CHAPTER XVI
THE MIDDLE PERIOD—1907–1914
Although the business depression consequent on the panic of 1907 seriously affected earnings of the Steel Corporation in the closing months of the year, the big company was able, as a result of the boom conditions that preceded the financial catastrophe, to report the largest earnings it had till that time shown. Total earnings were $160,964,673.72, and a net balance was left for dividends of $104,565,563.76. After the payment of the dividends, the common being maintained at the established rate of 2 per cent., and the appropriation of $54,000,000 for property additions, a net surplus of $15,179,836.76 remained.
In the appropriations for additions was included a sum of $18,500,000 for the continuation of the work being done at Gary, making the total amount appropriated for this purpose to the end of 1907, $50,000,000. During the year the work of building the new steel city progressed rapidly and $19,316,555 was added to the $4,632,202 expended the previous year.
The last two months of the year showed the effects of the business depression, earnings of the last quarter, net for dividends, being only $18,614,416, compared to $28,758,142 the three months preceding. But it was not until 1908 that the full force of the storm was to be seen. In the first quarter of this year net profits applicable to dividends dwindled to $8,854,297.37, compared with $27,031,008.20 a year previous, and second-quarter profits were $9,042,027.55 against $30,843,512.61 in the same period in 1907. A striking comparison of the difference in trade conditions that occurred in the twelvemonth is afforded by the following statistics.
| 1908 | 1907 | |||
| Gross sales | $482,307,840.34 | $757,014,767.68 | ||
| Steel ingot production | 7,838,713 | tons | 13,342,992 | tons |
| Finished steel production | 6,206,932 | tons | 10,564,537 | tons |
| Number of employees (avg.) | 165,211 | 210,180 | ||
| Net earnings | $91,847,710.57 | $160,964,673.72 | ||
| Net for dividends | $45,728,713.70 | $104,565,563.76 |
No special appropriations were made out of 1908 profits and a surplus of $10,342,986.70 was thus shown for the year after the dividend payments. However, such an appropriation appeared to be unnecessary as the Corporation already had a large reserve fund for the most important work underway, the building of the city and plant at Gary. On January 1, 1908, the balance on hand for this purpose was $26,051,242.62, and there was spent on the work $18,848,472.19 during the year, so that at the start of 1909 there was a balance of sufficient size to continue the work for several months.
During the year 1908 the bonded debt of the Corporation, which had been increased from $564,670,876 at the end of 1906 to $602,320,511 a twelvemonth later, chiefly on account of the issuance of securities for exchange for Tennessee Coal & Iron stock, was reduced to $594,865,534.
Among the important items of expenditure for 1908 is found a sum of $3,460,993 which was employed in modernizing the plants of the Tennessee company acquired the previous year. This was the beginning of a series of large expenditures extending over many years, and all for this purpose. Up to the end of 1914 approximately $20,180,092 had been spent on this work, most of it coming from the general funds of the Corporation and not from the earnings of the southern subsidiary itself.
To what extent the acquisition of the Tennessee company affected the Steel Corporation’s capacity is shown in a table submitted in the report to stockholders for 1908, the figures given being as of the end of the year: