News Archive: Youngstown quits 6-company merger

As I’ve been working on the new Center for Working-Class Studies site (launching in early January), I have been fascinated by the wealth of historical information and perspectives there–many of them first- and second-person accounts of working-class histories.

While searching for a reference, I stumbled on a headline from May 20, 1922: “Youngstown Quits 6-Company ‘Merger’“. Always interested in the history of Youngstown steel, I thought I would share this with you for your interest.

The article discusses a proposed merger of seven independent steel companies: Lackawanna, Youngstown Sheet & Tube, Midvale Steel and Ordnance, Republic Iron and Steel, Inland Steel Company, Steel and Tube Company of America and the Brier Hill Steel Company.

Lackawanna, it reports near the beginning, had already withdrawn from the merger talks after acquisition by Bethlehem Steel. Midvale joined Bethlehem in 1923. Republic, founded in Youngstown in 1899 and later headquartered in Cleveland, grew through mergers 1927 and became the third-largest steel producer in the U.S. (Republic was subsumed into LTV Steel in 1984, which is now part of Arcelor Mittal.) Inland was founded in Chicago in 1893 and was taken over in 1998 by what is now Arcelor Mittal.

As for The Steel and Tube Company–formed in 1919 in a consolidation of a few existing companies with plants in three states–and the Brier Hill Steel Company, my best guess is that talks during this time among them and Y S&T about a combination of their forces was both the reason for the merger withdrawal discussed in this article and the apparent dead end for the overall talks. In 1923, Sheet & Tube bought both Brier Hill and Steel and Tube, catapulting the company to the largest employer in the Mahoning Valley and the fifth-largest steel manufacturer in the U.S.

This theory seems confirmed by a June 23, 1922 article, “Brier Hill Steel Co Not to Join Merger.”

The Brier Hill Steel Company will not go into the North American Steel Company merger, comprising the Midland, Republic and Inland Steel Companies[...] [Merger leader Thomas L.] Chadbourne’s explanation was in the nature of an answer to advices from Youngstown, Ohio, that negotiations were being carried on to include the Brier Hill company[...]

The article notes that approval for the merger was pending Trade Commission approval. A September 1, 1922 article sums up the result of that review, though I couldn’t find confirmation that the deal had died or proceeded anyway: “Trade Commission Attacks Merger; Holds Midland-Republic-Inland Deal, Which Daugherty Approved, Illegal. Chadbourne Declare Ruling Will Not Prevent Carrying Out the Project.“

If you’re relatively new to town, like me, you may be interested to note that, despite the absence of the Jeanette Blast Furnace, the Brier Hill Works restarted under V & M Star.

Here’s a transcription of the original article:

Youngstown Quits 6-Company Merger

Another surprise was sprung at the conference of bankers and steel men negotiating for the consolidation of six of the large independent steel companies when it was made known that the Youngstown Sheet and Tube Company had decided to drop out of the proposed combination. This is the second large company to stray from the fold of the original proposed combination which was to have included seven of the independents. The first was the Lackawanna, which was taken over by Bethlehem.
Thomas L. Chadbourne, spokesman for the steel men and bankers, at his offices yesterday afternoon, issued the following statement:

“The representatives of the Youngstown Sheet and Tube Company at a meeting today of all representatives of the six-cornered merger advised that they had reached the conclusion not to participate further in the proposed consolidation. Conferences among the other five concerns are continuing to determine whether it is advisable to consider a consolidation of all or some of these companies.”
The five companies left to consider consolidation are Midvale Steel and Ordnance, Republic Iron and Steel, Inland Steel Company, Steel and Tube Company of America and the Brier Hill Steel Company.

Schwab Figures in Rumors

The dropping out of Youngstown Sheet and Tube caused much conjecture in the financial district late yesterday. In some quarters the belief prevailed that Charles M. Schwab, Chairman of the Bethlehem Steel Corporation, who put through the merger with Lackawanna, had accomplished another coup and had persuaded Youngstown Sheet and Tube officials to join the gigantic combination which Wall Street takes for granted Mr. Schwab has in mind.

James A. Campbell, head of the Youngstown Sheet and Tube Company, said last night that there was absolutely no foundation for the report that the Bethlehem was to take over his company or was negotiating for control. Mr. Campbell added also that no other companies had made advances to Youngstown for the purpose of gaining control.
Questioned as to his reasons for dropping out of the proposed six-company merger, Mr. Campbell at first said that he would rather have Mr. Chadbourne give the reasons. When informed that Mr. Chadbourne had referred all such questions to Mr. Campbell, the latter said that he could not readily divulge the reasons for dropping out of the conference, as it might interfere with the plans of the remaining companies.
In the speculation as to the reason for the Youngstown Company quitting the negotiations, an opinion was expressed that the merger had virtually fallen flat, and significance was attached to Mr. Chadbourne’s statement that conferences would be continued by the five companies to determine whether it was advisable to consider the consolidation “of all or some” of the remaining companies.

Terms in Dispute, One Theory

One theory advanced was that Youngstown Sheet & Tube dropped out because the other companies could not agree upon the terms at which the Campbell property would be taken over. Wall Street recalled the recent report that the bankers had stipulated the amount of capitalization of the combined company, requiring that all of the six concerns adjust their “price” within bounds of the amount set.

Youngstown Sheet and Tube is the most conservatively capitalized company of any of the independents that contemplated combination. The company has a capacity of 1,500,000 ingot tons annually, or about 2.98 per cent, of the country’s total. Its common and preferred capitalization is less than $30,000,000. As far as known the company has no bonded debt. Republic Iron and Steel, which has a capacity of 1,395,000 tons, or 2.77 per cent, of the country’s total, has $55,000,000 common and preferred stock outstanding and a bonded debt of approximately $13,500,000. Midvale Steel and Ordnance has an ingot capacity of 2,894,000 tons, or 5.74 of the total for the entire industry. This company is capitalized at $100,000,000 and has a bonded debt of $64,126,950.

Despite all rumors to the contrary, there is still a strong feeling in the financial district that more will be heard from Mr. Schwab and his associates in Bethlehem before all the merger clouds have disappeared.

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