The following year was one of general business depression and the steel industry, the barometer of trade, was seriously affected. The result to the Corporation is shown best by the simple fact that on December 30, 1903, unfilled orders on the books of the subsidiary companies aggregated 3,215,123 tons, against 5,347,253 tons a year previous. This falling off in orders was accompanied by declining prices, and the directors of the Corporation were impelled to reduce the quarterly dividend on the common stock for the third quarter from 1 per cent. to one half of 1 per cent. and to eliminate the junior dividend altogether in the final quarter. Gross sales for the year were $536,572,871 and net profits $109,171,152, the surplus for the period being $12,403,917. Several changes in the make-up of the subsidiary companies occurred in this year. The most important was the incorporation of the United States Steel Products Export Co. (the “Export” was later dropped from the title), headed by Farrell, to conduct the Corporation’s foreign business. The Carnegie and National Steel companies and the American Steel Hoop Co. were merged into one concern, known first as the National Steel Co., the name being later changed back to the Carnegie Steel Co. Lastly, the American Tin Plate Co. and the American Sheet Steel Co. were consolidated as the American Sheet & Tin Plate Co. The depression that began in 1903 lasted well into the year following and affected earnings of the Corporation to such an extent that, for the first and only time in its history, the wages of the men employed in the plants were reduced. (Incidentally wages were quickly restored.) Gross sales for the year were only $444,405,431, and net profits, $73,176,522. No special appropriation for new construction was made and, despite the small profits, the Corporation managed to show a surplus after the payment of the full preferred dividend of $5,047,852. But the wave of prosperity was returning. The first signs made themselves felt in the late months of 1904 and the Corporation’s earnings showed marked improvement in 1905. Gross sales amounted in value to $585,331,736 and net profits of $119,787,658. A surplus of $43,365,815 was reported after the preferred dividend payment, but $26,300,000 was deducted for new construction in contemplation so that the net amount added to surplus was $17,165,815. In this year production reached the highest mark so far recorded by the big company, the output of pig iron being 10,172,148 tons, of ingot steel nearly 12,000,000 tons, and of rolled products 9,226,386 tons. In the annual report for 1905 is found the following statement by Judge Gary: “It has been decided to construct and put into operation a new plant to be located on the south shore of Lake Michigan, in Calumet Township, Lake County, Indiana, and a large acreage of land has been purchased for that purpose. It is proposed to construct a plant of the most modern standard....”