U. S. Steel Groomed

After an uninterrupted advance during most of the summer, steel operations dropped a half point last week to 50% of capacity. Demand from the automobile industry was slackening as motor-makers retooled for new models. But like most businessmen, steelmasters were less interested in current figures than in speculating upon the aftermath of Labor Day, traditional turning point in the trend of trade. This year forecasts of an autumn upswing are almost unanimous, and corporations large & small are being groomed for better business.

Most conspicuous grooming done last week was on the mighty flanks of U. S. Steel Corp. In a terse statement from its fusty headquarters at No. 71 Broadway, Manhattan, Steel Corp. announced that it was about to combine operations of its two biggest subsidiaries, Carnegie Steel and Illinois Steel. Together these two giant subsidiaries account for nearly one-third of the total producing capacity of the U. S. Under Carnegie's grimy wing in the Pittsburgh area are the famed Farrell, Duquesne, Edgar Thomson and Homestead Works. Illinois owns the Gary, Joliet and South Works around Chicago. Both turn out a vast and almost identical list of steel products. Yet under U. S. Steel's conservative if not downright antiquated selling system, both have maintained sales offices in identical cities, sometimes not even in the same building.

"It is believed," read Steel's statement hopefully, ''that this plan will simplify and improve procedure in respect to production and sales in the Pittsburgh-Chicago districts."*

U. S. Steel is the world's biggest industrial enterprise but by no means the most efficient. Organization and management have always been a problem. When Chairman Myron Charles Taylor took charge of Steel he promptly set out to formulate a series of long-range policies, of which the Carnegie-Illinois union, representing a step away from centralized management, is the latest result. The first policy was to retire most of Steel's funded debt. That was accomplished in 1929, saving some $30,000,000 annually in fixed charges and enabling the corporation to ride out Depression without seriously depleting its treasury. Second was a vast program of plant improvement still in progress. Third was to pension off an army of aging executives, re-peopling Steel's offices with smart young men, of whom the most notable was Edward Riley Stettinius, son of the late Morgan partner. Now only 34 and vice chairman of the omnipotent finance committee, Steelman Stettinius was supposed to have been hand-picked as a likely future head for U. S. Steel.

Chairman Taylor's fourth major policy is at first blush paradoxical, involving both centralization and decentralization. Carnegie and Illinois Steels will be united under the control of a new organization, headed by Benjamin F. Fairless, a school-master-turned-steelmaster and now executive vice president of Steel Corp.'s second biggest competitor, Republic Steel. Steelmaster Fairless, however, will make his headquarters not in Manhattan but in Pittsburgh and will probably rule the most autonomous province in Steel's sprawling empire.

*Another move to modernize its selling methods was made last week when U. S. Steel announced that it had retained the big Manhattan firm of Batten, Barton, Durstine & Osborn as its advertising agents. Hitherto Steel Corp.'s subsidiaries have advertised independently.

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