Bet on the Future

In a major antirecession move, the nation's largest steel producer last week plunked down another hefty bet on the future. U.S. Steel Corp. announced plans to raise $300 million through debentures in mid-July. The bond offering will rank among the largest ever made by an industrial firm, equaling Big Steel's in 1954 and issues floated by General Motors in 1953 and General Electric in 1956. Said Robert C. Tyson, chairman of Big Steel's Finance Committee: "The purpose of this is to add money to our funds to restore working capital that we have used for expansion. Now is a good time to get money."

The fact is that Big Steel, which had planned to finance the bulk of its projected $665 million expansion program for 1958 (TIME, March 24) through profits and depreciation charges, has been hit by the profit squeeze and the inadequacies of depreciation allowances. By going into the public market, it will improve its cash position, make it easier to continue its expansion program without further dipping into working capital.

U.S. Steel, which has kept mum about whether it will raise prices to meet automatic July 1 wage hikes (estimated to cost steel firms 20-c- an hour), last week gave a hint of its intentions. Said Big Steel President Clifford F. Hood: "While costs are a major factor in any price determination, any adjustment of sales prices can only be made in the light of all known commercial and economic factors. The only point we have reached to date is not to attempt to change our prices until the situation clarifies itself."

Steel specialists, such as Editor Tom Campbell of Iron Age, took President Hood's statement to mean simply that Big Steel, traditionally the industry leader in raising prices, does not intend to hike its prices July 1 but will do so eventually. Steelmen are awaiting an announcement this week of the Consumer Price Index to tell them how great a cost-of-living increase they will have to add to their contract wage boosts.

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