Missouri Valley times. [volume] (Missouri Valley, Iowa) 1874-1931, 1913-05-15
REAL Competition
FOR STEEL TRUST
IS NOW IN SIGHT
India and China Can Lay Down
Pig Iron at San Francisco
For About Half Price
Charged BY Combine.
PRODUCTION COSTS LESS
Government Report Issued To.
day Shows System Used to
Make Initial Price of Ore
Seem Greater.

New York May 10. The United
States Steel corporation. the greatest
of all trusts. is To have real competi-
ton. James A. Farrell. president of
the steel trust, declared before the
government investigators here that pig
iron can be manufactured in India and
laid down at Calcutta for s5.Ss per ton
He added there is now sailing vessel
enroute from that port to San Fran
cisco with the first cargo of Indian pig
iron ever brought To this country.
The freight ON this shipment is com
puted at $3.50 per ton and under the
new tariff the duty is II cents. Thus
he Calcutta pig iron can be laid down
at San Francisco at d cost of about
s1l.50 Mr.. Farrell is also authority for
the statement that Chinese pig iron can
be laid down in San Francisco for
about Sl01S per ton. The present mar
kst price for pig iron on the Pacific
coast is S21 80 per ton.
What Federal Report Shows.
ON the heels of Mr.. Farrells state
ment that the cost of producing iron
and steel is greater I'm America than
elsewhere comes the report of Acting
Corporation Commissioner Francis
Walker made public at Washington to-
the gaze of the general public the
system of interlocking directorates and
corporations and subsidiaries which
are affixed to the steel industry like
so many leeches. All center in the
United States Steel corporation. but
each sucks its bit of profit from in
dustry, pilne cost upon cost The
ramiications of these interloclsing sub
salaries hardly can be comprehended
when the amount of waterea stock en.-
ployed in the capitalization of each is
taken into consideration. The actual
cost OF producing pig iron in this
country likely would prove less than
the net cost shown by the government
report could the actual facts be had
Mr., Walkers report is the third part
of review covering an investigation
OF the steel industry. A discussion of
the vast difference between book
costs" and net costs" features the re-
strate that iron and steel manufactur-
ing companies usually include In their
statements of cost OF Production large
profits usually paid to subsidiary ore
and transportation companies
Cost Of Steel Rails.
For Bessemer steel rails, for in
stance. the report stated that the
average book cost of the United States
Steel corporation was $2la3. while the
profit on transportation and material.
was only $l6.67. Similar differences
We're shown in the manufacture of
other steel products.
II is shown by the report that the
book cost of Bcsscmer pig iron In
1910 was shown TO he s1439. whereas
the net cost, excluding intercompany
profits on materials and transporta-
tion was only $1O.21. leaving an inter
company profit of $4.1S per ton.
Profits of Subsidiaries.
II is shown that an excessive profit
is reaped from the production of ore
by the subsidiaries Of the United
|of sl,30 per ton ON raw ore charged
by the corporation in 1910 is shown to
yield a return of 90 per cent on the
computed Investment i'm the raw ore
producing industry.
The ore producing companies are
assured of n market To the parent COM
pany and the element Of risk i'm the
operation of the business is reduced to
the minimum
The profits derived from the opera ;
tion of ore railroads are immense The
report shows the Duluth Mssabe g.
Northern railroad. a subsidiary of the
steel corporation. earned 23 per cent
on total Investment in 1910. and the
Duluth q Iron Range railway earned
llIi2 per cent
Parent Corporations Profits
Now comes the profits accruing to
the steel corporation
For Bessemcr steel rail the net cost
OF the steel corporation I'm 1910 was
sl6.67 per ton. including certain est
mated additional costs. as stated
above; the average selling price was
$21.45. giving Il profit margin of SLOTS.
| The Investment in raw materials,
transportation facilities. manufacture
ling plans. anh net WORKING capital re-
quired for the production of rails was
about $65 per ton at product accord :
| ing to the computations of the bureau.
This indicates a rate of nroft on in
Investment Of 16i2 per cent on rails On
a similar basis. the bureaus computa-
| tions indicate for plates rate of
profit I'm 1910 of 10l2 per cent on the
These different rates of
profit illustrate Furthermore certain
differences in price making conditions.
which were somewhat competitive for
plates in 1910. while notoriously nom
competitive for rails