The Sentinel=record., 1912-01-23


 ordinary ma efsa.t-i1s caFera i5es I may be entirely bsolc ;aat the uasl aggressive loa :" ,aolld reap lh, benefit Of it's en.er. .,.Bas. t E rpqpes tionably dittercu, tls ciso ot , public utility. suck for instance as railroad Com .1u n tho on strnction of Jftett ft4ri.rac ticable. Moreover. the lmpc,ta, ort railroads of thA ateai corporation were obtained, not tEr)dsp smeuor ability efficiency or foresight. but simply through superior command of capf tai as a result Of combination
 I.arse mtercompaay profits. thc report says, were revealed by the ex animation of the many companies linked under one control through va rious subsidiaries. ore mines. blas' furnaces, steel works. etc These component parts of one interest. it is charged, treated each other as unat lied concerns charg.ng a prort as the material went from company to com pany, in the process of manufacture.
 Citing steel rails as an illustration the report shows the cost Of manulac ure from the raw material to the fin ished article in comparison between the book cost" of the corporatic1s which includes the inter-company prot Its. and the actual cost The com missioner emphasizes the fact, now ever, that the reasonableness Of profit in this case must be determined tr connection with the total investment of an integrated company
 After going through the various stages of inter-company treatment the book cost on heavy Bessemot rails vas S2l27. The intermediat, profits were $2.f7 making the revised cost $IS.S0
 The total different is thus a yer. considerable amount the commission adds. The price of Beesemer stee rails, the report says, has been fixet for more than ii wears, al about g. ] [ ton. It is roughly estimated, at cording to this, that the profits O rals thus equals rom II to Y pc cent of the investment
 Comparing the large and small con panies, the report shows a conside ably lower net cost in favor of the bl concerns
 Part of this difference ia favor { the large companies. the report add
 must. of course. cover a greater ii vestment due to higher ntegration part is due to superior efficiency r, snlt'ng fron suGn tHrggTar1UH, bu part represents also monopolistic con trol. especially in orc.
 "lnsofar as this difference mean 6 larger per cent of returns on eac dollar Of investment. lt is real dii ference in industrial position betweei The two groups This difference mus be considered in any public action ai iecting both classes of companies
 Because of its unique character an, dominating postion,' the report pre- seuts the cost Of the products of in, steel corporation for 1910
 It's intermediate profits arc lh, highest and its net costs are tue tow est the commissioner asserts frbt net or integration cost Of heavy stan dard Bessemer rails was placed a $l667. the book cost" $2i.53 I'm difference, SiS6. was about eauaul divided, it was added. between trans poltatoh profit and intcrcompan. profit
 While the steel industry during th' five years, 1902 to 1906. covered by th. report was based upon lake ore. Com missioner Smith calls attention t the very low costs for southern pii iron The report says.
 For southern pig iron, the tota furnace coat was $952 whi1h wa much lower than for either Besst mer or basic The chief reasons fo the higher furnace cost Of aorther pig iron were. the large freight charg involved in assembling the raw lnat' rials at the northern furnaces, an ihe large profits on ore and coke il cluded in the costs of those mat, 1 rials for tho northern terraces Tn transfer profits on ere aad coke use in making southern pig iron were yer small.