Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1912-02-28
REPORT PROVESA
STEEL OCTOPUS
Morgan & Co. Receive S70,.
100000 for Merging Com
peting Companies.
IN RESTRAINT OF TRADE
Net Earnings of Corporation Shown
to Have Been 81, OPS, 6s5, $3.50
in Period of Nine Years.

Washington, Feb. %. - The house
steel trust investigating committee to-
day made public the result of the in
quiry into the books and minutes Of
the United States Steel corporation
conducted by FaTquhar ]. McRae, an
expert accountant.
The McRae report reaches the con-
clusion that the steel corporation op-
crates in restraint OF trade and pre-
vents competition through a manipula-
ton OF prices, through the influence Of
the so-called Gary dinners" by con-
troll of raw materials and through a
system OF interlocking directors in var
ious companies. 1t also tends to con-
tradict some OF the testimony given by
steel trust officials.
Some of the figures dealt with in the
report are startling. 1t Is shown that
J. p. Morgan & Co. received approx
mately $70,0OO,O00 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
we're more than a billion dollars.
FREE ACCESS TO BOOKS.
Steel corporation officials objected to
producing their books before the com
mittee in this city. but consented to
place them freely at the disposal of an
expert TO be named by the committee.
Mr.. McRae made a thorough study of
the books and minutes, and in his re-
port 10 the committee he pointed out
these salient features:
That J. p Morgan & Co.. heading the
syndicate which organized the steel
corporation, received a cash profit of
500, 900, 900. OF which $G2.5OO.0O0 was
for promotion. with an additional com.
mission of $G.3O0,O 900 for bond CONVEX.
sion scheme.
That the net earnings Of the corpora
ton for a period of nine years were
SLOPE, GS5, 3S9, or an equivalent of ap
proximately S13 ton on finished prod
uct, instead of s0.000,311 as claimed
by the corporation in its report.
That the steel corporation. contrary
20 the statement made by Judge Gary
and II. c. Prick to President Roosevelt
in 1907 that II did not control more
than 60 per cent OF steel properties ir
the country, controls about so per cen
of the steel holdings
GOLDEN RULE POLICY.
The section of the report dealing
with the Gary dinners" where indie
pendent as well as corporation stee
men assembled to discuss condition,
in the trade, contains an analysis of thu
legal effect of the golden rule polio!
prepared by Anthony J. Ernest, a New
York lawyer. In which It is declared
that the conventions agreed 10 and en-
forced would be Objectionable as re
CARDS their effect upon competition"
The Gary dinner arrangement,
says the report, "whereat the so-calle,
Independents are influenced to reduc
their production conformably to thei
estimate of the reduction in the dc
mand existing. and 10 maintain price.
is Objectionable as far as IL operates {
exclude free competition. The arrange
ment Is designed and intended 10 opel
ate, and has operated admittedly. a
to standard steel rails, although II /
claimed that the so-called Independent
participants can cut prices without fea
OF penalty. except the dishonor of d,
claring I'm favor of a named price an
then selling at some other price.
1T can be no justification Of the c.
operation Of the participants in tn
Gary dinners that no penalty attache
TO violation OF the declarations mt
tually exchanged. because perforce tn
anti trust act would prevent the ell
forcement OF any penalty for reducin