went in alone, and I went to the dry-goods merchants and bankers and got the money.

All my life I have been a protectionist, as the President-elect says he is, but after we do not need protection in an industry what gross injustice is put upon the consumer. If taken off to-morrow, the steel business would not be seriously affected, to my mind; it is the combination which permits it to be completed.

Now, I am not appearing here against this movement; it is one to which I keep an open mind. It seems inevitable that we are to give a trial to abolish competition and to depend upon governments to fix the prices, because that is inevitable-the most momentous departure that the world has ever seen. I am a protectionist if I can introduce a new industry into this country. Mark this: I prefer to obtain a cheaper and more regular supply than we could get from abroad, and if, after forty years experience, we can not develop steel to that condition-fortunately, you have the highest testimony in the world that it is in that position but if we had failed our protective policy in that instance would be a great failure instead of a triumphant success, which it has become, and the vindication of the protective policy is in the fact that we can agree with Judge Gary and say, “ Take back your protection, you paternal government that first nursed this industry. We are now men and we can beat the world in the manufacture of steel, and we shall make half of all the world's product in three years from now." What is the use of continuing that protection when the leading man in the steel business, representing 45 per cent of the total production of steel-and 45 per cent is greater than any other nation in the world makes, even greater than Germany-and therefore I say that its total abolition will leave the steel business of America in a better position for the country's sake than if you coddle it by protection and insist that we "let well enough alone." You want a vigorous, progressive steel industry.

Mr. FORDNEY. You had protection when you went into the business and had it all your life?

Mr. CARNEGIE. I never appeared before a committee without urging a reduction in the tariff on iron and steel. When the McKinley bill was under consideration I labored long with President McKinley. He was a protectionist after my own heart. The McKinley bill reduced the duty on iron and steel 25 to 35 per cent, partly upon my advice, and I am consistent in believing that now the removal of the present duties would not affect injuriously any person engaged in the manufacture of steel.

Mr. FORDNEY. Yet, when you engaged in the business you did not engage until you became satisfied that both the Republican and Democratic parties were for protection?

Mr. CARNEGIE. That is the reason I am a protectionist for any new industry that needs it. Show me anything that needs protection to introduce it into this country and I will go the farthest in claiming it; but in the leading industry of steel I think it no longer needs it. Mr. LONGWORTH. Whether it needs it or not, it is the difference in cost abroad and home?

Mr. CARNEGIE. Yes, sir.

Mr. LONGWORTH. And your proposition now, reduced to its last

analysis, so to speak, is the difference between the cost of producing steel abroad and at home?

Mr. CARNEGIE. I believe to-day, as I have stated before, that the cost at the mill which has the record of the lowest cost, compared with the best mills abroad, in England and Germany-I believe that there would not be much difference in the cost-that the difference of transportation for 3,000 miles on the sea and the difference in inland transportation here renders any serious competition with the steel industry of this country, in my opinion, impossible.

The CHAIRMAN. We will take a recess until 2 o'clock.
Mr. CARNEGIE. Am I through?

The CHAIRMAN. No, sir.

Mr. CARNEGIE. Oh.

AFTER RECESS.

The CHAIRMAN. Mr. Carnegie, I have before me the report of the United States Steel Corporation to which you alluded, dated March 17, 1908, which, I suppose, is the last report. I find that the net earnings for the year 1907 were $133,244,929. The rolled and other finished products for sale were 10,376,000 tons, which would make an average of about $13 a ton, and I find that the 10,376,000 tons were divided up as follows: In the first place, of steel rails there were 1,733,814 tons, or about 17 per cent; blooms, billets, slabs, sheet and tin-plate bars, 758,699; plates, 877,682; heavy structural shapes, 587,954; merchant steel, skelp, hoops, bands, and cotton ties, 1,316,387; tubing and pipe, 1,174,629; rods, 126,095; wire, and products of wire, 1,481,226; sheets, black, galvanized, and tin plate, 1,070,752; finished structural work, 719,887; angle and splice bars and joints, 195.157; spikes, bolts, nuts, and rivets, 67,991; axles, 189,000; sundry iron and steel products, 77,463. Those products that were rolled, according to this report, were of a higher grade of manufacture than steel rails, except steel rails and billets.

Mr. CARNEGIE. Mr. Chairman, I have spent some time explaining to you that steel rails are an entirely different article from any other. The CHAIRMAN. I suppose they are. The principal question I want to ask in regard to that, Mr. Carnegie, without taking too much time, is this, that all of those articles, other than steel rails, bring a higher price than steel rails, do they not, per ton?

Mr. CARNEGIE. I think, generally speaking, they do. My judgment is that they probably would bring a higher price than steel rails. The CHAIRMAN. Of course tin plate would, a much higher price? Mr. CARNEGIE. Certainly.

The CHAIRMAN. Several times as high; about how much a ton? Mr. CARNEGIE. I could not tell you about tin plate.

The CHAIRMAN. And billets, nuts, and so forth, would bring a high price per ton compared to steel rails?

Mr. CARNEGIE. Certainly.

The CHAIRMAN. And the same way with wire?

Mr. CARNEGIE. Yes; with wire.

The CHAIRMAN. And wire products?

61318-SCHED C- -09- -33

Mr. CARNEGIE. Yes, sir.

The CHAIRMAN. And so on all through; structural steel brings a pretty high price per ton, does it not, in comparison?

Mr. CARNEGIE. Certainly.

The CHAIRMAN. So that it would not be fair to average the profits on all those articles by the ton, would it?

Mr. CARNEGIE. Surely not.

The CHAIRMAN. The same percentage of profits on each of the others would make a much higher profit per ton than on steel rails? Mr. CARNEGIE. Certainly.

The CHAIRMAN. That was the question I wanted to ask. I am much obliged to you for calling the attention of the committee to this report.

Mr. CARNEGIE. What report is that, what year?

The CHAIRMAN. This is for 1907. The report is dated March 17, 1908, but it is for the calendar year 1907.

Mr. CARNEGIE. That is probably the report to which I referred, and the difference between the three and the five might lead it to be quoted elsewhere at one fifty-eight. I have made a memorandum from the statement that I have seen, one fifty-eight, but that makes very little difference-yes, it makes considerable difference.

Mr. COCKRAN. It makes a difference of twenty-five millions?
Mr. CARNEGIE. Yes.

Mr. COCKRAN. The difference between one hundred and thirtythree million and one hundred and fifty-eight. You said, Mr. Chairman, that the report shows there were one hundred and thirty-three million; Mr. Carnegie states one hundred and fifty-eight million. Mr. DALZELL. A difference of $2 a ton?

Mr. CARNEGIE. Yes. I assure you that the figures I have sometimes seen printed were one fifty-eight, and I am delighted that that error is pointed out.

The CHAIRMAN. I did not call your attention to it to point out any

error.

Mr. CARNEGIE. It would have been your duty to do that, I should think.

The CHAIRMAN. Not at all; I did not call attention even to that. Mr. CARNEGIE. I made it in good faith, but I wonder if it is the report before that; I took it from another document, 158.

The CHAIRMAN. That may be, and still, Mr. Carnegie, there was a higher amount of manufacture for the year 1907 in all the articles produced in the United States than in any other year?

Mr. CARNEGIE. Yes.

The CHAIRMAN. According to all our reports; also a greater importation?

Mr. CARNEGIE. I am inclined to think that that is the report from which this statement I made was taken; I haven't a memorandum. The CHAIRMAN. You only spoke of it from recollection.

Mr. CARNEGIE. Of course.

The CHAIRMAN. It is not material if you did make a mistake. Mr. CARNEGIE. No; but I have a good head for figures, and I remember them; and I am pretty sure it was printed 158.

The CHAIRMAN. And the profits that year were generally higher in all the lines than in any year previous, were they not?

Mr. CARNEGIE. I think the product was greater; it was a busy

year.

The CHAIRMAN. Yes, and the profits were higher?

Mr. CARNEGIE. Well, I have not seen the other reports.

The CHAIRMAN. That would be in accordance with the general experience, that the profits were higher during that year than any year previous?

Mr. CARNEGIE. I do not know about the profits per ton being higher, but I think more tons were made in that year. My impression is that prices were not advanced; that is my impression, but it would affect the gross amount.

The CHAIRMAN. That could be easily determined, of course, by looking at the reports. Mr. Gary testified that in Germany, as to German rails, the domestic price is $29.02, and the export price $22.20; in Great Britain the domestic price is $27.98, and the export price $23.61; in France the domestic price is $33.33, and the export price $25.69; in Belgium the domestic price is $27.45, and the export price $22.50; or, in other words, that the export price in each of those countries is but a trifle, if any, higher than what he testified was the cost price at the mill in the United States. Now, if that is correct, would it not look a little as though he had some grounds for fear if we had free trade in steel rails?

Mr. CARNEGIE. Well, Mr. Chairman, he has told you that he has

not.

The CHAIRMAN. No, he did not tell us that; you are mistaken about that. He said that his company could go on and do business, but they would have to cut down wages.

Mr. COCKRAN. I do not think he said that, Mr. Chairman.

Mr. CRUMPACKER. I do not recollect that he said they would have to cut down wages.

Mr. CALDERHEAD. That is his statement.

The CHAIRMAN. That is what I understood.

Mr. CALDERHEAD. I read that yesterday.

The CHAIRMAN. Mr. Calderhead says he read it in his statement yesterday.

Mr. COCKRAN. Could you give us the page?

Mr. CALDERHEAD. I did not bring it with me because I did not think it would be questioned.

The CHAIRMAN. That was my recollection of it, so that it is not quite fair to say that he said they did not need the duty, or anything of that kind. Now, if he does need the duty, in order to keep up the present wages, to meet competition from abroad; if he is right about that and also right about the proposition that the other companies, his competitors, have a cost of $2 more per ton than his, and over, it would look a little as though they needed some protection, would it not?

Mr. CARNEGIE. I do not think that they do, because if ever Judge Gary, with his capital, undertakes to fight his competitors, of whom he has only $2 a ton advantage, as I said before, I would consider my bonds not a good security. Two dollars a ton profit on the earnings of the United States Steel Company would not pay interest upon their bonds.

The CHAIRMAN. Are your bonds a lien on this ore property of theirs?

Mr. CARNEGIE. Yes, and everything they purchase.

The CHAIRMAN. I do not wonder that even if their business were wiped out but what your bonds would be amply good.

Mr. CARNEGIE. But I might have to go, in case of default, and prove them to be good, and that would be very objectionable.

The CHAIRMAN. I do not know; you could put Schwab in charge, and I think you would get out of it.

Mr. CARNEGIE. The trouble is, when I put Schwab in charge, that I would like to be pretty close to him all the time. [Laughter.]

The CHAIRMAN. If the ores of the world are to play out as soon as some people imagine, the ore bed, even without any mill or any prospects of running one for a long time, would be pretty good se curity for an ordinary business man for even the amount of your bonds which you hold.

Mr. CARNEGIE. I do not like things that are only a pretty good security. [Laughter.]

The CHAIRMAN. Evidently you do not; I agree with you on that, if you think that these ore beds would not be security enough for your bonds.

Mr. CARNEGIE. Now, Judge Gary there again uses his judgment, that it would be necessary to do so and so. I can not say anything about that except that my judgment is that it would not be necessary to do any such thing.

The CHAIRMAN. As to reducing wages, I again call your attention to the fact that it was in reference to tin plate, not to steel, he spoke of reducing labor. I started in at that point to ask Mr. Gary what it cost to produce steel rails abroad, or suggested to a member of the committee who was interrogating him at that time to ask him, but I do not find that that was done, so that we are without his estimate of the cost of steel except in one instance. He said that the cost of pig iron in the Lorraine district in Germany was $7.50 a ton and the cost of converting it, I think, about $7 a ton-$6 or $7-so that they could produce steel rails there at $14 or $15, somewhere near that rate, in that district. He said that was lower than the price generally in Germany. He also stated that as a factor in the competition between Germany and this country the German Government, owning the railroads, in order to give a bounty to the steel business or to any other export business, for that matter, were accustomed to make a rebate in the freights, and while they carry goods to the seashore for export to cut the freights.

Mr. CARNEGIE. Mr. Chairman, if the German maker can make a ton of steel rails at $15 and can send them here at a cost of $6, why does he not send them here and get $28?

The CHAIRMAN. That would be $21 and $7.80, which would make it $28.80. Simply because he could not get his money back.

Mr. CARNEGIE. That is the answer.

The CHAIRMAN. In that case, if he was exporting them at $22 a ton and can find a market at that rate for the surplus which he wishes to dump on the markets of the world, that would be another good answer why he should not send them here, if that is the export price of Germany, $22 a ton. I am not saying this to indicate how I would stand on this question; I am only trying to get at the facts.