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STEEL COST.

ENGLISH AUTHORITIES DENY THAT STEEL CAN BE MADE AS CHEAP IN AMERICA AS IN ENGLAND.

Hon. SERENO PAYNE,

Washington, D. C.

520-522 ELLICOTT STREET, Buffalo, N. Y., January 12, 1909.

DEAR SIR: Your committee may be conversant with the statements in inclosed article. If not, it may interest you to know what our English friends (?) have to say.

Yours, truly,

CHARLES ROHLFS.

[From Journal of the Royal Society of Arts, London, England, January 1, 1909.]

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THE COST OF STEEL PRODUCTION.

Mr. Carnegie's recent assertion that steel can be made at less cost in the United States than in this country is not supported by figures or accepted by authorities here. There is no good reason why steel should be made more cheaply in Pittsburg than Sheffield. On the contrary, we have coal, iron, furnaces, and harbors all within easy distance, whereas the enormous distances which separate the iron-ore deposits and the coal fields and the manufacturing plants from the seaboard in America severely handicap the American steel trade. In cheap and convenient supplies of minerals, in geographical situation, in sound capitalization, and in skillful labor the United Kingdom holds a combination of advantages enjoyed by no other country. It may be, says a Sheffield correspondent of the Manchester Guardian, that if the comparison is between the prime cost of a ton of American rails rolled from " piped" ingots insufficiently 'cropped "-rails of which about one in every four is defective and the quality of which is deliberately sacrificed to tonnage manufacture-and British rails rolled out of the solid only, Mr. Carnegie's statement may be correct. But taking quality for quality it may well be challenged. Between 1900 and 1907 the price of pig iron was on the average about 17 shillings per ton higher in the United States than in this country. That "price" is not "cost," but there is nothing to show that the American iron smelter, with his high price, has made any greater profit per ton than the British smelter, with his much lower price. With pig iron ranging from about 6 shillings to 29 shillings per ton higher in America than here it would be strange indeed if it were the fact that the cheapest steel in the world is produced in the United States. Mr. J. S. Jeans, a very high authority on the subject, has said that iron and steel profits are somewhat less, generally, in America than in Great Britain, and Mr. Gary, the chairman of the Steel trust, recently declared that pig iron can be made at $3.65 per ton less in England than in America. In 1906-7 pig iron was about $5 a ton dearer in the United States than in England, and the prices of most other products correspondingly high, yet several of the large American iron and steel concerns were not able to make anything like a stand when financial depression overtook them. Threatened industries, like threatened men, sometimes live long, and American predictions about British iron goods have been completely falsified. Excessive capital charges hang like a miiistone round the neck of American industry; the cost of construction, repairs, and removals per ton of output is extravagant in America as compared with this country, and the capital charges of the independent iron and steel concerns of the United States are roughly three times those of British works, while the capital charges of the United States Steel Corporation are about equal to $100 per ton of productive capacity. It may well be doubted whether the British steel industry has in the immediate future as much to fear from the competition of the United States in the world's markets as from that of Germany, nor has it anything to fear from Germany, if only it fully utilizes its advantages and capabilities.

STEEL AND NICKEL.

[Paragraphs 132, 135, 141, and 185.]

STATEMENT OF J. B. WILKINSON, ATTORNEY FOR CERTAIN NEW YORK IMPORTERS OF STEEL PRODUCTS.

WEDNESDAY, November 25, 1908.

I appear before your honorable committee on behalf of George Nash Company, J. Wilckes Company, and Hermann Boker & Co., all of them New York importers of steel.

My clients are practical business men. They are not requesting that the duty be taken off steel, and they are not clamoring for much lower duties, but they do ask that what business they have left be not killed by higher duties, levied either directly or indirectly.

The tariff on steel, as has been shown, is in most cases prohibitive. Out of $332,000,000 of tariff revenue for the year 1907 only $12,000,000 or 3.7 per cent came from iron, steel, and manufactures thereof. The importation of bars, railway iron, or steel was only $133,936, against $8,600.000 exported; hoop, band, or scroll iron $129,100, as against $267,939; sheets, plates, and taggers, iron or steel, $315,000, as against $6,630,000; wire, $1,000,000 imported, $8,000,000 exported; and structural shapes, $328,000 imported, $6,900,000 exported. In 1905 the domestic production of structural shapes was over $90,000,000. In 1906 pig iron produced amounted to $505,000,000, and that imported to $7,000,000. All of these figures are taken from the last United States Statistical Abstract. Comparisons made to-day would be even more striking.

It does not seem unreasonable, therefore, to ask for importers the preservation of some remnants of the metal schedule and to call attention to the efforts that may be made to make the schedule absolutely prohibitive. I shall confine myself strictly to the paragraphs in regard to which I am commissioned to appear.

The most important of these is paragraph 135, one of the few paragraphs not prohibitive. The material covered by this paragraph is iron and steel to be manufactured in this country into products ready for consumption. The rate of duty ranges, except on the cheaper grades, from about 25 per cent to 30 per cent. On the grade imported for tool steel, for instance, valued between 3 and 4 cents a pound, the duty is over 40 per cent. An effort was made by the Treasury Department some years ago to levy 45 per cent on some of the steel covered by this paragraph. The matter was fought out in the courts for over ten years, and it was finally judicially determined that this steel should come in at the specific rates under that paragraph. Of course, a new attempt will be made to bring it in at the 45 per cent rate. Various provisions of the paragraph have been fought out through the courts, and the phraseology, therefore, has a well-settled meaning. Rather than to have further controversies, the importers are prepared to accept this paragraph as it now stands, except on grades valued at less than 4 cents, which should be assessed on a plane with grades valued at more than 4 cents. Steel valued at more than 4 cents, up to 16 cents, ranges now from 25 to 40 per cent duty.

Paragraph 141. In the phraseology of the tentative draft made by the committee there is" a nigger in the wood pile." It was the pur

pose of this paragraph to levy an additional duty upon all strips, plates, or sheets that had received a further process to give a temper or a blued, brightened, or polished surface finish. The process of tempering, bluing, brightening, and polishing is an additional process, and the importers admit the correctness of adding a corresponding additional duty.

But the new text would exact the additional duty on cold rolled material. Much of the steel covered by paragraph 135 is cold rolled and the more it is rolled the higher its value and the greater the duty under said paragraph. The thinner the gauge required the oftener the steel has to pass through the rolls. Going through the rolls gives it a certain brightness, but this brightness is simply incidental, adds no value, and is not a surface finish because it is entirely destroyed in the further course of manufacture. In being tempered or otherwise treated in the factories of this country it becomes blackened and is subsequently brightened if a surface finish is required.

There would be no justice in exacting this additional duty, which would range as high as 40 per cent on an incidental and valueless brightness which is destroyed as soon as the steel reaches this country. The words "cold rolled, cold drawn" should be omitted from the paragraph, because as it is now drawn it puts a double duty on most of the steel under paragraph 135.

It is also proposed in this text to make a new paragraph for "steel strips, strip steel, or steel in strips twenty-five one-thousandths of an inch thick or thinner," and a comparison is made with the rate for flat steel wire.

These strips are now dutiable under paragraph 135 and the thinner they are the more duty they pay. They are not drawn as wire is, but are rolled, and making them dutiable as wire would stop their importation. That matter was fought out through the courts during the last ten years. I am informed that no corset steel is imported since its inclusion in the wire paragraph.

Regarding paragraph 132, I am informed that no iron or steel sheets or wire plated with copper or nickel are produced in this country, and that none is likely to be, as the quantity required is too small. The present 45 per cent duty is prohibitive and forces the use of substitutes, just as the high duty on matting forces the use of domestic rugs. A duty of 20 per cent is all that the article will stand.

As to paragraph 185, the following is suggested:

Nickel, nickel oxide, alloy of any kind in which nickel is component material of chief value, in pigs, ingots, bars, rods, plates, sheets, and strips, 6 cents per pound; all other forms 30 per cent ad valorem.

There is practically no crude nickel imported. The world seems divided between a European combination and a combination composed of Americans and Canadians. The Europeans will not sell here and the Americans do sell in Europe.

The irrepressible conflict that has been so long waged between domestic manufacturer and importer is rapidly drawing to a close. The importer has got the worst of it. But the Government will probably need revenue from duties for some time to come, and our gigantic iron and steel industries are likely to be slightly affected by the trifling competition they have to meet under the paragraphs I have enumerated. That is all I wish to submit.

TIN PLATE.

[Paragraph 134.]

STATEMENT OF WILLIAM U. FOLLANSBEE, OF FOLLANSBEE
BROTHERS COMPANY, PITTSBURG, PA., RELATIVE TO TIN
PLATE AND KINDRED PRODUCTS.

WEDNESDAY, November 25, 1908.

Mr. FOLLANSBEE. Mr. Chairman and gentlemen of the committee, I am to speak on paragraph 134, tin plate, and incidentally 131 and 132 as being a kindred product made by the same plant.

I am glad, in speaking of the tin-plate proposition, we can say it is not now an infant industry. It is, however, the youngest of all the iron or steel products. It is also important to bear in mind that tin plate is an item that has by far the largest labor cost. I am here today representing 12 independent tin-plate plants that are located in several different States, widely scattered. I believe I am entirely justified in saying these independent plants, while they are making tin plate, are also making money.

Mr. FORDNEY. Good.

Mr. FOLLANSBEE. We are capitalized in an aggregate of $10,000,000.
Mr. GRIGGS. Did you say they are making money?

Mr. FOLLANSBEE. They surely are, sir.

Mr. GRIGGS. I am very. glad to hear it.

Mr. FOLLANSBEE. These tin plants have an aggregate of about 103 mills.

Mr. GRIGGS. Permit me to say again that I am glad to find one man who is making money.

Mr. FOLLANSBEE. I would be ashamed to be here if I were not making money.

These tin plants have a capacity of about 300,000 tons, which is equivalent to about 6,000,000 base boxes. They employ in the aggregate about 7.000 hands. Their annual pay roll is about $5,000.000. Taking the tin-plate industry in an entirety, the entire production in this country is about 600,000 tons, equivalent to 12,000,000 base boxes of coated product.

These same mills turn out a large tonnage of the same material which, however, is not coated.

The industry of itself, tin-plate manufacturing, employs about 20.000 hands and pays annually in wages about $13,000,000.

In speaking of the tin-plate industry itself, it is only proper to remind you of the fact that tin plate has been the football of the tariff. The act of 1871 undoubtedly was intended to be highly protective. In that act was written a duty of 23 cents per pound. Under it two mills started the manufacture of tin plate. After the establishment of those two mills and after they became operative, the foreign manufacturers, through the New York importers, very greatly reduced the prices. The competition was very severe, and in some way which I can hardly understand a decision or interpretation or construction of the law was rendered by Secretary Fessenden whereby he inserted in the act a comma which did not belong there. The act read, "Tin plate, and iron galvanized shall pay 2 cents per pound duty." The comma was inserted there by Secretary Fessenden, which made it read in effect, "Tin plate galvanized, or iron

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galvanized." On the face of it was an absurdity. It was ridiculous, putting two coatings on one black sheet. Nevertheless, under that ruling, instead of 2 cents per pound, it was assessed at 15 per cent ad valorem, with the result that one of these mills that was in operation went into bankruptcy and the other struggled along for a few years and eventually turned to another line of business.

The act of 1883 called for a revenue tariff of 1 cent a pound, under which no tin plate was made in this country, except that one of the plants which I mentioned made a desperate effort for a short time, but had to give it up as entirely unsuccessful.

The McKinley tariff in 1891 called for a duty of 2.2 cents per pound. That was sufficiently protective to justify capital entering into the business and learning. The industry was getting on its feet when the Wilson bill came along in 1894, with a duty of 1.2 cents and knocked the industry to its knees. The result was that the mills closed for a considerable period and a most bitter labor conflict ensued. That lasted for a period of about six months, and finally, to get work and start the mills, the laboring men took a very severe reduction. That condition existed practically until 1897, when the Dingley bill put on a new tariff of 13 cents a pound. That was sufficient at the time. The mills which started following the passage of the McKinley law had received lower wages. They had gained in experience. Some of them, true, had failed and had been purchased at sacrifice prices by others, but nevertheless the industry continued satisfactorily up to the present time under the Dingley tariff of 11 cents per pound.

When the McKinley bill was passed, Wales was sending to this country, in round numbers, 300,000 tons of tin plate. The industry to-day, as I have already said, totals about 600,000 tons, having doubled. To this can be added fully an additional 100,000 tons of black product, made by the same mills. To produce the 600,000 tons of coated products, the following is necessary: One million four hundred thousand tons of ore, 850,000 tons of coke, 400,000 tons of limestone, 750,000 tons of pig iron, 700,000 tons of steel, paying to American wage-earners approximately $20,500,000 in wages. Of this very large sum is directly paid in the tin-plate line, which is protected, $13,000,000, in round numbers-I figure it at $12,800,000-out of the $20,500,000.

I am glad, so far as the tin-plate industry at least is concerned, that the tariff does not advance the price. The average prices of tin plate under the 15 per cent ad valorem duty of the act of 1871, from the years 1872 to 1878, in United States currency, was $6.35 f. o. b. Swansea, Wales. Irrespective of the freight and other small charges, add simply the 15 per cent ad valorem duty, and that means for the seven years from 1872 to 1878 America was paying an average of $7.30 for its tin plate.

During the period of 1879 to 1891, before the McKinley bill became effective, when we had a revenue duty of 1 cent per pound, the average price f. o. b. Swansea, Wales, in United States currency, was $3.81 plus the duty, making a total of $4.81, which America was paying for its tin plate during that period.

For the last five years the average price in this country has been $3.48, showing conclusively that the home competition has tremendously reduced the cost to the American consumer.

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