Pittsburgh Fuss

After the last great oil year of 1929, U. S. Steel Corp. got into the oil fields with the purchase of Oil Well Supply Co., third biggest maker of drilling equipment in the land. Consideration in the deal was 108,402 shares of U. S. Steel common stock, then worth $16,000,000. Set up as a holding company for this stock was a company named Pittsburgh United Corp., whose principal function was to transform Big Steel's dividends into dividends on Pittsburgh United's 58.212 shares of preferred, 389,963 shares of common. Unhappily for the onetime owners of Oil Well Supply Co., this function soon became an empty one because Big Steel's dividends stopped.

The capacity of preferred stockholders for long-suffering is notable, but not in Pittsburgh United. As early as 1931 preferred shareholders in Pittsburgh United were in full cry for liquidation of the company, which would enable them to salvage their own equities while the common stockholders went begging. Led by Richard King Mellon, his sister, Mrs. David K. E. Bruce, and Mellon friends including Aluminum Co. of America's President Roy Arthur Hunt, they brought suit against the company's management. Pittsburgh United's President John Hartwell Hillman Jr., who is also president of an investment company which held a block of 130,900 shares of Pittsburgh United common, fought the action tooth & nail. In 1932 a compromise was reached by which a redemption of $110 a share plus accrued dividends on all Pittsburgh United preferred, to be deposited with Peoples-Pittsburgh Trust Co. as trustee, would be made on March 1. 1937.

A temporary triumph for the common stockholders, this was regarded by many Pittsburghers as one more incident in a long, unacknowledged rivalry between the Mellons and Pittsburgh's second most powerful family. Founded by the late, hard-driving John Hartwell Hillman Sr., who cast cannon balls during the Civil War and moved to Pittsburgh from Tennessee, the Hillman coke-iron-coal-banking-industrial empire now extends over six States. John Hartwell Hillman Jr., who was born in tiny Trigg Furnace, Ky., 57 years ago, is a director in a score of banks, steel companies and other corporations including Pittsburgh's First National Bank and the Chemical Bank & Trust Co. In late years his interests have shifted heavily to small steel companies. Big. camera-shy Capitalist Hillman is publicly sensitive about his relations with the Mellons, emphasizes their co-operation on various business deals.

In the Pittsburgh United matter, co-operation came to an end last March when the date of redemption rolled around and the company still made no move to redeem its preferred stock. Far from paying dividends, it had lost $63,879 in 1935, $89,257 in 1936. By March ist, though U. S. Steel common had risen from a 1936 low of $46 to around $113, Pittsburgh United's equity was still nearly $4,000,000 short of its original value of $16,000,000. Since Big Steel was expected to resume payments on its common within a year, Pittsburgh United's common stockholders fought frantically to have the liquidation date postponed. The preferred holders' answer to this was another suit, brought this time not by a committee but by the trustee, Peoples-Pittsburgh Trust Co.

Last week Judge Elder W. Marshall in Pittsburgh's Court of Common Pleas handed down his decision, ordering Pittsburgh United to liquidate enough of its U. S. Steel holdings to pay off $1,227,187 in bank loans made by Pittsburgh's First National and the Chemical Bank & Trust Co. With the U. S. Steel common which had been held as collateral for these loans, he ordered Peoples-Pittsburgh to redeem Pittsburgh United preferred and in 30 days to turn over its remaining assets to Pittsburgh United. Immediately the preferred jumped from $100 to $141 on the New York Stock Exchange. For purposes of redemption U. S. Steel common was frozen at $111.25, Pittsburgh United preferred at $147.91. After the preferred stockholders got their redemptions and the banks get their payments this will leave little residue for some 2,000 Pittsburgh United stockholders.

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