The Virginia enterprise. [volume] (Virginia, St. Louis County, Minn.) 1893-19??, 1911-11-10
1vRn|NG LIGHT 4 %
HILL ORE LEASE
National Bureau of Corporatio1's
Discusses Phases zof the Hill
Ore Lands Lease.

National bureau u OoTp0f4t10Aa
Discusses Phases of the Hill
Ore Lands Lease.
Commissioner Herbert Knox
Smith, Of the bureau Of corpora
tions, has just issued the complete
text of Part Of his report on the
steel industry, a summary of
which was given to the public
more than three months ago. The
report itself is very much more
complete than the. preliminary
summary and deals at great length
with the conditions Of the steel
industry during the period just
before the formation Of the United
States Steel corporation. Then
the report turns to financial as
poets of the latter concern and
questions of valuation, finally TAX
ing up the income sheet OF the
corporation and discussing it's
form at considerable length. In
this connection interesting conclu-
sionA are offered with reference
to the profits of the Steel company
and their source. Many pages
are devoted to the ore holdings
Of the corporation. The report
says that the average royalty in
leases made since 1907 is under
forty cents per ton::~>l 1t then dis
cusses the lease Of: the Hill ore
lands, saying in part: The ques-
ton, therefore, arises as to why
the Steel corporation entered in
to this lease under tthe enorous
conditions noted. The only rea-
sonable explanation which the bu-
reau has found for this unusual
transaction is that it::>Was design
ed to prevent this ore from falling
into the hands Of competitors Of
the corporation. Had :. this ore
,een sold or leased ia small par
cells to a large number of indie
pendent producers this might have
tended to depress the price Of ore
as we'll as to foster competition in
the manufacture Of iron and steel.
On the other hand, if these ore
lands were simply. held by the
Great Northern interests without
development, this would leave the
opportunity open for the organ
ization Of a very important rival
to the Steel eorptsta At this
time, however, the Steel :eofpora-
tion was the only concern in the
iron and steel business which was
in position to consider the ac-
quisition of these Hill ore lands in
Il single block. By securing con-
troll of these enormous reserves
the Steel corporation obviously
strengthened it's control Of the ore
industry and at the same time put
substantial obstacles in the way Of
further competition in the iron
and steel industry. The Steel cor
poration specifically denies that
this lease was intended thus to
head off competition, and, instead,
contends that it was desired mere
ly in order to strengthen the cor
poration's 8 ore reserves. At the
time this lease was entered into,
however, the corporation had fully
thirty years supply (and perhaps
a fifty years supply) Of ore un-
der it's control. Had this Hill ore
been acquired at bargain price
an obvious reason for it's acquisi-
ton would be furnished; but in
view of the extraordinarily high
rate Of royalty at which this ore
was taken over and the other on
erous conditions in the lease, par
ticularly the high minimum ton
mage stipulated, the only reason
able explanation, in the opinion Of
the bureau, is that the corpora
tion chiefly desired to forestall
competition. The high royalty
named in this lease, therefore, in
stead of being proof of a marked
appreciation in ore values, Is rath
er an indication of the extent to
which the Steel corporation was
ready to go in order to prevent
this ore from falling into the
hands of rival interests. In view
of the exceptionally high royal
ties stipulated in this lease, it is