Vilas County news. [volume] (Eagle River, Vilas County, Wis.) 1896-1927, 1912-03-06
BIG PROFIT FOR
MORGAN IN STEEL
Financier Got 100000 for Or
ganizing Trust Says Expert.
CENSURE FOR GARY DINNERS
Report of investigator Finds Trade
is Restrained, That 80 Per Cent.
of Properties Controlled
by Monopoly.


900 United States Steel corpora
ton and its agent the United
States Steel Products company, con-
stitute double trust that fixes prices
and controls the steel export business
and 80 per cent of the domestic iron
and steel trade of the United States,
was made public in a report submit
ted to the steel trust investigating
committee of the house of representa-
tives by Farquhar ]. McRae, its expert
accountant.
That the big corporation makes its
gigantic profits through restraint OF
trade and manipulation of prices is
the conclusion drawn from the ex-
pert's study of the trusts books.
Competition is killed by the inlu-
ence exerted at the famous Gary din
ners, by control of raw materials, and
by system Of interlocking directors
in various companies.
Not the least sensational of the dis
closures is the showing that ]. P. Nor
gan & Co. prohted to the extent OF
$50 300, 900 in the organization of the
trust. Of this amount $62, 100000 was
the profit for the promotion of the
deal and $6,800,00O was CLEANED from
the conversion of the bonds.
The officials of the trust objected to
producing their books before the COM
mittee, but later agreed to submit
them to the inspection of the expert.
In his report McRae points out many
discrepancies between what he found
on the books and what the trust Off
Gals told the committee.
McRae found that in less than nine
years the steel corporations net earn
ings were $1,029, 685 1889, or an equiva-
lent of $13 a ton of the finished prod
uct. In it's report the corporation
says it's net earnings for that period
were $980,OO0,311
Chairman Gary and H. G.. Frick told
President Roosevelt that the trust
controlled only 60 per cent. of the
steel properties Of the country at the
time it wanted to absorb the Tennes-
see Coal and Iron company. McRae
reports that its actual degree of DOM
nation exceeded 80 per cent.
The golden rule" policy which per-
vaded the Gary dinners to Independent
as well as trust steel producers is rep
resented as one of the most subtle
but effective schemes for evading the
Sherman antitrust law.
"The Gary dinner arrangement"
says the report, "whereat the so-called
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 SIS far as it operates
to exclude free competition. The ar
rangement is designed and intended
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 dishonor Of declaring in favor
of a named price and then selling at
some other price.
AS showing the result of the policy
of the steel corporation to make the
bulk of its profits in the raw and semi
finished material, Mr.. McRea submitted
a condemned statement of dividends
paid by the subsidiary companies to
the steel corporation and the interest
paid by the Carnegie company on it's
collateral trust bonds, from April 1,
1901, to April 1, 1910 showing total
of $753, 1868.
In it's conclusion the report says:
'The United States Steel corporation
Is merely a holding company, engag-
ing in no business except the control
through stock ownership of the sub
sidiary companies. There were ac-
quired and brought under single con-
troll upward of $50 concerns in lines
of business allied with the steel-mak-
Ing business, including ore owning and
mining companies (which are now re-
strained from competing in the sale
Of ore.
There were acquired large num-
Der of major concerns at much in
hated valuations"