Biggest individual U. S. destiny to be tripped into a stumble by Depression is, of course, that of Herbert Hoover. Next biggest may well be reckoned as that of Cleveland's Cyrus Stephen Eaton who, last week, was forced back yet further in his long retreat.
On March 4, 1929, a romantic parallel could have been drawn between the two big destinies. Mr. Hoover, onetime orphan on an Iowa farm, had the power and the plans for making the world's most prosperous nation more prosperous and happy than it had ever been before. Mr. Eaton, whose birthplace, Pugwash, Nova Scotia, had already benefited from his financial greatness, had power and plans only one degree smaller. A potent public utilitarian, he had just begun to fashion the Second Greatest Steel Company. He had also turned to the rubber-tire business and, as greatest stockholder in the greatest rubber companies, he was about to bring order into an often chaotic industry. Furthermore, his financial plans were given a heroic cast because, through them, he felt he was bringing to the Middle West its just share of the control of American Industry.
Depression put an end to the program of both President and Financier. Whether their plans could be resumed depended on how long Depression lasted. Whether it will last too long for Herbert Hoover's re-election remains to be seen. But last week it seemed to be lasting too long for Cleveland's Eaton. He resigned as chairman of Continental Shares, a pot which contained more than $150,000,000 worth of U. S. industry and which was the centre of his power.
Undoing. Like everyone else's, Mr. Eaton's troubles began with the stock-market crash of November 1929. On top of this came the long and costly battle against the Youngstown-Bethlehem Steel Merger. Unwilling to sell his Youngstown stock and, for tactical reasons, forced to buy more, Mr. Eaton was soon in an over-extended position. He needed cash. So, at the end of 1930 he (through Otis & Co.) sold to Continental Snares one of his richest plums: 40% of the voting stock of United Light & Power (the $500,000,000 utility system which was Mr. Eaton's first big achievement after he had abandoned. in 1906, the idea of becoming a Baptist preacher). But more cash was needed and so he also gave to Continental Shares an additional holding in Cliffs Corp. which, because of its vast reserves of iron ore, was the hub of his steel plan—a plan which approached reality in 1930 with the formation of Republic Steel Corp., the third biggest steel company. And Continental Shares already had most of Mr. Eaton's rubber stocks, especially Goodyear.
Thus Continental Shares, through which Mr. Eaton had hoped to work out his destiny, grew fatter and fatter. But it was not healthy fat. To provide Mr. Eaton with cash, Continental was forced to borrow from the banks. Declining markets lowered the value of its collateral. Between 1929 and last week the following shrinkages in Eaton securities took place:
1929 High Last Week
Continental Shares $45⅞ 3⅝
Republic Steel 146½ 12
Goodyear 154½ 32⅛
Goodrich 105} 9
Otis Steel 55 7⅝
United Light & Power 61⅞ 20⅛
Youngstown Sheet & Tube 175 55