Arizona republican., 1912-02-29
Contention of President Taft is Upheld by Figures Given by an Ac-
 countant
INQUIRY WAS
 EXHAUSTIVE ONE
Details of Steel Company's Business Are Gone Into Thoroughly by Com
 mittee.
1 ASS0cidtcd Press DiSbdtchl 1

WASHINGTON. D. C., Feb 2S.-
 The house steel trust investigating
 committee today made public the re
 suit of the inquiry into the books
 and minutes of the United States
 Steel corporation conducted by Far quhar J. McRae, an expert account ant
 1 The McRae report reaches the con clusiUn that the steel corporation op- crates in 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. It also tends to i contradict some of the testimony given by steel trust officials. Some of the figures dealt with in the report are startling It is shown that J r Morgan & Co., receive approximately $70.000.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 Lcommittee in this city. but consented to place them freely at the disposal of an expert to be named by the committee Mir McRae made q thor ough study of the books and minutes, and in his report to the committee he pointed out these salient features:
 That J. P. Morgan x Co. heading the syndicate which organized the steel corporation. received cash profit of s69. 900. .O00 of which S62. 500,0oO was for promotion. with an additional commission of S6.S000o0 for i bond conversion scheme
 That the net earnings of the cor pdratiun for period of nine years were S1029.6S5.3S9. or an equivalent of approximately $13 ton on fin ished product instead of $9So.0oo.@ll as claimed by the corporation in it's report
 That the steel corporation. con- trary to the statement made by Judge Gary and II. C. Prick to President Roosevelt in 1907 that it did not con trol more than 60 per cent of steel properties in the country. controls about so per cent of the steel hold ings
 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 J. Ern- est. New York lawyer. in which it is declared that the conventions agreed to and enforced would be ob- jectionable as regards their effect upon competition"
 The Gary dinner arrangement. says the report. "whereat the so- called independents are influenced to reduce their production conformablN to their estimate of the reduction m the demand existing, and to maintain prices. is objectionable as far as II operates to exclude free competition The arrangement is designed and in- tended to be operated and has oper- ated admittedly. as to standard steel rails. although it is claimed that the so-caIled independent participants can cut prices without fear of penalty except the dishonor of declaring in favor of a named price and then sell ing at some other price.
 Tt can be no justification or the co-operation of the participants in the Gary dinners that no penalty at taches to a violation of the declara- tions mutually exchanged, because perforce the antitrust act would pre- vent the enforcement of any penaItN for reducing prices or exceeding one share of the business. Previous pool q agreements may have been broken and penaIties inflicted by the mem bers themselves. although thls was soon discontinued. It will be assumed even if a fund had not been de posited. that the men in the oid po'i would have paid their fines. If this be assumed it can also be assumed that the word of the participants m the Gary dinners is ample security for tho. professions of cooperation in the policy almost unanimously subscribed to at the dinners.
 .'On the other hand, any contract may he broken: any conspiracy may he upset bv recalcitrants. It is sure ly no excuse Tor the llleSditH VI e'iiH arrangement in restraint Of trade that it can be departed by the partici- pants.
 The control of ore by the steel cor poration. 76 per cent of competitive ore in Minnesota five hundred million tons in the south in all 2,5oo.OOO.OOo, tons out of 4.462, ,940,0 900 tons of com merciaIly available ore in the United States.-is an ownership and con troi which must interfere with com petition"