The Miller press. [volume] (Miller, S.D.) 190?-current, 1921-05-26
THE PITTSBURG PLUS CASE
by Clifford ThOrne, Attorney for the
American Farm Bureau
Federation

filing the complaint against the U. s..
Steel Corporation, has performed one
of the most important acts of its n
tire history. This action recognizes a
principle which will be of very far
reaching importance in the future in
dustrial development of the MISSISSIPPI
pi Valley and the western and northern
portions of the nation. 1t will be
epoch making in character If its por-
ton is finally sustained.
Defines "Pittsburg Plus"
The "Pittsburg Plus" system OF
making prices may be explained as
follows:
Rolled steel products constitute the
raw material from which finished steel
products are manufactured. The u. s..
Steel Corporation fixes prices on rolled
steel products on the Pittsburg basis
plus freight from Pittsburg to practi-
cally all portions of the United States,
with the exception of certain parts of
the South where an arbitrary is added
instead of the freight rate.
If the bulk of the iron ore were pro-
duced near P%ittsburg, or If the cost of
production were the lowest at Pitts
burg, or If that were our only source
of steel products, there might he
some force to the argument in favor
of this system. But let us consider
a few of the basic facts.
Fictitious Freight Charges
The largest steel plant in the world
is at Gary, Indiana, just outside Of
Chicago Ninety per cent of the iron
ore produced in the United States
comes from the Duluth District. And
yet the Gary plant will charge for its
products, the Pittsburg price plus
freight from Pittsburg, although not
one pound of the raw or finished pro-
duct was handled from Pittsburg. Yet
it adds $3.50 to the price of each ton
it sells, representing this fictitious
freight cost.
On one building nov being erected
at Chicago, the Federal Reserve Bank
building, this fictitious freight cost ag-
gregated $50, 900.
But how are the costs of production
at Gary compared to Pittsburg? In
a speech at Duluth, Judge Gary stated
"A composite cost of the different steel
products based OIL n ton of each
kind of products produced in respec-
tive districts shows Duluth costs to be
! higher than Gary by 3S per cent, than
Birmingham by 80 per cent, than Pitts
burg by 13 per cent" That means
Gary costs are % per cent below those
of Pittsburg.
If the Gary plant ships some steel
plates one hundred miles out of Chica-
go il will sell then at a lower price
than to q customer at It's very doors,
because of this fictitious freight cost.
This strange artificial system of fix
ing prices has mulcted the northern
and southern portions of the nation
out of millions of dollars. We Aro
paying a freight cost of $3.50 on every
ton of steel we use, when nobody has
ever actually paid that freight, for the
steel has not been shipped from Pitts
burg.
Steel plates made at Duluth, ada
cent to the very field of production OF
the ore, are sold at the Pittsburg price
plus freight. This system operates in
defiance of the law of supply and de-
mand. The rule Is enforced at Duluth
where supply exceeds demand, and at
Chicago where demand exceeds sup
ply. 1t works during seasons OF plenty
and during seasons of famine. The
independent manufacturer may vary
the base price from time. to time and
be above or below the scale of the
Steel Corporation, and they observe
this rigid rule for points outside of
Pittsburgh the very penny.
Hurts The Consumer
The commercial effect of this system
is as follows:
Manufacturers of finished steel pro-
ducts. in the west have to pay an arti-
fetal fictitious freight cost on their
raw products, and a genuine freight
cost on their finished products IL they
attempt to market their wares in the
east. This is practically prohibitive,
and have competition which would be
for the benefit of the farmer and all
consumers of steel in the east.
On the other hand the eastern manu-
f%acturer can get into the west with
precisely the same freight cost on both
his raw and finished product that his
western competitors has had to pay.
We're II not for this, the western man
ufacturers could cut way below his
eastern competitors. Here again the
consumer suffers. The Federal Trade
Commission deserves great praise. II
finally successful, this will mean much
toward establishing competition in the
manufacturers OF steel products, and
II will foster the industrial develop
ment of the west.
Hits The Farmer
When asked concerning the import
ance of the decision to the farmer Pres
ident ]. n. Howard Of the American
Farm Bureau federation said:
THE farmer is q very large user of
steel and steel products. We have In
the past been paying what is in effect
a bonus on all of our steel purchases
equivalent to the additional freight
charge from Pittsburg to the point of
origin or OF the manufacture of the
steel. In the majority of cases this
has amounted to from 81 to IS per ton. |
Setting aside the Pittsburg plus plan
should result in a substantial discount |
to the farmer on the prices which he |
has to pay for wire, nails. machinery |
and other steel commodities. n IA n :