Kansas City daily journal., 1897-01-06
PROFIT ON ARMOR PLATE.
SECRETARY HERBERT PRESENTS
SOME STARTLING FIGURES.
The Actual Cost of Material and La
Dor Is $19S.7O, and the Govern
ment Has Been Paying
S5S3 Per Ton.

Washington, Jan. 5.-secretary Herbert
to-day transmitted to congress his reply
to provision in the last naval appropria-
ton bill directing him to examine into the
actual cost of our armor plate and report
to congress before January 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 pro-
vision of the bill grew oct of "a heated de-
bate in the house and senate, in which
the main contention was that the gov
ernment was paying too much for armor
plates. The report is very important, and
in many respects a sensational document.
The present cost of armor is S5S3 per ton.
Mr.. Herberts conclusion is that the cost
of material and labor is $3.50, and, allow
ing for the cost of maintaining the plant,
and the nickel now furnished by the gov
eminent, and 80 per cent profit to the COM
panies, the net cost to the government
would be in round numbers s4OO per ton.
The Carnegie and Bethlehem companies
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 investigation
him. Both the Carnegie and Bethlehem
companies declined last spring to give the
information, on the ground that they We're
not obliged to give to the public the secrets
of their business, a position to which Mr..
Herbert took exception, on the ground that
the government had bound itself not to buy
armOr plate abroad and therefore was en-
titled to know whether the prices charged
We're reasonable. The government inspect
ors at the works OF the companies We're
examined. In November, 1896, however,
the Bethlehem Iron Company sent to the
department statement of the cost of ar
NOR plate.
The estimated cost of labor and material
they fixed at $3.50: interest on cost of plant
SIS.29: maintenance and depreciation. $l32 y;
working capital, $3.50; total, s494.56.
The letter is signed by Mr.. Linderman,
the president of the company. Secretary
Herbert severely criticises Mr.. Linder-
mans methods of calculation. calling atten-
tion to the fact that the Bethlehem COM
parry claims 10 per cent for depreciation
where the Carnegie company claims but
per cent, and he entirely Gissents from the
charge of maintenance. He also critiCiSes
the working capital charged.
The Carnegie company also sent a letter
about this time, declining to give full
statement of cost. but giving elements en-
tering into the cost exclusive of the shop
cost: Interest on plant per ton of armor,
$Sl.52; maintenance of plant per ton of ar
NOR. S6I4; loss by abandonment of plant
when navy shall have been completed per
ton of armor, $I5.i9; total $22i.s6. To this
the Carnegie company also adds So per
ton for working capital.
An inspection of the prices paid by the
American companies Mr.. Herbert says.
will indicate that they agreed with each
other as to prices. They divided the con-
tracts of this government between them
the armor required by the government
He speaks of the armor furnished by the
companies TO Russia at $2i9 per ton. and
later at $500 per ton, and concludes from 4
comparison of prices that there is at least
friendly understanding or agreement
among the powerful -armor manufacturers
of the world to maintain prices at or about
the same level
Mr.. Herbert says it is not desirable that
the government should manufacture ar
NOR. and for these reasons. very liberal
profits should be offered to the present
contractors to induce them to continue
their plants in operation. and he recom-
mends, as fair profit, - per cent on the
cost of manufacture, which would be 1913
per ton. The secretary further advises that
the contractors hereafter furnish the nick
el, which now costs the government about
so per ton. making the cost 1895 per ton,
or. in round numbers, 500.
The government is now paying $5G3 per
ton for armor and, with the nickel adeed.
S5S3 At the prices suggested by Mr.. Her
bert. SJ0O.CO0 would be saved on each bat
| tleshfp. In concluding his report, Secre-
tary Herbert says it is possible his con-
clusions are erroneous. and therefore sug
sests that If his methods of securing in
formation are not correct the facts can
be ascertained by an exhibition to con-
eress of the books of the companies IF
| congress should fix the prices. he recon-
rnends that provision be made for course
| TO be pursued in case the companies re-
| fuse TO make contracts at the prices deter
| mined upon. Unless the present law is
changed. the secretary could not obtain
armor for the battleships already under
contract. if the companies refuse to bid
within the limit congress might fix,