The Washington herald., 1912-01-23
STEEL PROBERs
DEMAND RECORDS
Stanley Warns Corporation
He Wants Facts on Pro-
duction Cost.
wRANGLE AT HEARING
President Farrell Asks that TRADE
Secrets" Be Kept from Public.
COMMISSIONERS Report.

the feature Of Chairman Stanley's ex-
animation OF James ]. Farrell. president
OF the corporation, who appeared as a
witness before the steel committee yes
terday. Mr.. StRnley's threat came at
the conclusion OF q long wrangIs over
the cost sheets OF the steel corporation.
President Farrell repeatedly insisting
that he had no objection to the submis-
sion OF such records for the perusaI Of the
committee, but that he did object to the
general publication OF what he charac-
teri1ed as trade secrets"
We VIII get the company's records"
declared Chairman Stanley, addressing
Mr.. Farrell, IF there Is any power left
In the government TO attain such an
end"
President Farrell on stand.
Like all the witnesses Of the steel cor
poration who have appeared in this In
quiry' President Farrell was led into the
field OF speculation and conjecture, and
ne was finally invited to give his views
as to what laws should be passed to cor
rect alleged evils in corporate manage
ment
The upshot Of the days proceedings
was an agreement that the steel corpo-
ration SHOULD submit to the COMMITTEES
compilations showing general average
costs. and that the committee stalls
tleian should have access. II he so de-
sired, to the original records from which
these compilations were made.
In the summons citing him to appear,
Mr.. Farrell was ordered to bring along
books and records OF the corporation IT,
SELF, and minute books OF the subsidiary
concerns. among them the papers Of the
carnegie Steel Company, prior to its alb
sorpuon In 1901. Mr.. Farrell testified
that he was not the custodian Of the
Tapers OF the subsidiaries, that he had
no knowledge Of their whereabouts, and
was In no way responsible for them. As
result OF Mr.. Farrell's testimony in
this regard subpoenas will be issued
upon the president OF practically every
subsidiary steel company, and they will
be ordered TO bring the records sought
In the summons served on President Far
rell
Takes Issue with Gary.
President Farrell took Issue with other
corporation officials who have appeared
as to the kind OF laws that should be
passed TO regulate corporation. He dis
agreed with the view Of Judge Gary,
Andrew Carnegie. and others that the
government should fix the prices OF in
dustrial corporations. He said the exer-
else OF such q power would prove i'm
practicable. Mr. Farrell recommended
the creation OF a board that would give
publicity TO the affairs OF corporations
and suggested that such board should be
given the power OF forfeiture II II was
shown that an Industrial corporation sold
az unreasonably high rates
Referring to the Gary dinners, Mr.
Farrell denied that these functions were
held as means Of evadlng the law
aimed at combinations in restraint OF
trade. He TOOK Issue with the assertion
of member OF the committee that IS
is an exorbitant price for rails, and de-
MED that that figure, which had been
maintained for a long time, was fixed
by agreement
Discussing rails, Mr.. Farrell made a
statement that excited a good deal Of
interest among the committeeman. He
declared that the rail now in use in this
country was too hard and brittle for
safety. He thought the travelling public
would be better safeguarded by a softer,
heavier rail than the one now in use,
which, he contended, contained too much
carbon. Mr.. Farrell said that the softer
rail was more expensive. and this was
the reason. he believed, why It was not
used generally by railroads in this coun-
try.
Would Lop on Treat Railways.
While President Farrell was getting his
first look at the mailed fist OF Chairman
Stanley. a drastic series OF recommenda-
tions by Herbert Knox Smith. Commits
sioner OF Corporations, wah made public.
These recommendation are embodied in
the second installment OF his report to
President Farrell.
The segregation OF the United states
Steel Corporations great railroad holdings
a
radical recommendation made by Com
missioner Smith. The report contains
material of a more vital bearing on the
dissolution suit undertaken by the gov
eminent against the steel trust than the
report which Mr. Smith made public
several months ago. This second report
deals with the costs Of production. In II
the Commissioner Of Corporations holds
that the United States Steel Corporation
is making decidedly excessive proflt on
its ore deposits. The profits on ore, Mr..
Smith charges. have not been based on
competitive conditions, but have been es-
tablished by agreement among the large
interests holding the ore properties. These
excessive prices, the Commissioner adds,
have put the iron and steel market OF
the country on an inflated cost and price
basis, to the probable disadvantage oil
the consumer"
PROFITS Are Excessive.
The Commissioner OF Corporations finds
further that the profits which the United
States Steel Corporation has been max
ing from its railroad properties are ex-
cessive. He contends that the corpora
TONS action In reducing these rates by
20 cents per ton for the haul from
Mesaba mines to Upper Lake ports was
In Itself a confession that the former
rates were unreasonable. The Commits
siorer Of Corporations believes further
more that the present reduced rate OF %
cents per ton Is still excessive.
Commissioner Smiths report shows that
the United States Steel Corporation Is
able TO turn out its products at consider
ably less than the smaller companies.
The plain inference from this being that
the smaller concerns wiz have to be pro-
tected by a tarin rate unless they are to
be entirely driven out OF business.
In regard to the United States Steel
ore holdings. Mr.. Smith
hnds that the corporation makes an
average profit on Lake ore delivered at
the Lower Lake ports for the period OF
1902 to 1906 Of IS cents per ton.
The Commissioner OF Corporations does
not attempt 10 say definitely to just |
1hat extent the proit on ore is unrea- |
sonable, but he regards Il as entirely |
possible that II all the facts were def |
1itely known more than one-half the |
lverage prcht Of g cents per ton on ore J