The CHAIRMAN. Yes.

Mr. GARY. Of course we take the ore at Chicago right into our furnaces and mills. There is no rail transportation at Chicago. The CHAIRMAN. You land at your furnace there?

Mr. GARY. Yes; land at the furnace.

The CHAIRMAN. Now, Judge, what does it cost to produce a ton of ore in the Tennessee region?

Mr. GARY. You mean what is the cost of assembling the ore at the furnace?

The CHAIRMAN. Producing it there at the mine the royalty on the value of the ore, the royalty on the ore and the cost of working the mines? What is that?

Mr. GARY. I have not those figures, Mr. Chairman. The cost of pig iron at Birmingham is not far from the cost of pig iron at South Chicago. It is very little different.

The CHAIRMAN. How close to it is it?

Mr. GARY. I am not certain which is lower, but the cost at Chicago, the manufacturer's cost, is probably $14.75 to $15. That is the manufacturer's cost. Of course that does not give credit for any profit to the United States Steel Corporation which it derives by reason of its investment in mines or railroads or ships.

Mr. COCKRAN. $14.50, did you say?

Mr. GARY. $14.75 to $15, manufacturer's cost.

Mr. CLARK. $14.75.

The CHAIRMAN. Can the Bethlehem Steel Company produce it cheaper than you can?

Mr. GARY. I do not think it can.

The CHAIRMAN. We have a statement from them at $14.

Mr. GARY. I think that is pretty low, allowing for depreciation and administration charges.

The CHAIRMAN. Does it cost more to-day than it did on the average in 1906?

Mr. GAINES. Do you mean 1906 or 1896?

The CHAIRMAN. I mean 1906.

Mr. COCKRAN. Two years ago.

Mr. GARY. A little more.

The CHAIRMAN. How much more?

Mr. GARY. Fifteen cents, maybe, besides extra cost of raw materials. Wages have been increased a little.

The CHAIRMAN. Fifteen cents?

Mr. GARY. Yes, sir.

The CHAIRMAN. Then it cost $14.60 in 1906. What in 1905?

Mr. GARY. I can not answer that. It is not much different from 1906.

The CHAIRMAN. Would you be surprised to know that the cost in the United States from 1902 to 1906, both inclusive, averaged $14.01 on over 90 per cent of the entire production of pig iron?

Mr. GARY. That depends a little on the basis of cost or the way of getting at it.

Mr. COCKRAN. You mean the basis of computation?

Mr. GARY. Yes, sir; the basis of computation.

The CHAIRMAN. Let us see what you take into consideration as the basis of cost.

Mr. DALZELL. As to this $14.75 that you gave us, Judge, do you count in that depreciation?

Mr. GARY. Yes, sir; I count depreciation.

The CHAIRMAN. I understood he did not.
Mr. GARY. You misunderstood me.

Mr. DALZELL. The figures that Mr. Schwab gave us did not take that into account.

Mr. GARY. This includes administration charges and overhead cost and all those things. I do not think Mr. Schwab's figures took those into account, Mr. Chairman.

Mr. DALZELL. They did not.

Mr. CLARK. It took in everything except the overhead chargesMr. GARY. And the depreciation.

Mr. GAINES. He took in the administration charges at the mills, but not the corporate costs.

Mr. BONYNGE. He gave the mill charges, as I understand.

The CHAIRMAN. How much do you allow in your estimate? What are the figures there?

Mr. GARY. Forty cents a ton on the blast furnace.

Mr. CLARK. Judge, do you mean that the blast furnace depreciates 40 cents for every ton of iron that is made?

Mr. GARY. Yes; I think that is very moderate, Mr. Clark.

Mr. CLARK. I just wanted to understand.

Mr. GARY. Furnaces wear out very fast.

That is all.

Mr. CLARK. How long does one of those things last?
Mr. GARY. I can not answer that definitely.

Mr. CLARK. Never mind, then. Go on.

Mr. GARY. Our depreciation charges and everything are regularly and carefully made, and intended only to be the actual depreciation. Of course we do intend to keep up the properties. We do intend to make it large enough to keep up the properties, but not for the sake of burying any money that is received. And I may add there, Mr. Chairman, that as a rule, in my judgment, the manufacturers of this country have not taken enough depreciation charges to keep up their properties.

The CHAIRMAN. Now, I wish you would give me, if you have them figured out there, the elements of cost to make pig iron at $14.75 a ton. What do you charge, Judge, for the metallic mixture, the iron basis per ton of pig iron?

Mr. GARY. The average for all of our pig iron was: For the iron ore, $4.70 for the ore delivered at the furnace; $8.62 in the iron. Cinder and scale

Mr. COCKRAN. Will you go a little more slowly, may I ask?

Mr. GARY. Yes.

Mr. COCKRAN. You say the iron ore is $4.70 delivered at the furnace?

Mr. GARY. Yes, sir; per ton of ore.

Mr. COCKRAN. What is the next item?

Mr. GARY. That would be $8.62 in the iron.

The CHAIRMAN. Now I will ask you about coke.

Mr. GARY. I will give you all the items; the coke next, if you wish. Coke, $3.93 per gross ton of coke at the furnace, which would be $4.15 in the iron.

The CHAIRMAN. Now limestone.

Mr. GARY. Limestone, $1.06 per gross ton.

That is 49 cents in the

iron, 49 cents per ton of iron. Scrap, 16 cents per ton in the iron. Cinder and scale, 11 cents.

Mr. COCKRAN. Cinder?

Mr. GARY. Cinder and scale, 11 cents per ton of iron. The cost of labor, material, and expense in operating, $1.37 per ton of iron. Mr. COCKRAN. $1.07?

Mr. GARY. One dollar and thirty-seven cents, and the depreciation, 40 cents. That makes a total of $15.30. That is the average of all our furnaces. Of course it is less than that at some points. It is less at South Chicago and higher in other places.

Mr. COCKRAN. That makes $15 and what?

Mr. GARY. Fifteen dollars and thirty cents, Mr. Cockran.

The CHAIRMAN. Now, Judge, was $7.30 per ton of pig iron a fair average price from 1902 to 1906, both inclusive, for the iron ore going into the pig iron?

Mr. GARY. What year?

The CHAIRMAN. From 1902 to 1906.

Mr. GARY. Seven dollars and thirty cents. It was lower then. The ore was a little lower at that time. You understand, Mr. Chairman, that the ores on the average are becoming a little less in quality, a little poorer in quality, a little less iron per ton of ore; and as the quantity of iron in the ore decreases, the cost of the iron in the furnace, of course, increases, because it costs just as much to handle a ton of ore with 40 per cent iron as a ton of ore with 60 per cent iron. And the same is true in the transportation; and then, when you get to the furnace, the cost of smelting is increased. It costs more to extract the iron per ton of ore.

The CHAIRMAN. What has that loss been since 1906?

Mr. GARY. It might account for that difference.

The CHAIRMAN. What has it been since 1906?

Mr. GARY. I can not answer that, Mr. Chairman.

The CHAIRMAN. You can not state that?

Mr. GARY. No, sir; I can not state that.

The CHAIRMAN. Has the cost of iron ore increased since 1906? Mr. GARY. Yes, sir; I think it has.

Mr. DALZELL. Have you got there the percentage of iron in the ore that went to make pig iron at $15.30 a ton?

Mr. GARY. No, sir; I have not got that.

Mr. UNDERWOOD. He figures a ton of ore at $8.70.

Mr. GARY. Now, what year did you desire?

The CHAIRMAN. 1906 and 1908.

Mr. GARY. In 1906 and 1908 the base prices were substantially the same. The price was higher in 1907.

The CHAIRMAN. Now, Judge, are you able to say what the percentage of iron in the ore was in 1906 and again in 1908, on the average?

Mr. GARY. No; I can not. I certainly can not give it on the average. I might possibly give it with reference to some one ore.

The CHAIRMAN. Give what you can. I do not insist on a categorical answer. I only ask for information. I only want information. Mr. COCKRAN. Is there any difference in the relative richness of the ores?

Mr. GARY. Yes; there is. The ores are decreasing in richness. Mr. COCKRAN. Can you tell in what proportion?

Mr. GARY. Take what we call our Hull-Rust district. In 1906 the Pillsbury ore contained 64.33 per cent in iron.

Mr. COCKRAN. In 1906?

Mr. GARY. In 1906. In 1907 the same mine produced ore containing 63.63 per cent in iron.

The CHAIRMAN. Now, the Superior district.

Mr. GARY. The Aragon mine, on the Menominee Range, the Grenada ore in 1906 contained 59.16 per cent of iron, and in 1907, 58.82 per cent in iron.

The CHAIRMAN. That was the average for that mine?

Mr. GARY. For that mine; yes.

The CHAIRMAN. Have you the figures there for 1902?

Mr. GARY. No, sir; we have not. We have not back of 1906.

The CHAIRMAN. Have you the figures for the price of pig iron— the cost of pig iron in 1902 per ton?

Mr. GARY. No, sir; we have not.

The CHAIRMAN. You do not go back so far as that?

Mr. GARY. Of course I have it in the office at home, but not here. The CHAIRMAN. I mean here. I asked with reference to what you had here.

Now the item of coke; has that increased in price since 1906 as compared with 1908?

Mr. GARY. It has increased somewhat.

The CHAIRMAN. How much?

Mr. GARY. That I can not answer. The cost at the oven last year. was $1.75 a net ton. We have slightly increased the wages there. In fact, we have slightly increased all our wages since we were organized.

The CHAIRMAN. You gave the cost of that as how much-the cost of coke?

Mr. GARY. At $4.15 per gross ton of iron.

The CHAIRMAN. Had it increased as much as to justify the statement of an increase of 46 cents in the cost of the coke that goes to make that ton of pig iron?

Mr. GARY. All of that, I would think, as compared with 1906.
The CHAIRMAN. But you have not the figures there?

Mr. GARY. No, sir.

The CHAIRMAN. Now, you did not give the limestone as a separate item, did you?

Mr. GARY. Yes; at 49 cents per ton of iron.

Mr. COCKRAN. Judge, you say now the cost of coke is $1.75 a ton? Mr. GARY. The cost of the coke at the ovens was $1.75 a net ton, but the figure I gave you before was the cost to the manufacturer of coke per ton of iron in the iron. The coke cost to produce it at the coke oven in the coal fields was $1.75.

Mr. COCKRAN. Yes.

Mr. GARY. Now, that same coke, with the transportation, etc., added, brought to our furnace and put in the iron, cost per ton of iron $4.15. Mr. COCKRAN. How many tons of coke to the ton of iron?

Mr. GARY. The cost of coke would be $3.93 per gross ton and in the iron $4.15. It would be about 13 tons of coke for 1 ton of iror

The CHAIRMAN. I have a statement here showing that when coke costs $3.37 a ton the amount or value of coke in a ton of pig iron was $3.89.

Mr. GARY. $3.37 and $3.89?

The CHAIRMAN. $3.37 in a ton of coke, and $3.89 for the price of coke that went to make up the pig iron.

Mr. GARY. That is about it. Ours is exact. The CHAIRMAN. Now the limestone. By the way, do you give credit for the by-products in the production of a ton of coke when you say the cost is so much?

Mr. GARY. Of course we would to the extent that we make it. We do; but we have not very many by-product coke ovens.

The CHAIRMAN. You have not got to that point of competition where you have to take care of little things like a by-product?

Mr. GARY. We are putting them in now.

The CHAIRMAN. How much do you estimate you would save by saving the by-products?

Mr. GARY. That is more or less problematical. There will be some saving, a little saving, enough to justify us in putting them in, although we have had very grave doubts about it and have delayed putting them in for that reason.

The CHAIRMAN. Other companies have put them in in the making of coke.

Mr. GARY. There have been different reasons. For instance, the Cambria put them in some years ago. They had their coal rather of poor quality, a poor quality of coal, and it needed a different character of oven to utilize that coal. They were obliged to do it. In foreign countries, perhaps, in some places the by-product ovens were put in because of the peculiarity of the coal. But with our coking coal, which, I suppose, is recognized as the best, the Connellsville coal, the by-products would not probably be of utility or benefit.

The CHAIRMAN. But it has been so successful that you are changing over some of your works and putting in your ovens so as to save the by-products?

Connellsville coke is

Mr. GARY. There are two reasons for that. getting more or less scarce, and we will use in the by-product ovens a mixture of Pocahontas coal and the Pennsylvania coal outside of that of the Connellsville district; but if we had enough Connellsville coal I doubt if we would put in the by-product ovens. The CHAIRMAN. You will make a saving by that?

Mr. GARY. There will be some saving.

Mr. GAINES. It is not proposed to do away with the regular coke ovens?

Mr. GARY. No, sir.

The CHAIRMAN. You will have to put in new coke ovens?

Mr. GARY. Yes.

The CHAIRMAN. You are throwing away the old and putting in new?

Mr. GARY. No; this is not for the old. We are putting in new ovens at Gary, Ind. We shall use a mixture of the Pocahontas and Pennsylvania coal outside of the Connellsville district and get the coke, which will be a little cheaper than the Connellsville coke, saving the by-products.