Ore Scale. Coke Limestone Material Labor. Salaries EXHIBIT C. Total cost f. o. b. cars of a furnace located in southern Ohio. The following letter, giving the costs and selling price and the net gain or loss for a series of years, is valuable and is reproduced in full: Yours November 27th received. Below is given the information regarding price, cost of production, etc., covering ten years, which we think is what you want. Selling expenses, losses, improvements and repairs, depreciation, discount and interest, etc., are closely deducted always. We give the above in confidence for what it may be worth to you in making up your brief. We can still make iron at the 1898 cost if labor at the ore and coal mines, on the railroad, and at the furnace is put back on the basis of $1 per day for common laborers, or 50 per cent reduction on everything, from present costs. Only sentimentalists and theorists want such conditions. EXHIBIT E. Letter below is from a southern Ohio furnace and is reproduced in full, as it shows the cost and selling price: Our fiscal year ends on March 31, and we have statistics here for two years, beginning April 1, 1906, and ending March 31, 1908, which shows that the average cost for that period of our iron was $16.19, and the average price of iron shipped during the same period was $17.82. We think that the average of the two years named is as fair a comparison as can be made. EXHIBIT F. Detailed cost of 119,081 tons of basic and Bessemer manufactured during Average yearly cost per ton manufacturing standard Bessemer and basic pig iron furnace plant, Mahoning and Shenango valleys, 1903-1907, inclusive, two to four furnaces in operation. Average yearly selling price per ton, standard basic and Bessemer pig iron, f. o. b. cars, same furnace plant: Plant in the Middle West. Detailed cost of 140,359 tons of pig iron produced in 1907-basic malleable foundry. The following is from a furnace that produces its own ores and coke, and is located south of Mason and Dixon's line: Your circular letter of the 27th ultimo relative to the hearing before the Ways and Means Committee in Washington was received some days since, but it has been impossible, owing to absence, for us to reply earlier. For the year 1907 our net sales of pig iron f. o. b. cars at furnace averaged $19.43. The average was rather high, owing to our having been fortunate in contracting well ahead at high figures. The cost of producing iron was $14.21. Our net selling price f. o. b. cars at furnace for the years given below were as follows: Making the average for the nine years of $14.59. For the year 1908 to the 1st instant our average net sales were $14.51. About 50 per cent of our product is shipped to eastern Pennsylvania and New England tide-water points. Our freight to such Pennsylvania points is $3.25, and to New England $4.25 per gross ton. EXHIBIT J. The following letter is from E. C. Means, general manager of the Low Moor Iron Company, and is reproduced by permission: Replying to your letter of the 27th instant, the average cost of making pig iron in Virginia for the five years 1903 to 1907, inclusive, where furnaces owned and operated their own ore mines, coal mines, limestone quarries, and coke ovens, approximately was as follows: $14.17 total costs, exclusive of freight on pig iron to customers. Freight to New York, $2.80, by rail and water (the lowest rate) make total delivered price in New York $16.97. Adding $1 for reasonable profit for investment makes fair selling price New York $17.97 per ton. During the five years above named, common labor in Virginia was paid a daily wage varying from $1.75 per day of ten hours; average daily wage during that period was about $1.50. This, however, includes only common day labor at furnaces, ore mines, and limestone quarries. In West Virginia at the coal mines wages averaged $1.75 per day of nine hours. The writer's opinion of the revision of the tariff is that present tariff of $4 per ton should apply when No. 2X iron silicon 2.25 to 2.75 per cent sulphur under 0.05 is selling at $18 f. o. b. New York Harbor; that for each $1 advance in the price of iron, tariff should be reduced 50 cents per ton; that is to say, when 2X iron is selling at $19 New York Harbor, tariff should be $3.50 per ton; when it is selling at $20, the tariff should be $3 per ton. The tariff should not, however, be less than $2 per ton, otherwise the revenue derived from the tax on iron would be less than if maintained at $2. The Virginia situation is as outlined in William W. Hearne's letter to you under date of December 1, copy of which I have, except that Mr. Hearne's letter does not go into costs as closely as this letter. Referring to that portion of your letter asking for the cost of pig iron during the year 1907 and the tonnage, would state that during 1907, on account of the high prices for iron, we used a considerable portion of lake ore and thereby increased our cost of production, so that for the year 1907 we show higher costs than was the average in Virginia. Referring to selling price during a series of years, say five or ten years, I do not believe that statistics as to the average selling price would fairly represent the market price. During part of that period, by selling so far in advance, our average returns were lower than the market price, while on the other hand, by refusing to sell during the latter part of 1906 we reaped nearly the full benefit of the advance of 1907. There is also some question in my mind as to whether the average selling price of the past five or ten years would govern the future selling prices. It seems more essential that costs based upon rates of wages should determine whether the Virginia furnace interests are entitled to protection through the tariff, and with daily wages of $1.50 for common labor under a tariff of $4 per ton, there is only a fair profit to the Virginia manufacturer. Pig iron made in Virginia is sold to the general trade. None of the companies have finishing plants. Two-thirds of the Virginia pig iron production is sold in the eastern or seaboard States. EXHIBIT K. I have the following letter from John B. Newton, vice-president Virginia Iron, Coal and Coke Company, reproduced by permission: In line with my letter to you of yesterday on the subject of proposed revision of the tariff on pig iron, I am to-day inclosing herewith tabulated statement showing the amount of pig iron produced by this company, the cost of same per ton, and an analysis of that cost for three years-the year ended June 30, 1906, the year ended June 30, 1907, and the year ended June 30, 1908. An examination of this statement will show that practically 50 per cent of the cost of our pig iron is labor, consequently any reduction that we might be forced to make on account of foreign competition would have to be made principally in labor. Our freights on raw materials are very low, and the item of "other expenses" is as low as we could ever reasonably hope to get it. An examination of the statement will show further that for three years the cost of producing pig iron has steadily and rapidly increased, the total increase in cost during the three years being $1.90 per ton, of which increase labor received the benefit of $1.07 per ton. As noted on the inclosed statement, the item of "Other expenses" included tools and supplies, royalties, general expenses, repair fund, and depreciation of improvements, but does not include insurance and taxes, bond interest, development, and dead rents. In the item of "Supplies," which is principally coal consumed under boilers, there is quite a percentage of labor which might properly have been included under the labor cost, but was not. The greater portion of the item of "General expenses" being salaries and clerk hire, might, I think, properly have been included under labor cost also, but was not. Our principal market for pig iron is in the Eastern States a large portion of our product going to New York, Philadelphia, Boston, and Providence. Our average freight rates from furnace to those ports being $3.25 per ton, our product for the year ended June 30, 1906, would have cost us laid down at these ports $16.37 per ton; for the year ended June 30, 1907, $17.68 per ton, and for the year ended June 30, 1908. $18.28 per ton, whereas English iron can be laid down in New York, duty paid, to-day with profit to foreign manufacturers added, at $18 per ton. The inclosed statement shows only operating cost. and all reference up to this point made in this letter as to cost has reference to operating cost only. While I do not contend that the amount paid for taxes, insurance, bond interest, development, and dead rents should be properly charged to the cost of producing a ton of pig iron, yet it is certainly fair to consider the fact that with our company these items in 1906 amounted to $1.70 per ton of pig iron produced; in 1907 to $1.85 per ton, and in 1908 to $2.85 per ton. It will be seen, therefore, by adding these amounts to the costs as set forth in the inclosed statement, our selling price in 1906 would necessarily have been in excess of $14.82 f. o. b. furnaces; in 1907, $16.31, and in 1908, $17.88 before any net profit at all could have been earned. By adding the average freight rate on a ton of pig iron from our furnaces to our eastern ports to the above figures, it will be seen at a glance that the maintenance of the present tariff on pig iron is a matter of very grave importance to us. Our company is the largest producer of pig iron in this section of the country, and in fact is the largest employer of labor in the State of Virginia, common carriers excepted. We employ, when running to full capacity, between 5,000 and 6,000 men, and contribute to the support of probably 25,000 people. There are numerous other manufacturers of pig iron in this State, the pig-iron industry being one of the State's principal industries. It is hard to imagine anything that could happen to the working people of this State that would so seriously affect so large a number of men, as such tariff legislation as would make it impossible for our pig-iron manufacturers to compete with foreign iron. In the light of the facts as they exist to-day, we feel that a radical reduction of the tariff on pig iron would be disastrous to the iron industry in this section, and any reduction whatever would be very harmful to it. |