Mr. GAINES. No; I am not talking about nursing. the failures. I am talking about a condition under which there is an opportunity for other people to start in a business than those who have already achieved the most pronounced success in the business.

Mr. CARNEGIE. You can not conduct a great steel business, and make rails and plates and girders and all that; the man is destitute of judgment who would attempt it.

Mr. COCKRAN. You mean without large capital?

Mr. CARNEGIE. Well, but one who attempts it is a small man.

Mr. COCKRAN. But I say your answer would indicate that any man who started in the steel business was destitute of judgment.

Mr. GAINES. It was your answer to my remark, Mr. Carnegie.
Mr. CARNEGIE. What is that?

Mr. GAINES. Mr. Cockran was interpreting your answer and not my remark.

Mr. COCKRAN. Yes; I am merely suggesting that you add to your answer" without capital," so as to make it clear.

Mr. CARNEGIE. Oh, but wait. He would still be a bigger fool if he had capital and did not build big works.

Mr. COCKRAN. Well, of course. [Laughter.] In other words, unless he employed it?

Mr. CARNEGIE. The time has gone past when in this great country the things that are used by the hundreds of thousands of tons, of steel, can be economically produced on a small scale.

Mr. GAINES. Then your opinion is that the time for the small manufacturer in steel has gone by, and we are to recognize the day of the large man and legislate solely with reference to him?

Mr. CARNEGIE. I think that that is quite true; but mind you, there will always be specialties which can be made in small quantities by the able man-always.

Mr. GAINES. Oh, yes; a razor or a special sort of high-speed steel or something like that?

Mr. CARNEGIE. Oh, a thousand little things.

Mr. GAINES. But in the general steel business, not the specialtiesas you said about tin plate, when we speak of "steel," it has a sort of meaning in a general way to all of us.

Mr. CARNEGIE. Yes.

Mr. GAINES. The day for the small man in the business, in your opinion, has gone by; and in making up this tariff bill we should recognize that there is no longer any hope for him?

Mr. CARNEGIE. That is what I believe. Do you differ with that? Mr. GAINES. Yes, Mr. Carnegie. I am very reluctant indeed to believe that the day of opportunity for the man of fairly modest means and the man who is not even a great genius has gone by, and that he must simply operate under the shadow of the protective wing and care of the big man. That is a thing that I hate to come to. Mr. CARNEGIE. My dear sir, the enterprising man under the shadow of what you call the big man, the big establishment, has far more opportunity of rising to fortune than he ever had of conducting a small business.

Mr. GAINES. I am inclined to think so.

Mr. CARNEGIE. And I am sure of it.

Mr. GAINES. But, at the same time, he should have an independent chance, I think. Still, that is a mere question of giving my opinion now, when yours are of much greater interest.

Mr. CARNEGIE. Yes; but hold on a little, now. Let us just get your judgment on this point: You agree with me in the statement that the opportunities for clever men never were so great as since these great aggregations of capital and works have taken place. Why, imagine take my own experience: I had 43 partners. There is not one of them but one that put a dollar in the business, and they were millionaires when we sold out. There never was such a chance.

Mr. GAINES. That was good work.

Mr. CARNEGIE. There never was such a chance for able men to make a fortune as these immense establishments have given. You have a wrong conception altogether about the small manufacturer. Mr. GAINES. Yes; but

Mr. CARNEGIE. Wait a moment. The man that had half of 1 per cent of interest with us we promoted 42 of them, young fellows; no relatives. There was only one that was a cousin of some partner, and he got in on his merits. No; there were two, but they got in in spite of that. It was ability; and these young fellows-Schwab was one of them-I found Schwab on the Allegheny Mountains. He had a taste for music then, and played a little. He was a bright boy. He wanted a situation. I sent him down to the works. He was a draftsman. He is an awfully clever fellow, Schwab is. He attracted attention, and he got an interest in the firm; and he had-I need not tell the money he had when he left. He was no small man. [Laughter.] Mr. GAINES. That I can readily believe.

Mr. CARNEGIE. Imagine what chance there would have been for Schwab when men were small manufacturers, pegging away at a hundred small establishments. That genius would never have had a chance to develop; because, besides being a great mechanic, he is the best manager of men I ever knew.

Mr. GAINES. But do you think, Mr. Carnegie, that the fact that there are opportunities under such men as yourselves is any reason for depriving people of opportunity elsewhere-those who want to start on their own account?

Mr. CARNEGIE. Those who want to start on their own account without capital betray a lack of judgment that will prevent them from ever being successful men.

Mr. GAINES. A strange state of affairs is about to develop. The agitation for the reduction of the tariff on steel, and perhaps for revision of the tariff, seemed to start mainly in the country because of the sale of steel rails abroad cheaper than at home. Now you aid the movement for the reduction of tariff, while defending the chief cause of complaint.

Let me ask you this question, Mr. Carnegie: When you were in business, did you sell abroad cheaper than at home?

Mr. CARNEGIE. I never had the glorious opportunity of exporting in my early days, as far as I remember.

Mr. GAINES. You did not export? What is your impression as to the practice of selling abroad cheaper than at home? What is your opinion of that practice?

Mr. CARNEGIE. I think it is good for all parties concerned.

Mr. GAINES. Will you analyze that?

Mr. CARNEGIE. Yes; with pleasure. You make everything cheaper if you keep your men at work; and if orders are slack at home, and there is the alternative of idle men with families to support, and the other alternative is that you are to run at a loss, or without profit, I know what my practice was. I ran the mills, and I sold everywhere I could sell. I think that the man who disturbs such an organization as we had, instead of maintaining it at a loss every month, is a poor

manager.

Mr. COCKRAN. Why could you not sell at home cheaper?

Mr. CARNEGIE. Because there is a certain demand at home that is supplied. We never sold abroad if we could sell at home.

Mr. COCKRAN. I understood you to say that you pursued the policy of reducing prices at home whenever there was a slackening in the demand, so as to stimulate it.

Mr. CARNEGIE. Oh, the same policy here?

Mr. COCKRAN. Yes.

Mr. CARNEGIE. Oh, yes; but he is asking me a different question there.

Mr. COCKRAN. But why should you sell abroad cheaper than at home? Why not sell just as cheaply at home?

Mr. CARNEGIE. Because if I sold every rail at a loss, I would soon shut up, and the rails would be dearer than ever.

Mr. COCKRAN. But would not the loss be just as great in the foreign markets?

Mr. CARNEGIE. No.

Mr. COCKRAN. Why?

Mr. CARNEGIE. Because you only sell the amount needed to keep your works running.

Mr. COCKRAN. Why not do that at home?

Mr. CARNEGIE. Because the demands were not here. They were satisfied. You can not force rail sales.

Mr. COCKRAN. Yes; but I understood that you could create a new demand by a reduction of price.

Mr. CARNEGIE. I have never found that so with rails.

Mr. COCKRAN. I questioned you about it this morning, Mr. Carnegie. Perhaps you have forgotten.

Mr. CARNEGIE. Well, wait a moment; wait one moment. There are two policies-whether the steel company's policy was right in holding up prices, or whether the consumer would benefit if we reduced prices. Now, I have an open mind; the other has not been tested, you remember

Mr. COCKRAN. Which other?

Mr. CARNEGIE. The policy of keeping up prices; it has not been tested yet. But if we had a depression we would rather reduce our prices if we thought it would stimulate orders, which has that effect, but not, sometimes, to a great extent. In regard to steel rails, a railroad company will buy so many steel rails. In depressed times there are no new railroads building, and I do not think that a reduction of prices there would give us 1 ton more orders. No; no railroad would buy a rail that it did not need in depressed times. You come now to general merchandise, and there we reduced prices at home as well as abroad, because you can stimulate demand in this field-not in rails in America, but cheap prices abroad might bring orders.

Mr. COCKRAN. Why, do you mean to say that the cost of rails would not have itself an effect upon a railway if it was contemplating relaying a track or extending its trackage?

Mr. CARNEGIE. Yes.

Mr. COCKRAN. Would it not have some effect?

Mr. CARNEGIE. Yes; some slight effect.
Mr. COCKRAN. Well, that is all.

the beginning of each year.

Railroads buy their supplies at

Mr. CARNEGIE. No, no! In times of depression railroads are not often contemplating extensions.

Mr. COCKRAN. That would depend upon what they cost; and if the reductions were extensive enough, do you not think that would be a factor in stimulating consumption?

Mr. CARNEGIE. But you do not extend any work on a railroad solely because of the cost of steel rails. A great many other things must be purchased.

Mr. COCKRAN. I understand that; but that is one factor, is it not? Mr. CARNEGIE. And the tendency is that low prices stimulate production. There is no doubt about that.

Mr. COCKRAN. When a manufacturer decides that he has a surplus (which of course comes from failure of demand), might not that demand be stimulated with good results at home as well as abroad by offering the steel product, whatever it is, at a lower rate?

Mr. CARNEGIE. I really do not believe that the lower cost of rails alone would stimulate railroad companies to buy much more-any reduction that you could make—although, of course, political economy does teach that low prices increase consumption, as a rule.

Mr. COCKRAN. It certainly applies to structural steel; a diminution in prices results in very greatly increased consumption.

Mr. CARNEGIE. It applies to everything in degree, more or less. Mr. COCKRAN. Yes; I suppose what you mean is that in the case of steel rails the consumption is confined to a single customer-that is, the railroad-whereas, in the case of structural steel, the consumption is extensive?

Mr. CARNEGIE. Yes; I think you might tempt a millionaire who wished to build a skyscraper with a great bargain, a fall of prices, if he were a bold man. A fall of prices would lead him to go on with his work again.

Mr. COCKRAN. Mr. Carnegie, you made a very significant remark

The CHAIRMAN. Mr. Carnegie, you seem to feel quite weary, and I do not know whether it would be your pleasure to come to-morrow morning at half past 9 and finish up your conversation here.

Mr. CARNEGIE. Well, gentlemen, if you are not weary, I would rather finish now.

The CHAIRMAN. All right; I just wanted to know.

Mr. COCKRAN. Mr. Carnegie, you said to Mr. Gaines that of the 43 partners with whom you started

Mr. CARNEGIE. I did not start with forty-three; I ended with forty-three.

Mr. COCKRAN. Well, of the 43 you had, only 1 of them ever put in any money?

61318-SCHED C-09- 35

Mr. CARNEGIE. Yes, sir; that is true. Well, allow me I think there was another one that went in who had a small interest in some of our other works. There may have been two.

Mr. COCKRAN. For the purpose of fixing what the profits of that industry were, would you mind telling us what capital was put into the Carnegie Company to begin with? With what capital did you start?

Mr. CARNEGIE. I could not tell you. It was in the millions; but really, I would have to refer—

Mr. COCKRAN. Mr. Schwab testified that there was no capital at all; that practically all the capital that ever was in the business had been made out of its profits. Was that a misapprehension on his part?

Mr. CARNEGIE. Oh, I think it was a misapprehension upon your part.

Mr. COCKRAN. I will read you his testimony.
Mr. CARNEGIE. Made out of the business?
Mr. COCKRAN. Yes.

Mr. CARNEGIE. Oh; that is a different thing. We were in iron for many years, and we made money that we put into steel. right about that.

He is quite

Would you

Mr. COCKRAN. I want to get back to the beginning. mind telling me, then, with what capital you did start? Mr. CARNEGIE. I could not without refreshing my memory. Mr. COCKRAN. Would you mind coming within a million or so of it? [Laughter.]

Mr. CARNEGIE. Do you mean when I first started in iron?

Mr. COCKRAN. Yes; we will begin with that.

Mr. CARNEGIE. Oh, well, we started in a small iron mill. You must not take this as correct; I will give it to you as I remember it. It was a small amount, the first interest I took in iron. It seems to me-I can tell you where my start was. Now I remember: My first start for manufacturing was in bridges. I saw that wooden bridges were not things for railroads, and we built a small bridge of castiron, and I saw that the time for iron bridges was coming, and I started there with $1,500 which I borrowed from the bank as my share. I got five other partners with me, practical men, and they each put in $1,500; and we made a small start on building bridges. They were just the men who would have delighted Mr. Gaines, and I wasn't too big myself then to be ruled out.

Mr. COCKRAN. So you started with $9,000?

Mr. CARNEGIE. I think that that is about the amount.

Mr. COCKRAN. There were six of you who put in $1,500 apiece?

Mr. CARNEGIE. Five of us. Five of us, I think.

Mr. COCKRAN. You said there were five others besides yourself. That was six altogether?

Mr. CARNEGIE. It was five with me.

Mr. COCKRAN. Yes; five with yourself.
Mr. DALZELL. "Five of us," he said.

Mr. CARNEGIE. I think so; I think so.

Mr. COCKRAN. Then you started with $7,500?

Mr. CARNEGIE. Yes.