consented to publication of his remarks, asking only for the privilege of making some corrections of grammar. Much of what he said could not be understood by the public when it appeared in print, for Mr. Farrell spoke with mill terms as well as mill frankness. But his big points were dramatically clear, namely: 1) That steel companies are engaged in a mean and vicious war of price-cutting; 2) that buyers of steel (e. g. the automobile manufacturers) are demoralizing he industry by their "ghoulish glee" in forcing prices down; 3) that if insensate price-cutting does not quickly stop, worse conditions will follow. Extracts from the Farrell speech:

"You know I said a year ago right in this very room that if this thing kept on that I doubted if any steel manufacturer in the United States could earn a dividend on his common stock. I say now at present prices they are not earning dividends on their preferred stock. . . ."

"There is not a single line in the steel business today, in my opinion, where there is an adequate cost return on the finished materials. . . ."

"It is not honest for us to go on and sell our goods below cost of production and deprive our stockholders and our workingmen of what they are entitled to."*

For the future, Mr. Farrell foresaw no "hope of better prices in our business until the presidents of the companies are willing to stop this diabolical business--that is the word--the most diabolical situation that was ever perpetrated in the business."

All of what Mr. Farrell said about price-structure had the most direct relation to Industry's question of the hour: Must wages come down everywhere and drastically? In his eloquent address, Bethlehem's President Schwab had said: "We have had a stabilized wage rate since 1923. In boom times our men have done the square thing by us. We have not had strikes or unreasonable demands to disturb us when markets were good, and in dull times we have not tried to take our loss of business out of the hide of the worker by reducing wages. This ... is an outstanding example of the ability of business leadership. ..."

There is no more distinguished proponent of wage maintenance than President Farrell, but his painful report of the situation was as follows: "We are living in a fool's paradise if we think that every steel manufacturer in the United States has maintained what is generally known as the current rates of wages. It has not been done. There has been honeycombing and pinching and that sort of thing. And even among the most talked-of companies, the so-called big companies. ... I am not going to mention names of all of the companies in this room that have cut wages; I do not want to embarrass them; but I think it is a pretty cheap sort of business."

Thus with painful candor did Mr. Farrell footnote Mr. Schwab's eloquence and the footnotes became the greater news. Even the painful candor, however, could not entirely blot out the memory of the Schwab eloquence: "There are many signs of stirring in our economic life. . . . We want to keep pulling for the shore. . . . We can be cheered by the knowledge that 'the tide is coming.' " In darker years han 1931 Mr. Schwab had said the same things and he had been right. But to make his prophecies come true again what seemed most to be needed was the stern Farrell lesson.

*Not in the edited text of Mr. Farrel's speech was an even more vitriolic sentence: "I think we should take the risk of closing down rather than to waste our raw materials."

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