Omaha daily bee., 1912-01-23
Separation of Railroads From Big
Trust May Be Necessary.
PRICES LONG KEPT TOO HIGH
Quotations on Raw Material From
Lake Region Unreasonable.
ADVANTAGES WR0NGFULLY USED
lnteeration of Industry to Permit
Large Operations at Minimum
Cost Bripgp No Benefit
to Pub1ic.

WASHINGTON, Jan. 22.-Unreasonaole
profits are made on iron ore Of the lake
region; excessive earnings flow into the
treasury OF the United States steel cor
poration from Its ore transportation
| facilities, which suggests the necessity
/ from the standpoint of public policy OF
segregatinx the ore railroads from the
giant corporation. and large inter-com-
pany profits are made by large consoli-
dated ore, iron and steel companies. ac-
cording to a preliminary report on the
cost OF production in the steel interests
by Herbert Knox Smith, commissioner
OF corporations. made public tonight.
! The report was presented to President
Taft and sent to the house committee
ON ways and means for consideration in
connection with the proposed revision
Of the steel tariff schedule upon which
the democrats will coucus tomorrow.
The prices OF lake ore" the report
declares, have been kept for many
years at an unreasonably high level,
compared with the cost Of production
and the cost Of investment In the pro
uucinB ore plupciues.
| The report is based upon an investi-
cation of two-thirds Of the country's
production OF ore from 1909 to 1906. IN
elusive. Limited data for 1902 10 1910,
Mr.. Smith adds makes X clear that
these five-year figures substantially
represent present conditions also.
Holds Large Ore Reserves.
Insofar as the steel corporation 'enjoys
monopolistic power" the report states.
'it lies chiefly In its holdings Of ore and
i Of railroad transportation facilities" This
company. the report declares. has ac-
quired unduly large ore reserves. holding
a. the close OF 1910 at least nifty years
supply at the present rate Of consump-
tlon, exclusive OF the Great Northern ore
properties, the lease OF which has been
cancelled, effective January l. 1916.
! II is estimated that the corporation has
fully l.so0OooOo tons Of other ore on the
lake region. s - 1850
"It is safe to assunne.s the report says
-that the present reduced rate Of % cents
Per ton Is still excessive"
/ The report adds:
"while integration Of Industry to per.
nit OF large scale operations at minimum
costs Is exceedingly desirable, those
enormous profits of the steel corporation
on the transportation OF ore present a
problem OF very great Importance. The
situation is this: Intesration Of the steel
industry with transportation thus far.
instead of working to the advantage OF
the public in the form OF lower costs TO
all shippers and lower prices, has Injured
to the benefit Of great corporation. On
the other htand, TO let the steel corpora
ton maintain this adysntase Of low COR
poration cost and to let this work itself
out in the form Of lower prices might DO
undesirable. because Il would tend to
give the steel corporation an unrssson-
able and undesirable advantage over COM
petitors in the sale Of finished products.
| Separation May Ne Necessary.
This situation celarly raises the Ques-
ton whether the interests Of the public
may not require the segregation OF these
railroad properties from the steel cor
lporation. Il would thus stop what is
an evil. aid that Is the
imposition Of high rates upon COM
ipetItorS shipments, which place them at
a great disadvantage. while, at the same
time forcing them by reason Of this very
fact to contribute unduly to the profits
OF the steel corporation on transportation,
while in the case Of integrstion OF
ordinary manufacturing enterprises It
may be entirely proper that the most ag-
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