(2 of 3)
For the first time since the early 1937 shortage, steelmen enjoyed a sellers' market, began turning down small-lot orders which are expensive to fill. What set off last week's steel boom were export orders actually booked plus feelers, hopes and promises of less than 250,000 tons (July exports: slightly more than 500,000 tons). Largest buyer was "London Merchants," No. 1 foreign steel jobber. U. S. steel exporters jacked up their prices $5 to $9 a ton. This prompted steel's domestic customers to see panicky visions of a war famine. They bombarded suppliers with orders for some seven million tons, enough to keep the industry operating well above 80% for two to three months. Ironically, this wave of domestic fear-buying may tie up many mills so that they may not be able to fill export orders yet to come. U. S. Steel Corp., inured to being called uneconomically large, started booking orders from customers it had not seen for months. In the Pittsburgh area it mobilized all its barges (many of them previously idle or rented to other users) and started to stock up raw materials. During the summer the industry lays in ore (from Minnesota) before the Great Lakes freeze. In July only 180 of 302 ore boats were in service; last week 230 were busy hauling for the winter's stock pile, and 15 more were being readied to handle the load.
Most depressed of capital goods industries has been railroad equipment. Last week John Jeremiah Pelley, head of the Association of American Railroads, declared that U. S. rail capacity can carry any imminent emergency freight load. Before the week was out Chesapeake & Ohio, Virginian, Norfolk & Western railroads, anticipating booming shipments from their coal districts, gave orders for freight cars. The far from prosperous New York Central is inquiring for cars. Even the struggling Delaware & Hudson and the bankrupt Erie started looking for 1,000 cars each. Altogether last week's speculative car business may total 30,000 (total 1938 orders: 15,000 cars).
Prices of major crops rose violently (see col. 3). Leading U. S. copper producers rationed their customers at 12¢ a pound, refused speculative orders from outsiders. Similarly St. Joseph Lead Co.'s shrewd Clinton H. Crane, announced a price advance to 5.55¢ a pound.
Two Dangers. All of this did not amount to a war boom. It amounted to speculation on a boom. Actually the number of war orders placed was negligible. The week saw no notable speed up of consumption. Inventories and surpluses did not disappear; they merely changed hands at mounting prices, while production was speeded up to enlarge speculative inventories of manufactured goods.
Because of this the Administration was alive to two dangers.