The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1897-01-06
Armor Plate Companies Have
Had Enormous Profits.
They Have Charged Govern
ment Exhorbitant Prices.
20 HERBERT SA
The Secretary Makes His Re-
port to Congress.
Carnegie and Bethlehem Would
Sell Out TO U. s.

bert has transmitted to congress MS
reply to a provision in the last naval
appropriation bill directing him to ex-
anime into the actual cost of armor
plate and report to congress before
January l, 1887, and to make no con-
tract for armor plate for the vessels
authorized by that act until after the
report was made to congress. This
provision of the bill grew out of a heat
ed debate in the house and senate in
which the main contention was that
the government was paying too much
for armor plates. The report is very
important and in many respects SEN
SatiOnal document. The present cost OF
armor plate is 1888 per ton. Mr.. Her
.berts conclusion is that the cost of ma
terial and labor is $19S.70 and allowing
for the cost of maintaining the plant
and the nickel now furnished by the
government and the present profit to
the companies would be in round num-
berS $500 per ton.
The Carnegie and Bethlehem compa-
MES have both expressed a desire to
sell out their plants to the government
Secretary Herbert in his reply to con-
greSS explains the methods of inveSti-
eating and the difficulties which beset
him. Both the Carnegie and Bethle-
hem companies declined last spring to
give information on the ground that
they were not obliged to give to the
public the secrets of their business, a
position to which Mr.. Herbert took ex-
ception on the ground that the govern
ment had bound itself not to buy armor
plate abroad and therefore was entitled
to know whether the prices charged
were reasonable. The government in
SpectOrs at the works of the compa MES
were examined. In November, 1896,
however, the Bethlehem Iron company
sent to the department statement OF
| the cost of armOr plate.
| The estimated cost of labor and ma
| terial they fixed at 1888; interest
cost of plant. $7S-29; maintenance and
| depreciation, $13272; working capital,
| 1913. So; total $494. Sc.
This statement concluded in these
| sensational words:
| when, at the instance of the United
| States government, we undertook this
! difficult and vexatious business, it was
| obvious that this could not be prudent
| ly done for the order which the govern
ment then desired to place, but we were
| given to expect such further orders as
| the government might have to give
| Now the government is urged to set
another plant operated by itself. We
! now confirm the informal suggestions
| made to yourself and others and state
! that we desire to withdraw from this
| troublesome business by selling to the
government. below cost, our entire ar
NOR plate plant, which we believe to be
i the best in the world
The letter is signed by Mr.. Under
| man, the president of the company
| Secretary Herbert severely criticises
| Mr. Linderman's methods of calcula-
| ton calling attention to the fact that
| Bethlehem claims ten per cent for de-
| probation, where the Carnegie COM
pany claims but per cent, and he en-
tirely dissents from the charge for
! maintenance. He also criticiSeS the
| working capital charge.
The Carnegie company also sent a
| letter about this time declining to give
a full statement of cost but giving the
| elements entering into the cost exclus-
i've of the shop cost: Interest on plant
per ton of armOr, $81.53; maintenance of
plant per ton of armor plate, $67. "a;
loss by abandonment of plant when
navy shall have been completed per
ton of armor, S75.49; total, 1924 sc.
To this the Carnegie company also
adds $25 per ton for working capital.
The Carnegie company then also ami
madverted on the fact the work of
making armor had been undertaken at
the request of the government and said
it would, if the government desired to
make it's own armor be only too happy
to sell it's plant at cost" The COM
pany, in case the plant was purchased
agreed to furnish steel in the ingot at
the price fixed by three arbitraters
The Carnegie company's statement is
also severely criticised by the secretary
who concludes that he needs mo as
! sistance in arriving at a correct con-
clusion unless it is that the cost of the
Bethlehem plant is $4,000, 900 and the
Carnegie $4,000, 900 is insisted upon
Mr.. Herbert says the government ex-
perts do not sustain the estimates OF
the Carnegie company. The Bethlehem
he says. cost much more, without doubt
the Roher board estimating it at $4,-
0S1,0O0. Mr.. Herbert calls attention to
the fact that the companies made nc
statements until he had returned from
Europe where he had ascertained the
cost of arnor plate.
He speaks of the armor furnished by
/ the companies to Russia at $249 per ton
and later at $500 per ton. and concludes
from a comparison of prices that there
is at least a friendly understanding OF
agreement among the powerful armoI
manufacturers of the world to main
tain prices at or about the same level >
; In summing up the secretary asks
what will be price sufficient to justify
manufacturers in maintaing armol
plants.
These two contractors have already
been repaid the cost of their plants, to-
gether with fair profits The govern
them more than the cost of their origi-
! nal investment, but should pay then
! enough to maintain the plant"
: 1t has been determined, he says, thai
the cost of labor and material in q tor
| of double forged nickel steel Harvey
lied arnor, including allowances fol-
losses in manufacture, is S192.7S. This
comprises every clement of cost save
maintenance OF plant. He allows II
per cent for this and says it is enough
and more He estimates the cost OF
the plants of the two companies a 81, =
! 500 600, and an allowance of $3.50, 900 pei
anaum would be sufficient for main
. tanning the plants. SuppOsing that 3
| 500 tons of aFmor were manufactured
, | yearly, ii gives an allowance of $50 pei
: | ton making in round numbers the cos
+ | of armor $3.50 per ton. It 5000 tons were
! made the price could be ascertained by
| adding $50 to the original cost per ton
| S19S or SPAS He concludes that S25t
! ! may be taken as the cost of a ton OF
| armor when the companies nave fail
| orders for work.
This estimate is almost the exact fig.
ure which the Bethlehem works bid fol