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Mr. SCHWAB. Those with which I am familiar, in Lorraine and in Luxemburg, have their coal and coke very close together. They make about the cheapest pig iron in that part of Germany of any. The materials to make pig iron are not widely separated in Germany. Mr. UNDERWOOD. In England it is necessary for a good many of the plants there to bring their ore from Spain, is it not? Mr. SCHWAB. It is.

Mr. UNDERWOOD. Is that cost of transportation high?

Mr. SCHWAB. Not so high. Of course, the greater part of it is so transported. Large manufacturers at Cardiff and through that part of Wales bring their ore there cheaper.

Mr. UNDERWOOD. The price you gave us this morning of the cost of making pig iron and steel rails was the cost without any profit to the manufacturer?

Mr. SCHWAB. It was. I want to make one correction about that, that I think I neglected to state this morning, and that is that the cost which I gave you was the Bessemer steel rail.

Mr. UNDERWOOD. It was?

Mr. SCHWAB. Yes, sir; the Bessemer steel rail.
Mr. UNDERWOOD. Instead of the open-hearth?
Mr. SCHWAB. Yes, sir.

Mr. UNDERWOOD. You stated this morning you did not want to make a comparison of the two, and I do not want you to do so unless you can; but if you can do so, will you state whether the Bessemer rail costs more or less?

Mr. SCHWAB. The open-hearth rail costs about $2 a ton more than the Bessemer rail costs.

Mr. UNDERWOOD. Would you mind describing to the committee the difference in the process of manufacture?

Mr. SCHWAB. You mean technically describing it?

Mr. UNDERWOOD. In as few words as you can.

Mr. SCHWAB. Raw pig iron contains about 3 to 4 per cent of carbon and 1 to 2 per cent of silicon. Steel contains only a trace of these two elements. In order to make steel, it becomes necessary to remove the carbon and silicon. In the Bessemer converter they are removed by the introduction of air, which combines with the carbon and silicon in the pig iron and burns them out, producing steel. In the open-hearth process the carbon and silicon in the pig iron are removed by contact with oxygen in iron ore; that is, liquid iron ore is brought into contact with liquid pig iron, and the oxygen combines with the carbon and silicon and produces steel. Those are the two processes, briefly described.

Mr. UNDERWOOD. In making the Bessemer steel, you put the molten iron into the converter and blow the air into it?

Mr. SCHWAB. Yes, sir.

Mr. UNDERWOOD. That process takes how long?

Mr. SCHWAB. For a single heat?

Mr. UNDERWOOD. Yes.

Mr. SCHWAB. Ten minutes.

Mr. UNDERWOOD. For a single heat in the open-hearth process you put it into a converter

Mr. SCHWAB (interrupting). No; in a furnace. Then you boil it. You boil it in contact with oxygen in some form.

Mr. UNDERWOOD. How long does that process take?

Mr. SCHWAB. Ten to twelve hours.

Mr. UNDERWOOD. Now, the duplex process?

Mr. SCHWAB. That is a combination of the two. They remove part of the silicon in the Bessemer converter and part of it in the openhearth. That is the practice in Alabama.

Mr. UNDERWOOD. The duplex process would be more costly than the Bessemer and less costly than the open-hearth?

Mr. SCHWAB. Yes, sir.

Mr. UNDERWOOD. How long would it take to boil it out in the duplex process?

Mr. SCHWAB. About half the time it would take in the openhearth process.

Mr. UNDERWOOD. So it is the length of time your furnaces are engaged in operating these different processes that makes the difference in cost?

Mr. SCHWAB. Not entirely. The cost of making pig iron in the Bessemer converter is more expensive than the cost of making pig iron for the basic. Pig for Bessemer must contain phosphorus, while pig iron for the basic may

Mr. UNDERWOOD (interrupting). That is due to a difference in the cost of your ore?

Mr. SCHWAB. Yes, sir.

Mr. UNDERWOOD. The cheaper ores can be used for the basic process and the more costly ores must be used for the Bessemer?

Mr. SCHWAB. That is quite true.

Mr. UNDERWOOD. Then the price that you gave of making pig iron in Germany and in England was the actual cost without counting in anything for the profit of the manufacturer?

Mr. SCHWAB. It was.

Mr. UNDERWOOD. You gave the freight rates from Germany to this country on pig iron at $2.50.

Mr. SCHWAB. That is approximate. It varies very much.

Mr. UNDERWOOD. Yes; I understand that. Approximately, what

is it from England?

Mr. SCHWAB. I think it is about the same-$2, probably.

Mr. UNDERWOOD. On steel rails, what would it be?

Mr. SCHWAB. Very nearly the same-from $2 to $3. I have seen it much higher and have seen it much less, but that is probably an average price.

Mr. UNDERWOOD. In regard to competition at present in steel rails or pig iron-I mean material competition-by the foreign manufacturers with this country, is there any?

Mr. SCHWAB. No; for this reason: As a rule the buyers of rails in this country want to get their rails from the people who patronize their railroads. A railroad in this country would naturally rather pay a dollar more for its rails from a man who manufactures on its line of railroad, and therefore there is not much competition in rails in this country. The competition in rails is in countries where we have a mutual field of competition-South American, Siberia, or similar countries.

Mr. UNDERWOOD. Under ordinary circumstances that same condition is true as to pig iron, is it not?

Mr. SCHWAB. There is not much consumption of pig iron there.

Mr. UNDERWOOD. In figuring the pig iron in this estimate which you made, you figured on the molten pig iron carried to the steel plant.

Mr. SCHWAB. The difference in cost is very little. It is not over 10 It costs about 10 cents a ton-from 10 to 15 cents a tonto cast molten pig iron into cold pig.

cents a ton.

Mr. UNDERWOOD. Does that include removing it from the stock house?

Mr. SCHWAB. From the furnace to the casting. It is all done by machinery, and the loading of it in the cars after cast will be covered by the 10 or 15 cents a ton.

Mr. UNDERWOOD. In the manufacture of iron bars, as compared with steel bars, is it cheaper or more expensive to produce steel bars

than iron bars?

Mr. SCHWAB. If you were to produce iron bars from pig iron it would cost more than steel bars would cost; but iron bars are not produced in that way. Iron bars are produced to-day by the purchase of old iron scrap that has accumulated over many years of iron manufacture, that has no real use for market, and so they are able to produce iron bars somewhat cheaper to-day than they can produce steel bars.

Mr. UNDERWOOD. There is another question I want to ask you. I notice that in the world's production of pig iron the production in Germany has developed very much more rapidly than it has in Great Britain.

Mr. SCHWAB. Yes, sir.

Mr. UNDERWOOD. I believe the world's production for 1907 was about 61,000,000 tons. Great Britain produced about 11,000,000 tons and Germany about 13,000,000 tons, whereas in 1900 Great Britain produced 8,000,000 tons and Germany 8,000,000 tons. Is the cost of production in German any greater than in Great Britain, so that the cost has brought about the development of the German production so much in excess of the British production?

Mr. SCHWAB. That is a difficult question to answer, but I will give you my view on it very generally. The Germans have made the greatest advance in economic metallurgy of any nation in this world during the last five years. They have utilized their by-products to a greater extent than any other manufacturing nation. Not only that, but they have developed their mechanical appliances with reference to manufacturing to an extent that no other nation has, and they have developed their quality to a greater extent than any other nation during these past five years. In other words, manufacturing in Germany five years ago seems to have had a complete renaissance, and they have advanced very much more rapidly than any other nation for the reasons I have given. For two reasons, the first, the very excellent technical education of their metallurgical engineers in Germany; the second and most important, the labor conditions in Germany as compared with the conditions in England. I think the labor conditions in England are the worst of any of the great manufacturing countries of the world.

Mr. COCKRAN. Worse in what way?

Mr. SCHWAB. That is a delicate subject to talk about. I would rather say nothing about it. I mean for the manufacturer, making

cost higher, difficulty of getting production per man, and the difficulty of introducing modern machinery.

Mr. UNDERWOOD. I want to ask you if during the last decade the German Government has not given to manufacturers of iron and steel products a bounty?

Mr. SCHWAB. I can not speak of that. But I do know that no government in the world has given its manufacturers in iron and steel the same encouragement and advantages that Germany has given. Mr. UNDERWOOD. You are not familiar with that bounty?

Mr. SCHWAB. I can not speak of the bounty. I am not sufficiently familiar to know what it is.

Mr. HILL. You know there is a bounty?

Mr. SCHWAB. Yes, sir.

Mr. HILL. But you do not know the amount?

Mr. SCHWAB. No; I can not tell.

Mr. UNDERWOOD. The reason I asked the question was to find out if the large exportation that has come from Germany and gone into competition with England was not to a large extent due to the bounty given by the German Government.

Mr. SCHWAB. The advance in German steel manufacture in the past few years has been on account of the untiring effort of the German Government in every way, in its diplomatic and consular service throughout the world, to push and promote German manufactures. Wherever you go, to South America or any part of the world, you will find the whole country and its consular service, and every part of it, devoted to the sale of German steel goods and interesting themselves in it.

Mr. UNDERWOOD. If we were to write a minimum and maximum tariff here, and do not give the minimum rate to any country that gave a bounty for the development of their products, would not that relieve us to a great extent from German competition?

Mr. SCHWAB. I do not know about that. I would have to think about that.

Mr. UNDERWOOD. If you come to a conclusion about it, I will be glad to have it.

Mr. SCHWAB. That is a new thought, and I have not considered it at all.

Mr. UNDERWOOD. I will be glad if you will consider that question, because I think it is a material one.

Mr. SCHWAB. It is, indeed.

Mr. UNDERWOOD. Now, I want to ask you about the sale of your steel rails abroad. You sold a large amount abroad?

Mr. SCHWAB. Not very large, no. I can not give you the figures offhand. You no doubt have the figures here. They are a matter of record, but it is not a very large quantity. When I say abroad, I mean all countries other than the United States.

Mr. UNDERWOOD. Have you gone into the European countries with rails?

Mr. SCHWAB. No; very few, at least.

Mr. UNDERWOOD. It has been in the Orient?

Mr. SCHWAB. Countries open to competition; yes. The tariff of Germany and France and Austria is so high we can not ship the products in there.

Mr. UNDERWOOD. The reason you can not get into French markets is that France applies her maximum rate against American iron and steel products?

Mr. SCHWAB. Yes, sir.

Mr. UNDERWOOD. And she gives Belgium and England her minimum rate?

Mr. SCHWAB. Yes; that may be.

Mr. UNDERWOOD. If we had a maximum and minimum tariff bill, by which we could get the French minimum rate, would not there be an opportunity

Mr. SCHWAB (interrupting). There might be. That is a new thought for me, I must confess, and I have not considered it at all. Mr. UNDERWOOD. I would like to have your opinion about that. Mr. SCHWAB. I shall be very glad to think about it, sir.

Mr. UNDERWOOD. Your company does not make any pig iron for sale at all?

Mr. SCHWAB. The Bethlehem Steel Company?

Mr. UNDERWOOD. Yes.

Mr. SCHWAB. Yes, sir; we do.

Mr. UNDERWOOD. Do you export any?

Mr. SCHWAB. None whatever.

Mr. UNDERWOOD. Do you know anything about the exportation of pig iron in recent years?

Mr. SCHWAB. I do not.

Mr. UNDERWOOD. There is one other question I desire to ask. In answer to the chairman, you stated there were some other products of iron and steel which you made besides steel rails. Will you enumerate those and give the cost of the manufacture of those?

Mr. SCHWAB. One of the most important is steel plates. Another very important item

Mr. UNDERWOOD (interrupting). Give the cost as you go.

Mr. SCHWAB. The cost of plates and the cost of all steel structural shapes that is, rolled products-in round figures, is about $3 a ton above the cost of rails. There is a great variety of specifications and qualifications with reference to these special grades of steel that make their cost very considerable, but I am taking the common standard shapes. I mean by that, columns for buildings, girders for buildings, or plates for ships, or any similar line, and you can reckon that as a general thing the cost is about $3 to $4 a ton above that of rails. Mr. UNDERWOOD. You also make car wheels?

Mr. SCHWAB. Yes, sir.

Mr. UNDERWOOD. What is the cost of those?

Mr. SCHWAB. That is a great variety of cost. Common cast-iron wheels are made at very low cost, while the steel-rolled wheels are three times the cost of cast-iron wheels. If you will specify a specific kind, I can give you the cost.

Mr. UNDERWOOD. What is the difference between this country and your foreign competitors, the English manufacturers, on those items? Mr. SCHWAB. I can not give it; I do not know.

Mr. UNDERWOOD. You are not familiar with that?

Mr. SCHWAB. No, sir; I am not sufficiently familiar with that. The important factors are those I have given you-structural shapes of all sorts, bars, and rails. Steel wire I am not now sufficiently familiar with to give any data.

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