The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1912-02-28

S0IpOISJtOu, sECStVeu a. CASH pIOtll OF
s69, 0 10000 Of which $50, 100000 was for
promotion, with an additional commits
sion OF $6,s00,000 for a bond conversion
scheme.
That the net earnings OF the corpor-
alton for q period of nine years were
$1,029,685, 1888, or an equivalent of ap-
proximately $13 a ton on finished pro-
duct, instead of $3.50, 0o0, 81 as claimed
by the corporation in it's report.
That the steel corporation, contrary
to the statement made by Judge Gary
and II. G. Frick to President Roose-
welt in 1907, that it did not control
more q so per cent of steel pro-
perties in the country, controls about
80 pc cent Of the steel holdings.
The section of the report dealing
with the Gary dinners where indie
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. Ernest,
a New York lawyer, in which it is de-
clared that the Conventions agreed to
enforced would be Objectionable as re-
CARDS their effect upon competition"
The Gary Dinners.
"The Gary dinner arrangement says
the report, ''whereat the ~so-calIed in
dependents are Influenced to reduce
their production conformably TO their
estimate of the reduction in the de-
rnand existing, and to maintain prices,
is Objectionable as far as it operates
to exclude free competition. The ar
rangement is designed and intended to
operate, and has operated admittedly,
as to standard steel rails. although it
is claimed that the so-called inde-
pendent participants can cut prices
without fear of penalty, except the
dishonor of declaring in favor of a
named price and then selling at some
other price.
1T can be no justification Of the
cooperation OF participants in the
Gary dinners that no penalty attaches
to a violation of the declarations mu-
tually exchanged, because perforce the
antitrust act would prevent the en-
forcement of any penalty for reducing
prices or exceeding ones share Of the
business. Previous pool agreements
may have been broken and penalties
inflicted by the members themselves.
although this was soon discontinued.
1t will be assumed, even il a fund
had not been deposited, that the men
in the old pool would. have paid their
fines. If this be assumed, it can also
be assumed that the word of the par
Elephants in the Gary dinners is ample
security for the professions of CO.
operation in the policy almost unani-
mously subscribed to at the dinners.
ION the other hand, any contract
MAJ be broken; any conspiracy may
be upset by recalcitrants. 1t is surely
no excuse for the illegality of any ar
rangement in restraint of trade that
it can be departed from by the par
ticipants."
Restraints Composition,
stress is laid in the financial sec
tion of the report upon the denonstra-
ton by figures that the pool corpora
ton restraints competition by making
the greater portion Of it's profits in
raw materials and in plants produc-
ing semi finished materials. while the
finished product plants make very low
profits. This operates, it is declared.
to keep the price of raw materials.
ore, coke, and pig iron on a high
plane, to the advantage of the corpor-
alton and disadvantage Of the inde-
pendent.
During the nine years from Jan.
/. 1902, to Dec. 81, $780, the report
says, 'the productions of the corpor-
alton in rolled and other finished steel
amounted to 79,267,3 6 tons and the
adjusted net earnings for the same
period, amounted to s1,029,6S5, 1888, or
an equivalent of approximately $1S
per ton. In order that an idea MAJ
be had of the net earnings in dollars
per ton of the several operating
groups Of the corporation, I have cal
culated these figures and find the APP
proximate net earnings of $13 per ton
or finished product to have been earn
ed as follows:
BY manufacturing companies, 1901
per ton. BY coal and coke companies,
5 70 per on. BY iron mining com
panies, $2.12 per ton. BY transporta.
ton companies. $751; per ton. BY mis-
c~eIlaneous companies, s SO per ton.
1OLAl, S1o.
This. the report says is equivalent
to an earning of 40 per cent on cost,
Accounts for Discrepancy.
In accounting for the discrepancy
between the earnings claimed by the
steel corporation. $4,000 0o ,S11, and its
estimate of $1,109, l46, 1898, Nj. McRae
destored to net earnings what had been
eliminated by the steel corporation in
it's accounting, including such things
as interest on bonds of subsidiary
companies, the locked-up inter com
pany profits in Inventories, special de
probation admittedly charged to con-
struction, employees bonus funds and
special compensations, account pre-
ferred stock subscriptions. which have
been treated as DIVIDENDS from rarn-
ings nj not in the nature of add
tional wages to employees, and lastly
interest on bonds, mortgages and pur
chase money obligations of subsidiary
companies.
AS showing the result of the policy
of the steel corporation to make tht
bulk OF its profits In the raw and semi
finished material, Mr.. McFae submit
pISTURBS AUDIENCE