New-York tribune., 1919-04-08
Steel Rail Costs
Higher Than Prices
Hines Would Pay
Judge Gary Issues Statement
Showing Production at
Director Generals Fig
urcs Would BE ut n Loss

The United stntes Steel Corporation,
tho worlds greatest steel maker, can
not manufacture rails at the low fig
ures suggested by the railroad admin
lstration and make profit on the basis
of present operating costs. according
to information supplied yesterday by
Judge Ebert II. Gary, chairman of the
board of the Steel Corporation. Act
ually, were the corporation to sell rails
to Director General Hines at his figure
1T would sustain heavy loss on every
ton of rails so sold.
Mr.. Gary told The Tribune that the
latest figures available show that it
costs the corporation approximately
SAG ton TO manufacture Bessemer
process rails and around $40 a ton to
make open hearth rails.
Conditions Reversed
These costs arc figured on the basis
of January operating conditions at the
rail mills. Normally it costs more to
produce open hearth rails than the Bcs-
semer rails, but conditions at the diff
ferent mills Of the corporation have
reversed the ratio between the costs
at the present.
Under tho schedule Of steel prices
agreed upon at the Washington con-
ference the minimum price at which
the steel manufacturers were to sell
Bessemer rails to consumers was $15
a gross ton. The price for the standard
open hearth rails was to be SAT q gross
ton. This was about 81 q ton above
the actual production costs for open
hearth rails for the corporations mills
and 81 a ton under the present cost of
producing ton of Bessemer rails.
The railroad administration, led by
Director General Hines, has taken the
position since they refused to accept
the conference prices as q basis upon
which to do business that they should
be able to buy the rails at $S to $40
a ton under the schedule of minimum
prices that has been discarded. That
would bring the prices down to around
$50 to $35 a ton.
Judge Gary, in discussing the huge
rise in operating costs in the steel in
dustry, said that the present production
cost figures for steel rails of $40 to SAG
a ton compared with cost of around
$50 to S25 ton in 1914 before the war
demand sent steel prices soaring. He
pointed out that the labor costs enter
ing into the manufacture of steel prod
ucts have risen approximately 1863 per
cent since 1914, and added that about
products was the labor factor.
The head of the corporation said he
had received no official intimation from
Washington regarding any further step
toward bringing about a downward re
vision of prices.
Trade in Confusion
"The demand for steel products"
said Judge Gary, was beginning to
show Substantial revival following
our price schedule agreement, but the
in confusion in the trade have halted
somewhat the influx of new business.'
Information obtained elsewhere in the
steel industry indicates that the CON
tinued talk of further steel price read
justment is having depressing effect
on export as we'll as domestic buying.
Large inquiries for export which were
giving indication of becoming firm
orders in the near future are reported
to be held back. At the same time the
buying for domestic account is said
to be greatly rcpressed.
A trade authority from Pittsburgh
expressed the opinion yesterday that
un early restoration of free-for- all
competitive conditions in tho selling
Of steel is ut hand and that before
long somc Of the so-called indcpcn-
dents may step out and offer to sell Mt
considerable concessions in order to
stimulate activity.
Orders for Approximately 100000
tons Of steel rails arc oVerhAngine The
market IN tho shape Of the needs ot the
rnilrohds Of the country In 1919, but
their plncing is anid TO be dependent
upon what Director General Hines
Thinks Ia "A fair price,