Mr. COCKRAN. You belong to the Maryland Steel Company, do you not?

Mr. FELTON. We own the Maryland Steel Company.

Mr. COCKRAN. You are still exporting steel rails?

Mr. FELTON. We are still exporting steel rails when we get a chance to do it.

Mr. COCKRAN. I mean, you are getting chances to do it?

Mr. FELTON. We have not had very many chances this year. There does not seem to be any demand for rails in foreign markets, or any

where else.

Mr. COCKRAN. There is no foreign market where you fear competition to-day, is there?

Mr. FELTON. Where we fear competition to-day?

Mr. COCKRAN. I mean, there is no competition that you are afraid of in a neutral market? There is no neutral market in which you fear competition now, is there?

Mr. FELTON. Absolutely.

Mr. COCKRAN. Where, for instance? If you are able to deliver rails in Argentina and in Siberia, that pretty nearly covers the whole extent of the globe.

Mr. FELTON. Those rail deliveries in Siberia were made many years ago, when the cost of steel rails to us was very much less than it is to-day. In the ten years for which I have figures the cost of steel rails to us has risen enormously. It has increased $7 or $8 a ton. That may seem extraordinary to you, but I think it perhaps explains some of the things in Mr. Carnegie's article in the magazine, which I have not seen. Mr. Carnegie was familiar with the steel trade in the United States in the late nineties. I do not think he has had anything to do, directly, with the steel trade of the United States since 1896 or 1897. In making his statement I think he was figuring on the cost of rails at that time. If he knew the increased cost, at least as shown by our cost books, he would not, I am sure, have made the statement he did.

Mr. COCKRAN. The increasing cost is largely due to the increase in the cost of the raw material, is it not?

Mr. FELTON. Raw materials, freight, and labor. If you will let me state it, I will tell you just what those costs are.

Mr. COCKRAN. Certainly.

Mr. FELTON. Iron ores which in 1898 cost us $2.25 a ton at lower lake ports

Mr. COCKRAN. $2.25?

Mr. FELTON. Yes; [continuing] in 1907 cost us $1.75.

Mr. GAINES. In 1898 it was what?

Mr. FELTON. In 1898 they cost us from $2.15 to $2.25 per ton at lower lake ports. In 1907 they cost us $4.75 for those same ores. The unit price, which, after all, is the thing which determines the cost of ore going into a ton of the pig iron, cost us in 1898 $5.75— that is, the amount of iron ore necessary to make a ton of pig iron cost $5.75, and in 1907 it cost us $11.25.

Mr. DALZELL. What was that last statement?

Mr. FELTON. The iron ore which was necessary to make a ton of pig iron-not the price per ton of the iron ore, but the iron ore necessary to produce a ton of pig iron-cost us at our Maryland works in 1898 $5.75 a ton. In 1907 the same ore cost us $11.25 a ton.

Mr. CLARK. You do not mean to say there was $6 a ton difference in two years?

Mr. FELTON. No, sir; in ten years-from 1898 to 1907.

Mr. CLARK. Oh, eight or nine years.

Mr. FELTON. Ten years, I think-from 1898 to 1907. Then there have been advances in freight rates and on coke, and there have been advances in labor, so that the cost of steel rails has advanced during those years, as I say, some $7.50 a ton, probably.

Mr. COCKRAN. The cost has not advanced any more in this country than in England and Germany, has it?

Mr. FELTON. I wish I knew. I do not know. The only thing we have to guide us as to the cost of rails in foreign countries is their selling price. In Germany, as you know, the Government there places a bounty on export rails. Now, how much that bounty decreases their cost, and whether the price at which they sell in the foreign markets is anything like a legitimate price, I do not know. German rails are selling now f. o. b. Antwerp at something like $23 a ton, I think. Mr. GRIGGS. Did you say Antwerp?

Mr. FELTON. Yes, sir; that is that " Belgian nightmare." [Laughter.] These are the latest advices I have. These came over to us from London.

Mr. COCKRAN. Surely you can tell us what the price of iron ore is in Germany, can you not?

Mr. FELTON. I have not the slightest idea.

Mr. COCKRAN. You would not undertake to say that the price of iron ore, or pig iron, has advanced in this country in larger proportion than it has in Germany, would you?

Mr. FELTON. I do not know. If I attempted to tell you, I would be drawing on my imagination. I do not want to do that.

Mr. COCKRAN. I understand that perfectly. Therefore, when you undertake to explain the increase in the cost of production here in this country you must see the value of your explanation is very much reduced if it turn out that this increase is not any greater than has occurred in other countries?

Mr. FELTON. I do not know.

Mr. COCKRAN. You would not state the contrary of that?

Mr. FELTON. I would not state the contrary?

Mr. COCKRAN. No.

Mr. FELTON. Well, I should think it extremely likely the contrary was true, because I know, from the price which these rails are selling at now, that the home market has slackened up, and these foreign mills are now pushing their products out into the markets of the world.

Mr. COCKRAN. But notwithstanding all the advantages which the Germans have, you have been able up to this year to maintain competition against them in neutral markets, have you not?

Mr. FELTON. We have, by making great sacrifices.

Mr. COCKRAN. These sacrifices did not involve a positive loss, I understand you to say?

Mr. FELTON. I can tell you about what we can

Mr. COCKRAN. Would you mind answering that?

Mr. FELTON. I think it would be a great deal better to give you the figures, sir.

Mr. COCKRAN. All right; go ahead.

Mr. FELTON. In the ten years our total export business showed a book loss of $1.49 per ton. Does not that answer your question? Mr. COCKRAN. I understood you to say that that was not an actual loss, but a profit.

Mr. FELTON. I say that is partly made up by the cheapening of our product, due to the steady operation of our mills.

Mr. COCKRAN. Will you tell me in cash? Take it in cash. Did these sales in foreign markets result in an actual payment by you for the privilege of selling your product or did it result in a profit to you in cash?

Mr. FELTON. I should say that we just about came out even on it. Mr. COCKRAN. Now, can we rely on that?

Mr. FELTON. I think you can. I have said it.

Mr. COCKRAN. That there was no positive loss. Very good. We can accept that as a definite and final statement that in competition with Germany, where they have this bounty, as you say, and in competition with England, Belgium, and all the rest of the world, in neutral markets, you were able to hold your own, without loss. Mr. FELTON. I think that is true; yes.

Mr. COCKRAN. You do not think you would have great trouble in holding your own in this country, where all the advantages are in your favor and where you have no freight to pay?

Mr. FELTON. What do you mean?

Mr. COCKRAN. I mean that you would not have any trouble in holding your own in this country against foreign competition.

Mr. FELTON. Of course we would when the demand in these producing countries slackens up. Remember these conditions in the last two or three years have been exceptional. We have all been so busy that we did not know what to do. Those conditions have changed. The Germans, the English, and these Belgians also are now sending their rails out into the markets of the world. They send them out at a much lower price than they are willing to sell for in their own countries. That is especially true of Germany, where, as I say, the export of rails by the Government is encouraged by an indirect bounty.

Mr. COCKRAN. That did not occur in the last ten years, did it, since 1898? You were sending out yourself. You were actually exporting yourself. They were not sending any goods in here, were they?

Mr. FELTON. I do not know just what the imports of rails into this country were. The statistics, I think, would show that. Mr. COCKRAN. So they would. That is quite true.

Mr. FELTON. I have it here.

Mr. COCKRAN. The statistics we can look up ourselves. What I want is this: According to your own testimony, there would be no fear of competition with foreign countries unless it were under conditions where they could not find a market at home, and where they were prepared to send their rails to this country and sell them at less. That is the only condition under which you could have ruinous competition in this country, is it not?

Mr. FELTON. They would send them in and sell at a loss. We know they won 1.

Mr. COCKRAN. That is what I want to get at-that unless they sold their goods at a loss in this country they could not compete with you?

Mr. FELTON. Now, you are making me assume that I know what their costs are. I have stated that I do not know. I can not find out. I wish I could.

Mr. COCKRAN. I understood you to say-perhaps I am entirely wrong that you were able in perfectly neutral markets, for the last ten years, to meet them and beat them in fair competition. Is not that so?

Mr. FELTON. In neutral markets, I do not know-yes; we soldof course these mills have made their prices. I do not know what the prices of the German mills are.

Mr. COCKRAN. If you could meet their prices in neutral foreign markets with the additional cost of transportation, do you think you would have any trouble in meeting their competition in your own home market, with no cost of transportation whatever to reach the point of consumption?

Mr. FELTON. These prices that I have given are our prices f. o. b. at our mills. They are not the prices at the point of delivery in other

countries.

Mr. COCKRAN. Regardless of that, I ask you this question. I seem to have great difficulty in making myself clear. You have testified that for the last ten years you have met their competition in neutral markets and have overcome it. Now, I ask you what the reason is why you could not meet the same competition in your own market, where your condition is no worse than it is in the foreign markets. Mr. FELTON. Because if we sold all our rails at cost or less than cost, we could not exist.

Mr. COCKRAN. As a matter of fact, at the prices you have obtained in these markets you have been able to meet their competition?

Mr. FELTON. We have been able to secure some portion of the busi

ness.

Mr. COCKRAN. And that you secured in competition with all the world, did you not?

Mr. FELTON. Yes, sir.

Mr. COCKRAN. Now, I ask you, under normal conditions, under the conditions we have had for the last ten years, would you not be able to meet their competition here, without reference to your business during the past year?

Mr. FELTON. I do not believe we would, because our costs have advanced during that year to such an extent that if the German rails were sold in our market and the foreign market at the prices they brought in 1900, 1901, and 1902-our prices in the meantime, our costs have advanced as I have said some $6 or $7 a ton, and we could not meet that competition.

Mr. COCKRAN. You say you do not know whether their price has advanced or not?

Mr. FELTON. I say at the prices which they would make in these quotations which we have here, which only came yesterday, indicate that they are putting their prices down, then, I say, with our increased cost to-day we could not meet that.

Mr. COCKRAN. That is an exceptional condition, the condition of last year and this year?

Mr. FELTON. I think the exceptional conditions were last year, and the conditions this year are normal.

Mr. COCKRAN. Excluding the adjective "exceptional," and taking the experience of this year, it is different from the experience you have had with the nine years preceding it, is it not?

Mr. FELTON. The experience of this year?

Mr. COCKRAN. Yes; it is different from the experience of the last nine years.

Mr. FELTON. You mean

Mr. COCKRAN. Will you not answer that question? I mean this year has been one of depression in your business, and the other nine years were years of experience. Am I not right in that?

Mr. FELTON. Yes; but during a large portion of the years for which I have figures here our rail costs were very much less than they are to-day. We were therefore able to meet these foreign mills in the markets of the world. If the prices of the German mills come down to what they were in the five years which these figures that I have here cover, and which these figures indicate that they are coming to, then I say with our increased cost we could not meet that competition.

Mr. COCKRAN. If a hypothetical condition should turn out to be an actual condition, then you say you could not meet the competition? Mr. FELTON. That is not a hypothetical condition, but an actual condition.

Mr. COCKRAN. You say "if" these rates come down.

Mr. FELTON. They have come right down.

Mr. COCKRAN. Will you get your mind away from this year altogether, and go back to the years preceding this year, from 1899 to 1907. Taking those years, is it not a fact that you defeated that competition?

Mr. FELTON. We did, but our costs were very much below what they are to-day or what we conceive they are to be in the future. Mr. COCKRAN. We grant all that

Mr. FELTON. That is the important point

Mr. COCKRAN. We grant that; but assuming that conditions are equal to-day, you will not have any reason to fear their competition to-day, would you?

Mr. FELTON. We certainly would, because our costs to-day are much higher than when we were getting very low rails before.

Mr. COCKRAN. But assuming that their costs to-day are in proportion to yours

Mr. FELTON. I am not going to assume that.

Mr. COCKRAN. Well, try to. It seems you are only willing to assume conditions that will justify a protected condition. I want you to assume conditions that are actual, the same as those that have actually occurred.

Mr. FELTON. The position I take covers the conditions that actually occur, not the suppositious conditions that you try to put before me. Mr. COCKRAN. I am taking the conditions from 1899 to 1906. Mr. FELTON. I understand.

Mr. COCKRAN. Under those conditions you met their competition, did you not? Do not be ashamed of it; it is very creditable. Mr. FELTON. I told you we had met their competition

Mr. COCKRAN. Very good.