The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1912-02-28
McRae in Testifying Before
the Stanley Steel Trust
Probe Committee Gives
Actual Facts.
STEEL CORPORATION
MADE OVER BILLION
Owned Railroads and Ore
Mines, Fixed the Prices
Openly and Then Secretly,
States McRae.
(National News Association)

WASHINGTON, Feb. 2S.-Restraint
OF free competition is charged against
the United States Steel corporation in
conclusions submitted to the Stanley
committee by F. B. MacRae, the COM
mittee's expert accountant.
No charges that a policy of restraint
was announced early in the formation
of the steel corporation, and that a
power to raise the price of pig-iron
has been deliberately exercised by
that concern. His figures show that
since the amalgamation of $50 con-
Germs into the security holding COM
pany known as the U. S. Steel Corpo-
ration, fair estimate of the adjuated
earnings ofthis gigantic commercial
force would be $1,306. .937, 1862,
which would be the equivalent of 36.6
per cent on the sales to outsiders Of
$S,s69, ,629 ,965.97, which is equal to
ST. of cost.
Then Competition Died.
When Mr. McRae took the stand
the committee was told that competi-
tion between previously competing
concerns was absolutely terminated by
the birth of the U. S. Steel Corpora
ton. He described the bringing under
control of corporation OF the $50
concerns, through gaining control of
the subsidiary companies, which in
clude ore mining and mining CON-
panies now restricted from compel
ing in the sales of ore: transportation
companies, among which are the Du-
luth and Iron Range railroad and the
Duluth, Mesaba and Northern rail-
road, formerly controlled by the Lake
Superior Consolidated Iron mines.
The control of these two roads, he
said, places the control Of every pos
sibility of competition in the hands of
the corporation.
The report submitted by MacRae
divides the consideration of the U. S.
Steel Corporation into three sections:
The first deals with the earnings Of
the corporation since its formation,
the second with extracts from the
minutes of the meetings of the big
concerns, while the last section is a
summary of all the evidences extract
ed from the minute books and from
testimony take. by the Stanley CON-
mittee.
Those Gary Dinners.
The Gary dinners came in for de-
tailed discussion in the report; and
in this connection the expert account
ant concludes that a number of agree
ments in restraint of trade existed be-
tween the subsidiary companies and in
dependent companies at the time of
the organization of the steel corpora
tion which was continued until 1904
and that other agreements were en-
tered into in July, 1908, and continued
until 1909. Gary dinners, the first of
which took place in November, 1907,
took the place of these agreements
which were discontinued.
1T is admitted" says the report,
that the price of at least one COM
modify, standard rails, has remained
fixed, notwithstanding the termina-
ton of the pool arrangement; and the
prices of other commodities, to an ex-
tent to be determined hereafter, have
been Influenced by the interchange of
information at the Gary dinners.
"The legal effect of the transition OF
the system of written contracts with
penalties, or secret meetings for the in
terchange of data as to output and
prices, to the system Of Gary dinners
should be considered"
Kills Competition.
After reviewing the testimony of
many ironmasters the report says:
"'The Gary dinners arrangement where
at the so-called Independents were in
fluenced to reduce their production
comformably to the estimate of the
reduction In the demand existing and
to maintain prices, is Objectionable
30 far as it operates to exclude COM
petition. The arrangement Is design
ed and intended to operate; and has
operated, admittedly as to standard
steel rails; although it is claimed that
the socalled independents can cut
prices without fear of penalty, except
the dishonor Of declaring in favor Of
a named price and then selling at