Capacity for What?

The steel-capacity fight headed to a showdown this week. Washington's expansionist group wanted a 30,000,000-ton (35%) increase; the industry did not. Last week the industry looked to be having its way.

OPM's Knudsen was clearly on its side. Said he: "What would we do with 30,000,000 tons more? That's too much for me. I'm not smart enough to pass on that. Let's keep our feet on the ground." Moreover, OPM recommended against Engineer Henry J. Kaiser's loan application for 1,500,000 tons of new capacity on the West Coast (TIME, April 28).

Mr. Kaiser did not care. His loud proposal had served its purpose, which was to get him enough steel to supply his Richmond, Calif, shipyard. The industry moved him up on its own private priorities list (at the expense of less vocal customers); he is building his ships with hush steel.

Expansion or no, it was clear this week that steel's private rationing system will soon have to be exchanged for an official one. There are current shortages in plates for ships and railroad cars, in nickel steels, in structural shapes; yet many a non-defense customer (notably the auto industry) gets all the steel it needs.

At a meeting of the American Iron & Steel Institute, U.S. Steel Chairman Irving Olds proposed that non-defense customers be rationed at once. If that is done, said he, current capacity (increased by 3,500,000 new tons to be ready by year's end) plus moderate further expansion and renovation will be enough.

The expansionists recalled that the Institute had once promised to supply defense, Britain and civilian needs from its current capacity. They recalled that the Gano Dunn report of last February, setting 1942 "reliable" capacity at 91,100,000 tons, had predicted (with many an if) that this would be more than enough; yet steel's present operations rate of over 84,000,000 tons a year is not enough for current demand. This week a second Dunn report, recalculating supply & demand, was on its way to the President.

But the heart of the steel problem cannot be calculated. It is the heart of the whole defense problem: the lack of an economic coordinator of all industries, with a knowledge of what U.S. grand economic strategy is to be. Steelmen have had to revise their figures upwards once because of the unexpected railroad-car demand; an equally unexpected demand for utility equipment may force them to revise upwards again. What they need is warning from an official bookkeeping headquarters where such demands will not come as a surprise.

That, in turn, requires an official policy on how long and how deep an emergency the U.S. is preparing for. Said U.S. Steelman Olds, "A proper program is all-important." The New Dealers who clamor for 30,000,000 tons do so not on the basis of demonstrable needs, but on the assumption that the U.S. should be prepared for anything.

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