Evening star., 1934-05-21
DARROW REPORTS
ON 9 INDUSTRIES
MonopoIies Are Charged,
Particularly in Steel,
Movies, Coal.
Continued From Sixth Page.)

he seems to have prospered steadily.
When the automobile had replaced
the horse, Mr.. Swanstrom turned to
the making of tools and particularly
of tools used in automobile repairing.
This necessitated considerable pur-
chase Of steel, which he obtained at
first in Chicago, but upon which he
paid the freight from Pittsburgh to
Duluth. which was twice the freight
from Chicago to Duluth.
Seeks Remedy.
In 1918, he conferred with high Of
ficers of the United States Steel Cor
poration and obtained from them a
concession of IS a ton in these So
called freight charges, which In real
ity were not freight rates at all but
an additional tax levied by the steel
company.
BY this time a steel mill had been
established in Duluth. mile and a
half from the Swanstrom factory and
was supplying him with all the steel
he consumed. Nevertheless, the freight
charge had continued to be exacted.
In 1924, after the final decision in
the famous pittsburgh plus" case.
Chicago was made, in the steel trade,
what is known as a "basing point"
and in consequence the myth that
Swanstrom's steel had been shipped
from Pittsburgh was exchanged for
the myth that 1t was shipped from
Chicago.
This shift in fictions resulted in a
still further reduction of his ghostly
freight charges and under this stim-
ulus his business further expanded.
The original investment had been
$4,000. In 1918, the amount invested
had become $165,000; in 1888. code
designed and made by and for the
great companies, the beneflcence
whereby the SwanStrom factory had
been charged only 81 for fictional
transportation was abolished and the
company was notified that thereafter
it must pay the full "basing point"
only a mile and half. The order
increased the cost OF his steel by
$3.50 a ton.
Factory Begins to Lose.
Mr. Swanstrom testified that as a
result his factory, since october /,
1888, had been operated at loss and
unless the fictional charge could be
removed the factory must soon close.
The steel upon which this charge
is levied Is made in Duluth from iron
ore mined only 60 miles away The
actual charge for transporting Mr..
Swanstrom's steel Is so cents ton
for switching. 1t never saw Chicago
nor anything near Chicago. Yet the
factory must pay $3.50 freight charges
upon it, which is the rate from Chi
cago to Duluth.
1t was further alleged that the dis
elimination complained Of was ex-
acted only in regard to steel bars and
billets; that if the same steel were
transformed at the same mill into
wire, the phantom freight rates were
not exacted upon this. No attempt
was made to controvert this charge
nor to explain it.
An attempt was made to cause 1t
to appear that the Minnesota Steel
Co., a subsidiary Of the United States
Steel Corporation, being the concern
that collects the fictional $3.50. has
full authority under the code to make
the price of steel what it pleases so
long as it does not undersell the mar
ket.
A hearing OF Mr.. SwanStroms case
before the Federal Trade Commission
produced evidence that seemed to dis
pose of this allegation and to show
that the Minnesota Steel Co. was OBJ
liged to charge whatever rates were
prescribed for it by the Steel In
stitute.
Indorses Fuel Rates.
Mr. Swanstrom was asked II his
factory could continue upon a salts
factory basis If the $3.50 ton Of
tribute now levied upon his raw ma
terial should be removed. He said
that he would need nothing more.
He was then asked what would be
the effect of a rational system Of
railroad rate-making that would be
based upon the cost of the service
plus a reasonable profit thereon-in
other words, a rate made up Of the
line haul and the terminal charges.
He answered that this would be per-
fectly satisfactory.
1t is part of the evil wrought by
the "basing point" madness that it
has produced hot-house industries in
localities where they have no natural
right to exist, and that any attempt
to return now to the methods OF
sanity would be greeted with an out
cry from the vested interests thus
artificially planted and nourished. Yet
it is equally true that so long as
these conditions exist they will work
hardship, bulwark monopoly and
crush the small man as here indi-
Gated
At one of the hearings upon this
industry recourse was had by the steel
interests to the familiar defense Of
this great evil that 1t Is necessary
as means to promote competition
and prevent local monopoly. The
manifestation by a great corporation
Of a tender solicitude concerning
monopolies Is not without a certain
suggestion of humor to those well
acquainted with American economic
history, but the defense of the
is the business of the State, not of
private agencies, and in this case
the menace seems chiefly imagined
for propaganda purposes.
There can be no more just reason
to pervert the normal laws of ex-
change than those of physics, and,
as clearly demonstrated before us,
the practical working of this anoma-
lous and preposterous device is once
more to hasten the exit of the small
enterprise and foster the always
growing autocracy of the greater.
Steel Case Findings.
Findings: It is the opinion of this
board that the code adopted for this
industry should be amended in ac-
cordance with the attached brief.
Ice: Monopolistic practices obtain
in this industry, and small enterprise
is oppressed, apparently because the
code was made by representatives Of
d. f,1fA