Catalyst in Steel

One day in 1925 troubled directors of Trumbull Steel Co. sat around a table and wondered where they could get money enough to put their wavering company firmly on its feet. They had been sitting for a long time without finding a way out of their difficulties when, miraculously, a taL stranger walked into their sanctum, slapped down on the table a $20,000,000 check, said, "There is my letter of introduction."

Thus did Cleveland's Cyrus Stephen Eaton, a stranger to steel men, enter a business which was no less strange to him. Once in, he stayed in; acquired a controlling interest in many another steel company; created one of those vague but formidable entities known as an interest. Steel men, surveying the various steel companies included in the Eaton steel interests, began to predict a merger that would leave United States Steel and Bethlehem Steel no longer so pre-eminently first and second largest steel companies that the position of third largest carried with it only a statistical distinction. Last week a portion of the merger rumors came true in the formation of Republic Steel Co., Eaton consolidation which, though still considerably smaller even than Bethlehem Steel, moved indisputably into the third position and contained the potentialities of a still larger company wth the possible addition of other Eaton companies as yet uncombined.

Constituents of Republic Steel Co. are Republic Iron & Steel Co., Central Alloy Steel Corp., Donner Steel Co., Inc., Bourne-Fuller Co., Trumbull Cliffs Furnace Co. and their subsidiaries. Outstanding statistics (approximate):

Assets $350,000,000

Sales $250,000,000

Ingot capacity 5,000,000 tons

Republic Iron & Steel is the keynote of the new structure. Organized in 1899, from a merger of 24 small steel companies, chiefly in Ohio and Indiana, the company last year went through a rapid expansion program which included acquisition of Trumbull Steel Co. and Steel & Tubes, Inc. There were also continuous but as yet unfulfilled rumors of a merger with Youngstown Sheet & Tube Co., in which Mr. Eaton is also interested. Republic Iron & Steel showed a net of $4,642,000 in 1928 and a net of $8,667,530 for the first nine months of 1929.

Central Alloy Steel Corp. is the leading producer of steel alloys and is one of the several U. S. steel companies 'licensed by Germany's Krupp Works to make the new nitralloy and nirosta (stainless) steels. The new Republic company is forming a subsidiary, Republic Research Co., which will specialize in the development of alloy steels and will be headed by Frederick J. Griffiths, Central Alloy's board chairman.

The Republic-Youngstown amalgamation, which has on several occasions appeared all but ratified, may yet be arranged, and Chicago's Inland Steel Company, in which Mr. Eaton is heavily interested, is also a potential member of the combination. The Republic group at present lacks a rail-making member--a gap which Inland would fill. Present ranking of the leading steel companies is:

Ingot capac. (tons)

U. S. Steel 20,105,749

Bethlehem 8,000,000

Republic 5,000,000

Jones & Laughlin 3,270,000

Youngstown 3,000,000

Addition of Youngstown and Inland to the Republic Co. would give the Eaton consolidation an ingot capacity of about 10,000,000 tons.

One of the several shadows thrown before the Republic merger event was last month's (TIME, Nov. 4) resignation of Tom Mercer Girdler from the presidency of Jones & Laughlin, Pittsburgh's great "family" steel company. Last year Jones & Laughlin made Mr. Girdler president, having heard that the Eaton interests were negotiating with him, so that his departure from Jones & Laughlin indicated that Mr. Eaton had some large fish ready to fry. Mr. Girdler, who has spent nearly 30 years in various steel mills, swears vigorously and always keeps his hat on, to be ready for emergency calls.

Perhaps a very farsighted steel observer could have forecast the Republic merger as long ago as April 1928, when another steel man in whom Mr. Eaton was interested also changed jobs. This man was Elmer T. McCleary, who, after 22 years with Youngstown Sheet & Tube, left its vice-presidency to become president of Republic Iron & Steel. Under the McCleary administration Republic acquired Sheet & Tube, and in 1929 will more than double its 1928 earnings. McCleary habit: to work 12 hours a day 365 days a year. McCleary pride: the new electrical welding process which Republic acquired in taking over the Sheet & Tube Company. Mr. McCleary becomes president of Republic Steel.

Essential to Mr. Eaton is the assistance of able steel men for Mr. Eaton knows little of steel and, like a chemist's catalyst by his mere presence hastens reactions in which he has otherwise no part. "I am,'' he himself has said, "only an investor." Born in Pugwash, Nova Scotia, he graduated from McMasters University, Toronto, and, in 1906 arrived in Cleveland with the Baptist ministry as his chosen career. Before ordination, however, he became interested in public utilities, left the ministry in favor of Cleveland street railways. Next he went to Iowa, bought up options on public utilities. One of his Iowa deals was financed by Otis & Co., Cleveland bond house, marked the beginning of Mr. Eaton's connection with Otis & Co. of which he has been a partner since 1915. In 1912 he organized Continental Gas & Electric, one of the earliest of public utility holding companies. The Republic deal was handled through Cliffs Corp., a recently organized investment company which combines the resources of Otis & Co. with Pickands, Mather & Co. and M. A. Hanna Co., thus bringing Cleveland's famed old iron and steel Mather and Hanna families into the newest steel development.

Mr. Eaton is a member of ten clubs, including a fishing club and two hunt clubs, one of which, at Northfield, Ohio (where Acadia Farms, his summer home, is located) he founded and subsidized. He has made many gifts (one of $250,000) to McMasters University, also to Denison University (Ohio), and is a University of Chicago trustee. On a visit to his home town of Pugwash he disliked the hotel accommodations, so undertook a campaign of municipal improvement which included the straightening of Main Street, a park, and a new hotel. Shortly after these improvements, the whole town was practically destroyed in a fire, and had to be largely rebuilt, again with Mr. Eaton's assistance. Mr. Eaton never drinks, seldom smokes, spends much time at home with his art-loving wife and seven children (five girls). A hobby: Reading character from faces.

This file is automatically generated by a robot program, so reader's discretion is required.