The Marion daily mirror. (Marion, Ohio) 1892-1912, 1912-01-23
Commissioner Knox Hands
is Report on Steel Pro.
duction.
REPORT HITS THE TARIFF
Segregation of Railroads
From U. s. Steel Co. is
Demanded.
Ore Profit Agreed on Be
tween the Great Ore
Producers.

Washington, Jan. 23.-Unreason
able profits are made on iron ore OF
the lake region, excessive earnings
How into the treasury OF the United
states Steel corporation from its orc
transportation facilities, which sug.
gest the necessity from the standpoint
of public policy of segregating the
ore railroads from the giant corpora.
ton and large inter-company profits
are made by consolidated ore iron
and steel companies, according to a
preliminary report on The cost of
production in the steel industry by
Herbert Knox Smith. commissioner OF
corporations. made public last night.
The report was presented to Presi-
dent Taft and sent to the house com
mittee on ways and means for con
alteration in connection with the pro-
posed revision of the steel tariff
schedule, upon which the Democrats
caucus today
Prices UnrcasOnabIy High.
THE prices Of lake ore" the report
declares, have been kept for many
years at an unreasonabIy high level
compared with the cost OF production
and the cost Gf the investment I'm the
producing ore properties"
In connection with the alleged ex
cessive profits realized by the steel
corporation from its ore railroads,
Commissioner Smith says that the
control Of public agencies of trans
portation carries with 1t such possi-
bilities OF abuse that the question Is
raised. whether the public interest
in this industry does not require a
segregation Of the ore railroads from
the steel corporation"
| The report is based upon an inves-
| tigation of two-thirds of the coun-
i trys production of iron and steel
from 1902 to 1906. inclusive. Limited
data for 1902 to 1910. Mr. smith
adds, make it clear that these fye-
year figures Substantially represent
present conditions also.
In so far as the steel corporation
"enioys monopolistie power" the re-
port states. at lies chiefly i'm its
holdings Of ore and its railroad trans
portation facilities"
This company the report declares.
has acquired unduly large are re-
serves holding at the close of 1910 at
least fifty years supply at the pres
cnt rate Of consumption, exclusive OF
the Great Northern ore properties
The lease of which has been Cancelled.
effective January 1, 1915. IT is esti-
mated that the corporation has fully.
1000 100000 tons OF other ore in tho
lake region.
Profits Per Ton.
| The average cost Of lake ore, gem
orally, delivered at lower lake ports,
from 1902 to 1906, was $2.G4 per ton
The average transfer profit on ore
was sc cents per ton. This is re-
garded as excessive by the commits
sioner, representing, In his judgment
| from 10 to 8 per cent. on the invest
ment, with the presumption in favor
OF the higher rate" and including
earnings on the large ore reserves
which are entirely inactive at this
time.
1T may be stated" the report
adds, 'as n notorious and incontro-
vertibe fact that the price of Lake
superior ore during the greater part
OF the period 1902 10 1906, ana indeed
back to 1895, has been established in
large measure by agreement among
the principal ore-producing inter-
ests"
The excessive profits on ore. the
report says, handicap effective com |
petition in the production OF pig iron |
and steel by concerns which must
go into the open market for their
ore.
The transportation profit of sixty |
cents a ton realized by the steel
corporation on It's own ore over It's
principal ore-earrylng railroads and
in lake vessels from 1902 to 1906 was
grossly excessive" report alleges. As
evidence of this. it is added, the cor
poration recently reduced the rates on
its two principal ore roads.
Rates Held Excessive.
ut Is safe to assume" the report /
continues, that the present reduced
rate Of sixty cents per ton is stlll ex-
cesslve."
The report adds:
while integratlon OF industry TO
permit of large scale operations at
minimum costs is exceedingly deslr-
able, these enormous profits OF the
steel corporation on the transporta.
tion Of ore present problem of very
great Importance"
The situation is this; integration
of the steel industry with respect to
transportation thus far, instead OF
working to the advantage Of ue
public In the form of lower costs to
all shippers and lower prices, has in
ured to the benefit Of great com
bination. on the other hand to let
the steel corporation retain This ad-
vantage of low transportation cost
and to let this work itself out in the
form of lower prices might be un
desirable because It would tend TO
give the steel corporation an un-
reasonable and undesirable advantage
over competitors in the sale Of finish
ed products.
"rhis situation clearly raises the
question whether the interests OF Inc
public may not require the segrega-
tlon of these railroad properties from
the steel corporation. II would thus )
stop what 10 unquestionably an eyil +
and that Is the imposition OF high T,
rates upon competitors shlpmenta I,