Ottumwa tri-weekly courier. [volume] (Ottumwa, Iowa) 1903-1916, 1912-02-29
Result Of Inquiry Into Books
, and Minutes Of Corpora
tion Given Out by Investi-
eating Body.
GARY DINNERS HELD
TO. BE OBJECTIONABLE
Another Feature Of Report
is That Morgan Got $685.
100000 for Promoting the
Trust; Control Alleged.

washington, ~. ", Ecu. 1i.-I Ae
house steel trust investigating com.
mittee today made public the result OF
the inquiry into the books and min
utes of the United States Steel cor.
poration conducted by Farquhar J. NC
Rae, an expert accountant.
The McRae report reaches the con-
clusion ], that the steel corporation
operates in restraint of trade and pre-
vents competition through manipula-
ton of prices, through the influence OF
the so-called "Gary dinners by con
troll of raw materials and through q
system of interlocking directors IN
various companies. 1t also tends to
contradict some of the testimony given
by steel trust officials.
Some Of the figures dealt with in
the report are startling. It is shown
that j. P. Morgan & Co., received ap-
proximately $7O,0O0,000 in cash profits
for: organizing the big steel combine.
and that the net profits of the concern
for the first nine years of its existence
were more than billion dollars.
Steel corporation officials objected
to producing their books before the
committee in this city, but consented
to place them freely at the disposal
Of an expert to be named by the COM
mittee. Mr.. McRae made thorough
study of the books and minutes, and
IN his report to the committee he
pointed out these salient features:
Net Earnings $13 a Ton,
That J. p. Morgan & Co., heading
the syndicate which organized the
steel corporation, received a cash
profit Of $6s,300,O00 Of which $62,50O,-
900 was for promotion, with an addi-
tional commission OF $6,800000 for q
bond conversion scheme.
That the net earnings OF the cor
poration for a period OF nine years
were 81 ,029, 9,6s5,389, or an equivalent
OF approximately $13 a ton on finished
product. instead Of $9S0,O00,311 as
claimed by the corporation in it's re.
port.
That the steele corporation, con-
trary to the statement made by Judge
Gary and H. c. Frick to President
Roosevelt in 1907 that it did not con-
troll more than so per cent OF steel
properties in the country. controls
about 80 per cent OF the steel holdings.
The section Of the report dealing
with the "Gary dinners" where inde-
pendent as well as corporation steel
men assembled to discuss conditions in
the trade, contains an analysis of the
legal effect of the golden rule" policy
prepared by Anthony J. Ernest, a New
York lawyer, in which it is declared
that the conventions agreed to and
enforce would be Objectionable as re-
CARDS their effect upon competition" !"
NJ Gary Dinners Objectionable.
The Gary dinner arrangement, .
sA 5 the report, "whereat the socalled
independents are Influenced to reduce
their production conformably to their
estimate Of the reduction in the de-
mand existing, and to maintain prices
is Objectionable as far as it operates
to exclude free competition. The
arrangement is designed and intend
ed to operate and has operated admit
tedly, as to standard steel rails, al
though it is claimed that the so-called
Independent participants can cut prices
without fear of penalty, except the dis
honor of declaring in favor of a named
price and then selling at some other
price.
1T can be no justification Of the
operation Of the participants in the
Gary dinners that no penalty attaches,
because perforce the antitrust act
would prevent the enforcement of any
penalty for reducing prices or ex-
ceeding ones share of the business.
Previous pool agreements may have
been broken and penalties inflicted
by the members themselves. although
this was soon, discontinued. 1t will
be assumed, even If a fund had not
been deposited, that the men in the old
pool would have paid their fines If
this be assumed, 1t can also be as
sumed that the word of the partici-
pants in the Gary dinners is ample Sc
curity for the professions of co-opera-
ton in the policy almost unanimously
subscribed to at the dinners.
ION the other hand, any contract
may be broken; any conspiracy may
be upset by recalcitrants. 1t is surely
no excuse for the illegality of any ar
rangement in restraint of trade that
It can be departed from by the parti-
cipants." .
Stress is laid in the financial section
OF the report upon the demonstration
W figures that the steel corporation
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