The Calumet news. [volume] (Calumet, Mich.) 1907-1938, 1912-02-28
This is Amount Paid J.P. Morgan
& Co. Says Expert Who Ex-
amined Books
VIOLATION OF LAW CLAIMED
Declares Steel Corporation Is in
Restraint Of Trade
Claims Il Prevents C ompetition
Through Manipulation Of Prices.
Figures Starting.

Washington. Feb. 2s-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 Farquhar j. McRae. an
expert accountant
The McRae report reaches the con-
clusion that the Steel Corporation op-
crates i'm restraint of trade and pre-
vents competition through a manipu-
lation Of prices, through the influence
Of the so-called Gary dinners by
control Of raw materials and through
a system of interlocking directors in
various companies. II also tends To
contradict 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 approxi-
mately S50,OOO,o0O 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. MIR. McRae made a thorough
study of the books and minutes and in
his report to the committee he pointed
out these salient features:
What investigation Revealed.
That J. p. Morgan & Co.. heading
the syndicate which organized the steel
corporation, received a cash profit of
S6s3OO,00O of which S62 500 OOO was for
promotion. with an additional COM
mission of SO. SOC, 900 for bond con-
version scheme.
That the net earnings Of the cor
poration for period Of nine years were
$l,O2s,6S5.3S9, or an equivalent OF ap-
proximately Sl3 ton on finished prod
ucts. instead Of $3.50 OOO,Sil as claimed
by the Corporation in its report.
That the steel corporation. contrary
TO the statement made by Judge Gary
and III. c. F'rick TO President Roosevelt
in 1907 that il did not control more
than 60 per cent of steel properties in
the country, controls about so 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 }. Ernest. a New
York lawyer. ia which IL is declared
that the conventions agreed To and
enforced would be Objectionable as re-
CARDS their effect upon competition"
The Gary Dinners.
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 I'm the de-
mand existing and to maintain prices,
is Objectionable as FAR as il operates
to exclude free competition. The ar
rangement is designed and intended to
operate and has operated admittedly.
as to standard steel rails. although It
is claimed that the so-called inde-
pendent participants can cut prices
without fear Of penalty. except the dis
honor of declaring i'm favor of named
price and then selling at some other
price.
1T can be no justification of the CO.
operation of the participants i'm the
Gary dinners that no penalty attaches
to violation of the declarations mu-
tually eNchanged. because perforce the
Antitrust act would prevent the en-
forcement of any penalty for reducing
prices or exceeding ones share of the
business. Previous pool agreements
may have been broken and penalties
inflicted BY the members themselves.
although this was soon discontinued.
II will be assumed. even If fund had
not been deposited. that the men In the
pool would have paid their fines. IL
this be assumed. it can also be as
sumed that the word of the partici-
pants in the Gary dinners is ample
security for the professions of coop
Grafton in the policy almost unanim-
Galley two-MORGAN
on the other hand, any contract
may be broken; any conspiracy may
be upset by recalcitrants. IL is surely
no excuse for the illeglity of any arr
rangement in restraint of trade that
it can be departed from by the particl-
pants
Profits From Raw Materials.
Stress is laid In the financial section
Of the report upon the demonstration
by figures that the steel corporation