The sun. [volume] (New York [N.Y.]) 1833-1916, 1911-08-05

rather proud OF prediction that ne made
to Mr.. Morgan ten years ago when he
crease until in 1910 the production would
be 25.oOO. 900 tons. That was about what
II was last year. he said.
You we're opposed. then" asked the
chairman, "to restriction OF competi..
ton. making territorial boundaries and
fixing fixing prices the three weapons OF the
"Let me answer that by saying that
in that period the fundamental idea
of most people in regard to the formation
Of n trust" replied Mr.. Schwab. was
that the most successful corporation was
the one that controlled the most OF the
output. My idea was exactly the oppo..
site. 1t was to reduce the cost OF output.
In answer to question from the chair.
man the witness said that the control OF
prices was frequently fixed by gentle
mems agreement. Mr.. Stanley said he
was going to lay this trust on the table
and get Mr.. Schwab to help him dissect
it, to discover its NAV. how II ate and
all about it. Mr.. Schwab's first insertion
of the knife was to say that when 95 out
Of 100 manufacturers sat down together
and agreed to restrict the output and put
up the price that was a gentlemen's gree
ment.
WAS there ever any intimidation used
to keep them from breaking these agree
ments?" asked Mr.. Stanley MIR. Schwab
believed that there was a forfeit Of 500. 900
in one instance.
would that tend to maintain it?"
was the next question:
Not in the steel business" was the
answer.
what" exclaimed the chairman. sit
ting upright at once. Can get into the
steel business?'
WHAT'S 100000 COMPARED TO ORDERS?
f-I f. 1L =
said that in the matter OF orders he
wouldn't let SiOOOOO stand in his way.
The chairman asked about arran gements
Of this sort before the formation Of the
Steel Corporation and wanted to know
how long such agreements lasted and
whether they we're broken after due
n0t!Gs Ms had sea1 been fefiUw Saysn; remarked Mr.
Schwab. Il have been in the steel business
since 1880 and have heard Of these agree:
ments frequently. Some OF them lasted
only a few months and some OF them a.
long as it would take a man to go out Of
a room and get to a telephone.
Of cordialities between the witness and
his examiner. At one time the bouquets
came 80 continuously in the course OF a
number OF after yous and please
pardon mes" that Mr.. Schwab said smil-
insly; w., ,.r ~. - MANY oom,,;usn,..
lou Day Tie 70 ulhly
Mr.. Chairman. that you make me want
to be confidential" =,
Il desire your confidence above all
things" returned the gentleman from the
South; You know many things that l
should like to know.
But these gentlemen's agreements,' '
said Mr. Stanley; they made Andrew
Carnegie persona non grata. with the
older companies. didn't they. because he
persisted in keeping his mills running to
their capacity?"
But IL he were in business l am quite
sure that he would realize that there is no
more possibility Of a big new steel COM
pany than there Ia OF new trunk lines in
this country. 1t is in the development
Of the present ones that the future OF these
-is il your idea?' asked MIR. uittleton,
that competition among number of
companies producing the same things
is destruotive?"
1T is destructive to the best develop
ment Of the steel industry"
is there any way to avoid limiting the
output?"
A curious economic principle is in
volved there" was the answer. Every
mill is going to get its legitimate share
because OF Its location. no matter what
prices other people make. Most Of the
products have an established price, rails,
for instance"
HE'D HAVE PRICE OF RAILS HIoHER
How was the price Of rails fixed at s2s
a tom
Probably. by a gentlemen agree
ment fifteen years ago was the smiling
reply. That's a fair profit. IL it were
too high the customer would object if i,
were too low the manufacturer. It's a
happy medium, arrived at 10y custom
and use. Personally think it s too low
Suppose the Steel Corporation Gu,
it to s2?,- suggested Mr.. Littleton. Mr..
Schwab said that the others would follow
In other words. this eminence Of con-
| solidation, to use the least offensive term.
said Mr.. Littleton.. makes it fact that
| if they reduced the others would have
| to do the same
1T would follow naturally" the witness
returned. But didn't say that il they
| third Of the entire cost Of making steel
| rails Is consumed in transportation,
Mr.. Schwab said that when the Steel
| Corporation was formed they had prac-
ticaily no foreign business and he brought
Mr., Farrell. the present president. to New
York and told him to develop il. Last
| year, said the witness. the corporation
exported nearly $1,000 tons Of steel
1t had been his idea that the mill nearest
the seaboard should he used for this pur-
pose and that was the principle he spoke
of when he mentioned extension of trade
you are asking your questions with
such fineness of distinction and shading
OF meaning" said Mr.. Schwab moment
later. that it is difficult for mere mill
man to answer them
"On the contrary" replied Mr.. Littleton
Il feel like man fioundering around in a
blast furnace.
There was considerable discussion in
| regard to the chances of competing with
the steel industries of other count ries
Mr.. Schwab said that in the finality trans
portation and labor were the two decid-
| ing elements. There hadn't been year
| in its life, said he. that the Steel Corpora
tion's labor charges hadn't increased
He thought that with the came conditions
the industry here could hold its own with
| the other countries. But at present the
Germans were able to lay their rails down
on the Pacific coast ahead OF the Ameri-
cans.
WHY PRICES ARE LOWER ABROAD.
Rails were sold in other countries, he
admitted, at a lower rate than in the
United States. He said that he would
advise it IL it were necessary to get the
business. 1t was good business to sell
the surplus supply at cost, he thought.
Why doesn't the consumer here get
the benefit of this effort TO meet foreign
prices?' asked Representative Bartlett.
why doesn't he bring in foreign rails?"
Mr. SObw wah hack