ness without any protection, merely and entirely as a matter of business. Mr. GARY. Of course I can not say certainly. Mr. COCKRAN. You would not say you could not? Mr. GARY. No; I would not. Mr. COCKRAN. Therefore, so far as you are concerned, you are not prepared to state on your own responsibility as a citizen and under your oath as a witness that any protection whatever is necessary. Mr. GARY. For the United States Steel Corporation? Mr. COCKRAN. Yes: so far as the United States Steel Corporation is concerned. Mr. GARY. No. Mr. COCKRAN. Now, that is clear. There is just one thing more I want to question you about. Mr. GARY. Of course I would have to go through the list carefully, Mr. Cockran, before I could answer your question accurately. That might be true of some commodities and not true as to others; that is, it might drive us out of business so far as some commodities are concerned. Mr. COCKRAN. You are not prepared to name one now? Mr. GARY. No; the only way that could be determined is to look up the figures of cost. Mr. COCKRAN. About that, unfortunately, there is a great deal of doubt, because the figures given here in the government returns seem to be so much at variance with the expert figures. Mr. GARY. This occurs to me: I do not see how we could survive in the sheet and tin-plate business if the tariff is removed. I think we would be driven out of that business. Mr. COCKRAN. As to that, what tariff is essential to keep you afloat in that business? Do you need the present rate, or would one-half of that rate be sufficient? Mr. GARY. What is the present rate? Mr. DALZELL. The tariff is 1.5 cents a pound, which would be equal to 1.2 cents a pound under the Wilson bill. Mr. GARY. My impression is that the amount which was fixed under the Wilson bill, which was 1.2, would protect us. I think it would. Mr. COCKRAN. Could you get along with any less? Mr. GARY. I would not like to say, because I don't know. Mr. COCKRAN. I suppose you would be willing to admit that this is a fair principle on which to charge a tariff, that in the absence of very satisfactory evidence of necessity for the imposition of a tax, the tax ought not to be imposed. I am speaking now from a protective point of view, to which I do not agree at all, but which I am willing to concede is the policy of this bill. Mr. GARY. Yes; but I think the responsibility of getting that evidence and of being certain is just as great or greater with the Congressmen than it is with the manufacturers. That is what I think. Mr. COCKRAN. The fact that we are sitting here and probably will sit all through the Christmas holidays, and have given you the trouble of coming here, shows you how anxious we are about it. Mr. GARY. It is our duty to give you all the information we can; and I am trying to do that. Mr. COCKRAN. Could we go to a more responsible source for information than to the manufacturers themselves? Mr. GARY. Yes; but have not I covered the question from the standpoint of my duty, when I say that it does not seem to me it would be safe to make it lower than 1.2? Mr. COCKRAN. That is to say, you suspect or apprehend that any change below that might hurt you? Mr. GARY. No; I think that is the consensus of opinion of those who have studied the question very carefully. That seems to be the common belief. Mr. COCKRAN. You, as the head of this company, can tell whether you could go on making tin plates if we reduced this tariff to 60 cents, which would about cut it in two? Mr. DALZELL. It is 1.5 now; it was 1.2 under the Wilson bill. Mr. GARY. No; I must confess I can not answer that question. The CHAIRMAN. Some of the manufacturers came in here and recommended a reduction of 20 per cent. They said that was a sufficient protection for tin plate. Mr. GARY. I did not know that. Mr. COCKRAN. That is what these independent manufacturers think, and you say their necessity for protection is very much greater than yours. I would like to get your testimony as to how much you would need, regardless of what these weaker competitors might need. Mr. GARY. Well, I may be mistaken; but I certainly believe we could stand 10 per cent less than our competitors. Mr. DALZELL. I do not recall now who made that statement; but it seems to me it was one of your constituent members. The CHAIRMAN. I think not. Mr. GARY. There has not been any one of our members here. Mr. GARY. He is a well-posted man. I may be mistaken, and I may do him an injustice; but I believe if he could stand 1.20 we could take 10 per cent off from that and make a fair profit. Mr. COCKRAN. So that if we regulate this protective duty to the necessities of Follansbee, we would be affording you a luxurious margin? Mr. DALZELL. And if you regulate it by the United States Steel Company, what will you do to Follansbee? Mr. GARY. That is right. If you protect our competitors, you leave us more than protection. I say that the United States Steel Corporation ought to take the position of not only making public the conduct of its affairs and business, but of submitting to government control. Now, that is a radical view, and you understand that I am not speaking for the corporation when I say that. Mr. COCKRAN. I understand that. Mr. GARY. We have got to come to that, in my opinion. Mr. COCKRAN. I am questioning you now solely with reference to the effect of the tariff on your industry. Mr. GARY. Yes: I understand that. Mr. COCKRAN. I am one of those who believe that you can not make dollars for yourself without making hundreds for the community, provided you make it without any aid from the Government. I would rather see you make it than not, if you make it solely by your own efforts and not by assistance from or discrimination by the Government. I do not think the Government has any right whatever to interfere with you, because you are not in the position of a corporation exercising a public franchise. Personally I do not think there is any foreign manufacturer in the world who can compete with you, even in a neutral market, much less in this one. That is what I am seeking to find out now. I do not want you to think that when I am questioning you as to profits I am in the slightest degree critical of any profits that can be made by any man through the exercise of his labor and genius, provided it is made without any aid from the Government, because he can not enrich himself without enriching the community more. Mr. GARY. That seems to me to be a pretty fair statement. Mr. COCKRAN. I mean to say that you can not make steel cheaper without increasing the welfare of every man in this country. Now, the particular question I put to you is with that object in view. I hope to see hundreds of millions of dollars made by the industry without any assistance. Mr. COCKRAN. Now, Judge, in answer to Mr. Clark, you said you did not dominate the market. Is it not a fact that if you have competitors to-day it is because you tolerate them? Are you not in a position, if you wish, to compel Mr. GARY (interrupting). That is a pretty strong statement. Mr. GARY. It is a fact, however, that we have been friendly and of benefit to our competitors, not simply because we are so much better than anybody else, but as a matter of policy. It is good business policy for us to pay heed to the interests of others, including our competitors and our customers, the Government, and the public generally. It is good business policy. Your question, if I really understand it, answers itself, provided my facts are right-that is, if, in any particular line, by reason of our opportunities, our wealth, our organization, and our ownership of the best raw products, we can manufacture cheaper than our competitors, then with reference to that line we could drive them out of business. Mr. COCKRAN. You can get your pig iron $2 a ton cheaper than your competitors and you can produce your rails at least $2 cheaper, and therefore you could sell them, say, at 5 per cent profit, while he would be selling at an actual loss and would be hastening toward bankruptcy; so if you have competition it is because of your liberality. Is not that so? Mr. GARY. Yes; with reference to any line and on the basis of facts which I have given. Mr. COCKRAN. Take the question of rails. I understood that your explanation Mr. GARY. Of course that is true of every line of business. Mr. COCKRAN. No; it would not be true of any line of business. Mr. GARY. Take it in the line of business in which there is an element of strength, where some are superior by comparison with others, and, of course, the inferior ones would be driven out. Mr. COCKRAN. I do not think that would be true without you mention some that could be mentioned where that policy is not pursued and where every independent competitor is given the best chance possible. There is no disposition in the case of the meat industry, for instance, to do that. There are a number of meat men competing, but no one of them could drive the others out; but in this industry of yours, the steel industry, I understand you to say that all competitors are practically at your mercy for their existence on this account. You control the raw products and you control the means of transportation, and then you have also, I am free to admit, very efficient organization. With those three items there is no person can compete with you if you choose to drive them out. That is true, is it not? Mr. GARY. Of course your whole question characterizes and I do not like to do that. You put it so broadly that if I could and should answer it in the affirmative, it would almost seem like boasting. We have competitors, you know, who are just as able to take car of themselves as we are, perhaps, particularly in some lines, but I do believe large numbers would be driven out of business if we were willing to drive them out, either because we thought it was right to do so or good policy to do so. Mr. COCKRAN. To be perfectly frank about it, there is nobody who could compete with you if you made up your mind to take this market and exercise all your powers to control it? Mr. GARY. Would you not think it looked like boasting for me. to say so, if I believe it? I do not know. Mr. COCKRAN. No: I do not think so. I do not think so, because, as I say, I think your position in the trade is so pronounced that you can afford to be candid without exposing yourself to the reproach of boasting. I think you can speak the truth about that. Mr. GARY. I think we have the commanding position in the trade, and I believe we recognize our responsibility to all on account of that position. Mr. COCKRAN. I think you do. If by any chance the management of this stupendous organization should pass from hands as wise and as prudent and as just as ours into the hands of somebody more reckless and more avaricious and with less foresight, and he should undertake to exercise this province, there is little doubt that for a while, at least, he would have a monopoly of the entire trade and be without practical competition. That is one of the conditions that we are confronting. Mr. GARY. You are asking for an opinion. Your opinion is just as good as mine. Mr. COCKRAN. I think it is, on your statement. Now among the conditions, to analyze the conditions that contribute to that situation, an important element is your ownership and control of the ore supply? Mr. GARY. Yes; of course it is. Mr. COCKRAN. You practically do control the ore supply of the country? Mr. GARY. No; not now; not for the immediate future. Mr. COCKRAN. Well, the ultimate supply? Mr. GARY. Yes; I think so that is, pretty nearly. It is not absolute control. Mr. COCKRAN. Sufficient to make the competitor Mr. GARY (interrupting). For instance, take the Woodward Company, just as an illustration-excuse me for being personal-with the capital of their business they have a very large supply of ore, and it will be a long time before they get out of the business, no matter what comes. They can manufacture Mr. COCKRAN (interrupting). That is a small company? Mr. GARY. Yes; in comparison with ours. Mr. COCKRAN. This is not the only supply of the world by any means, is it? Mr. GARY. Oh, no. Mr. COCKRAN. So if your supply of the world were open to these competitors, and with the advantage of cheap transportation by water, which you discussed a short time ago, they might be able to make a stand for life and liberty? Mr. GARY. If you remove the duty from ore alone, and it remains so, no doubt that would protect the people here, who will in the future have to buy their ore, against a possible oppression on the part of our corporation. That is your question, only in my words. Mr. COCKRAN. That is a perfectly frank answer. It states the situation admirably. Then, so far as the transportation is concerned, you really have not any advantage over your competitor, so long as you exercise your duty as a common carrier in the matter? Mr. GARY. You are speaking of our company? Mr. COCKRAN. Yes. Mr. GARY. No. Mr. COCKRAN. You have no advantage whatever in transportation, unless you should abuse your duty as a common carrier? Mr. GARY. No. Mr. COCKRAN. Of course you could give yourself an advantage?* Mr. GARY. Not under the present régime. Mr. COCKRAN. I am mighty glad to hear that. That is the first adequate testimony I have heard as to the efficiency of the present inspection. Mr. GARY. The Interstate Commerce Commission and the railroad commissioners of the various States-take Minnesota, for instanceare very strict in regard to the matter. There would not be much chance for us to discriminate against our neighbors in the matter of transportation. Mr. COCKRAN. If I may return for one moment to the capitalization of the steel company, for the purpose of fixing these profits, I want to direct your attention to the common stock. For what was that issued? Mr. GARY. It was issued for the properties which we received-or perhaps I do not understand your question. Mr. COCKRAN. The total capitalization of the companies that you acquired was not nearly equal to the bonds and preferred stock of the new company? Mr. GARY. No; some received more and some less. We issued our common stock, I think, in exchange, in some cases at least, for the common stocks of other corporations, and on a basis agreed upon. Mr. COCKRAN. It was not by any means computed by those receiving it that that stock was worth par or anything of that kind? Mr. GARY. Yes; it was. Mr. COCKRAN. How did you manage to give some more and some less? There were $508,302,000. Mr. Schwab said. I think, that Mr. Carnegie declined to take anything but bonds. There were others that took bonds and preferred stock. |