Omaha daily bee., 1908-12-16
SCRWAB ON STEEL MARlNC
Magnate Testifes on Trade Conditions
in Tariff Hearing.
AGAINST ANY CHANGES NOW
Cost of Manufacture Increasing Along
with Improvement I'm Quality
New Methods Entail New
Construction.

WASHINGTON. Dec. M-Disagreelng
with the published views of Andrew
Carnegie with regard to the steel schedule
Of the tariff. Charles M. Schwab. former
president OF the United States steel cor
p~oration gave valuable testimony this
afternoon at the tariff hearing. While he
admitted that the conditions which existed
nine years ago would have permitted a
reduction in the steel schedule at that
time, he said that the cost Of every item
entered into the manufacture of steel rails
had increased to such an extent. the
present conditions must be changed to per-
NIT tariff reduction.
'In five years there will not be a
Bessemer steel converting works left In
the United States" Mr.. schwab predicted.
"Bessemer steel will be of no use. The
same is true of structural steel as we'll as
rails. They will all be made by the open
hearth process Of manufacturing. Coatly
changes in the construction of plants will
be necessary to make improvements in the
method MANUFACTURED"
Mr.. Schwab also declared that within
ten years It open hearth" process would
be superseded by the electric system OF
manufacture, which was being developed
in Germany.
"These improvements in process Of
manufacture increase the quality Of the
steel" he continued, but this is increases
the cost of production
Mr., Schwab said he was not in favor
Of any change in the tariff on steel and
steel products.
"A moderate change would not make a
material difference" he said, but a
radical change might do considerable
HARM" He admitted that the tariff could
be taken off iron ore without affecting the
value of the Mesaba ore of this country.
Mr.. Schwab stated the Bethlehem Steel
company, of which he is president imports
all Of its iron ore from Cub
SchVvab Asked About Letter.
A large fund of information regarding
the cost of making steel was given the
house ways and means committee today
by Charles M. Schwab of New York.
Chairman Payne of the committee began
a cross-fire of questions by asking Mr..
Schwab about a letter which had been
referred to by a previous witness.
This letter was written by Mr.. Schwab
to Henry c. Prick on May 16, 1899. and
stated that rails were being made for
less than $2 a ton, or nearly 81 less than
the cost in England. In the letter Mr..
Schwab predicted that the Carnegie Steel
company, Of which he was then presi-
dent, would be able to increase its net
earnings to 100000 a month. and said
it would sell all of its surplus production
abroad at a profit nearly equal to the
profit on domestic sales.
Before proceedings with his testimony,
Mr.. Schwab, upon being questioned. said
that the Bethlehem Steel company. OF
which he is president, is not affiliated
with the United States Steel corporation,
but. he said, that he was a ~stockholder
in the latter corporation.
Before Mr.. Schwab took the stand Wal
ter Wood of Philadelphia, a manufacturer
of c~astiron pipe, asked thatrthe difference
in the duty on c~astiron and pigiron be
reduced s. and in addition advocated the
reduction of the duty on the pip as much
as the duty on piglron is reduced. The
tariff on iron pipe is now IS higher than
on pigiron.
Cost of Production Abroad.
Upon resuming the stand at the after
noon session Mr.. Schwab replied to many
questions bearing IN the advisability Of
changing the tariff on iron and steel.
Mr.. Schwab stated in Germany the cost
of producing pigiron is from $3.50 to 81
a ton. while the cost of conversion into
steel is about the same as in this coun.
try. The cost of manufacturing in Eng
land is a little less than in Germany.
"If the tariff on steel should be consider.
ably reduced, would the steel business b.
seriously affected?" asked Mr.. Hill Of Con
necticut.
"If conditions are equal we can maxi
steel rails as cheap as they can be made
anywhere" replied Mr.. Schwab. 'The cos
Of manufacturing steel depends on two con
| l4ftnna. fha aAgf 90 fkn wantartoI -. ~.
ground and the cost OF labor. II the con
ditions are same as elsewhere we dom
need the tariff, but IL the cost OF transpor
tation, of labor OF something else is greatei
here, we need a tariff for protection"
Mr.. Schwab claimed that he was no
aware Of any understanding between tn
United States corporations and the German
steel syndicate and the English rail syndi
cate. He said that there was not as mucl
competition between the domestic stee
manufacturers in the home market as II
the foreign market.
"a railroad company will pay 81 NOR
a ton for rails to a company having 1t
plant along its line OF road than 1t woul,
pay to another company" ne said.
Mr.. Schwab answered all questions aske
with f~rankness He said the price OF steg
rails was fixed by most OF the America
manufacturers at $26 in 1895 or 1895; that 1
1888. during the 'steel war" this price wa
not maintained, but that following tn
war" is was again agreed that price
should be the same. Since then no manufac
turer has attempted to lower this price 70
. fear OF causing another war.
Labor Conditions Abroad.
Referring again to foreign countries, NJ,
Schwab said:
The labor conditions in England are III
most complicated OF any country. He sal
, the German government does more tina
5 any other for its manufacturers and III
steel makers in that country are furths
advanced in the methods of manufacturin
than those in this country"
els the tariff balanced between pig fro
, and rails2" he was asked.
"The difference between rails and p
4 steel products is fair" stated Mr.. Schwa
replying affirmatively.
Z Mr.. Schwab declared that the averal
e manufacturer is entitled to a profit of
Z TO 20 per cent and that the most s~uccessf
e manufacturers have Is per cent net prof
I He said the prices on billets and steel bai
4 vary according to the cost of productio
Mr.. Schwab stated that the railroads al