H. J. v. Big Ben

In his role as the West's favorite son, Henry J. Kaiser has loudly and frequently demanded that the West must have cheaper steel. The eastern steel barons, said H. J. darkly, were deliberately keeping up steel prices just to keep the West in its industrial short pants. But last week, Kaiser was in a peculiar, and uncomfortable position. He had become the chief opponent to a cut in the price of steel from U.S. Steel's Geneva (Utah) plant.

The trouble started when Big Steel madea deal to buy Los Angeles Consolidated Steel Corp. (TIME, Dec. 30). Kaiser complained that this was a rabbit punch to his own Fontana steel plant, which supplied Consolidated. Presumably, Consolidated would now buy from its new owner, Big Steel. About a month ago, Kaiser again felt the hot breath of Big Steel on his neck. Through a dicker with four western railroads, Big Steel had won a $4-40-a-ton reduction in the freight rate on steel shipped from Geneva to the coast.

Kaiser's own shipping costs for steel from his Fontana plant had gone up 17 1/2% in the general freight rate carriers. At the news that his Utah competitor was actually getting a reduction, he jumped as if someone had dropped a hot rivet in his pocket. The lowered Geneva freight cut, he cried, would amount to a "subsidy of some $1,200,000 a year" to Geneva. In his complaint Kaiser had some strange allies: the eastern steel companies, competitors of U.S. Steel, whom he had long condemned.

Help for Henry. Big Steel's Ben Fairless' retort to the protests was: nonsense. The freight cut would, he said, be passed on directly to consumers. They would get the cheaper steel which the company had promised the West Coast when it bought Geneva. But Kaiser, thrown into a bad competitive position, was undoubtedly not interested in cheaper steel if it meant closing up Fontana. And it might mean just that when the current steel shortage is over.

Fontana's costs, largely because of the $105,000,000 it still owes RFC, are far higher than Geneva's. So Kaiser's most practical move was to ask the railroads which serve him to give him the same reduction as Geneva had gotten from its carriers. He wanted lower rates on all steelmaking materials brought to Fontana as well as on his outbound shipments.

Then Henry Kaiser asked the Interstate Commerce Commission to ban the cut for Geneva. Last week, he got the help of two potent allies. Attorney General Tom C. Clark filed suit to keep Big Steel's Columbia from buying Consolidated on grounds that it would give Steel a virtual monopoly on West Coast steelmaking and fabricating. The RFC, worried about its huge investment in Fontana, also asked the ICC to hold up the Geneva reduction.

At week's end, on the day before the reduction was to go into effect, the ICC agreed to hold up the rate changes while it investigates. It looked as if the West would not get cheaper steel from Big Steel unless Henry Kaiser got a freight reduction, too.

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