The herald., 1897-01-06
THE PRICE OF ARMOR PLATE
AS Shown by Herbert's Careful
Inquiry
THERE'S MILLIONS IN IT."
But There Won't Be II Herbert Has
Ills Way
The Secretary Recommends the Offer of
Fair Price or Manufacture by
the Government
Associated Press Special Wire

|
Associated Press Special Wire
! WASHINGTON, Jan. 5.-Secretary
Herbert today transmitted to congress
his 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 Jan
uary l, 1897, and to make no contract 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 heated debate in the house
and senate in which the main conten-
| tion was that the government was pay
ing too much for armor plates The re-
port is very important and in many
/ respects a sensational document. The
present cost of armor is 1888 per ton.
Mr.. Herbert's conclusion is that the cost
of material and labor is $19S.70 and al
lowing for the cost Of maintaining the
| plant ana the nickel now furnished by
the government and 80 per cent prot to
| the companies. the net cost to the gov
| ernment would be in round numbers $500
| per ton.
| The Carnegie and Bethlehem compan-
| les have both expressed desire to sell
out their plants to the government.
Secretary Herbert in his reply to con-
gress explains the methods of investiga-
tion he pursued and the difficulties which
beset him. Both the Carnegie and Beth
lehem companies declined last spring to
give the Information on the ground that
they were not obliged to give to the pub
lie the secrets of their business. posi-
tion to which Mr.. Herbert took eXcep-
tion on the ground that the government
had bound itself not to buy armor plate
abroad, and therefore was entitled to
know whether the prices charged were
reasonable. The government inspectors
at the works of the companies were ex-
amined. In November. 1886, however
the Bethlehem Iron company sent to the
department a statement of the cost OF
armor plate.
The estimated cost of labor and mater
ial they fixed at $3.50; interest on cost of
plant. S7S.29: maintenance and depre-
citation, s132.72; working capital, $33. .55;
total, s49i.56
This statement concluded in these
sensational words: When at the in
stance of the United States government
we undertook this difficult and vexatious
business, 1t was obvious that this could
not be prudently done for the order
which the government then desired to
place, but we were given to expect such
further orders as the government might
have to give.
"The obstacles and delays that al
ways beset the pioneer had, however,
been overcome when the government
gave a private contract on the same
terms as our to a rival concern which
guided by our sacrifices, was spared
the outlay of more than a million dollars
And now the government is urged to set
up and operate one itself. Under the
circumstances we now confirm the In
formal suggestions made to yourself
and others, and state that we desire to
withdraw from this troublesome busi-
ness by selling to the government, be-
low cost, our entire armor-plate plant,
which we believe to be the best in the
world"
The letter is signed by Mr.. Linder-
man. the president Of the company.
Secretary Herbert severely criticises
Mr. Linderman's methods of calculation
The Carnegie company also sent let
ter about this time declining to give
full statement of cost, but giving the
elements entering into the cost, ex-
elusive of the shop cost; interest on the
plant per ton Of armor. $S1.5S; main
$67.94; loss by abandonment of plant
when navy shall have been completed
per ton of armor, $75,49; total, 1924 &c.
To this the Carnegie company also
adds $25 per ton for working capital.
The Carnegie company also animad-
verted on the fact that the work of
making armor had been undertaken at
the request of the government and said
1t would, If the government decided to
manufacture its own armor, "be only
too happy to sell its plant at cost"
The company, In case the plant was
purchased, agreed to furnish steel in the
irgot at the price fixed by three ar
biters.
The Carnegie statement is also crit
icised by the secretary.
Mr.. Herbert calls attention to the
fact that the company made no state
ments until he had returned from
Europe. where he bad procured two es-
Inmates of the cost of armor plate.
IAN inspection of the prices paid the
American companies" Mr. Herbert
says, will indicate that they agreed
with each other as to prices. They
divided the contracts of this govern
ment between themselves. each bid
ding lower on one-half of the armor re-
quired by the government"
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 friendly understanding or
agreement among the powerful armor
manufacturers of the world to maintain
prices at about the same level"
In summing up the secretary asks what
will be price sufficient to justify man
ufacturers in maintaining armor plate
plants. "These two contractors have al
ready been repaid the cost of their
plants, together with fair profits. The
government is under no obligations to
pay more than the cost of their original
investment, but should pay them enough
to maintain the plants
1t has been determined, he says, that
the cost Of labor and material in a ton
of double forged nickel steel, Harveyized
armor. including allowances for loss in
manufacture, is s198.5S. This comprises
every element in cost, save mainten-
ance of plant. He allows 10 per cent for
this. and says it is enough and more. He
estimates the cost of the plants of the
two companies to be 81. SOC. 900 and an al
lowance of s150.000 per annum would be
sufficient for maintaining the plants.
He concludes that $3.50 may be taken as
the cost of armor when the companies
have fair orders for work
Mr.. Herbert says 1t Is not desirable
that the government should manufac-
ture armor, and for these reasons very
liberal profits should be offered to the
present contractors to induce then, n