Coming: 10,000,000 Tons

Last week it looked as though the steel-capacity fight (TIME, June 2, June 9) had ended in victory for the expansionists. Plans were started for 10,000,000 tons of new capacity, which should be ready not more than two years hence. That meant that, right now, U.S. civilian steel users will have less steel, not more.

Ben Fairless, Eugene Grace, Leon Henderson, Jesse Jones, John Biggers and Samuel Fuller of 0PM, and James Forrestal of the Navy, agreed to the expansion in two "secret" meetings, from which the news leaked out as quickly as if they had met on the Capitol steps. The money ($800,000,000 to $1,000,000,000) will come mostly from Jesse Jones's newly swollen coffers. Anti-expansionists described the increase as "precautionary." But if Messrs. Grace and Fairless, lately of the "we have plenty" school, had agreed to 10,000,000 tons, they might later agree to more.

Problem was how to get the new tonnage. Ben Fairless was put in charge of a committee of seven steelmen to figure this out, report back to 0PM this week. Cheapest, fastest and likeliest method: to add to existing mills, rather than build new ones. Two mills expected to grow much bigger are Bethlehem's 3,200,000-ton Sparrows Point mill near Baltimore and U.S. Steel's Columbia subsidiary in California, both on tidewater. Gano Dunn had figured week before that a 10,000,000-ton "horizontal" expansion would cost $1,250,000,000 and probably require more labor than is available. But this expansion will be directed at specific bottlenecks such as steel plates.

Meanwhile 0PM attacked the steel-plate problem from another front. Its steel expert, W. A. Hauck, set off last week on a junket to big-time sheet and strip mills to study whether they might be converted to plate production. Present annual plate capacity is some 6,500,000 tons; it was hoped that 1,500,000 tons could be added to this by conversion right away. One example was announced last week: smart Ernest Tener Weir's National Steel (see p. 74) is rearranging its Great Lakes subsidiary (hot-rolled strip and sheets) to provide 300,000 tons of light plates, saving at least a year over the time it would take to build a new mill.

Strangely enough, the drive behind the 10,000,000-ton expansion was not primarily the need of plate. It came chiefly from Leon Henderson, whose job is to govern civilian supplies, and who knows that many "civilian" needs are really auxiliary defense needs. He estimated that defense demands on present steel output would leave only 36,000,000 tons for 1942 civilian needs, "and," said he, "you can't even run a depression on that." (Gano Dunn, whose report did not make a deep impression in Washington, figured 67,000,000 tons would be left for civilians, if there were no new expansion.)

But Henderson's civilians will be the immediate losers. It will take over 4,000,000 tons of steel to build 10,000,000 tons of new capacity. (Henderson: "It takes corn to grow corn.") This means extra curtailment of civilian supplies.

Last week Leon Henderson set up a program for allocating iron and steel among non-defense users. It involved six tests, including the manufacturer's past rates of consumption, the availability of substitutes for his use, and his policy toward defense orders (if he discriminates against them, no steel). Next day OPM announced its first actual allocation of steel: eight shipbuilders and the British Purchasing Commission got 469,420 tons.

This week OPM was expected to allocate another 4,200,000 tons to railroad-car builders, since the railroads have been promised a preference rating. New pipe line needs--upwards of 800,000 tons--were apt to be next. Meanwhile automakers were pounding away at a rate expected to bring June production to 565,000 units. They knew it was their last chance for a long time to come.

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