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ROLE OF THE UNITED STATES IRON AND STEEL INDUSTRY
IN THE DOMESTIC MANUFACTURING ECONOMY
BILLIONS OF DOLLARS 10 20 30
TEXTILE MILL PRODUCTS
PRINTING AND PUBLISHING
PAPER ANO ALLIED PRODUCTS
LUMBER AND PRODUCTS,
STONE, CLAY, AND GLASS
LEATHER AND PRODUCTS
12.6 10.6 14.6 15.4 14.9 18.5 16.0 14. 9 16.4 17.9 21.1 21.6 25.1 19.8 18.9 17. 2 15.1 16.4 15.8 5.8 5.4 7.4 9.7 15. 1 16.3 17.2 20.1
5, 527 5, 376 6, 203 7, 027 7, 781 7, 907 8, 643 7,355 4, 589 2, 693 2, 713 3, 266 3,981 5, 967 6, 623 3, 985 5, 458 6, 552 9, 995 10, 397 6, 515 6, 189 8, 303 8, 130 10, 039 10, 157 9, 146
1,350 1, 355 1, 598 1, 509 1, 577 1, 813 1, 912 1,871 1, 585 1, 161 1, 805 1, 602 2, 107 2, 537 2, 998 1, 936 2, 664 2, 915 4, 510 3, 950 4, 220 3, 842 4, 307 4, 749 5, 596 5, 844 5,038
3.6 4.3 4.3 3.8 4.3 4.3 4.1 5.7 7.4 9.9 10.5 8. 2 8.5 7.3 7.8 9.1 7.6 6.3 7.4 6.4 6.8 6.1 7.6 9.7 8.9 8.9 8. 7
1.3 1.5 1.9 1.9 1.6 3.1 3.1 4.7 42 3.6 3.7
EXHIBIT S-10 Distribution of finished steel to consuming industries, 1923-49
(In thousands of net tons)
Footnotes on p. 10.
Distribution of finished steel to consuming industries, 1923-49—Continued
(In thousands of net tons)
Sources: Adjusted by Iron and Steel Division, Office of Domestic Commerce from figures supplied by United States Steel TNEC Papers, vol. 1, Economic and Related Studies, 1940, pp. 328–329; annual numbers of The Iron Age; American Iron and Steel Institute Statistical Reports; V. S. Bureau of the Census.
1 Negligible or not available, and included in “All others." 2 Included in “All others," 1923-27; in “Pressing, forming, and stamping," 1939-49. 3 Included partly in "Furniture and furnishing" and partly in “All others. • Tonnage and percent are total for “Aircraft” and “Automotive,” not shown separately. . Preliminary. NOTE.-1923–32 are based on the production of hot-rolled iron and steel products; 1933-49 are based on shipments of finished steel.
SOURCE: FORCION STATISTICAL AND TRADE PUOLICATIONS, FOREIGN SERVICE REPORTS, AISI.
THE WEEK IN FINANCE
(By George Wanders)
AN ECONOMIST LOOKS (TWICE) AT STEEL From the legislative and administrative halls of Washington an uncommon amount of political eloquence has been poured forth in recent years, respecting corporate bigness and monopolistic tendencies. The process was resumed last Monday, when Representative Emanuel Celler, Democrat, of New York, opened hearings on the steel industry. The inquiry, which apparently will continue
for some time, is being conducted by Mr. Celler as chairman of the House Judiciary Subcommittee on the Study of Monopoly Power.
The aim is to substantiate, if possible, Mr. Celler's oft-proclaimed thesis that companies should be broken into bits and parts if they have waxed in size and power to a point where they substantially lessen competition within an industry or tend to create a monopoly. To prove that they have arrived at such a level in the steel industry is hardly an easy thing. The economists have been discussing the problem with varying degrees of penetration, but they come up with different answers. Indeed, the same ones seem to have different answers at different times.
The steel companies, like most others, have grown in recent years with a national economy that has expanded threefold on a dollar basis. The largest outfits, however, actually have slipped backward in relative importance within the industry. To the problems posed by this phase must be added many others, such as the need for finding and utilizing new ore supplies, which only large aggregates can handle properly. Best use of managerial skills also runs naturally to large units, as does research and development. Economists often prefer to tread softly in an area thick-strewn with conflicting possibilities of the good or harm that might be done by undue meddling.
As his first witness in support of his viewpoint, Representative Celler called upon George J. Stigler, professor of economics at Columbia University. Dr. Stigler conceded to begin with that there is a good deal of competition in the steel industry and a great deal more than in its British counterpart. He maintained, however, that the real question is whether we have enough competition to dispense with the necessity for further social controls, and his answer was decidedly in the negative.
As evidence of the insuficiency of competition he cited the basing point system of pricing, which no longer is being used. Price rigidity was another main complaint, in which emphasis was placed on the infrequency-quite natural-of steel company changes in the intricate structure of extras. Other symptoms of monopoly mentioned were uniformity of bids on Government contracts, price discrimination against foreigners, and an assumed reluctance of rivals or customers to complain of anything done by the leading companies.
On these grounds Dr. Stigler felt convinced that the steel industry "displays important monopolistic tendencies that call for corrective social policy." And the policy which he appeared to favor is dissolution of United States Steel, and probably also Bethlehem and Republic, into a considerable number of independent companies. The conclusions thus reached by the Columbia University economist, and the reasoning by which he reached them, seemed to dominate a good part of the further proceedings of the subcommittee last week.
Since the line of inquiry thus established is of considerable importance, it may be of interest that Dr. Stigler, in a different setting, found not long ago that the problem of competitive trends in the United States does not quite deserve all the attention heaped upon it. In the course of a series of lecures before the London School of Economics, he discussed our long-term competitive history and outlook. These discourses have just been published by Macmillan.
Looking down the aisles of time at the competition-monopoly dispute, Dr. Stigler noted for the benefit of the budding economists in London that absolute size of a firm is irrelevant to the question of competition. This, he said, is not only well know, but well forgotten. United States Steel, he added by way of elaboration, is a giant with sales of $1,486,000,000 in 1946, but it was relatively a much bigger steel company in 1902, when its sales were $422,000,000.
"It is my present judgment," Dr. Stigler concluded, “that competition declined moderately from the Civil War to the end of the nineteenth century, and there. after increased moderately. There is no obvious evidence for the more popular thesis that competition has been declining steadily (and in many instances, drastically) for a half-century or more. The popular belief, I think, is partly fictional history, partly symptomatic of increasing sensitivity to given departures from perfectly competitive behavior. Unless it can be given a documentation that I do not believe exists, it should be abandoned as an obstacle to clear thinking on social policy."