Steel & Dividends

Reporters gathering at No. 71 Broadway, Manhattan for U. S. Steel Corp.'s dividend meeting last week were sent up to the 20th floor instead of to the chairman's office. They explored the big waiting room, sampled water in the cooler, found it tepid, made remarks about a bit of Christmas tinsel still festooned around a clock. No cigars were passed. At length Myron Charles Taylor, Steel's handsome, grey-haired finance chairman, stepped in, announced that a 50-c- quarterly dividend had been declared on the preferred stock. Yelling loudly, "Fifty cents, fifty cents" to their colleagues stationed at telephones, the reporters stampeded for the statements in Mr. Taylor's hands, nearly knocked him down. Still smiling pleasantly he waited for questions. No one asked anything so Mr. Taylor boomed: "Well, good-by." No one answered. . . .

Inspired press stories had prepared Wall Street for a cut in Steel's regular $7 preferred dividend, paid since the company was formed by John P. Morgan the Elder in 1901. A slash to $4 or $5 was generally expected. Reduction to a $2 rate took the city by surprise. Last July the directors had warned that the dividend could be continued only if business picked up. An $18,500,000 deficit in the last quarter of 1932 and a $92,000,000 deficit for the year had eaten heavily into Steel's working capital. The late Elbert Henry Gary used to say that the corporation always needs at least $100,000,000 in cash for efficient operation. At the end of September cash was down to $130,000,000 and last quarter losses must have depleted it further. The new $2 annual rate, requiring about $8,000,000 a year, could probably be continued indefinitely. Neither this nor the fact that the preferred dividend is cumulative (must eventually be paid in full) was much comfort to its conservative stockholders, who had long regarded Steel preferred as better than most bonds.

Steel shares, slumping sharply after the reduction, led the whole New York stock list downward, pounded by a barrage of other dividend cuts. American Steel Foundries also cut its $7 preferred to $2. Studebaker Corp., breaking a 20-year record, passed its preferred entirely. Drug, Inc. pared its common rate from $4 to $3. Standard Oil Co. of New Jersey, like American Tobacco the week before, omitted its usual extra.*

General Motors Corp. despite a $63,000,000 deficit for last year last week declared the regular 25-c- quarterly dividend on its 43,500,000 shares of common stock. In 1931 GM earned $97,000,000. Last year it earned $164,979.

National Lead. Two years ago Edward Joel Cornish, forthright president of National Lead Co. (Dutch Boy white lead, paint, Babbitt metal), told his stockholders that if the $5 common stock dividend should have to be passed "then all the work and planning of your management will have been in vain." Last week it looked as if all of President Cornish's work had been in vain. National Lead reported earnings of $3.15 per share against $5.48 in 1931. and Mr. Cornish admitted that further dividends hinged on earnings, that business showed no improvement. Retreating stubbornly, he said: "The [$7] dividend on the preferred has been paid every year since organization of the company. Nothing but dire necessity would cause the dividend . . . to be passed, and thus destroy its goodwill value that has been built up during the last 40 years. When a company has the necessary cash it would be an outrage to delay payment. . . ."

At the year end National Lead had $8,000,000 in cash & securities. Preferred dividends require about $2,000,000 annually. In 1931 National Lead paid an extra 25-c- "unemployment relief" dividend on its common, urged stockholders to "pass it along."

Metropolitan Giant. Only financial institution in the world larger than Metropolitan Life Insurance Co. is the Federal Reserve System. Only larger private corporation is American Telephone & Telegraph Co. Last week Metropolitan Life reported that its assets had climbed $179,256,000 last year to a new high of $3,769,372,425. Its total income was $922,000,000--an average of $3,032,740 for each business day. Of this, $563,000,000 was paid back to policy holders--an average of $3,857 a minute.

Other prime Metropolitan facts:

P: During 1933 it will pay $101,685,956 in policy dividends, down less than 1% from last year.

P: Total policies in force: $18,980,700,000--18.3.% of all U. S. life insurance.

P: Employes added last year: 1,000.

P: Last week Metropolitan did not join other life insurance companies in their moratorium on Iowa farm mortgages but stated it would be lenient with defaulters.

* President Kenneth Raleigh Kingsbury of Standard Oil of California stated last week that the long-negotiated merger with Standard of New Jersey was "imminent."

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