Mr. COCKRAN. When they discovered who was the real wise partner they were eager to consolidate? Mr. CARNEGIE. Yes. Mr. COCKRAN. And then we find the Edgar Thomson Steel Company and the Union Iron Mills merged into the Carnegie Brothers' Company? Mr. CARNEGIE. Yes, sir. Mr. COCKRAN. You spoke of the Homestead Bridge Company? Mr. CARNEGIE. No; the Homestead works. It was the Keystone Bridge Company. Mr. COCKRAN. The Keystone Bridge Company? Mr. CARNEGIE. Yes. Will you tell me what you want to get at, and I will tell you. Mr. COCKRAN. I will tell you frankly, I want to get what the actual profits of your company were the company which was a great monument to your success. For that purpose I want to find out what cash capital was put into the company and how that has grown. Mr. CARNEGIE. Why didn't you tell me that? [Laughter.] Do you know, when you have not thought of a subject for thirty years, you can not remember everything. I could lie down in my bed and think for a while and study it up. Practically, Mr. Cockran, one enterprise gave us the capital, of course in a small degree, for another enterprise; one was merged into another, and so on, and so on. Mr. COCKRAN. Exactly. Mr. CARNEGIE. I wish you had asked me that. Mr. COCKRAN. So that practically, Mr. Carnegie, when you sold out your interest-well, when you withdrew, at the time of the formation or prior to the formation of the United States Steel Company, this vast property which had been created by your partners and yourself represented almost entirely profits earned? Mr. CARNEGIE. Why didn't you ask me that question? Mr. COCKRAN. I started by citing what Mr. Schwab had said, and you said you thought that was a misapprehension, and you came along finally to this same conclusion Mr. CARNEGIE. But Mr. Schwab was wrong. Mr. COCKRAN. Yes; Mr. Schwab was wrong, then, to the extent of two or three millions of dollars? Mr. CARNEGIE. Certainly. Mr. COCKRAN. What do you remember was the amount paid you for this enterprise when you sold it? Mr. CARNEGIE. My position there was-now, I can tell you exactly-that is, recent. Mr. COCKRAN. Yes, Mr. Carnegie; thank you very much. Mr. CARNEGIE. My partners, young partners, received an offer for the mills, to convert them into this great new company, consolidate with the others, and I sent my cousin out to Pittsburg, who was a partner himself, to ask the young men if they were all in favor of making this change; that if they were, I would acquiesce, because I had made up my mind when I was younger that I would never spend my old age grabbing for more dollars. There is a phrase that you know, Mr. Cockran, very well, when an old man says he retires for "the making of his soul." Well, I made up my mind that I would retire early, and then I said to these young men, "I will do whatever you wish," and they all wished to sell out. Now, I had nothing whatever to do with the negotiations. They made their bargain and came to me and asked what I would sell for, and I said I would sell for the same amount of bonds as they were to receive, 7 per cent preferred stock. You see they were continuing in the business and they took 7 per cent stock and I took 5 per cent bonds. Then they got $1,500 a share more of common stock, and I declined to take any common stock because I thought it was then water. Mr. COCKRAN. It has turned out to be wine, has it? [Laughter.] Mr. CARNEGIE. Yes. I didn't take any. Mr. COCKRAN. You regarded water as not a thing financially to be used as a beverage? Mr. CARNEGIE. Well, I was satisfied with the bonds. Mr. COCKRAN. You took yours in bonds because you did not like common stock; is that it? Mr. CARNEGIE. No; I could have gotten the common stock in addition. Mr. COCKRAN. Oh, you could? Mr. CARNEGIE. I have no doubt of it. Mr. COCKRAN. Then, you did not take the common stock because you regarded it as water, and you did not want to carry water even on one shoulder? Mr. CARNEGIE. But, remember, I do not consider it water now. Mr. COCKRAN. Of course, I understand that. Nobody could think that who looks at a list of stock quotations. Mr. CARNEGIE. I think, perhaps, you are inquiring into private matters. Mr. COCKRAN. The moment I touch that I want you to tell me, because my only object is this: We have been talking a great deal about the profits of the company. You, for instance, have been testifying about the profits in the last year, and you have asked the committee to be careful about going after specific facts on which to fix their tariff legislation, and I thought it important, for the purpose of getting the exact facts in considering possible tariff legislation, to show how this company has grown from a very small beginning to the stupendous amount of $1,780,000,000, as the value fixed by Mr. Gary. Mr. CARNEGIE. Which great company? Mr. COCKRAN. The Steel Company itself. First of all, I wanted to find out how much your company was paying, how much it was sold for, to get the growth of that, and then I was in hopes I could find the corresponding growth of the other companies and thus get an idea of what the total profits on manufactured steel might be. Mr. CARNEGIE. If that is your object, I do not think I am justified in revealing their private matters. Mr. COCKRAN. Then I haven't the slightest disposition to ask a question which you consider touches private matters. Mr. CARNEGIE. I would not object for a moment to tell you, and I have told you just what I got. Mr. COCKRAN. You told us you got bonds, but you did not tell the amount, and I have no right to press you on that against your objection. Mr. CARNEGIE. No, sir. Mr. COCKRAN. But I understood you to say to-day that one of the sources of information you considered absolutely reliable as to the cost of producing steel was the report of the company for the last year, and I must say I agree with you as to a company that earned $160,000,000, less $27,000,000 deducted for sinking funds on bonds of subsidiary companies, depreciation and extinguishment funds, replacement funds, and so forth, leaving the amount at $133,000,000, quoted by Mr. Payne, and expenses, the difference between your estimate and Mr. Payne's. Now, if that be a reliable source of information as to whether the industry dominated by this company should have a tariff or not, would it not be equally proper for us to look back and see what the earnings were when you were the chief factor in producing steel? Mr. CARNEGIE. I do not think the tariff question was an issue then. Mr. COCKRAN. I do not think it was an issue. I think it was a factor, though. Mr. CARNEGIE. Certainly. Mr. COCKRAN. Yes. The CHAIRMAN. Is not that the amount that is deducted from the interest on those bonds? Mr. COCKRAN. No; that is deducted from the other amount of $133,000,000. The interest on bonds of subsidiary companies only was taken from this amount of $160,000,000. From $133,000,000 they have deducted the interest on bonds and the preferred stock and the dividends on the common stock of the United States Steel Corporation. That is not net earnings. The CHAIRMAN. No; they are not net earnings. Mr. COCKRAN. Oh, no; the $133,000,000 is not their net earnings. Mr. CARNEGIE. If you want the United States Steel Company to tell you the cost of everything, go to them and get it. Mr. COCKRAN. The only trouble is that we have the same difficulty with everyone that we have with you. The moment it touches information exclusively within your own control you do not care to give it, and the committee has that difficulty all the time. Mr. CARNEGIE. Because I am no longer in steel. I have retired. Mr. COCKRAN. But you have knowledge and information of most important character as to the growth of this industry, and its development under the influence of this tariff, while the tariff was fixed at varying amounts. I think if we take these net earnings for the last year as a source of information in dealing with the cost of producing steel now, we should also be free to take its earnings during that long period when you were the chief factor in production, to ascertain the cost of wrought iron; and I am free to say that the thing that has puzzled me is why steel has been an article on which such extraordinary profits have been made-profits above every other industry in the world. I will ask you the question I asked Judge Gary. Mr. CARNEGIE. Let me say this to you, that I have no interest in the United States Steel Company, because that is what you are getting at. I have not a dollar in it except bonds. Mr. COCKRAN. I understand that. Mr. CARNEGIE. And I have never bought a share of the stock; and I have never bought a share of stock on the New York Stock Exchange in my life, nor sold a share of stock on the New York Stock Exchange. Mr. COCKRAN. I understand that. I am not getting at the stock value of this company; I do not care what its stock may be quoted at; that is only one indication of its value, but I do want to get at what the actual profits have been. Mr. CARNEGIE. I am very sorry you told me what your idea was. I would have referred you to the United States Steel Company. I am out of business now, and they have everything right there Mr. COCKRAN. But Judge Gary's position, it seems to me, in that respect is absolutely clear. Whatever it may have cost the Carnegie Steel Company in the way of cash investment to acquire the property it possessed at the time of consolidation, he, on behalf of the United States Steel Corporation, had to pay a good round sum for it when he got it. The United States Steel Company started with an investment, and a very large investment, in the Carnegie Steel Company. What I want to do is to go back and see what the Carnegie property came from; whether it did not come almost entirely from the results of profits made in the business. That, I am frank to say, I consider a very important factor in determining the result of the tariff, and I would have pursued that tone of inquiry, and I tried to find out how many fortunes besides those you have referred to as having been taken out of this business have been taken out and are now invested in bricks and mortar. I think that information would have been valuable; don't you think so? Mr. CARNEGIE. No; I do not think that is for the committee at all. I do not see that that has any bearing on the subject. What bearing has it on the tariff question-what values parties are willing to buy property for? Mr. COCKRAN. It shows the value of the property; and if the property itself is the result of tariff taxation, it becomes of value in the inquiry. I will ask you another question, because it is Mr. CARNEGIE. I must refer you to the United States Steel Com pany. Mr. COCKRAN. You will not give us any information yourself on that? Mr. CARNEGIE. No; I will not go into that. Mr. COCKRAN. All right. I want to ask you one more question. You have said a good deal here to-day as to the importance of this committee's regarding the interest of the person testifying, and I thought that was proper. I assume that you have no interest in any steel company of any kind except the bonds which you hold of the United States Steel Company? Mr. CARNEGIE. That is quite true. I never was interested in anything but our own works. Mr. COCKRAN. Now, passing from that question of profits, you stated this morning, I understood, that there has been a steady decrease in the cost of steel rails and all steel, due to the improved methods since the steel business was organized in this country and to the scientific knowledge that the men have gained. Now, that steady decrease in the price of steel has been accompanied by an equally steady rise in the rate of wages, has it not? Mr. CARNEGIE. What is that? Mr. COCKRAN. The decrease in the price of steel as a commodity has been accompanied by an equally steady increase in the rate of wages, has it not? Mr. CARNEGIE. I hardly think so. I would not be prepared to indorse that. Mr. COCKRAN. Did you not say that the rate of wages, on the whole, has risen steadily since the steel business has been begun; that the men are getting more than ever now? Mr. CARNEGIE. Certain specialists are getting more, as they prove themselves to be skillful, but I doubt whether the cost of labor has risen much. Mr. COCKRAN. I do not mean the cost of labor as measured by its production, but I mean the daily rate of wages; has not that increased steadily? I think we have had almost a consensus of opinion on that. Mr. CARNEGIE. Well, I think that wages are high now, the rate of wages; but I think we have had periods of depression. Wages have gone up and down. Mr. COCKRAN. But I mean the general average. While the price of steel has been falling, the general average rate of wages has been increasing, has it not? Mr. CARNEGIE. My opinion is that it has varied as business was brisk or dull. We have had a great boom in steel in the last five years, and there has been an increase in labor; but my recollection, as far as my recollection goes, we have had a depression, and I think labor did not advance. Mr. COCKRAN. Then you do not think labor has advanced on the whole in the steel business during the last twenty years? Mr. CARNEGIE. Well, it has as to experts. Mr. COCKRAN. Oh, no; I mean the average rate of wages. Mr. COCKRAN. Yes. Mr. CARNEGIE. I do not think it has.advanced much. Mr. COCKRAN. You think it is just about the same? Mr. CARNEGIE. There are periods when it has been so low, and there are periods when it has been higher. Now, we have had a great boom in steel Mr. COCKRAN. Take the last ten years; has the rate of wages increased? Mr. CARNEGIE. In the last five or six years labor has advanced. Mr. COCKRAN. And during that time the price of steel also has been about stationary, has it not? Mr. CARNEGIE. Do you mean in the general business? Mr. COCKRAN. Yes. Mr. CARNEGIE. But we have ups and downs in prices. Mr. COCKRAN. I understood Mr. Schwab to testify that wages had risen steadily; that the cost of wages, I think he said, increased from year to year. That is not your belief? Mr. CARNEGIE. Well, Mr. Schwab is a better authority on labor than I am. I was not watching that and certainly he ought to be better authority, and I would not put my judgment there against his. That is in his department. Mr. COCKRAN. Mr. Fordney asked you to-day that even if competition could be maintained with the foreigner in this country, whether you would object to maintaining a tariff to make higher prices if labor got the benefit of these higher prices. Do you think it possible for labor to get the benefit of artificial high prices? |