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that amount, we have $27,000,000, the exact sum which was taken from the profits of 1907 to add to the surplus.]
Mr. RANDELL. It is developed, it developed this morning that some of the witnesses have testified that on the sales made abroad, the steel contracts, there was a loss; but on probing the matter they found it was a book loss, but an actual profit. Can you give us any enlightenment on what that means, where they have testified that there was a book loss, but an actual profit, in reference to foreign sales?
Mr. CARNEGIE. I can only imagine that they mean that it enabled them to run their mill. I do not know how many times they sent abroad at a loss. Was it a great number?
Mr. RANDELL. I do not know the amount, but would it mean that it was a book loss because they sold at a less price than they valued at here, but at the same time it was an actual profit because they got more than it cost them?
Mr. CARNEGIE. You had better ask a member of the steel company; I am unable to explain that.
Mr. RANDELL. Then, in reference to the export expenses that they claim they were put to now, special stress was laid upon one item especially, that the price of coal in the ground was so much more, a difference between $600 an acre and $3,000 an acre, making, as you calculate it, a difference of 30 cents in a ton of coke. That would be an extra cost in the manufacture of steel, would it not?
Mr. CARNEGIE. Yes.
Mr. RANDELL. I wanted to get your opinion on this matter. Is that extra expense, and all other extra expenses that you know anything of equal to the savings that have been made, such as utilization of gases, which they did not use before, and the using of slag, something which cost them something to remove before, and other matters of that kind, such as improved machinery; what relation would the cheapening of the product by these things have to the enhancing of its cost by the higher price of coal in the ground?
Mr. CARNEGIE. I should be happy to answer your question if I could. Now, let me say once more, the chairman has just read a report of figures, and a very long report. Can any human being listening to him get an idea of its import? It is impossible. Now, I must say this: To go into the details of a report and try to explain things, just on that statement, really I must be excused; I can not do it.
Mr. RANDELL. I will excuse you from anything of that kind. I did not mean to ask you that. I want to ask your idea on this proposition, simply, if you can give it, and that is, do these factors that operate to decrease the cost equal, in your opinion, or more than equal the factors that have tended to increase the cost of the production of steel in this country?
Mr. CARNEGIE. I am not prepared to give you an opinion on that. Mr. RANDELL. Well
Mr. CARNEGIE. All these improvements have reduced the price, have reduced the cost, but I wish again to call attention to this fact. You can not arrive at a just conclusion upon figures in a report. I have told you over and over that the costs are largely what the system of bookkeeping makes them.
The ChairMAN. You brought the figures in in this report, did you not, this morning? You alluded to them?
Mr. CARNEGIE. I alluded to the report, but I do not think I stated any figures, except I remembered the gross earnings were so much.
Mr. RANDELL. You have been questioned a long time, and I will not weary you with many questions, but I want a little information on just one or two matters. I want to get your opinion as to whether or not you think it important in this country to conserve and economize our natural supply of iron?
Mr. CARNEGIE. I have made a report on that to the Government, as to our iron resources.
Mr. RANDELL. Well, do you think it is a matter of importance that we should do so?
Mr. CARNEGIE. Certainly, but see what you mean exactly—to preserve them, you said?
Mr. RANDELL. To conserve and economize them.
Mr. CARNEGIE. Well, I do not think you can economize if you make more steel. Do you mean
Mr. RANDELL. We should prevent waste at least.
Mr. RANDELL. To be candid with you, the idea in my mind was to get your opinion as to the matter of economizing our natural resources, so important to this country at present.
Mr. CARNEGIE. Do you mean for to-day?
Mr. RANDELL. Well, with a proper idea of the future. We owe duties to the future as well as to the present?
Mr. CARNEGIE. Then my answer would depend upon your view of the future.
Mr. RANDELL. Looking forward to the next generation, say. Iron does not grow again I do not suppose. It will sometime give out.
Mr. CARNEGIE. That is the trouble. I think that the wants of this country should be met now, because there is a possibility that we shall find other fields of iron.
Mr. RANDELL. Yet you do not think there is any special necessity for economizing at present!
Mr. CARNEGIE. Economizing is such a vague word. I do not think it is right to waste a pound of anything.
Mr. RANDELL. Then you think the supply in this country such, and its location is such that the producers of steel in the United States have a natural advantage over the producers of steel in other countries, do you not?
Mr. CARNEGIE. Certainly I do.
Mr. RANDELL. Of course they would not have an advantage in the markets of Germany against German producers?
Mr. CARNEGIE. No, sir.
Mr. RANDELL. They would have an advantage in the rest of the world where the steel was not produced, as I understand it.
Mr. CARNEGIE. I think so. Wait a moment—one moment. When you go to Europe with steel, the German and the Briton would have an advantage over us in the transportation to the eastern world, would they not? They are nearer than we are.
Mr. RANDELL. In other words, unless the other producers are nearer to the market the American producer would have the advantage?
Mr. CARNEGIE. Unless what?
Mr. RANDELL. Unless the other producers are nearer to the market—have an advantage geographically—the American producer would have the advantage? Mr. CARNEGIE. Yes, but I do not think that the cost of a ton of steel rails or a ton of steel is much less with us than it is in Europe. I think they will be found very close together now. M; RANDELL. For the American market we have a great advantage? Mr. CARNEGIE. Yes, sir. Mr. RANDELL. And for the Western Hemisphere, in fact, we have an advantage, do we not? Mr. CARNEGIE. Yes, sir. Mr. RANDEEL. And we have an advantage as far as South America is concerned? Mr. CARNEGIE. I think the cost of freight from Europe to South America might possibly be about as cheap as our rate of freight. Mr. RANDELL. But is not that owing to the fact of artificial ar* in reference to transportation and not any natural reason or it Mr. CARNEGI.E. Well, the traffic between Europe and South America is much greater than ours, and a ship would want to load fully, and I think—I am not prepared to say #o the manufacturer of Britain would not reach South America cheaper than we would. Mr. RANDELL. Let me ask you in reference to armor plate. Do you think that the abolition of the tariff would have any effect on that? Mr. CARNEGIE. Have we a tariff on armor plate? Mr. RANDELL. My understanding is that it is about the same as steel rails, is it not, Mr. Chairman? Mr. DAlzell. Armor plate is not specifically named; it comes in under the basket clause, 45 per cent ad valorem. Mr. RANDELL. It is a higher per cent, then, than steel rails? Mr. CARNEGIE. Oh, armor plate is between $300 and $400 a ton, and there is less money made on armor plate than there is on the same capital invested in pig iron. I decline to go into armor plate. You know you keep a plate six days in a heating furnace— Mr. RANDELL. Do you know whether there is any combination that affects the production of armor plate in this country? Mr. CARNEGI.E. No; I do not. Mr. RANDELL. In reference to one matter I want to make my examination as short as I can, because I suppose you are weary— Mr. CARNEGIE. Oh, no— Mr. RANDELL. You said you thought it was fair that the company should receive $28 for steel rails because the railroads are willing for
that, and it is an agreement between the consumer and the manu
too. By the consumer I suppose you mean the railroad comanies : p Mr. CARNEGIE. They are the only consumers of steel rails. Mr. RANDELL. But, Mr. Carnegie, in your opinion, would not an arrangement between transportation companies and the manufacturers of steel rails and the general classes and kinds of steel that are used in structural works, and in the general business of the country, affecting the prices of the product necessary to be used by railroads, and in reference to prices of transportation—such an agreement as that between the transportation companies and the manufacturers
would have a great effect upon the mass of consumers in this country, the general public, that have to use the transportation and have their goods carried over the rails of the transportation companies?
Mr. CARNEGIE. That is a very long question. Mr. RANDELL. I know; but the gist of it is this: Would not a combination between the transportation companies and the manufacturers, no matter how satisfied they might be in reference to prices and rates, yet the public might be robbed by them in combination that way better than it could be if they were not in combination?
Mr. CARNEGIE. In other words, your question means that if the railroad companies and the steel manufacturers mutually agreed upon prices for rails and rates? Mr. RANDELL. Yes. Mr. CARNEGIE. Yes, they might if rates were included.
Mr. RANDELL. Suppose they put the rails at $50 a ton, that would make it that much more expensive to build a railroad. Suppose the other arrangements between them, however, were satisfactory, so that the railroad company was able to pay $50 a ton for the steel rails that they now get for $28 a ton; that they had advantages in reference to rates that applied directly or indirectly to all rates, and therefore that the manufacturer would get a higher price by the consent of the carrier, and the carrier would get a higher price by consent of the steel companies, but the general consuming public would get the worst of it, is not that a fact?
Mr. CARNEGIE. I have stated that from everything I have heard and know, I think that arrangement with the railroad companies about steel rails is a very fair arrangement. I never heard that it was based upon any concessions in the rates.
Mr. RANDELL. I will ask you, then, do you not think it a dangerous situation when the steel manufacturers and the railroad companies can make such arrangements and no one has the power to undo them?
Mr. CARNEGIE. The railroad companies and the steel companies are in the relation of a manufacturer and a seller, the railroad companies are buyers.
Mr. RANDELL. Do you not think the general public is interested in that; because they must pay to the railroad companies, they must pay, in the way of rates that they give to the railroads, more money than is invested in the railroads, and the railroads charge up to the public the cost as a part of their investment?
Mr. CARNEGIE. Well, the varying of that is so slight, if it exists, the rails that a railroad company buys are not a very great thing. When the Pennsylvania Railroad buys for its whole system, of course that is a great thing, but I must say that I see no objection whatever, no connection between the general consumer of steel and any agreement made, mutual agreement, between the railroads and the steel company if rates be not included.
Mr. RANDELL. I am speaking of the effect it would have upon the general business of the country. Suppose they just doubled the price of rails; suppose they doubled the price of other things to correspond. It suits the producer of steel and iron. It suits the carrier of goods, and then each one is getting a higher price by mutual agreement?
Mr. CARNEGIE. Yes.
Mr. RANDELL. But somebody has to pay it. Now, is it not a fact that the general public has to pay that?
Mr. CARNEGIE. In reply to that, I wish to state again that it occurs to me-I have been interested in the matter—that when I heard of that I thought it was not an excessive price for steel rails—the price of $28 a ton.
Mr. RANDELL. But you spoke of it, that we ought to guard against the danger of these companies in the future, at some time, perhaps, using the tariff to levy a higher rate on the people than they otherwise could levy. Now, on that same line, do you not think it is not very dangerous to the public for the steel companies and the railroad companies to combine and agree in reference to the price of steel and the price of transportation ?
Mr. CARNEGIE. Do you call that a combination, when the seller and buyer agree as to their price for rails?
Mr. RANDELL. I think so, when it affects the general public, the public which has to pay the bills.
Mr. CARNEGIE. I can not agree with you. That is what takes place in every sale and purchase. I can not agree as far as I see that.
Mr. RANDELL. I wanted to get your idea.
Mr. CROZIER. Mr. Chairman, as I am going to comment upon Mr. Carnegie's testimony, I will be glad to have him remain.
Mr. CARNEGIE. Certainly.
STATEMENT OF ALFRED OWEN CROZIER, OF WILMINGTON, DEL.,
WHO REPLIES TO ANDREW CARNEGIE.
MONDAY, December 21, 1908. (The witness was sworn by the chairman.)
Mr. CROZIER. Mr. Chairman, a portion of my statement, of course, will be my opinion and will be accepted as such.
I must say that I have been highly entertained to-day, but I have been very much reminded of a definition which I heard, and you have undoubtedly heard, that speech is the instrument with which men conceal their thoughts. However, during the testimony to-day I have been very much surprised as to a point of view industrially that I did not suppose existed in the mind of the gentleman who has enlightened us upon the subject.
As his testimony is public, and as his recent article in a magazine was a public article, I assume that he has no objection to the plainest possible criticism of that article.
Mr. CARNEGIE. Not at all.
Mr. UNDERWOOD. Before you go on with your statement, will you state what business you are engaged in. Are you a manufacturer?
Mr. CROZIER. No, sir. With all due apologies, I would say that I am the author of The Magnet, a recent economic novel, and I am a lawyer and some other foolish things. I have no interest in any