What Price Scrap?

WPB planners changed signals again on steel last week, recommended that ingot capacity be boosted from the present 88,569,970 tons to 98,279,970 tons by mid-1943, even if it takes more than 4,000,000 tons of steel desperately needed now.

All this talk begged a more immediate question: What good will it do to increase capacity 9,710,000 tons unless the U.S. can find some way to use the capacity it already has? The industry will not come within 4,000,000 tons of its present rated capacity this year (and present mills could produce a good 2,500,000 tons more than that).

WPB planners had one costly solution: add 10,945,000 tons of new pig-iron capacity. But that solution merely put the finger again on the real problem of how to get more steel at once: the steel shortage is first & foremost a scrap shortage. If the scrap shortage can be solved, steel production from present plants can be upped at least 6,000,000 tons a year, right away.

There are plenty of reasons for the scrap shortage. U.S. steel mills chewed up more scrap in six months of 1942 than in all of 1917--three times as much as in all of 1932. And just when the demand for scrap is zooming to record heights, some of the most important peacetime sources are supplying less than they normally do and, in many cases, what they are supplying is lower-grade scrap. For example, the railroads (usually good for 4,250,000 tons of scrap a year) are finding it next to impossible to get new equipment, so they are hanging on to old equipment for dear life instead of junking it for scrap. Even the steel mills themselves are getting less "home scrap" (usually 50% of the total) because so many ingots are being shipped abroad instead of being chewed up into shapes at the mill.

All this makes it imperative to tap new sources of scrap. But the Government is still loth to be anywhere near tough enough about requisitioning hoarded industrial scrap--unused machinery, etc., that low-prioritied industries feel is worth more to them than any kind of reasonable price bonus. It still hopes to get the added scrap through patriotism rather than pressure or price. Last week it launched the biggest hoop-la scrap-collection drive ever, through a new American Industries Salvage Committee. U.S. industry anted up $2,000,000 for paid advertising, sought to get 3,000,000 added tons from industry, more than 7,500,000 from households.

If this drive fails, the Government may at long last have to let the profit motive help solve the steel shortage. For while OPA's price ceilings are enough to bring in more ordinary scrap than ever before, they are not high enough to give the most essential scrap collector of all, the small junk dealers, an adequate incentive for abnormal effort. They are not even high enough, in fact, to keep a lot of small junkmen in business.

The steel industry is grimly opposed to puncturing scrap ceilings, mainly because that would increase steel costs. But no less an authority than Iron Age, the voice of the steel industry, came out on the junkies' side last week. Screamed this normally staid trade paper:

"The psychology of the junkman has been ignored from the beginning of the war program. The scrappie's prices have long been frozen both horizontally and vertically; he is therefore going out and getting a defense job. There is scrap lying around everywhere, uncollected and unprocessed, and at the same time the only organization that can possibly turn in a satisfactory performance is slowly disintegrating. Only a recognition of the profit motive, such as perhaps a $2 rise in the scrap ceiling and more freedom to manipulate different classifications at will under the ceiling can possibly alter this unfavorable trend. The new advertising campaign to the general public to contribute scrap will likely serve only as a temporary fillip. . . ."

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