The New York herald., 1921-03-03
GARY CONTRADICTS
WILLIAMS REPORT
Continued from First Page.

Continued from FnSt rage.
submit that your criticism should be
directed not against the price policy of
this corporation but against the price
fixing policy adopted by the Govern
ment during the years in question
Reduced Prices in 1919.
In discussing the situation during the
post war period. that Is the years 1919
and 1920 Mr.. Gary calls the attention
OF Mr.. Williams to the fact that as soon
as Government fixed maximum prices
were cancelled or withdrawn the United
States Steel Corporation and other steel
manufacturers reduced prices. This re-
duction had by March 81, 1919. reached
total average reduction OF about $40
O ton. He also emphasized the fact that
from January l. 1919. there have been
no governmental restrictions on steel
prices and the market price for steel has
been influenced entirely by the law or
supply and demand.
Although during 1920 In particular"
the sta tement says. many producers of
Steel owing to the unusual demand in
comparison with the supply. were able
to secure in many cases substantially
higher prices than the price schedule
eStduuSneu III March, 1olSi ILLS cCi-
poration has adhered to that schedule ;
it has not asked or received higher base
prices. 1t did not join in the wave Of
imitation of prices in most commodities
which swept over the country In 1919
and 1920, notwithstanding wage in
creases. advances in prices OF raw ma
terials. heavy advances In freight rates,
tax increases and increases in other gen.
eral expenses. arising from this wave
of imitation, all OF which added very
largely to the cost of production, SO
largely. in fact, that at the close OF
1920 the margin, in a number of lines.
between manufacturing cost and selling
price was practically nil, in some cases
costs exceeding selling price"
The statement also discusses the as
sertion OF Mr.. Williams that by closing
down mills and mines the output of
steel and iron was reduced approxi-
matelv one-fourth the year following
the armstice, In order that exorbitant
profits might be obtained. or continued
on the same basis as had been OBJ
talned during the war. This assertion
Mr.. Gary declares. is inaccurate and ua-
true. so far as the United States Steel
Corporation Is concerned. In the reason
assigned for the fact that the output OF
steel in 1919 reached only about rs
per cent. OF capacity. lts uSCidEtS ltlit
the real reasons for this reduction were
the natural hating In business In the
first quarter of 1919. while business
was swinging over from a war TO a peace
basis, the insufficiency of transportation
and principally the general strike in
the steel and coal industry. which In
terfered with operations considerably.
wflIinms's Figures CHALLENGED.
considerable part OF Mr.. Gary's
statement Is devoted to a discussion of
tho analysis of the corporations 1913
profits made BY Mr.. williams and con-
tanned in the latter's letter to Direc-
tor-General Hines. In this analysis Mr..
williams states that exclusive OF GER
tain specific appropriations. as set forth
III the corporations annual report, the
amount OF the corporations income for
1918 was $549, 10000. Mr.. Gary says
he does not know how these figures were
arrived at. but declares that the correct
figures, the net earnings OF the CONF
pany. are 354a.4s5, ,393.
From this total Of net earnings
says Mr.. Gary. you draw two conclu-
sions:
"First--That the corporation could
have doubled the amount Il paid It's en-
ployees for wages ard salaries In 1918
and still have had enough left TO pay
interest charges. certain stock dividends
of and per cent and sinking fund
bonds. with a surplus OF $3.37S.o00.
"Second--That the corporation could
IN 1918 have afforded to have reduced
the price of the steel II sold by $50 a
ton and still have earned enough to pay
tho charges on its debt and capital
Now. as flat arithmetical statements.
your conclusions are mathenatically
correct. Bot they arc. ! submit. shall
low. specious. misleading and viewed
from q business and common sense
standpoint, Inaccurate. In the first
place. In your calculations you have
failed entirely 10 recognize allowances
for depletion and deterioration, amount
Ing to s33 1888 which was reserved
from net earnings IN accordance with
tho practice. aud on the same basis that
this corporation has observed for years.
and which allowance Ia universally rec
ognized on I proper and necessary ona.'
Also Ignored TAX Demands.
Mr. Gary says also that In arriving a.
his conclusions Mr.. Williams omitted
any allowance for Federal income and
reserved s2T4.27T.S3b in 1913.
Had you taken this figure and the
ono o. s33, 900. 600 for depletion and de-
terioration into consideration" he says.
you would Mt once have reduced from
$40 ton 70 about SO n ton the reduc-
tion In prices which. according TO your
own method OF figuring. the corpora
tlon could have cut Its prices and still
earned its fixed charges and per cent.
on lts common stock. but no moro. An
tlcipatlng a stat nent that income and
profits taxes are not payable IL not
earned. ~ NGnry says:
But tNhorinal income taxes would
be payable on profits which your calcu-
iations would allow, aa. presumably IN
your opinion. reasonable profits: and
not having allowed for this in your cal
cuatl ms wo nnd another omission Of
some sf2,oo1,0o0 rar your own formula.
However. the fact is that for 1918 the
corporation did pay very nearly the
total amount before mentioned. and all
IN accordance with the Governments $
programme in financing the war. is Il
necessary 20 point out TO you that unless
citizens and business interests had been
gbic during the war 10 derive relatively
large incomes the Government would