The Birmingham age-herald., 1922-06-07
Gary VIII Not Admit Morgan Firm Dominant Verbatim Testimony of Steel Corporation Chairman ~~ Brings Gut Some Interesting Facts About Conduct of the Business

lne testimony or JuuBe E.. IL GdFy chairman of the Steel Corporation, before the Lockwood investigating committee, in New York last Friday brought .out some interesting facts.
 The verbatim questions and an swers. as reported by the New York Herald. with a brief preliminary ex- planatien were as follows;
 Judge Gary regarded the control of the steel business by the corporation as reasonable" rather than q be nevolent" despotism. He would not admit that the eirm of J. P. Morgon & Co. dominated the affairs of the corporation. although he said that NJ. Morgan. like every other member of the finance committee, was consulted In matters of policy and personnel of the directorate. Neither would Judge Gary agree that corporation like the United States Steel should be prohibited by federal statute from owning railroads in the same way that the railways are prohibited from owning mines; nor would he admit that the Steel Corporation could at its own measure force the independent compauies from the field by doubling its.putput to meet it's existing capac- ity1and eliminating it's preferential.
 If we ruthlessly drove the others outTof business" he explained I've woufd~be in precisely the same posi- tions that some of these other com panies were in that were dissolved by goxernment lawsuits"
 Eye on Lawsuit, Snys Untermyer
 F see" remarked MT. Untermyer. 'you had your eye to that lawsuit all the time. You were in the courts and you knew you would have to behave yourself In order to get the favor of theeeohrts; and you would have done so anyway"
 Yes For two good reasons; first. because it was right to do it; and, secand, because we had to do it.
 Suppose the United states Steel Corporation, in the evolution of time, with It's great and increasing power, goes Into the hands of men who do not practice a benevolent despotism, but "a ruthless despotism; then it has these men absolutely at it's mercy?"
 E don't like the word benevo- lentsS Judge Gary began.
 'Isrwill call 1t a reasonable despot- isn,s MT. Untermyer interjected.
 "Issee that they might have an ad- vantage, and perhaps carry 1t further than you and I think they ought to carry it," Judge Gary replied. T would not like to go further than that,s because I remember in the gov ernment case, under a very severe cross- examination, many of the inde- pendepts testified that whatever hap pened they could survive and thrive in spite of the United States Steel Corpora tion."
 < Mergers and Competition
 MT. Jntermyer then asked Judge Gary whether he believed mergers like the Midvale, Republic and Inland did not tend to eliminate competition, and Whether this was not one of the distinct advantages of such consoli- dation.g
 Iii. fhe sense of two different plants Covering the same job of course you are right" he replied.
 .'Yous understand that this commit tee is Particularly concerned in keep ing open the market in structural steeR.s~Mr. Untermyer asked.
 T hope it will succeed in every way.s,,nsaid the witness.
 Thasrelationship of the Morgan firm to thesSteel Corporation was brought out after Mir. Untermyer had got into the record figures of the company's capaeity and production of 1920 and 1921 .@ Judge Gary put the sales for 1920 at st. 200, 100000 and for 1921 at about s655. .oo0,ooo He hesitated some time and could not recall the corporations surplus, then said he wpufd ..guess" S400. 100000.
 Cash Balance S125,O00,O0O
 Questioned regarding the corpora ti6ns cash balances Judge Gary said they were in the neighborhood of about SIPS. .ooo,ooo and that about $ss000l009 of that amount was kept on deposit with J. P. Morgan & Co. at 2.6 per centinterest.
 eYon don't borrow any money from Nor rgan's2" asked MT. Untermyer.
 -Wexdon't borrow any money from any one.""
 sInS fact. you lend money in the street. don't you, on cail?"
 eNosreplied Judge Gary.
 pWeli,S Morgans lend the money theysiend your money and get any wheres from to and 8 per cent as the market permits. don't they?" Mi. Urit erf1yer asked.
 fl adonst know. I cannot answer"
 c. Don't you think that Is very viei oue practice of a great corpora tionss lseeping its money with private bankers who simply use 1t for their ownA purposes and make profits on 1t and deposit in their own banks and get control and power in their banks thsoueh the use of the moneys of xanorporations?
 A%AffTthe banks in which we de- posit our money do the same thing, suppose. They make some money out oft.
 a. You know that that practice was criticized in the money trust investi- gasion, do you not?
 A. remember that investigation in Ia general way.
 6. How long have you been getting interest. on these deposits?
 A. Ever since we have had any there-always. There have been times -a comp paratively short time-we got only 2sper cent, and there was a good deal of discussion between Nr. Nor san and myself in regard to that. wanted per cent. and he thought 21z per cent was liberal.
 Q. And you compromised at 2h per cent? A We compromised at 2.6o, yex. that Is right.
 e. By the way, Judge Gary, the Morga firm virtually names the di reotors of the steel company, doesn't it?s
 4. No. they do not, certainly not. .- Q. Now let us see about 1t. Do you remember MT. Morgan was testi- lying before the money trust inves- tigation?
 4 No, I do not. I would be very much surprised if he testified to that.
 c. We'll, he did in effect?
 4. That is that he did 1t then or that he did in at the beginning?
 Choosing of Directors
 O. No, he did 1t then. Who names thes directors? You know the stock holders do not name them?
 A I think I will have to admit and perhaps claim that I do more of that