The necessity for passing the dividend—and it was a pressing one—was keenly deplored both by the management of the big company and, naturally, by its stockholders. That payments would have been maintained had there seemed the slightest warrant for such a course seems to be beyond question as the directors realized that the wide distribution of the stock, and the fact that many of its shareholders were people of small incomes who looked to their Steel dividends almost with the feeling of security they would have reposed in good bonds, would make their action necessarily a great hardship to many. But there was no way out. Even had wages been reduced there did not, at the time, appear to be any hope that profits for a long time would meet requirements, and the conservation of resources was paramount. But wages were not cut. In the early part of 1915, with earnings running even lower than in the last quarter of 1912, the matter was considered, but a slight increase in business was seized upon as a warrant for the continuance of the old wage scale. The steel worker was saved, although the steel stockholder suffered.
Sales to outside customers in 1914 totalled only $380,228,143, inter-company sales $129,565,729, and other receipts made a total of $558,414,933—a decrease of over $238,000,000 from the previous year. Ingot production fell to 11,826,476 tons, and finished steel output to 9,014,512 tons, equal to about 62 per cent. of the gross capacity. Practically no change was shown in the bonded debt, which on December 31st stood at $627,238,417.26. The number of employees averaged 179,353.
So acute was the depression that the construction of the new Duluth plant was temporarily stopped in the fall of the year, and work was not resumed until well along in 1915.
In December, 1914, production of the Corporation’s plants fell to the lowest point ever recorded. One of its largest subsidiaries operated through most of the month at only about 15 per cent. capacity and another at 18 per cent. The general average of operations for the month was probably hardly over 20.
Thus we come to the close of the second or middle period of the Corporation’s existence. The years which made it up were generally trying ones. At no time between 1907 and 1915, except to some extent in 1910, was there anything like real prosperity. And the close of the period saw industry practically suspended, aghast at the conflict that was shaking Europe to its very foundations, and threatening world credit.
But while these seven years, 1908–1914 inclusive, were not, on the average, prosperous for the Steel Corporation, neither were they years of stress. Industrial affairs over the greater part of the period proceeded along a rather monotonous level, but this was possibly an advantage. So far as United States Steel was concerned, these conditions gave it an opportunity to perfect its organization, work out economies, and extend its operations along carefully considered lines. So that when industry revived under the urge of war times the big company was able to take advantage of the situation and to reap large profits and pay big dividends to its stockholders.
For the Steel Corporation and for American industry generally conditions at the end of 1914 were as dark as could be imagined, but it was the darkness that comes before brilliant dawn.