The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1909-03-01
The Importance of the II. C. |.
Merger"
REASONS FOR PURCHASE
The Ultimate Result Will Be Great
Industrial Good For the South.
Facts Are Not Clearly IN
derstood BY People.


may be fundamentally of much moment,
but the chances are that after some agi-
tation, which will serve in no small de-
gree to distract and perplex the minds
of the public, there will be a quiet funeral
in the cemetery of dead issues, and its
residuary legatees, the American people,
and particularly the southern people, will
gradually get more or less clear idea
of their inheritance.
There seems to be some doubt in the
minds of many people in the south as to
whether this is an asset or a liability,
and these doubts are partially due to the
reason that the public is not familiar
with the fundamental facts surrounding
the development of the southern iron
industry.
The common impression is that the
Tennessee Coal, Iron and Railroad COM
pany can and was producing its product
In such quantity and so cheaply as to
threaten the supremacy of the United
States Steel corporation and this led to
the purchase.
Another view is that the Steel corpora
ton may find it to its interest to lessen
the development of the southern district,
with view to aiding other sections.
Yet another view is that with the con-
troll of the Tennessee Coal, Iron and Rail
road company the Steel corporation will
be in a position to regulate steel prices
more than they were before, and, even
If they do not seek at present to inn
properly use this power, that the newt
able tendency of human nature would
be to do SO at some time in the future.
In most particulars each of these views
| is at fault
| 1t is very difficult to get an idea into
| the mind of the public, but they ocea-
sionally hold to one with much tenaoity
after it has ceased to be true. There
was a time when the Alabama district
produced iron as cheaply, IL not more
cheaply, than it had ever been produced
in the world before; yet it was only by
selling for a great many years at totally
inadequate figures, and without due re-
gard to the rapid depletion of the re-
sources that made it possible that Ala
bama was able to prove this. Almost
before the idea was driven home the
conditions which made 1t possible no
/
a factor in all considerations of the south
ern iron industry.
The things which made these extreme
ly low costs possible were:
Short freight hauls and low freight
rates.
High grade easily won ores.
An abundance of very cheap and easily
controlled labor.
High-grade easily won coal.
Prefacing that some of the changes are
| in degree only, I would say that the first
named is the only one remaining today.
| The value of this can hardly be over
estimated. Where 1t is possible to collect
all of the raw material which goes to
make up a ton of iron for less than ST. as.
is true In certain of the plants imme-
diately at Birmingham. it would seem
that nothing more might reasonably be
! asked in this connection. This is made
possible mainly by the juxtaposition of
raw material, but also is largely due to
the liberal terms made by the railroads.
Certainly the southern district, and es-
pecially Alabama, should express in every
possible way its deep appreciation of
the work of the common carriers.
The high-grade easily won ore has
passed as sahrply as II cut with a knife,
and the basis of the iron industry is
now a lower grade ore, which at the
same time is far more costly to win. For
tunately, its regularity and extent gives
ample assurance of permanency
The labor is neither cheap nor abund-
ant, nor easily controlled.
The coal a whole is more expensive
and difficult to win and requires greater
care In its preparation.
Alabama will never make iron as cheap
as 1t has made it In the past, and IN
less the increased cost inevitably due
to these changes, Is met by increased
skill and efficiency in management. more
and better labor. more perfect and en-
larged equipment and new invention and
new methods, the price the consumer will
have to pay will be very much greater
A want of appreciation of these facts
ha sled to most serious errors as to what
the district Is capable of doing, and
demands have been made for low prices
on crude Iron and finished products which
are not warranted by the conditions An
effort to meet these demands has made
the returns to the southern iron indus
try in many cases totally inadequate.
plant working at less than it's capacity, or
in which its Organization is incomplete, or
in which the labor and material supplies
fall in any way short OF what Is neces-
sary, is commonly more expensive to OPP
crate than a smaller plant. Other things
being equal. large plant provides a big
common divisor for all expenses, and has
inherently great possibilities. but 1t often
happens that big ant Is not producing
as cheaply as p siatively insignificant
one.
sorption by the Steel corporation, had GER
tainly never been a very successful or
profitable operation, while the percentage
of iron produced by the entire state of
Alabama was very small compared with
that produced in the United States at
large and the percentage of steel was, of
course, even less Any fear that the T. C.
| l. was to become a serious competitor of
| the Steel corporation must have been
| based on belief as to what might be
| done in the future, and not what had
been done in tn past, and carried, no
| doubt, those general Ideas as to cost of
| production to which have been referring
| above.
| These considerations meet absolutely the
| first and second questions. Any one at
f! all familiar with the industry would know
| that at the price at which the L. c. l.
was purchased by the United States Steel
| corporation It could not be made profit
4 able, worked as It had BEEN but would
I need large amount of additional devel-
>pment. 1t was not a bargain-counter
y ice Before 1t could become real fac
it We ;p,nthe iron industry, Of the country
use \untI Ms of money had to be expended
u l.