Bethlehem Steel

When the directors of Bethlehem Steel some time ago decided to pass the common dividend, considerable pessimistic comment was occasioned about future prosperity for the "independent" steel companies. This attitude was, for the time being at least, borne out by the company's statement for its third quarter this year, ending Sept. 30. During these three months, total income was $6,495,731; after interest, etc., of $3,466,107 and depreciation and depletion of $2,927,457, the net income amounted to only $102,167, or nowhere near enough to cover preferred dividends of $1,075,129. Yet the directors could not find it in their hearts to pass the dividends on the company's preferred stocks, and in consequence a deficit for the third quarter of $972,962.

Present operations are about 65% of capacity, against 31% in July, 45% in August and 52% in September. On Sept. 30, the company had $48,686,000 cash and securities in its treasury, and its current assets exceeded liabilities by about $134,000,000, or a ratio of assets to liabilities of over 5 to 1.

The difficulty with Bethlehem Steel would therefore appear to be mainly overcapitalization. Owing to Wartime prosperity and post-War mergers, the company has very considerably increased the amounts of its outstanding stock and bonds. Now, in normal times, it remains to be seen whether earnings will be large enough to pay dividends on the generous scale formerly practised.