The Review of Economics and Statistics Vol. 3 No. 12 1921
The Iron and Steel Industry During Business Cycles
Abstract
T HE census of manufactures of the United States classifies manufacturing industries into fourteen groups.' Of these groups and steel and their leads all others, whether the groups be ranked according to capital investment, amount of wages paid, or value added to materials by the manufacturing process.2 Moreover, the industrial importance of the iron and steel group is not fully revealed by the figures for that group considered by themselves. Among the other thirteen groups there are two, vehicles for land transportation and railroad repair shops, which are so intimately connected with iron and steel that the three might well be classified together, while the remaining eleven manufacturing groups are all dependent upon the iron and steel industry for tools, machinery and structural steel. Furthermore, the non-manufacturing activities, agriculture, mining, building, and transportation, are large consumers of iron and steel products. The manufacture of iron and steel, therefore, is not only important because of its magnitude but because it is more intimately related to every phase of our industrial life than is any other branch of manufacturing activity. Because of its importance and its unique interlocking with every branch of the modern industrial organization, the manufacture of iron and steel has been generally recognized to reflect the business situation as a whole. Direct evidence that this industry actually does offer good indices of business conditions may be found in various data published by the Harvard University Committee on Economic Research. We may remind the reader that in our original study, Indices of General Business Conditions, we found the monthly volume of production for I903-I4 to fluctuate concurrently with bank clearings outside New York City and general commodity prices. Consequently, production was one of the series selected for our curve B representing general business conditions.3 Comparison of the annual volume of production with indices of the output of manufacture as a whole led Professor Day to the conclusion that pig-iron production appears to give an amazingly accurate picture of the year-to-year fluctuation of physical production in manufacture. 4 Prices of iron and steel, as well as production, reflect the general business situation. The prices of pig iron and bar iron are included in our commodity price index of business cycles.5 Finally, the price indices of iron and steel stocks fluctuate in a manner very similar to that of the indices of other industrial stocks.6 It is the object of this article to bring together the significant material showing the fluctuations of the iron and steel industry during periods of business prosperity and depression. Prices. Chart I shows the monthly prices, I898I92I, in dollars per gross ton, of four iron and steel products in various stages of manufacture, namely, Bessemer pig iron, Bessemer billets, steel bars, and black steel sheets.7 The chart is constructed on the logarithmic scale, so that the equal vertical distances represent equal percentage changes. The important thing brought out by the chart is the manner in which fluctuations in the prices of pig iron are reflected in the prices of the semi-manufactured and manufactured products. During certain periods like I902-03, I90507 and I9I0, however, the prices of bars and sheets reveal a high degree of stability while pig iron and billets fluctuate considerably. That fluctuations in the prices of iron and steel products during periods of business prosperity and depression are representative of fluctuations in prices of other important commodities is shown by Chart II. The curves on this chart represent the prices (B) of pig iron and (C) bar iron compared with (A) our tencommodity price index of business cycles, based upon the prices of mess pork, cottonseed oil, hides, print cloths, sheetings, spelter, worsted yarns, and coke as well as pig iron and bar iron. This chart shows that the prices of pig iron and bar iron have similar cyclical movements to those of the ten-commodity index. The thr e curves have been adjusted for their respective long-time movements 8during the period of comparison, i898-i914, in order that the different long-time movem nts of the various price series might not interfere
- DOI
- 10.2307/1928896
- Volume
- 3
- Issue
- 12
- Pages
- 378
- Sources
- openalex crossref