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Full text of "Investigation of concentration of economic power. Hearings before the Temporary National Economic Committee, Congress of the United States, Seventy-fifth Congress, third Session [-Seventy-sixth Congress, third Session] pursuant to Public Resolution no. 113 (Seventy-fifth Congress) authorizing and directing a select committee to make a full and complete study and investigation with respect to the concentration of economic power in, and financial control over, production of goods and services .."

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INVESTIGATION OF CONCENTRATION 
OF ECONOMIC POWER 



HEARINGS 

BEFORE THE 

TEMPOEAEY NATIONAL ECONOMIC COMMITTEE 
CONGKESS OF THE UNITED STATES 

SEVENTY-SIXTH CONGRESS 

SECOND SESSION 
PURSUANT TO 

Public Resolution No. 113 

(Seventy-fifth Congress) 

AUTHORIZING AND DIRECTING A SELECT COMMITTEE TO 
MAKE A FULL AND COMPLETE STUDY AND INVESTIGA- 
TION WITH RESPECT TO THE CONCENTRATION OF 
ECONOMIC POWER IN, AND FINANCIAL CONTROL 
OVER, PRODUCTION AND DISTRIBUTION 
OF GOODS AND SERVICES 



PART 18 



IRON AND STEEL INDUSTRY 
IRON ORE 



NOVEMBER 1, 2, AND 3, 1939 



Printed for the use of the Temporary National Elconomic Committee 




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
124491 WASHINGTON : 1940 



TEMPORARY NATIONAL ECONOMIC COMMITTEE 

(Created pursuant to Public Res. 113, 75th Cong.) 

JOSEPH C. O'MAHONEY, Senator from Wyoming, Ctiairman 

HATTON W. SUMNERS. Representative from Texas, Vice Chairman 

WILLIAM H. KINO, Senator from Utah 

WILLIAM E. BORAH, Senator from Idaho . 

CLYDE WILI TAMS, Representative from Missouri 

B. CARROLL i EECE, Representative from Tennessee 

THURMAN W. ARNOLD, Assistant Attorney General 

•WENDELL BERGE, Special Assistant to the Attorney General 

Representing the Department of Justice 

JEROME N. FRANK, Chairman 

*LEON HENDERSON, Commissioner 

Representing the Securities and Exchange Commission 

-GARLAND S. FERGUSON, 'Commissioner 

•EWIN L. DAVIS, Commissioner 
Representing the Federal Trade Commission 

IS AD OR LUBIN, Commissioner of Labor Statistics 

*A. FORD HiXRICHS, Chief Economist, Bureau of Labor Stitistics 

;t"('i:s'-'ntiiii; ihe Department of Labor 

JOSEPH J. u'COXXELL, Jr., Special Assistant to the General Counsel 
Ropreienting tlu Department of the Treasury 

CLARENCE AVILDSEN, Special Adviser to the Secretary 
Repn!sentius the Department of Commerce 

J AMES R. BRACKETT, Executive Secretary 
'Alternates. 

II 



CONTENTS 



Testimony of — Page 

Butler, Emmett, president, Butler Bros., St. Paul, Minnesota. 10290-10389 

Butler, Patrick, Butler Bros., St. Paul, Minnesota 10291-10389 

Greene, Edward B., president, Cleveland-Cliffs Iron Co., Cleveland, 

Ohio 10235-10283, 10294-10389 

Hoyt, Elton, II, manager and partner, Pickandp, Mather & Co., 

Cleveland, Ohio 10218-10234, 10294-10389 

Humphrey, George M., president, M. A. Hanna Co., Cleveland, 

Ohio -- 10283-10290, 10294-10389 

Oglebay, Crispin, president, Oglebay, Norton & Co., Cleveland, 

Ohio 10237-10243, 10294-10389 

Statement of Arnold, Thurman W,, Assistant Attorney General of the 

United States, Washington, D. C ,-. 10215-10216 

History and background of the iron ore industry 10220 

The major iron ore producers 10224 

Financial connections between ore companies and steel companies 10225 

Acquisition of stock in Oglesbay, Norton Co. by Cleveland-Cliffs Iron Cb_ 10237 

Cyrus S. Eaton project for Midwestern steel merger 10256 

Stabilization and competition 10271 

Formation of the National Steel Corporation 10284 

The Rowe Mine 1 0286 

Pickands, Mather-Butler Bros., ore contract 10291 

The "United Front" policy.. 10298 

The Lake Erie base price 1 0305 

Price rigidity 10311 

Iron ore pricing 10329 

Establishment of the base price ^ ■:0:.';52 

Variations from the base price 10337 

Effect of cutting the market price 103 '3 

Limited market for ore sales 10350 

Price discussions i 0352 

Significance of ore prices to integrated and nonintegrated steel producers. 10300 

Lake freight rates on iron ore 10372 

Question of modification of existing laws to allow more freedom for business- 
men . 10382 

Iron ore reserves 10387 

Schedule and summary of exhibits v 

Wednesday, November 1, 1939 10215 

Thursday, November 2, 1939 10267 

Friday, November 3, 1939 ... 10329 

Appendix 10391 

Supplemental data 10446 

Index _ . _ T 



SCHEDULE OF EXHIBITS 



Number and summary of exhibits 



Intro- 
duced 
at page 



1349. Pamphlet, prepared by the staff of the Department of 

Justice, entitled "Major Characteristics of the Iron 
and Steel Industry" 

1350. Map showing movement of Lake Superior iron ore and 

of Eastern and imported ore from sources to consum- 
ing districts, 1937 

1351. Chart: Percentage of Lake Superior iron ore shipments 

by major iron ore companies, 1937 

1352. Table: Relative industry position of major iron ore com- 

panies, 1937 

1353. Chart: Financial connections between major iron ore 

companies and steel companies 

1354. Appears in Hearings, Part 17, appendix, p. 9929 

1355. Letter, dated February 17, 1930, from Crispin Oglebay, 

president, Oglebay, Norton & Co., to E. B. Greene, 
Cleveland-CliflFs Iron Co., outlining the advantages 
to the companies involved of the acquisition of inter- 
ests in Oglebay, Norton by the Cliffs Co 

1356. Letter, dated May 29, 1930, from Wm. G. Mather, presi- 

dent, Cleveland-Cliffs Iron Co., to S. R. Elliott, man- 
ager of the mining department of the company, out- 
lining the advantages to the Cliffs Co. of the acqui- 
sition of interests in Oglebay, Norton & Co 

1357. Letter, dated January 27, 1930, from Wm. G. Mather, 

president, Clevelend- Cliffs Iron Co., to Crispin Ogle- 
bay, president, Oglebay, Norton & Co., discussing the 
advantages of the proposed acquisition plan between 
the companies 

1358. Telegram, dated January 26, 10:17 P. M. (1930), from 

Crispin Oglebay, president, Oglebay, Norton & Co., 
to W. W. White, Cleveland- Cliffs Iron Co., stating 
that "as individuals we are heartily in favor of Cleve- 
land-Cliffs Co. acquiring Oglebay, Norton Co. under 
the proposed plan, believing that this merger tends to 
stabilize the market value of ore" 

1359. Inter-office memorandum, dated December 11, 1933, by 

E. B. Greene, president, Cleveland-Cliflfs Iron Co., 
outlining negotiations taken by his company in trying 
to persuade the Republic Steel Co. to let its ore 
properties be managed by it 

1360. Statement of Wm. G. Mather, chairman, to the board 

of directors of Otis Steel Co., on August 2, 1934, in 
regard to the proposed consolidation of Otis Steel Co. 
with Republic Steel Co 

1361. Memoranduin. dated April 14, 1936, by E. B. Greene, 

president, Cleveland-Cliflfs Iron Co., relating his con- 
tacts with Thomas Girdler, president. Republic Steel 
Corp., on the subject of investments in steel companies. 

1362. Letter, dated September 4, 1928, from Patrick Butler, 

Butler Brothers, to his father, Emmett Butler, presi- 
dent, Butler Brothers, relative to the sale of ore to 
Pickands, Mather & Co 

' On file with the Committee. 



10217 

10218 

10224 

10224 

10225 
10235 



10240 



10240 



10244 



10250 



10259 



10260 



10263 



10292 



VI 



SCHEDULE OF E,XIIIBITS 



Number and summary of exhibits 



lutro- 
duced 
at page 



Appears 
on page 



1363. 



1364. 



1364^A. 



1365. 



1366. 



1367. 
1368. 
1369. 



1370. 



1371. 



1372. 



1373. 



1374. 



1375. 



1376. 



1377. 



Letter, dated September 19, 1934, from E. B. Greene, 
president, Cleveland-Cliffs Iron Co., to G. M. Hum- 
phrey, president, M. A. Hanna Co., regarding the 
appointment of A. C. Brown as a vice president of the 
Cliffs Co 

Letter, dated August 11, 1934, from E. B. Greene, 
president, Cleveland-Cliffs Iron Co., to S. R. Elliott, 
manager of the mining department of the company, 
regarding the labor and tax situations in mining 
operations 

Letter, dated October 17, 1936, from E. B. Greene, 
president, to S. R. Elliott, manager of the mining de- 
partment, Cleveland-Cliffs Iron Co., regarding 
working hours of employees of the company 

Telegram, dated May 8, 1937, from A. C. Brown, vice 
president, to E. B. Green, president, Cleveland-Cliffs 
Iron Co., advising Mr. Greene of a proposed meeting 
of officials of iron ore companies 

Letter, dated May 24, 1938, from E. B. Greene, presi- 
dent, to S. R. Elliott, manager of the mining depart- 
ment, Cleveland-Cliffs Iron Co., regarding the em- 
ployment of Fayette Brown, Jr 

Chart: Iron ore prices, 1925-1939 

Chart: Lake freight rates on iron ore, 1925-1939 

Letter, dated April 10, 1934, from Patrick Butler, Butler 
Brothers, to his father, Emmett Butler, president of 
that company, regarding the price of iron ore 

Letter, dated March 28, 1929, from Patrick Butler, 
Butler Brothers, to his father, Emmett Butler, presi- 
dent of that company, regarding the quotation of iron 
ore prices to the Ford Motor Co 

Letter, dated August 4, 1931, from Patrick Butler, Butler 
Brothers, to his father, Emmett Butler, president of 
that company, regarding the quotation of a price on 
iron ore 

Letter, dated March 25, 1931, from Patrick Butler, 
Butler Brothers, to his father, Emmett Butler, presi- 
dent of that company, regarding submission of iron 
ore prices to the Ford Motor Co 

Letter, dated March 27, 1929, from Patrick Butler, 
Butler Brothers, to his father, Emmett Butler, presi- 
dent of that company, retarding the quotation of iron 
ore prices 

Letter, dated April 16, 1935, from C. L. Wyman, Butler 
Brothers, to Emmett Butler, president of that com- 
pany, regarding the price of iron ore to be sold the 
Ford Motor Co 

Letter, dated April 23, 1935, from H. A. Raymond, Cleve- 
land-Cliffs Iron Co., to E. B. Greene, president of that 
company, regarding iron ore prices and the absorption 
of freight rates 

Letter, dated January 18, 1930, from Ernest Weir, chair- 
man of the board. National Steel Co., to George M. 
Humphrey, president, the M. A. Hanna Co., inquiring 
as to the advisability of an increase in the price of iron 
ore 



Letter, dated February 28, 1937, from A. C. Brown, vice 
president, to E. B. Greene, president, Cleveland-Cliffs 
Iron Co., regarding sales of iron ore and the prices at 

which it was to be sold 

1378. Letter, dated March 28, 1934, from Emmett Butler, 
president, to his son, Patrick Butler, Butler Brothers, 
regarding the price of iron ore 



10295 



10296 



10297 



10300 



10304 
10310 
10310 



10321 
10342 
10342 
10346 
10351 
10351 
10354 

10362 

10370 
10371 



104 36 



C) 



10436 



> On file with the Committee. 



SCHEDULE OF EXHIBITS 



VII 



Number and summary of exhibits 


Intro- 
duced 
at page 


Appears 
on page 


SUPPLEMENTAL DATA 

Unnumbered. Narration delivered by Edwin C. Hill during the 
showing of the moving picture, "Steel, The Ser- 
vant of Man", before the T. N. E. C. on Novem- 
ber 1, 1939 - -- -- 




10446 


Unnumbered. Letter, dated November 9, 1939, from Elton Hoyt, 
IT, manager and partner, Pickands, Mather & 
Co., to Senator Joseph C. O'Mahoney, chairman 
of the committee, in reply to the Chairman's sug- 
gestion that Mr. Hoyt recommend to the Com- 
mittee his ideas as to what businessmen might 
feel free to do without violating the antitrust 
laws _____ 




10453 









INVESTIGATION OF CONCENTEATION OF ECONOMIC POWEK 



WEDNESDAY, NOVEMBER 1, 1939 

United States Senate, 
Temporary National Economic Committee, 

Washington, D. C. 

The committee met at 10:40 a. m., pm^suant to adjournment on 
Friday, October 27, 1939, in the Caucus Room, Senate Office Building, 
Senator Joseph C. O'Mahoney presiding. 

Present: Senator O'Mahoney, (chairman) ; Representative Sumners 
(vice chairman); Senator King; Representatives Reece and WilHams; 
Messrs. Arnold, Henderson, Avildsen, Lubin, O'Connell, and Brackett. 

Present also: Willard Thorp and John V. W. Reynders, represent- 
ing the Department of Commerce; Willis Ballinger, representing the 
Federal Trade Commission; Theodore Kreps, economic adviser to the 
committee; A. H. Feller, special assistant to the Attorney General; 
John W. Porter, Irving B. Glickfeld, Hyman B. Ritchin, Ward S. 
Bowman, and Monroe Karasik, Department of Justice. 

The Chairman. The committee will please come to order. This 
hearing will be opened by Assistant Attorney General, Mr. Thurman 
Arnold. Mr. Arnold. 

STATEMENT BY MR. ARNOLD 

Mr. Arnold. Mr. Chairman, this morning the Department of 
Justice begins the presentation of testimony and materials relating 
to the iron and steel industry. The importance of a study of this 
industry in any consideration of national economic problems cannot 
be emphasized too strongly. Our industrial civiHzation is fundamen- 
tally based on steel. Automobiles, agricultural implements, machin- 
ery, containers, railroads, shipbuilding, construction, and innumerable 
other industries depend on the steel industry for their most essential 
raw material. The steel industry itself constitutes a major segment 
of our economy. It ranks first among manufacturing industries in 
the number of its employees and third in the value of product. The 
total capital investment by the companies who are its members is in 
excess of $4,000,000,000; the annual value of its products is nearly 
$3,000,000,000; and it employs in the neighborhood of 600,000 people. 

In his message to the Congress requesting the investigation with 
which this committee has been charged the President said, "One of 
the primary causes of our present difficulties lies in the disappearance 
of price competition in many industrial fields, particularly in basic 
manufacture where concentrated economic power is most evident and 
where rigid prices and fluctuating pay rolls are general". It is widely 
believed that these phenomena are characteristic of the iron and stee' 

10215 



10216 CONCENTRATION OF ECONOMICS POWER 

industry. The existence in this industry of a small number of verj 
large producers is a matter of common information. The charge is 
frequently made that this concentration is accompanied by other 
manifestations of monopoly power and that the prices of many steel 
products are artificipJly maintained. 

For a number of months the Department of Justice has conducted 
a painstaking study of the practical implications of this concentration 
and of the extent to which this charge may be warranted. With the 
cooperation of members of the industry, facts and statistics have been 
and are being assembled and analyzed. These should tell us more 
about the industry than we have ever known before. 

The hearings which begin today will be concerned mainly with 
price, the primary regulating mechanism in a free, competitive 
society. But while the emphasis will be upon price — what it is, how 
it is made, what factors are responsible for its behavior — other subjects 
within the sphere of this committee's inquiry will be touched upon. 
It should be emphasized that these hearings deal only with a part of 
the Department's study. From, time to time within the next few 
months reports on other aspects of the industry will be made to the 
committee. 

Our aim at this time is to show how the industry actually operates 
in the present and how it has operated in the very recent past. So 
far as possible matters primarily of a theoretical nature have been 
eliminated. 

I must emphasize that in these hearings the Department takes no 
attitude for or against the industry or for or against any particular 
company. Nor will it here present any judgment upon the industry 
or make any recommendation with respect to public policy. Such 
judgments and recommendations will be presented in due time after 
the material has been placed before the committee. At this time, we 
conceive our task to be to show you the facts. 

Important as a consideration of this industry would be in normal 
times, it is all the more important when we stand under the shadow of 
the European war situation. Steel is the metal of war as well as of 
peace. Extraordinary demands will be made upon the industry in 
the near future. With these demands will come responsibilities which 
the industry must meet if our own national well-being is not to suffer 
as a result of Europe's war. We, as neutrals, have a great task before 
us — to see to it that our economy is not distorted because of someone 
else's war. It was therefore with considerable gratification that the 
Department noted some weeks ago the decision of the major units of 
the industry to confirm existing published prices to the end of the 
current year. I do not pass judgment at this time on the problems 
which wUl beset the industry in the coming difficult months, but I 
confidently trust that the patriotic spirit which prompted that decision 
will continue to rule the industry's decisions in the future. 

Now, Mr. Chairman, I will turn the presentation of our material 
over to Mr. A. H. Feller. 

The Chairman. Mr. Feller, do you want to present a statement? 

Mr. Feller. At the outset, Mr. Chairman, I should like to offer 
for the record the pamphlet entitled "Major Characteristics of the 
Iron and Steel Industry." This pamphlet was prepared by the staff 
of the department and the text which it contains is in the nature of 
background information? We have tried so far as possible to eliminate 



CONCEx\TRATI()N OF PX'^^NOMIC POWER 10217 

anything of a controversial nature. I suggest that it would be useful 
to the committee to refer to the text, charts and tables in this pamphlet 
from time to time during the hearing. 

The Chairman. Without objection the pamphlet may be made a 
part of the record. 

(The pamphlet referred to was marked "Exhibit No. 1349" and is 
included in the appendix on p. 10391.) 

The Chairman. A few days ago, before the hearing was scheduled 
to have opened, representatives of one of the large steel companies, 
the United States Steel Corporation, approached the Department of 
Justice and the chairman of the committee with the suggestion that 
a motion picture showing the steel industry as a unit might be 
advantageous to the committee. The committee was quite agreeable 
to that presentation. It will now be made before we proceed with 
the testimony. 

In order to make it convenient I will ask the members of the 
committee to take their seats in these chairs that face the screen. 

(The motion picture "Steel, the Seraant of Man," as produced 
for the United States Steel Corporation, was sllo^vn to the committee. 
The narration by Mr. Edwin C. HiU is included in the appendix 
on p. 10446.) 

The Chairman. The committee will please come to order. Have 
the photographers completed their work? 

Before turning the hearing over to Mr. Feller, who will act on 
behalf of the Department of Justice in presenting the testimony, it 
may be appropriate for the chairman to express the appreciation 
which the committee feels for the opportunity of witnessing this 
motion picture which has just been throwai on the screen. I am sure 
nobody could faO to be impressed by the magnitude of tliis industry. 
Nobody could fail to be impressed by the precision of the machines 
which have been made b^ men to mold steel into the various forms 
in which it is used by society. 

I notice that the picture was entitled "Steel, the Servant of Man," 
and that on numerous occasions, as the scenes were being flashed 
before our eyes, Mr. Edwin C. Hill called attention over and over 
again to the fact that the purpose of this industry is actually to 
serve mankind. 

I couldn't help but think that this is one industry, only one; this 
committee has just listened for 3 weeks to part of the story of the 
petroleum industry. It has been studying numerous other industries, 
all of which are bmlt probably on the same proportions as the steel 
industry, but the thought which is left with me is that while this 
physical perfection has been attained by mankind in building these 
wonderful industries, there still remains the discovery of the formula 
by which the human resources of society may be conserved as well 
as the material resources are conserved as indicated by this picture. 
That, I take it, is the fundamental work of this committee, to study 
how we may gear together all of these tremendous industries that 
mankind has developed so as to make it possible to provide security 
for all men, so as to provide a solution for the problem of unemploy- 
ment — unemployment of men and unemployment of capital — which 
remains with us in spite of all these tremendous achievements of 
industry. 



10218 CONCENTRATION OF ECONOMIC POWER 

I am sorry to have taken this time to make these remarks, but the 
picture seemed to me to indicate the desirability of pointing out what 
seems to me to be the primary lesson of this picture. 

Mr. Feller, are you ready to proceed? 

Mr. Feller. Mr. Chairman, I think it might be of some use to 
the committee if I outlined in a very few words the general substance 
with which this hearing will deal. We will start literally from the 
ground up, with the iron-ore industry, the testimony on which will 
take the next few days. We will then proceed to consideration of 
the general price policies of the steel industry and then, due to the 
complexity of the industry, center our attention on price behavior 
and price policies in certain specific product categories, some of the 
products that the committee saw in the process of manufacture in 
the motion picture. 

Finally we will conclude the hearing with a consideration of exports, 
the relations between the American steel industry and the rest of 
the world. 

In beginning the iron-ore industry we wiU first call on Mr. Elton 
Hoyt. 

The Chairman. Do you solemnly swear that the testimony you 
are about to give in this proceeding shall be the truth, the whole 
truth, and nothing by the truth, so help you God? 

TESTIMONY OF ELTON HOYT H, MANAGER AND PARTNER. 
PICKANDS, MATHER & CO., CLEVELAND, OHIO 

Mr. Hoyt. I do. 

Mr. Feller. Mr. Hoyt, will you give your full name to the 
reporter? 

Mr. Hoyt. Elton Hoyt, II. 

Mr. Feller. And the company with which you are associated? 

Mr. Hoyt. Pickands, Mather & Co. 

Mr. Feller. And what is your position in that company? 

Mr. Hoyt. I am manager and partner. 

Mr. Feller. How long have you been a member of this part- 
nership? 

Mr. Hoyt. I think since '18. 

Mr. Feller. What are your general duties? 

Mr. Hoyt. Well, they are principally executive, but my experience 
has come up primarily through the iron-ore end of the business. 

Mr. Feller. You are also, are you not, a director of the Interlake 
Iron Corporation? 

Mr. Hoyt. I am. 

Mr. Feller. AndB.a director and vice president pf Interlake 
Steamship Co.? 

Mr. Hoyt. That is correct. 

Mr. Feller. And also president and director of the Mather Iron 
Co.? 

Mr. Hoyt. That is correct. 

Mr. Feller. I offer for the record the map entitled "Movement 
of Lake Superior Iron Ore." 

The Chairman. It may be received. 

(The map referred to was marked "Exhibit No. 1350" and is in- 
cluded in the appendix facing p. 10424.) 



CONCENTRATION OF ECONOMIC POWEtt 10219 

Mr. Feller, A'Ir. Hoyt, looking at this map, I want to call your 
attention first to the broad band indicating the movement of iron ore 
through the Great Lakes. From what States does this iron ore come? 

Mr. Hoyt. The broad band represents the shipments from Min- 
nesota, Wisconsin, and Michigan. It is usually called the Lake 
Superior district. 

Mr. Feller. About how much of the iron ore consumed in the 
United States comes from this district? 

Mr. Hoyt. Well, approximately 85 percent. 

Mr. Feller. Mr. Chairman, it might be of interest to the com- 
mittee if at this point I indicated what other sources there are for iron 
ore as consumed in the United States. As Mr. Hoyt has said, 85 
percent of the iron ore consumed comes from the Lake Superior 
region, the Lake Superior district. The other two large sources are 
imports, which are indicated on the map by lines reaching into several 
ports. About. 80 percent of the imported ore moves to Sparrows 
Point, the plant of the Bethlehem Steel Corporation near Baltimore. 

The largest producing State outside of the three that Mr. Hoyt has 
mentioned is the State of Alabama. There are also iron-ore deposits 
which are being mined in New York, Peimsylvania, Utah, and Col- 
orado, and smaller ones in some other States. 

The Chairman. Don't forget Wyoming. 

Mr. Feller. And Wyoming. 

The Chairman. Near my own home in Cheyenne we have Iron 
Mountain, which is an untouched deposit of iron ore. Iron deposits 
at Guernsey, Wyo., are, I am informed, the principal source of supply 
for the Colorado Fuel & Iron Co., which operates at Pueblo, Colo. 

Mr. Feller. I am glad to have that correction. Senator. 

The Vice Chairman. While we are interrupted, Mr. Chairman, 
may I suggest for the record and for brevity of procedure that those 
factual references to iron which are not controverted be stated as 
facts, rather than to draw them out from the witness by question and 
answer? I rather appreciate what you have just done, as one member 
of the committee. For those things that are not controverted I can't 
see any reason why, as an individual member of the committee, they 
should be drawn out question by question. 

Senator King. I share that view — those which are noncontroversial, 
and the facts with which at least some of us are partially familiar 
you might state as facts. 

The Chairman. Before the hearing began, at the outset, before 
Senator King appeared and before Vice Chairman Sumners appeared, 
Mr. Feller presented for the record and laid on the desk of each 
member a pamphlet entitled "The Major Characteristics of the Iron 
and Steel Industry," which I think contains a good deal of this un- 
contro verted material. 

Mr, Feller. We intend to foUow that procedure. Senator. At 
present we are going to ask Mr. Hoyt to give something of the history 
and background of the Lake Superior district, which, as has been 
stated, produces 85 percent of the iron ore. That description by 
Mr. Hoyt will give us most of the background of this industry. 

Can you tell us something about the background? 

Mr. Hoyt. If it is satisfactory, I wrote a few notes on this for 
brevity and accuracy, which I will read, Mr. Chairman. 



10220 CONCENTRATION OF ECONOMIC POWER 

HISTORY AND BACKGROUND OF THE IRON ORE INDUSTRY 

Mr. HoYT. While from a geological standpoint iron ore was known 
to exist in what is now called the Lake Superior district prior to 1800, 
its actual discovery from a commercial point of view did not take 
place until the middle of the last centurv. On July 7, 1852, the 
Marquette Iron Co. shipped 6 barrels of ore to New Castle, Pa., 
which represented the first shipment by the Great Lakes. 

The Marquette Range, as shown on the chart, is located just south 
of Lake Superior, on the Upper Peninsula of Michigan. In 1853 
the Cleveland Iron Mining Co., which was the forerunner of the 
Cleveland-Cliffs Iron Co., became active on this range and took over 
the Marquette Iron Co. in that year. The year following, 1,000 tons 
of ore were shipped from this district and 1854 is therefore credited 
as the first year of iron-ore shipments in any volume, but it was not 
until the completion of the canal at Sault Ste. Marie in 1855 that the 
present iron-ore industry really got under way. 

A few years later the Menominee Range, also in Michigan, started 
operations. Early in 1870 enough ore had been developed on the 
Menominee Range, south of the Gogebic, to warrant mining, but ship- 
ping was delayed until 1877, until the Chicago & Northwestern Rail- 
way Co. had built a line from Quinnesec to Escanaba and the initial 
shipment from this territory amounted to about 10,000 tons. The 
ore found on the Menominee, while mined by underground methods, 
is nearer the surface and, while of good structure, on the average is 
high in phosphorus, an element undesirable in the manufacture of 
basic iron. 

In 1884 the first ore from the Gogebic Range was produced from 
the Coulby Mine. This range, as you can see on the chart, is located 
partly in Michigan and partly in Wisconsin and the ore produced 
therefrom is shipped through the port of Ashland on Lake Superior. 

Until this period the production and shipment of iron ore were 
confined to the State of Michigan and a relatively small tonnage from 
Wisconsin, but for a number of years prior to tlus date rough explora- 
tion had been going on in what is now known as the Vermillion 
Range in Minnesota located 80 miles norto of Lake Superior. Before 
development could actuallv get under way it was necessary to build 
a railroad to the Lake and loading facilities at it'^ terminal. In 1882 
the Minnesota Iron Co. was organized and during the next 2 years this 
company built the railroad known as the Duluth & Iron Range 
Railwav and shipments actually commenced in 1884. 

The ranges herein briefly mentioned, particularly the Marquette, 
Gogebic, and Vermillion, generally spoken of as the old ranges, were 
noted for the quality of the ore, high in iron content and coarse in 
physical structure, and the mines located thereon from which the ore 
is produced are generally deep shaft mines, a number of them being 
several thousand feet in depth. 

With the gradual growth of the iron and steel industry during this 
period, shipments from the four ranges had increased to a total yearly 
tonnage in excess of 9,000,000 tons by the year 1892. A few years 
prior to this time, ore had been discovered on the eastern and western 
ends of what is now known as the Mesabi Range, but in both instances 
the ore was of low grade and not merchantable in comparison with 
ore from the old ranges. In 1891 and 1892 Mountain Iron and 



CONCENTRATION OF ECONOMIC POWER 10221 

Biwabik mines were located and with the completion of the Duluth, 
Mesabi & Northern Railway in 1892 shipments actually commenced; 
in the following year a total of 10 mines were operating and produced 
a little over 600,000 tons. Mesabi is a Chippewa word meaning giant 
and this range is therefore properly named, as the shipments increased 
until in 1937 a total of 45,000,000 tons was shipped in 1 year. 

It -was not until 1911 that the Cuyuna Range was commercially 
developed, although it was known that ore existed in this locality for a 
number of years earlier. This range is particularly noted for large 
tonnages of what is known as manganiferous ore, running from 7 to 9 
percent in natural manganese and while it is not possible to use 
these ores in the manufacture of ferromanganese and spiegel, the 
manganese content is beneficial in the manufacture of higher manga- 
nese pig irons. 

The rapid development of the Mesabi Range was held back for a 
considerable period of time due to the fact that the structure of the 
ore was materially finer tlian that produced from the old range. 
However, the ore in the Mesabi is near the surface and by stripping the 
overburden the ore can be produced by open pit methods at marked 
decreased cost compared to deep shaft mining. 

As improved methods of blast furnace practice enabled the use of 
the finer ores in increasing quantities, aided of course by the cheaper 
cost of mining, the development of the Mesabi Range really came into 
its own. At the end of the year 1938 a total of 1,700,000,000 gross 
tons of iron ore had been shipped from the six principal ranges, 
indicating the growth of the steel industry, keeping pace with the 
general industrial expansion during the first part of the present cen- 
tury. The location of these ranges in close proximity to the Great 
Lakes resulted in the development of bulk freighter transportation and 
the movement of the ore to lower lake ports where it met coal produced 
from the States of Kentucky, West Virginia, Pennsylvania, and Ohio, 
brought about in large measure the industrial growth of the Middle 
West area to the point with which we are all familiar today. 

Prior to 1900 the mines were principally developed by companies 
organized for that purpose or by individuals. Many of the lumber 
companies in Minnesota found that when their timber was being 
exhausted their lands contained large quantities of high-grade iron 
oi'e and they either developed these mines themselves, or leased them 
to companies or individuals, and also the railroads, in acquiring 
rights-of-way, became owners of iron-ore lands. In 1899 a maximum 
of 95 individual mines were operating and shipping ore, but many of 
these, of course, were under the same ownership or operation. 

Some of the iron and steel companies had acquired interests by 
this time in iron-ore mines, but to a large extent the producers of 
iron and steel relied for thoi]" supplies through purchases on the 
market. It is commonly known that on the formation of the United 
States Steel Corporation those interested in this consolidation felt it 
desirable to protect the large investment in steel plants by actual 
ownership of iron ore reserves and in 1901 the Minnesota Iron Co., 
which by this time had extended its activities from the Vermillion 
Range to the Mesabi, and other mming companies, were included m 
the consolidation. These properties are now operated by the Oliver 
Iron Mining Co. 



10222 CONCENTRATIjON OF ECONOMIC POWER 

Mr. Feller. Mr. Chairman, I think at this point I should call 
the committee's attention to the fact that the process of acquisition 
of these properties by the Oliver Iron Mining Co., a subsidiary of 
the U. S. Steel Corporation, was the subject of investigation by a com- 
mittee of the House of Representatives in 1911, a committee known 
as the Stanley committee. For the record, I think I might give the 
citation of the Stanley committee report. It is House Report No. 1127, 
Sixty-second Congress, second session, ana the discussion of this 
subject commences on page 52. 

The Chairman. Does that report contain any recommendation? 

Mr. Feller. The report was a report on the U. S. Steel Corporation 
as a whole, and it was one of the matters which was in a sense pre- 
liminary to the institution of the suit by the Department of Justice 
against the U. S. Steel Corporation. 

Mr. O'CoNNELL. Could you in a few words tell us something about 
that report? I doubt very much if the members of the committee 
are apt to read the report. 

Mr. Feller. On the matter which is now being discussed? 

Mr. O'CoNNELL. Yes; particularly with reference to this point. 

Mr. Feller. Briefly, I think perhaps it would be best if I read a 
few extracts from the pages indicated. The Stanley committee 
reported, and here I quote [readingl: 

This great ore body was first discovered by Alfred and Leonidas Merritt in 1891. 
They formed one company for the development of these mines and another 
for the construction of a railroad from the Mesabi Range to Lake Superior. 

I will skip a few lines here [continuing]: 

In order that they might extend their railroad into Duluth and construct ore 
docks there and for other purposes, the Merritts borrowed about $420,000 from 
Rockefeller, hypothecating stock in these mining and railroad companies to 
the extent of many millions of dollars. This loan was called on short notice 
during the panic of 1893, and the Merritts lost their interest in the railroad and 
the Lake Superior ores, and Rockfeller obtained them. 

In detailing the transaction before this committee, Leonidas Merritt said: 
"By whatever means these properties may have been obtained this fact remains 
unquestioned: They were secured, together with the Duluth, Missabe & Northern 
Railroad, for a sum hot exceeding $420,000, and that the mines and railroad were 
immediately consolidated in a corporation, the Lake Superior Consolidated Iron 
Mines, capitalized at $29,413,905, which stock was, upon the formation of the 
United States Steel Corporation, exchanged for an issue of $39,708,771 of preferred 
and a like amount of common stock, or a total of $79,417,542." 

I will skip a few lines here [Continuing]: 

The reasons for issuing to Mr. Rockefeller over $79,000,000 in the corporation's 
securities for properties which eight years previously had cost him $420,000 were 
twofold, viz: This company held by far the largest and richest ore mines on the 
continent, and it was highly probable that the Rockefeller interests, if they con- 
tinued to retain control of this iron range, would go still more extensively into the 
business of manufacturing iron and steel products. The opportunity to at once 
secure these extensiv,. holdings and to eliminate their last formidable competitor 
induced those in control of the United States Steel Corporation in the payment of 
an exorbitant prir 

Second. It was . ..ecessary step in any effort to secure an effectual monopoly 
of the iron ores of the country. 

In fairness to the Steel Corporation, I should say here that the 
testimony which will occupy the next day or two will show the extent 
to which the Corporation now holds iron-ore reserves and the extent 
to which it ships iron ore. 



CONCENTRATION OF ECONOMIC POWER 10223 

Mr. HOYT. It is unnecessary to comment on the growth of the steel 
industry from 1900 to the present day, but as a result of large expendi- 
tures in steel producing units the owners of the properties became 
actuated by the same motive as mentioned above in the formation of 
the Steel Corporation and felt it not only desirable, but necessary to 
protect these plant investments with actual ownership of the necessary 
ore reserves. In fact, capital was not always available without the 
knowledge that ore reserves for a long period of time in the future 
were assured to the steel companies involved. For this reason, 
particularly from about 1910 to the present day, the steel companies, 
through interests in mining companies, or direct leasing of mines, 
have acquired their own ore supply to an extent that there is hardly 
a steel company today operating its own blast furnaces that has not 
from 50 to 100 percent of its ore supply under its own ownership, 
although in many instances these properties may be managed by ore 
companies. 

It is estimated that the United States Steel Corporation, through 
the Oliver Iron Mining Co. and other subsidiaries, OAvns in the neigh- 
borhood of 50 percent of the Lake Superior iron-ore reserves and whUe 
exact percentages are not available, I would estimate that other 
integrated steel companies o\^'n by direct leases, or through ownership 
in mining companies, in the neighborhood of two-thirds of the balance, 
the remaining one-third owned by fee owners or merchant producers 
who are not producers of steel. 

In years when the steel industry is running at a normal rate of 
capacity many of the steel companies' own supplies are augmented 
by spot purchases from the merchant producers and also by time con- 
tracts running usually for a period of several years. In 1931 the 
marked depression in business generally affected the steel industry to 
such an extent that in 1932 only a total of 3,500,000 tons was shipped 
from the Lake Superior district, as compared with a maximum ton- 
nage of nearly 67,000,'000 tons shipped in 1916 and a yearly average 
of the years from 1916 to 1931, inclusive, of about 52,000,000 tons. 
As is weU known, during the next few years the operations of the 
steel industry continued at a low rate of capacity gradually improving 
in 1936 and in 1937 shipments again increased to a total of 63,000,000 
tons. Exact figures are not available, but it is generally recognized 
that in a normal year about 85 percent of the ore produced from the 
Lake Superior district is shipped directly to users who have a direct 
ownership in the mines and in years when operations of the steel 
industry are curtailed this percentage is even larger. 

As a matter of interest to the committee, it is generally believed 
that the known ore reserves in the Lake Superior district are in the 
neighborhood of 1,400,000,000 tons, of which by far the greatest per- 
centage is in the State of Minnesota, and to supplement this tonnage 
there are large quantities of low-grade ore not now of commercial 
grade which will be made available as time goes on through improve- 
ments in the treatment and processing of low-grade ore. 

Senator King. May I ask, are there any other mLncrals in your 
ores other than iron; is there any lead or copper or zinc? 

Mr. HoYT. Very little; practically none in the Lake Superior 
district. 

Senator King. What is the iron percentage in the ore? 

124491—40 — pt. 18 2 



10224 CONCENTRATION OF ECONOMIC POWER 

Mr. HoYT. Id the average shipments they are something over 51 
percent, in that neighborhood. Ores run up to 56 to 57, some a little 
higher on the old ranges. 

Mr. Feller. Mr. Chairman, I offer now a chart entitled "Percent- 
age of Lake Superior Iron Ore Shipments by Major Iron Ore Com- 
panies." 

The Chairman. The chart may be received. 

(The chart referred to was marked "Exhibit 1351," and is included 
in the appendix on p. 10425.) 

Mr. Feller. I should like the committee to have these charts 
before it. 

The chart itself is on the easel and a reproduction is now being 
distributed to the committee. 

I should also like to offer a supporting table containing figures for 
the chart. 

The Chairman. The table will likewise be received. 

(The table referred to was marked "Exhibit No. 1352," and is 
included in the appendix on p. 10426.) 

THE MAJOR IRON ORE PRODUCERS 

Mr. Feller. The committee will notice on this chart ("Exhibit 
No. 1352") the shipments of Lake Superior iron ore in the year 1937. 
Nineteen thirty-seven was one of the good years. The largest per- 
centage of shipments indicated by the first bar is by the Oliver Iron 
Mining Co., a subsidiary of United States Steel Corporation. The 
percentage of shipments w^as in the neighborhood of 42 percent, as 
the table will indicate. 

Mr. Hoyt, is it generally known in the industry, in the iron-ore 
industry that the Oliver Iron Mining Co. does not sell ore to compa- 
nies which are not affiliates of the United States Corporation? 

Mr. HoYT. Yes, sir. 

Mr. Feller. For the record, I should like to read a sentence from 
a letter which was sent to Mr. Thurmaii Arnold by Mr. Irving Olds, 
counsel for the United States Steel Corporation, the letter dated 
August 31, 1939. The sentence reads: 

There ^re no term and spot sales contracts between the Oliver Comiiany or its 
affiliates and companies not wholly owned by the Steel Corporation. 

Mr. Hoyt, The Pickands, Mather & Co., is represented by the 
second bar on the chart, is it not? 

Mr. IIoYT. Yes, sir. 

Mr. Feller. The committee should bear in mind the fact that dur- 
ing the next few daj'^s representatives from the companies, beginning 
with Pickands, Mather and including Cleveland-Clift's Iron Co., the 
M. A. Hanna Co., Butler Bros, and Oglebay, Norton & Co., will appear 
to give testimony. 

The Chairman. Mr. Hoyt, is your company an integrated company? 

Mr. Hoyt. In the sense of having steel plants connected; no, sir. 
We are managing operators of mines in the Lake Superior district. 

The Chairman. And your business is the production and sale of ore? 

Mr. Hoyt. Primarily, Mr. Chairman, it is the production of ore 
for a number of steel companies for whom we operate the mines as 
managing agent. 



CONCENTRATION OF ECONOMIC iH)\Vl']U 10225 

The Chairman. Are those steel companies integrated companies? 
. Mr. HoYT. Of the total there of some 13,000,000 tons, I would say 
the big bulk of that, Mr. Chau-man, probably over 12,000,000, goes 
directly to steel companies who have interests in these mines or own 
them outright and for whom we act as operating agent. 

The Chairman. As I understand it, your company is merely the 
operating agent which is concerned solely in managing these mines, 
but these properties in turn are actually owned for the most part by 
companies which are engaged in the production of steel. 

Mr. HoYT. That is correct. 

Mr. Feller. Mr. Chairman, I offer for the record a chart wliich 
appears on the easel, entitled "Financial Connections Between Major 
Iron Ore Companies and Steel Companies." Copies of the chart are 
now being distributed. 

(The chart referred to was marked "Exhibit No. 1353" and is 
included in the appendix on p. 10427.) __;;_ 

FINANCIAL CONNECTIONS BETWEEN ORE COMPANIES AND STEEL 

COMPANIES 

Mr. Feller. It would be helpful to the committee if I explained 
in a few brief words the construction of tliis chart. The chart contains 
the names of a number of companies which will occur throughout the 
testimony to be given in the next few days. The first line of the 
chart contains the names of four companies engaged in the produc- 
tion, sale, and transportation of iron ore. These names are the same 
as the names which appear on the base chart of shipments ("Ex- 
hibit No. 1351") ^ with the exception of Butler Bros., which does not 
appear on the chart I am now discussing. 

The second line of the chart contains the names of six steel com- 
panies with which one or more of the iron ore companies have financial 
connections. The third fine of the chart contains the names of two 
banks which also have financial connections with tliree of the iron-ore 
companies and with one of the steel companies. 

The steel companies which appear on the second line of the chart 
rank as follows in the industry, that is, in the steel industry, m terms of 
invested capital: The Republic Steel Corporation is third, the Youngs- 
town Sheet & Tube Co. is fourth, the National Steel Corporation 
is sixth. Inland Steel Co. is seventh, the Wheelmg Steel Corporation 
is ninth. Otis Steel Co. is smaller than any of these, having invested 
capital of about $36,000,000. The total capital investment of the steel 
companies on the second Ime of the chart constitutes approximately 
23 percent of the capital invested in the steel industry. 

As the legend at the bottom of the chart shows, the connections 
by virtue of the directorships are indicated by arrows. The con- 
nections by virtue of percentages of voting stock control are indicated 
by numbers that are placed in circles. 

The Chairman. Will you give the order of size again of these six 
companies? 

Mr. Feller. Republic, third; Youngstown Sheet & Tube, fourth; 
National Steel, sixth; Inland Steel, seventh; Wheeling Steel, ninth. 

The Chairman. Then the Otis Steel, have you given that a number? 

Mr. Feller. No; it is considerably smaller. 

' Appendix p. 10425. 



10226 CONCENTRATION OF ECONOMIC POWER 

The Chairman. What about the total mvested capital of aU of 
these six as compared with one and two on the list wliich are not 
mentioned here? 

Mr. Feller. If the committee will tm-n to the pamphlet which I 
introduced at the outset, on page 15, table 16,^ it wdll give the rank- 
ing of the 10 largest companies in the industry. 

The Chairman. And that also shows the invested capital? 

Mr. Feller. That is right; in terms of invested capital. 

Now, Mr. Hoyt, you have already stated in answer to a question 
by Senator O'Mahoney that your company is engaged primarily in 
the management of ore properties. When was your company 
founded? 

Mr. Hoyt. In 1883. 

Mr. Feller. WTio was the founder? 

Mr. Hoyt. Col. James Pickands, Samuel Mather, and James C. 
Morse. 

Mr. Feller. What are your total approximate assets? Is $28,- 
000,000 about right? 

Mr. Hoyt. Yes; $28,000,000. 

Mr. Feller. About how many ore-mining companies do you 
manage? 

Mr. Hoyt. I think there are 21 mining companies operating about 
26 mines. 

Mr. Feller. And these mining companies are owned in part by 
various steel companies? 

Mr. Hoyt. That is correct. 

Mr. Feller. May. I read off a list of the steel companies which 
are the main stockholders in these mining companies, and would you 
tell me whether that is correct: Youngstown Sheet & Tube, Bethle- 
hem Steel Corporation, Pittsburgh Steel Co., Carnegie-Illinois Steel 
Corporation, Sharon Steel Hoop Co., Inla,nd Steel Co., International 
Harvester Co., the Steel Co. of Canada, the Republic Steel Corpora- 
tion, the Tonawanda Iron Corporation. 

Mr. Hoyt. That is right. 

Mr. Feller. Now, in managing these mines, you have a contract, 
do you not, with the iron-ore company? 

Mr. Hoyt. We do. 

Mr. Feller. And as I understand it, you have two contracts with 
each mining company, do you not, one a management contract 

Mr. Hoyt (interposing). We have a management contract and 
then there is a stockholders' agreement to take ore which is between 
the stocldiolders in the company and the mining company. 

Mr. Feller. Would you describe very briefly what is contained in 
your typical management contract? 

Mr. Hoyt. A typical management contract employs the firm to 
operate the specific mine in question. The company agrees to fur- 
nish to the firm aU of the necessary funds for exploration and develop- 
ment and equipment, and the necessary actual operating expenses, 
and to reimburse the firm for their out-of-pocket expense in their 
N^arious departments strictly given over to this business, but without 
any payment of any kind to the partnership, to the partners indi- 
vidually. And then the compensation is arrived at by a fiat rate 
per ton, usually on the shipments produced each year. 

• "Exhibit No. 1349," at appendix, p. 10408. 



CONCENTRATION OF ECONOMIC POWER 10227 

Mr. Feller. And what are the main terms of your stockholders' 
agreement to take ore, the stockholders being the steel corporations 
which own stock in the mine? 

Mr. HoYT. Not entirely that, Mr. Feller, because I don't know 
whether you mentioned it but the Dalton Ore Co. in which we are 
interested and the Mather Iron Co. have minority interests in a 
number of these companies, but there are five or six stockholders, we 
will say, in a mining company and the stockholders' agreement sets 
up the obligations to those stockholders, and the stockholders to the 
company; in other words, that they will furnish the money to the 
company so that the company can furnish it to the operator for all 
the necessary expenditures of 'the mining company, and that they will 
agree to take their proportionate share of the ore, based on their 
stock ownership in the mining company each year, the production 
each year to be decided by the consent of the stockholdi rs, by mutual 
agreement. They will take the ore forward each year in proportion- 
ate amounts at the cost of the mining to the company. 

Mr. Feller. And in each of these mining companies, Mr. Hoyt, it 
is true, is it not, that one of the partners of your company is the 
secretary-treasurer. 

Mr. Hoyt. No; I think it would not be true, Mr. Feller. 

Mr. Feller. Of about how many of the companies would that be 
true? 

Mr. Hoyt. I don't think there is a partner secretary and treasurer — 
not secretary, but treasurer, probably. I don't think the secretary is 
a partner, but the treasurer is a partner. 

Mr. Seller. Is that Mr. Bool, Mr. Samuel Bool? 

Mr. Hoyt. Yes. 

Mr. Feller. Turning to the chart entitled, ''Financial Connections 
Between Major Iron Ore Companies and Steel Companies"' 

The Vice Chairman (interposing). May I ask a question? Do 
any of the owners of the mines have any interest in your company? 

Mr. Hoyt. No, sir. 

Senator King. May I ask a question? Was your company organ- 
ized primarily to operate mines and develop ore bodies for other 
companies? 

Mr. Hoyt. Well, no, in 1883 their principal idea was to act as 
selling agents for pig iron and coal, and then it gradually worked into 
the related industries. Mr. Mather and Colonel Pickands were very 
active in developing the Lake Superior district; th*e Coulby mine on 
the Gogebic range was the first one to ship. They were active in 
getting that on a producing basis. 

This situation has developed over a period of years into one where 
we are primarily operating. 

Senator King. Have any comparisons been instituted as to whether 
or not your operations ton per ton with comparable conditions, have 
produced or can produce ore on the surface cheaper than other 
companies? 

Mr. Hoyt. There have been records published in Michigan which 
indicate that as far as the Michigan mines are concerned, our records 
are very satisfactory compared with some of the other operators. 

Senator King. Was there any effort on the part of your company 
to exclude other mining operating companies from operating in that 
field in which your company was located? 

« "Eshiblt No. 1363",'ttppendlx, p. 1042T. 



10228 CONCENTRATION OF ECONOMIC POWER 

Mr. HoYT. No, sir; this relationship of ours and this operating 
business grew like "Topsy", you might say. 

Senator King. It started in in a small way and by reason, I sup- 
pose, of your technique and the skill which you developed, and the 
mechanical appliances which you employed, you found that you could 
operate more cheaply than those who owned the ores? 

Mr. HoYT. I think that many of them feel there is a little more 
behind it than that, because back in say '15 and '16, back in about 
that time, we invited two or three steel companies to come into partner- 
ship with us in mines, specifically the Bennett and the Plymouth mines. 
Those mines were too big, we felt, for us to undertake, purely as pro- 
ducers and sellers of ore. They involved very large amounts of strip- 
ping and development, and it meant too big a production for us to be 
sure of a market, so at that time we proposed to five or six of these 
companies that they join with us in this mine and on that basis they 
agreed that we should operate that mine for its duration, or unless 
the company voluntarily surrendered it. 

Then we went on from there — of course, prior to this time we were 
connected with a number of these other steel companies where we 
brought the mines to them and built up the organization, and they 
continued to have us operate them. Well, then in later days as these 
steel companies have become merged in many instances, the mines 
that were formerly in the hands of three or four companies became 
in one company and that one company, therefore, had a large interest 
in this property which either was tied up to us by contract or was 
only tied up for a short period of time. That is the way the picture 
grew. 

Mr. Feller. Mr. Hoyt, with respect to one of these steel companies, 
Youngstown Sheet & Tube Co., which is Hsted on this chart entitled 
"Financial Connection," the chart indicates that your company, 
Pickands, Mather & Co., is a large stockholder. By that I mean 
that the company and the partners own a substantial block of stock 
in Youngstown Sheet & Tube. 

Mr, Hoyt. Your chart shows 3.6 percent, or 3.5 percent. 

Mr. Feller. You hadn't calculated that? 

Mr. Hoyt. Well, I know that the firm itself, through Mather Iron 
Co., owns about 46,000 shares. 

Mr. Feller. That is right, and the members of the partnership 
owned about 1,000 shares? 

Mr. Hoyt. I can't testify as to that. 

Mr. Feller. Those figures were furnished by your company? 

Mr. Hoyt, Yes ; and that is approximately correct. 

Mr. Feller. Now your senior managing partner, Mr. H. G. Dal ton, 
is chairman of the executive board of Youngstown Sheet & Tube, is 
that corrept? 

Mr. Hoyt, That is correct. 

Mr. Feller. And Mr. Dalton, it would be fair to say, is an import- 
ant figure in the management of Youngstown Sheet & Tube? 

Mr. Hoyt, Yes; I would say that was correct. 

Mr. Feller, Is it correct that you managed practically all of the 
Lake Superior mines of the Youngstown Sheet & Tube? 

Mr, Hoyt, Yes. 

Mr, Feller. And that the Youngstown reserves constitute about 
23 percent of all the reserves which your company controls? 



C(^N(1KNT11AT1()N OF ECONOMIC I'OVVKU 10229 

Mr. HoYT. I don't know what you mean by "controls," 

Mr. Feller. I mean manages. 

Mr. HoYT. Operates. 

Mr. Feller. Operates? 

Mr. HoYT. If we have given you that figure, it is correct. 

Mr. Feller. The figure you gave us was. Your company also, 
Mr. Hoyt, manages a steamship company, does it not, the Interlake 
Steamship Co.? 

Mr. Hoyt. That is correct. 

Mr. Feller. And that company carries iron ore? 

Mr. Hoyt. Yes, 
, Mr. Feller, How does it compare in rank among the fleets i>perat- 
ing on the lakes? 

Mr. Hoyt, It is the second largest — has the second largest carrying 
capacity. 

Mr. Feller. The Interlake Steamship ^o. which you manage 
carries aU of Youngstown's ore, coal, and Hmestone, does it not? 

Mr. Hoyt. It does. 

Mr. Feller, And I beheve your contract provides the carriage shall 
be at going rates? 

Mr, Hoyt, Correct, 

Mr. Feller. Now turning to the chart, it is also correct, is it not, 
that at one time Mr. H. G. Dalton, who you have said is a partner 
of your company, and also chairman of the board of Youngstown, was 
a director of the Bethlehem Steel Corporation? 

Mr. Hoyt. Well, when Bethlehem took over Lackawanna, the 
Lackawanna Steel Co., I think in '21 or '22, Mr. Dalton had been a 
director for many years in Lackawanna, I think, from the time that 
Lackawanna moved from Scranton to Buffalo, and 1 think for the 
time being he went on the Bethlehem board to represent the Lacka- 
wanna stockholders, the old Lackawanna stockholders. 

Mr. Feller. And he remained on the board of Bethlehem Steel 
until about 1930; is that correct? 

Mr. Hoyt, Yes; until 1930, 

Mr. Feller. And your company also manages most of Bethlehem's 
Lake Superior mines? 

Mr, Hoyt. Those in which they have an interest. I think all but 
one. 

Mr. Feller, And you have stated to the Department that the 
Bethlehem reserves constitute 33,9 percent of all the reserves which 
you manage? 

(Mr, Hoyt, nodding head, yes.) 

Mr. Feller, Now, from time to time mention has been made of 
the Interlake Iron Corporation. What is the Interlake Iron Cor- 
poration? 

Mr. Hoyt. The Interlake Iron Corporation is the largest merchant 
producer of pig iron, which came about, I think, in '29. 

Mr, Feller, What is a merchant producer of pig iron, for the con- 
venience of the committee? 

Mr, Hoyt. Well, a blast furnace that has no steel connections. In 
other words, it produces pig iron for the trade and sells its product 
as such. 

Senator King. Where is it located? 



10230 CONCENTRATION OF ECONOMIC POWER 

Mr. HoYT. It has plants at Duluth, Chicago, Toledo, and Erie, 
and there was a merger of these four furnace companies. in which the 
firm in the early days had an interest and supplied them with its 
iron-ore requirements. 

Mr. Feller. And you are a director of the Interlake Iron Cor- 
poration? 

Mr. HoYT. That's right. 

Mr. Feller. Your company owns, doe« it not, about 25 percent 
of the stock of Interlake Iron? 

Mr. HoYT. As of what date? Yes; about that. 

Mr. Feller. And Interlake Iron, in turn, owns 40 percent of the 
voting stock of another company, the Dal ton Ore Co., according to 
the figures submitted to ns, Interlake Iron owning a total of 70 percent 
of all of the stock of the Dalton Ore Co. What is the Dalton Ore Co.? 

^Ir. HoYT. At the time of the merger of these four blast-furnace 
companies one of the reasons for it from the standpoint of the large 
stockholders in the companies was to have an adequate ore supply 
which they owned, and the Pickands, Mather & Co.'s ore properties 
were put into Dalton Ore Co., and 70 percent of the stock was sold 
to Interlake Iron Corporation for its common stock. 

Now, the reason for the difference in the ownership and voting stock 
was because, without connections with these other steel companies, 
as operators, we had to be left in the position of being able to have 
the voting in the meetings with the other stockholders as to new im- 
provements and all that without interference from the Interlake, be- 
cause we were in a position of managers and operators and partners 
with these companies, so that was all part of the arrangement when 
the ore was turned over to Interlake Iron Corporation, and it i^ subject 
to the limitation that none of the properties of Dalton Ore can be sur- 
rendered, or new properties taken into Dalton Ore without the approval 
of Interlake Iron Corporation. 

Mr. Feller. And your company, Pickands, Mather, owns 60 per- 
cent of the voting stock of Dalton Ore? 

Mr. HoYT. For that reason, as I have explained. 

Mr. Feller. Your company manages the Dalton Ore Co. proper- 
ties, and is the sole and exclusive sales agent? 

Mr. HoYT. That is right; but you must just keep in mind that the 
Dalton Ore Co. as such is really the sum of the minority interests in 
these other mining companies that we have spoken of, a minority up 
to 50 percent of them. 

Mr. Feller. You also have certain relations with the Steel Co. 
of Canada, do you not? 

Mr. HoYT. We do. 

Mr. Feller. As I imderstand it, Mr. H. G. Dalton, one of your 
partners, is a director of the Steel Co. of Canada. 

Mr. HoYT, That is correct. 

Mr. Feller. And all the interests of the Steel Co. of Canada in 
Lake Superior mines are managed by your company? 

Mr. HoYT. That is correct. 

Mr. Feller. Going back for a moment with respect to Interlake 
Iron Corporation, Interlake Iron buys all its ore requirements from 
Dalton Ore, does it not? 

Mr. HoYT. Providing that the interests of Dalton Ore, the mines 
in which they are interested, can produce sufficient to satisfy their 



CONCENTRATION OF ECONOMIC POWER 10231 

requirements, and sufficient of the right kind of grade. Otherwise 
they can buy outside. 

Mr. Feller, And the purchases wliich Dalton Ore make for Inter- 
lake Iron are at current market prices? 

Mr. HoYT. Yes. 

Mr. Feller. Now, lastly, in order to complete the elucidation of 
the chart, Mr. H. G. Dalton is a member of the board of directors of 
the National City Bank of Cleveland, is he not? 

Mr. HoYT. Yes. 

Mr. Feller. Then, in sunmaary, we may say, may we not, that the 
various companies with which Pickands, Mather & Co. and its partners 
have financial connections are Youngstown Sheet & Tube, Interlake 
Iron, Dalton Ore, the Steel Co. of Canada, and the National City 
Bank of Cleveland, connections by way either of stock ownership or 
of a directorship, and you formerly had a connection with Bethlehem 
Steel Corporation. 

Senator King. Did he assent to that? 

Mr. HoYT. Yes ; that is true, sir, 

Mr. Feller. Mr. Chairman, the purpose of calling Mr. Hoyt at 
tliis time was to place liis company in the general picture of the 
industry. We should like to release Mr, Hoyt now, and call him 
liter in the hearing for further matters that may be elucidated. 

The Chairman. Are there any questions to be addressed to Mr. 
Hoyt now by any other members of the committee? 

Senator King, I prefer to defer any interrogatories until he comes 
back, when we will have had an opportunity to examine these charts. 

The Chairman. Would you be good enough to Ust these com- 
panies again, please? 

Mr. Hoyt, In which we have an interest? 

The Chairman. Yes. 

Mr. Hoyt. Interlake Iron Corporation; Dalton Ore is the ore 
company; Youngstown Sheet & Tube, in which we have only 3,5 
percent interest according to the chart' and Interlake Steamship Co. 

The Chairman. And the National City Bank of Cleveland? 

Mr, Hoyt. The only way we have any connection there, Mr, 
Dalton has been a director of the National City Bank. 

The Chairman, Are these the three companies? 

Mr. Hoyt. You [to Mr, Feller] mentioned Steel Co. of Canada. 
Mr. Dalton is a director of the Steel Co, of Canada, 

Senator King. Does that company have any operating mines in 
the United States? 

Mr, Hoyt. They have interests in these mining companies such 
as I have described, sir. 

The Chairman. Where is your company chartered — by what 
State? 

Mr. Hoyt. I didn't hear that, sir. 

The Chairman, By what State is your company chartered? 

Mr. Hoyt. Delaware. Pickands, Mather, sir, is a partnership, 
but Mather Iron Co., through which we hold our investments and 
operate these properties, is a Delaware corporation. 

The Chairman. All of the stock of that is owned by the partner- 
ship? 

Mr. Hoyt. All of the common stock, sir. 

The Chairman. All of the common stock. The preferred stock? 



10232 CONCENTRATION OF ECONOMIC POWER 

Mr. HoYT. The preferred stock is held prmcipally by the families 
of our partners who have died in the past few years. 

The Chairman. "What is your ownership in the Interlake Steam- 
ship Co.? 

Mr. HoYT. I think we own 8,200 shares out of about 469,000. 

Mr. Feller. But you manage the Interlake Steamship Co. and 
you officer the fleet? 

Mr. HoYT. Correct. 

The Chairman. You manage it by means of a contract? 

Mr. HoYT. Yes, sir. 

The Chairman. Over a period of years? 

Mr. HoYT. Yes, sir. 

The Chairman. What period? 

Mr. HoYT. I think it has about 12 years to run. I can't be sure of 
that date. 

The Chairman. Is it renewable? 

Mr. HoYT. No; I think, except by mutual agreement. It would 
be a new contract. 

The Chairman. You have no preferred right to renewal? 

Mr. HoYT. No; but the board of directors technically have em- 
ployed Pickands, Mather & Co. to operate the Interlake Steamship 
Co. 

The Chairman. Now then, your ownership of the Dalton Ore Co. 

Mr. HoYT. Thirty percent. 

The Chairman. Do you have a contract with that company? 

Mr. HoYT. Yes, sir. 

The Chairman. Over what period? 

Mr. HoYT. That runs for the life of the mines in which the Dalton 
Ore Co. is interested. 

Mr. Feller. Thirty percent of the total stock of Dalton Ore is 
owned by you, but 60 percent of the voting stock. 

Mr. HoYT. As I have explained before. 

The Chairman. You have complete control, then, of that company? 

Mr. HoYT. Purely as to operations, sir, as I have explained before. 

The Chairman. As you have explained before, it was necessary for 
you to have full authority to manage the properties of this company. 

Mr. HoYT. That's right, because they were minority interests in 
mines in which we had a great many other associates. 

The Chairman. By what State is that corporation chartered? 

Mr. HoYT. I can't tell you, sir. 

The Chairman. How many corporations are represented in this 
corporation by minority interests? 

Mr. HoYT. You mean how many mining companies? 

The Chairman. As I understand your testimony, this is an organi- 
zation, which was formed to group together certain minority interests 
in certain other mining properties. 

Mr. HoYT. Yes. Well, I can't tell you offhand, but I would say 10 
or 12 mining companies. 

The Chairman. Who are the major interests in those companies? 

Mr. HoYT. Well, they are very much diversified, sir, and according 

to that list that Mr. Feller read, for example, if I can give you an 

illustration, in one mine we would have Bethlehem, Youngstown, the 

Steel Co. of Canada, Republic, and Dalton Ore as stockholders. And 



CONCENTRATION OF ECONOMIC POWER 10233 

it is varied. In other mines there is just Yoimgstown and ourselves, 
or Bethlehem and ourselves, or I say Dalton Ore rather than ourselves. 

The Chairman. Do those companies which constitute the majority 
interests in certain pro]>erties also owned by the minority interests 
whrch are organized in the Dalton Ore Co. exercise any control over 
the properties held by the minority interests which constitute the Dal- 
ton Ore? 

Mr. HoYT. No, sir; you mean, have they any interests relating 
through to the steel company or pig-iron company back of it, is that 
it? No, sir. 

The Chairman. Well, do I understand that the minority com- 
panies, these minority interests organized into the Dalton Co., can in 
effect manage the properties in which they have a minority interest? 

Mr. HoYT. No, sir; Dalton Ore Co. is only related to Pickands, 
Mather because we own 30 percent of the stock, and as such we have 
a contract as a firm to operate the mine in which Dalton Ore Co. has 
an interest. 

The Chairman. That is just the particular property that that com- 
pany has an interest in? 

Mr. HoYT. That would be true of all of them. I think there are 
no mining companies in which Dalton is interested where there is a 
majority owner. In other words 

The Chairman (interposing). Oh, then, though they may be the 
minority interests, they are so large a minority interest that in effect 
they control the property? 
. Mr, HoYT. No, sir; very far from that. 

The Chairman. Well, I don't quite get the picture. Let us take, 
for example, mine A 

Mr. HoYT (interposing). Yes, sir. 

The Chairman. In which the minority is owned by X, Y, and Z, 
Now X, Y, and Z have participated in the organization of the Dalton 
Ore Co. 

Mr. HoYT. Now wait just a second,^sir, if you will. 

The Chairman. There seems to be a complicated arrangement here 
which isn't quite clear. 

Mr. HoYT. It really isn't complicated. 

The Chairman. I knew you could make it clear. 

Mr. HoYT. If I can take one mining company, I have already men- 
tioned the Bennett earlier. There are four stockholders in the Bennett 
mine. It was one of those properties that we, as a firm, asked this 
group to come into back iu 1917. 

Now, Dalton Ore Co. has a two-ninths interest, Youngstown Sheet 
& Tube a three-ninths interest. 

Senator King. In the mine themselves? 

Mr. HoYT. In the Bennett Mining Co. 

Pittsburgh Steel Co. has a two-ninths interest, and Bethlehem 
Steel Corporation a two-ninths interest. 

Now, that mining company hires Pickands, Mather to operate its 
mines subject to the direction of the board of directors of the Bennett 
Mining Co. 

The Chairman. In other words, the Bennett Mining Co. is the 
owner of this particular property? 

Mr. HoYT. That is correct. 



10234 CONCENTRATION OF ECONOMIC POWER 

The Chairman. Dalton owns only two-ninths of the Bennett Co.? 

Mr. HoYT. That is correct. 

The Chairman. But it nevertheless is the manager of the com- 
pany? 

Mr. HoTT. No, no, sir; not the Dalton. Don't confuse Dalton Ore 
with Pickands, Mather. 

The Chairman. Then Pickands, Mather is the operating agent for 
that? 

Mr. HoYT. That is correct. 

Ttie Chairman. And the Bethlehem Steel, Youngstown, and the 
others have participated in that agreement by which Pickands, Mather 
has become the manager? 

Mr. HoYT. And the board of directors decides on the policy of the 
Bennett Mining Co. as to improvements, developments, extensions, 
production, and so forth, and instructs us what to do. 

Senator King. The partnership has a contract with the Bennett 
Mining Co. as I understand it. 

The Chairman. So that your arrangement whereby you have the 
voting power to control the Dalton Ore Co. does not extend to the 
control of the Bennett Co.? 

Mr. HoYT. It only extends to the fact that as far as any develop- 
ments, expenditures, and so forth, in the Bennett mine; we vote for 
the Dalton Ore Co. for the two-ninths. 

The Chairman. And if the others, Bethlehem, Youngstown Sheet 
& Tube and the others were to vote for a different sort of control, then 
they would dominate? 

Mr. HoYT. Yes, sir; surely. 

Senator King. If I understand, the Mather partnership company, 
separate from the Dalton Ore Co., and the Dalton Ore Co., together 
with Bethlehem and others, have an interest in this Bennett Corpora- 
tion. In dealing with it, then, you deal with it first in the contract; 
in operating you deal with it as a partnership, but in the directorate 
there might be one of your partners who would be a ^ director, 
but at any rate the contract is between the Bennett Co. and the 
Dalton Ore Co.? 

Mr. HoYT. That is right. 

Mr. Feller. Mr. Hoyt, in your contracts with these mining com- 
panies such as the Bennett Mining Co., a provision is contained which 
makes Pickands, Mather exclusive salesman for any ore produced for 
the stockholders of the mine? 

Mr. HoYT. Yes, sir. 

(The witness, Mr. Hoyt, was excused temporarily.) 

The Chairman. The chair wishes to announce that Mr. John V. 
W. Reynders, consulting engineer of New York, is sitting with the 
committee by appointment of Secretary Hopkins of the Department 
of Commerce, as an alternate for Mr. Avildsen during this hearing 
upon steel. Mr. Reynders was at one time engaged in bridge build- 
ing and in steel manufacturing, from 1886 to 1916. Since that time 
I understand he has conducted his own consulting engineering office 
and is engaged primarily in steel making, mining, and bridge build- 
ing. This is in harmony with the policy which the Department of 
Commerce has been following in designating as an alternate some 
businessman to work and consult with the Department of Com- 
merce. It was first undertaken in the petroleum hearing, when Mr. 
McConnell was designated as alternate. 



CONCENTRATION OF ECONOMIC POWER 10235 

The Chair wishes to file for the record a letter from Mr. A. A. 
Stambaugh, vice president of the Standard Oil Co. of Ohio, trans- 
mitting an aflBdavit which that company desired to put in the hearing 
in connection with petroleum. 

(The communication referred to was marked "Exhibit No. 1354," 
and is printed in Hearings, Part 17, appendix, p. 9929.) 

The Chairman. The committee will hold an executive session at 
2:15 this afternoon, but at 2:30 will resume the hearing on the steel 
industry. 

Mr. Feller. We should like to announce that the next witness 
will be Mr. E. B. Greene, president of the Cleveland-Cliffs Iron Co. 

The Chairman. The committee will now stand in recess until 2:15. 

(Whereupon at 12:30 o'clock the committee recessed until 2:15 
for an executive session with the hearing to resume at 2:30.) 

AFTERNOON SESSION 

The session was resumed at 2:35 p. m., at the expiration of the 
recess. 

The Chairman. The committee will please come to order. 

Are you ready to proceed, Mr. Feller? 

Mr. Feller. Yes, sir. 

The Chairman. Do you solemnly swear that the testimony you 
are about to give in this proceeding shall be the truth, the whole 
truth, and nothing but the truth, so help you God? 

Mr. Greene. I do. 

The Chairman. Please be seated. 

TESTIMONY OF EDWARD B. GREENE, PRESIDENT, CLEVELAND- 
CLIFFS IRON CO., CLEVELAND, OHIO 

Mr. Feller. Will you give the reporter your full name? 

Mr. Greene. Edward B. Greene. 

Mr. Feller. What is the company you are connected with? 

Mr. Greene. Cleveland-Cliffs Iron Co. 

Mr. Feller. What is your position in the Cleveland-Cliffs Iron Co.? 

Mr. Greene. I am president. 

Mr. Feller. You are also president of the Cliffs Corporation? 

Mr. Greene. Yes, sir. 

Senator King. What was that last name? 

Mr. Feller. Cliffs. C-1-i-f-f-s. 

And you were formerly a director of the Republic Steel Co., were 
you not? 

Mr. Greene. I was. 

Mr. Feller. When was the Cleveland-Cliffs Iron Co. founded? 

Mr. Greene. The Cleveland-Cliffs Iron Co. was founded in 1890 
but it was then a holding company, holding all the stock of the 
Cleveland Iron Mining, and say two-thirds of the Iron Cliffs Mining. 
Legally it became one company, the Cleveland-Cliffs Iron Co., in 1914. 

Mr. Feller. Is it correct to say that the Cleveland-Cliffs Iron Co. 
is historically the family property of the Mather and Wade family 
of Cleveland? 

Mr. Greene. Well, that would be, I think, a slight exaggeration. 
Those two families have held a large interest in that company for 
several generations. 



10236 CONCENTRATION OF ECONOMIC POWER 

Mr. Feller. Will you tell us the name of the founder of the original 
company? 

Mr. Greene. The founder of the two companies, incorporators of 
the Clev 4and Iron Mining Co. were Samuel L. Mather, John Outh- 
waite, Morgan L. Hewitt, Selah Chamberlain, Isaac L. Hewitt, 
Henry F. Brayton, E. M. Clark. The large stockholders of the Iron 
Cliffs Co. were Samuel J. Tilden of New York, William B. Ogden, and 
William H. Barnum, of Connecticut. 

Mr. Feller. Mr. Samuel L. Mati. , the name you read first, was 
the father, was he not, of Samuel Mather, one of the founders? 

Mr. Greene. Samuel Mather and Mr. Wilham G. Mather, chair- 
man of the board of the Cleveland-Cliffs Iron Co. 

Mr. Feller. Is it correct to say the total assets of the Cleveland- 
Chffs Iron Co. is about $65,000,000? 

Mr. Greene. Approximately about $69,^00,000. 

Mr. Feller. Now, Mr. Hoyt testified tL morning with respect to 
the functions of Pickands, Mather & Co., and he told us that Pickands, 
Mather & Co. was primarily engaged in the management operation of 
ore properties which were owned by others and part-owned by various 
connections of Pickands, Mather. Now, your company is different, 
is it not? Your company mainly owns or leasco in fee ore properties. 

Mr. Greene. We have, I believe, three mines only in which we have 
a partial ownership. In two of them we own the majority and in one 
it is about a quarter. All of our other properties are owned entirely 
by Cleveland-Cliffs Iron Co. 

Mr. Feller. Is it correct to say that the Cleveland-Cliffs Iron 
Co. is the largest owner-seller of ore in the Lake Superior district? 

Mr. Greene. Do you mean seller of its own ore? 

Mr. Feller. Seller of ore which it operates in property that it 
owns or leases in fee? 

Mr. Greene. That is a little hard to answer. We sell more of 
our own ore than any other company. We do not handle as much 
ore as Pickands, Mather. 

Mr, Feller. That appears on this bar chart which we produced 
this morning^ which shows that your company in 1937 shipped 9.1 
percent of the total shipments. Cleveland-Cliffs Co. also owns a. 
fleet of vessels, does it not? 

Mr. Greene, It does. 

Mr. Feller, Could you tell us what ranking that fleet of vessels 
has in the total lake transportation? 

Mr, Greene, It is fourth in capacity. 

Senator King. In what? 

Mr. Greene. Capacity. 

Senator King, You don't carry passengers, just ore? 

Mr, Greene, We handle ore, coal occasionally, stone, and grain. 
They are aU bulk freighters. We have one self-unloader in which we 
have a half interest. 

Mr. Feller. Which of the companies is larger than the Cleveland- 
Cliffs in the transportation of ore on the Great Lakes? 

Mr. Greene. Pittsburgh Steamship Co. 

Mr. Feller. Subsidiary of United States Steel? 

Mr. Greene. Sure; the Interlake, Pickands, Mather Co. 's fleet and 
the Hutchinson fleet. The latter is a combination of two fleets. Our 
fleet is a combuiation of 4 companies of which the Cleveland-Cliffs owns 

> "Exhibit No. 1351", appendix, p. 10425. 



CONCENTRATION OF ECONOMIC POWER 10237 

15 and there are 7 boats in 3 other companies which we manage which 
is called the Cleveland-Cliffs fleet, 22 bulk freighters and 1 is a self- 
unloader. 

Mr. Feller. The Cleveland-Cliffs Iron Co. also owns a large 
interest in the Lake Superior & Ishpeming Railroad Co. 

Mr. Greene. It does. 

Mr. Feller. Seventy-five percent? 

Mr. Greene. Yes. 

Mr. Feller. And that railroad carries ore produced by the mines on 
the Marquette Range, in Michigan, is that right? 

Mr. Greene. That is right. 

Mr. Feller. Mr. Greene, turning to the chart entitled "Financial 
Connection Between Major Iron Ore Companies and steel Com- 
panies", ^ I call your attention first to the indication on the chart 
on the upper left hand corner that the Cleveland-Cliffs Iron Co. in 
conjunction with the Cliffs Corporation, owns 66.7 percent of the 
voting stock of that company. 

Mr. Greene. It owns two-thirds of the so-called preferred stock. 
I do not recall just whether the other stock votes or not, but I think 
your statement is correct. 

Mr. Feller. Mr. Chairman, at this point we are going to consider 
also Oglebay, Norton & Co., and I should like to call Mr. Crispin 
Oglebay at the same time as Mr. Green. 

TESTIMONY OF CRISPIN OGLEBAY, PRESIDENT, OGLEBAY, 
NORTON & CO., CLEVELAND, OHIO 

The Chairman. Do you solemnly swear the testimony you are 
about to give in this proceeding shall be the truth, the whole truth, 
and nothing but the truth, so help you God? 

Mr. Oglebay. I do. 

The Chairman. Will you be seated, Mr. Oglebay, please. 

Mr. Feller. Mr. Oglebay, will you give your name to the reporter, 
please? 

Mr. Oglebay. Crispin Oglebay. 

Mr. Feller. And your position in Oglebay, Norton & Co.? 

Mr. Oglebay. President. 

acquisition of stock in oglebay, NORTON CO. BY CLEVELAND- 
CLIFFS IRON CO. 

Mr. Feller. Mr. Greene, when was this stock interest in Oglebay, 
Norton & Co. acquired by the Cleveland-Cliffs Iron Co.? 

Mr.^GREENE. I believe it was May 1930. 

Mr. Feller. Mr. Oglebay, in 1930 was Oglebay, Norton engaged in 
the mining and selling of iron ore? 

Mr. Oglebay. It was. 

Mr. Feller. At that time would you be able to tell us roughly 
what percentage of its shipments was accounted for by Oglebay, 
Norton shipments? 

Mr. Oglebay. I don't know. 

Mr. Feller. Well, in accordance with figures submitted by your 

company it would appear that in 1929 Oglebay, Norton & Co. shipped 

— I 

> "Exhibit No. 1353," appendix, p. 10427. 



10238 CONCENTRATION OF ECONOMIC POWER 

4.2 percent of the total industry shipment and in 1930, 3.9 percent of 
the total industry shipments. Mr. Greene, your company also at 
that time was engaged in mining and sale of iron ore? 

Mr. Greene. It was. 

Mr. Feller. Oglebay, Norton was a substantial competitor? 

Mr. Greene. Yes. 

Mr. Feller. I should like to ask you, Mr. Greene, whether you 
could tell us why the Cleveland-Cliffs Iron Co. acquired this stock 
interest in Oglebay, Norton & Co. 

Mr. Greene. I believe from the records of that time that the 
interest in Oglebay, Norton was acquired for two reasons; in the 
first place at that time, there were being created many larger units 
in the steel business, being brought about by mergers, and it was 
thought that by associating ourselves with Oglebay, Norton we might 
have the opportunity of selling ore to the companies that Oglebay, 
Norton were close to, only to the extent" beyond Oglebay, Norton's 
ability to supply their requirements, and possibly kinds of ore which 
Oglebay, Norton did not have. We also thought that from the stand- 
point of mining properties the association of Cleveland-Cliffs Iron Co. 
with two or three splendid properties on the Gogebic range was ad- 
vantageous. I believe those were the two reasons that actuated the 
Cleveland-Cliffs Iron Co. in acquiring that interest in the stock of 
Oglebay, Norton. 

Mr. Feller. Mr. Greene, I show you a letter which was taken 
from your files which appears to have been written by Mr. William G. 
Mather, dated May 29, 1930, and addressed to Mr. S. R. Elliot, 
manager.^ What was Mr. Mather's position at that time with the 
company? 

Mr. Greene. He was then president of the Cleveland-Cliffs Iron 
Co. 

Mr. Feller. And Mr. Elliot? 

Mr. Greene. Manager of the mining department with head- 
quarters at Ishpeming. 

Mr. Feller. I should lil^e to call your attention^ — the letter, I 
might say, for the record, is certified to be a true copy by the secre- 
tary of the Cleveland-Clifi's Co. I call your attention in particular 
to the third paragraph which reads as follows treading from "Ex- 
hibit No. 1356"]: 

The Oglebay, Norton people will continue to run their business as heretofore. 
The advantages that will acciue to us — 

and by us I presume is meant Cleveland-Cliffs Iron Co.- — 

are that we share in their net profits to an appreciable extent and that we are 
placed in a position of greatly minimizing if not entirely preventing*tendencies 
which have prevented iron ore producers from getting a reasonable price for their 
product. 

Now skipping to the next paragraph I read further from the same 
exhibit: 

I think it is an excellent move and will have a stabilizing effect on the conduct 
of the iron ore industry, but you can see that it is a relationship which we do not 
want to talk about as such publicity might result in opposition on the part of the 
public or the consumers to a move which they may construe as tending toward an 
undue control of prices. 

> Introuuced infra as "Exhibit No. 1356"; included in the appendix on p. 10430. 



CONCENTRATION OF ECONOMIC POWER 10239 

Have you any reason to suppose that Mr. Mather's statement was 
not a correct statement of the reasons for the acquisition? 

Mr. Greene. Well, I am not able to testify as to what was in 
Mr. Mather's mind. I, myself, can't understand those statements. 

Mr. Feller. I would like to ask you, Mr. Oglebay, what was the 
reason for the sale of the interests of Oglebay, Norton to the Cleve- 
land-ClifFs Iron Co.? Were you at that time connected with Oglebay, 
Norton? 

Mr. Oglebay. I was the president. We were as- Oglebay, Norton 
Co. at that time the managers of five mines and one steamship com- 
pany. It was in the air at that time this possibility of another large 
consoUdation headed by Cleveland interests, and it was in our mind in 
our office that tliis might absorb interests that were independent in 
the ore business and that it would be wise for us to cooperate with this 
movement, not thinlcing at all of the welfare of Oglebay, Norton & 
Co. Oglebay, Norton & Co. is a mine-managing corporation; it 
owns nothing. It is a personal-service corporation and employed by 
these companies to manage their properties. We felt that if there 
was to be a consolidation, Cleveland-Cliffs would play a very promi- 
nent part in this consolidation and if we could be seated around the 
table with them, representing these various properties, it would be to 
their welfare, and with that in mind, why, we negotiated a sale of this 
personal service corporation, that is Oglebay, Norton Co., two-thirds 
of its interests, to the Cleveland-Cliffs Iron Co. 

Mr. Feller. As I understand, you sold this interest to Cleveland- 
Cliffs Iron Co. because of your fear of what might happen to your 
business in the event of a large-scale consolidation of steel companies? 

Mr. Oglebay. I don't tlunk you are quite right in saying "fear." 
I think we just felt that probably our bread would be buttered maybe 
a little better if we were sitting around the table with a group of 
fellows, if there were to be a consolidation, who would effect this 
consolidation. Our hands were perfectly free as far as the individual 
corporations that we manage. They are separately owned from 
Oglebay, Norton Co., separate boards of directors, and each one of 
them would have the privilege of reporting themselves to some new 
consolidation or they would not. It just seemed to us in representing 
tiiose corporations that we had more to gain by sitting around the 
table than being on the outside. 

Mr. Feller. I show you, Mr. Oglebay, a letter which appears to 
have been sent by you to Mr. Greene. The letter is dated February 
17, 1930. The letter was taken from the files of Oglebay, Norton Co., 
your company. I call your attention specifically to the second full 
paragraph on page 2 of this letter, a very lengthy letter. Now that 
paragraph reads in part as follows: 

Our association with Cleveland-Cliffs will presumably strengthen our market 
position with respect to the manganiferous grades known as Ontario and Quebec, 
because it will give us a favorable standing with the steel companies associated 
with Cleveland-Cliffs' operations. 

That in part was your reason, was it not? 
Mr. Oglebay. Yes. 

Mr. Feller. I offer, Mr. Chairman, this exliibit and the exhibit 
[jreviously shown to Mr. Greene. 

124491— 40— pt 18 3 



10240 CONCENTRATION OF ECONOMIC POWER 

The Chairman. Yo\i want them in then- entirety? 

Mr. Feller. I should like to have them in their entirety. 

(The letters referred to were marked "Exhibits Nos. 1356 and 
1365," respecti\'ely, and are included m the appendix on pp. 10430 and 
10428.) 

Senator King. Would you have assets other than your Cleve- 
land organization? 

Mr. Oglebay. We have no assets, other than just like assets 
approximating $200,000 to finance our operations. We own nothing; 
we are a personal service corporation and are responsible just like an 
individual would be who might be appointed general manager of 
these corporations. 

The Chairman. But you had complete control? 

Mr. Oglebay. Oh, no. Every one of thetn has a separate board 
and each company has separate offices and we are — 

The Chairman (interposmg). A service corporation with your 
functions, a'^d what was the extent of your authority in the manage- 
ment of these properties? 

Mr. Oglebay. I would say about the same as the general manager 
reporting to the board and the president. 

The Chairman. Well, what was the term over which you exercised 
this authority? Was it subject to cancelation day by day? 

Mr. Oglebay. Year by year. 

The Chairman. You had no contracts beyond the year? 

Mr. Oglebay. No; year by year contracts. 

Mr. Feller. Your cliief assets, then, were these contracts, were 
they not? These contracts to manage mine properties? 

Mr. Oglebay. Yes. 

Mr. Henderson. Had they been renewed over a period of years 
each year? 

Mr. Oglebay. For a long time; yes. Now we only have two prop- 
erties; three of these properties during the period of depression we 
lost; that is, they decided to abandon them because they didn't have 
enough merit to face these difficult times in the last 7 or 8 years, 
so that today we only manage two iron-ore properties, and one of 
those properties you might call a captive mine, in that I mean two- 
thirds of it is owned by the Wheeling Steel Corporation and the 
American Rolliug Mill Co. 

The Chairman. Well, is it within your jurisdiction, or has it been 
within your jurisdiction, as. the manager of these properties, to deter- 
mine how much ore should be sold? How much should be mined? 

Mr. Oglebay. No; to the contrary we endeavor not to place our- 
selves in that position. 

The Chairman. Well, who tt)ld'you 

Mr. Oglebay. The board of directors. Our board meets three or 
four times a year, each time any problems come up why we call the 
board together. 

The Chairman. You mean the board of directors of your company? 

Mr. Oglebay. No; the board of directors of these separate cor- 
porations that we manage. We are in a sense no different than you 
if you were placed as general manager, instead of an individual being 
general manager why Oglebay, Norton Co. is general manager, re- 
porting to the board of directors of each one of these separate 
corporations. 



CONCENTRATION OF ECONOMIC POWER 10241 

The Chairman. And carrying out the orders of the separate cor- 
porations as to the amount of ore to be shipped and sold and produced? 

Mr. Oglebay. Yes, sir. 

The Chairman. What, in your mind, did you stand to lose and 
what did you stand to gain when this proposed merger was discussed 
;md the sale of this stock was proposed? 

Mr. Oglebay. Well, these corporations, of course each one of them 
is quite valuable and we as the managers of these corporations had 
the feeling that if we, the personal service corporation, could get in 
and have a close picture with these very large corporations we would 
have two advantages, we would have the added advantage in being 
able to sell them ore from these companies, and if there be a large 
consolidation, we might be in a httle friendlier contact with them in 
case it was to our advantage to sell these companies. 

The Chairman. Well, if you were merely carrying out 

Mr. Oglebay (interposing). I don't mean our advantage, I mean 
the advantage of the corporations we represent. 

The Chairman. Well, if you were merely carrying out orders of 
these various boards of directors and exercised no original authority 
upon your own part, what advantage was it to the Cliffs Co. to ac- 
quire two-thirds of your control, since you had no control? 

Mr. Oglebay. Well, I can't answer for Cleveland-Cliffs. I am 
speakmg for the way we thought 

The Chairman. Hadn't you any ideOt what it meant to them to get 
control of your company, tliis purely personal service company? 

Mr. Oglebay. Well, I really don't know exactly what was in 
their mind. 

Mr. Feller. Mr. Oglebay, in that connection, I should like to 
show you what appears to be a telegram sent by you to W. W. White 
January 26, 1930; the copy which we have is certified to be a true 
copy by the secretary of the Cleveland-Cliffs Iron Co., and it was 
secured from their files. ^ If I may read the first few. sentences. 
[Reading:! 

I have talked with Wade and Greene and they approve of general plan and ask 
the following telegrams be sent as representing their thoughts. I think their 
recommendations for specific considerations are entirely proper and have advised 
them in my opinion they should be so recognized. STOP As individuals we 
are heartily in favor of Cleveland-Cliffs Company acquiring Oglebay, Norton 
Company under the proposed plan, believing that this merger tends to stabilize 
the market value of ore. 

Mr. Oglebay, could you tell us what you had in your mind then 
when you used those words? 

Mr. Oglebay. No; I can't. I think, in general thinking, I had 
in my mind the general values of ore properties and the entire problems 
associated with independent mines. One of the great big resj^onsi- 
bilities that this office has. 

Senator King. Which office, yours? 

Mr. Oglebay. Ours, Oglebay, Norton Co., has the management of 
one of the large independent iron ore mines and that is the Montreal 
Mining Co. Mr. Wade, who is mentioned in this telegram, is the- 
president of the Montreal Mining Co., and Mr. Greene married Mr. 
Wade's sister and was on the board, and is now, and as I stated in 
the beginning in my conversation here, one of our keen responsibilities 

■ Introduced infra, p. 10250, as "Exhibit No. 1358," appendix, p. 10432. 



10242 CONCENTRATION OF ECONOMIC POWER 

is the welfare of the Montreal Mining Co., and we felt that due to this 
possible consolidation of these corporations that in thinking of the 
welfare of the Montreal Mining Co. it would be well for us as this 
management service corporation to be on the inside of the picture. 

Mr. Henderson. You felt that a stabilized price, if it could be 
arranged by this new contract, would redound to the benefit of the 
Montreal Mining Co.? 

Mr. Oglebay. Yes. 

Mr. Henderson. May I ask this question? You spoke of your 
relationship being exactly like a general manager on these properties. 
However, if you were general manager you would not be able to sell 
two-thirds of your contract with the company to a rival organization, 
would you? 

Mr. Oglebay, Oh, no, no. 

Mr. Henderson. Then in that sense there is quite a difference, 
isn't there? 

Mr. Oglebay. There is in that sense; yes. But I mean we our- 
selves were, through the service corporation, putting our personnel 
in closer touch with tliis bigger picture and in that way, in being in 
closer touch with the possibly bigger picture, we were possibly aiding 
in helping these various corporations whose responsibiUty we had for 
their management. We looked upon that responsibiUty in the sense 
that if there was to be consoHdation probably we would play a very 
important part in the negotiations in trying to get as high a value as 
we could and just like a general manager or president of the corpora- 
tion would. 

Senator King. You mean a higher value for the properties which 
you were managing? 

Mr. Oglebay. Yes. 

Senator King. May I ask a question here? 

Mr. Feller. Yes. 

Senator King. Who fixed the prices at which the ore from these 
respective companies, the management of which in part was in your 
hands — who fixed the price that would be paid for the ore? 

Mr. Oglebay. The board of directors. 

Senator King. Well, did all of those companies imder whose 
management you had charge of the mines fix the same price or did 
each company fix the price of its own ore? 

Mr, Oglebay. Each company fixed the price of its own ore. 

Senator King. I presume there was a variance in the metallic 
content of the ores in the various properties? 

Mr. Oglebay. Oh, yes. 

Senator King. And the ores of one mining company being dis- 
similar, I assume, from the ores of others, would not command the 
same price? 

Mr. Oglebay. That is true. 

Senator King. Did you attempt to fix the price monopolistically 
or was there a system of competition in force among those whose 
companies you represented? 

Mr. Oglebay. Well, I can answer that probably better in detail. 
One of these "companies, two-thirds of it is owned by the American 
Rolling Mill Co. and WheeUng Steel Corporation and we sit around 
every year and decide with those what is a fair value and agree on a 
price and ship the ore to them, because they own two-thirds of the 



CONCENTRATION OF ECONOMIC POWER 10243 

ore anyhow, so they are not so keenly interested in what the value 
of the ore is. 

Senator King. Well, did the ores of all of the companies which you 
represent go to the same vendee, the same purchaser? 

Mr. Oglebay. Oh, dear; no. 

Senator King. Went to different companies? 

Mr. Oglebay. Different corporations. 

Senator King. And was there competition among those different 
corporations in bidding for the ores which you represented? 

Mr. Oglebay. Well, the ores were all sold in different years. As 
an example, I mean the Montreal Mining Co. Nearly all their con- 
tracts have been made in different years and carry over anywhere 
from 5 to 10 years, and nearly all those contracts were negotiated and 
sold against labor values and material costs. We arrive with the 
president of the steel corporation at about a fair value and then we 
fix that profit factor and then that profit factor changes with the 
different cost in labor and the different cost in raw material over a 
period of years. 

Senator King. What I am trying to get at is this, that the orders 
being different in value because they had different metaUic contents, 
there was no plan by which you were to standardize them and fix the 
same price and pay as much for the poor ores as for the good ores? 

Mr. Oglebay. Oh, yes; nearly all these ores are standardized at 
approximately 51 percent iron, and if an iron ore goes 60 percent, as 
an example, then you are paid for nine points more of iron, and if it 
goes lower than 51, why you are paid less for your iron ore. 

Senator King. Then the metallic content determined the amount 
which would be paid for the ore? 

Mr. Oglebay. Surely. 

Mr. Feller. Mr. Chairman, further on in this hearing we shall 
present rather extended testimony on the question of price along 
the lines Senator King has been asking about. 

Senator King. I thought it was material to ascertain just who fixed 
the prices of the ores of these various corporations that his company 
represented as merely service representatives; I was wondering just 
what disposition was made of the ore. 

Mr. Feller. Mr. Greene, reverting to the letter of May 29, 1930, 
sent by Mr. WilUam G. Mather to S. R. EUiott,^ you will recall that 
that letter contained these words: 

The advantages that will accrue to us are that * ■ * * * we are placed in 
a position of greatly minimizing, if not entirely preventing, tendencies which have 
prevented iron ore producers from getting a reasonable price for their product. 

I realize that this letter was written by someone else, but you were 
at that time the director of the corporation, were you not? 

Mr. Greene. I was. 

Mr. Feller. Would you be able to explain what that means? 

Mr. G'lEENE. I haven't any knowledge of what was in Mr. Mather's 
mind. The only reason that I feel that Mr. Mather was right, and I 
think I'lat is not what he expressed in the letter, was with the bigger 
units and possibly the abihty to dea,l with the buyers on a bigger scale, 
you could hope to get a better price for iron ore. That is the only 
thing tha;. I can see about it; as far as price goes, I presume it was the 

> "Exhibit No 1356", appendix, p. 10430. 



10244 CONCENTRATION OF ECONOMIC POWER 

customers of the two companies that were the ones he rather hoped 
would not be discussed. I think the advantage comes in simply 
dealing in smaller numbers. 

Mr. Feller. Do you see any reason why in the next paragraph 
Mr. Mather should have cautioned .against giving any publicity to 
this relationship? 

Mr. Greene. Yes; that is just what I alluded to. I think it was 
a matter of the ore companies having strong friendships with their 
customers, and probably it would be better for both Oglebay, Norton 
and Cleveland-Cliffs that the relationship should be not discussed too 
generally. 

Mr. Feller. Well, if, as you have said, the way in which this 
prevention of unreasonable tendencies in the price of iron ore would 
operate would be by virtue of the fact that you would have a larger 
organization, wouldn't it follow that people would have to know that 
it is a larger organization in order for you to be able to get the ad- 
vantages of size? 

Mr. Greene. That is true. Of course this was a period when there 
were a great many mergers taking place in the steel business, and 
there was one at that time contemplated which if brought about would 
have created a big unit and the steel companies that made up that 
merger would have had a big purchasing power. Now Oglebay, 
Norton, and Cleveland-Cliffs both wanted to participate in that busi- 
ness to the full extent that they could, and I think that was in the 
minds of Cleveland-Cliffs, and I think Mr. Oglebay has just testi- 
fied that that was in their minds too. 

Mr. Feller. Would you also say that this acquisition was con- 
nected with the attempts to merge the steel companies at that time? 

Mr. Greene. I wouldn't say connected ; I w^uld say that the pro- 
posed merger was a strong motive which helped to bring about a feel- 
ing on the part of the ore companies that maybe a close association 
would be helpful to the ore men. 

Mr, Feller. I should like to show you, Mr. Greene, a letter writ- 
ten by Mr. William G. Mather to Mr. Crispin Oglebay on the letter- 
head of the Cleveland-Cliffs Iron Co. This letter reads in part: 

There are, to be sure, advantages which will accrue to the owners of the fees 
and to those interests which are more or less associated with us, who have in mind 
the desirability of enlarging the mergers of steel companies which are now in 
progress. 

I offer this for the record. 

The Chairman. It may be received. 

(The letter referred to was marked "Exhibit No. 1357" and is 
included in the 'appendix on p. 10431.) 

Mr. Feller. Was that in effect a restatement of what you have 
just been saying? 

Mr. Greene. Exactly it. 

Mr. Feller. Then does it not appear that Mr. William G. Mather 
had in mind two main thoughts when this transaction was in the 
process of being accomplished; one, in his own terms, "preventing 
tendencies which have prevented iron-ore producers from getting a 
reasonable price for their product," or as it says in another place, 
"stabilizing the conduct of the iron-ore industry." That would be 
reason number one; and reason number two would be as an aid in 



CONCENTRATION OF ECONOMIC POWER 10245 

bringing about mergers of the steel companies. Is that a fair sum- 
mary of these two letters of Mr. Mather? 

Mr. Greene. Well, I think that is somewhat the same statement 
I made a moment ago. I think it was brought about to strengthen 
the ore people possibly, as opposed to the steel people, or rather as the 
steel people grew in size why maybe the ore companies if they grew 
in size would be better able to hold their own. 

The Chairman. Are you the Mr. Greene referred to in this letter 
of Mr. Mather? 

Mr. Greene. I think I am. 

The Chairman. Mr. E. B. Greene? 

Mr. Greene. Yes. 

The Chairman. Director of the Cleveland-Cliffs Iron Co.? 

Mr. Greene. That is right. 

The Chairman. And how long had you occupied that position? 

Mr. Greene. The position of director, you mean? 

The Chairman. Yes. 

Mr. Greene. I was elected to the Board of Cleveland Cliffs Iron 
Co. in 1926. 

The Chairman. So at the time this letter was written you had been 
a member of the board of directors for about 4 years? 

Mr. Greene. About 3 years. 

The Chairman. And you were also designated here as a representa- 
tive of the Wade estate? 

Mr. Greene. That is correct. 

The Chairman. How long had you occupied that position? 

Mr. Greene. I was an executor of the Wade estate. 

The Chairman. How long had you occupied that position? 

Mr. Greene. About 3 years. 

The Chairman. How long were you familiar with the properties 
of the Wade estate? 

Mr. Greene. I had no connection 

The Chairman. I said, how long were you familiar with them? 

Mr. Greene. Oh, familiar, for nearly 20 years. 

The Chairman. You were thoroughly familiar with all of the 
properties and the events which go into this whole transaction? 

Mr. Greene. All the major events; yes. 

The Chairman^ I wonder if you could tell the committee what you 
think were the tendencies to which Mr. Mather referred which had 
prevented iron-ore producers from getting a reasonable price for their 
product, tendencies which it was sought to minimize if not actually 
prevent by the acquisition of two-thirds of the control of the Oglebay 
company? 

Mr. Greene. Well, it is rather a difficult matter to interpret another 
man's letter, but I would feel that Mr. Mather just referred to the 
fact that the steel units were getting larger and larger, following the 
Great War, when freight rates were doubled; it was an advantage to 
be in all markets or as many markets as you could be; there were in- 
creased overhead expenses, and they called for the investment of a large 
amount of capital. Now for all these reasons the steel companies 
faced one of two alternatives. They either had to go to work and 
each one of them integrate and add on all the products they didn't 
have and attempt to reach all the markets; that would have required 



10246 CONCENTRATION OF ECONOMIC POWER 

an immense amount of capital and would have greatly oversupplied 
this country with steel. The other and more obvious course was for 
the steel companies to so merge as to supplement each other and in 
that way avoid the overextension in capacity. I could take just 
one case of that kind which I think will|illustrate that point. 

I think in 1927 the Trumbull Steel went into the Old Republic, 
located at Youngstown, only a few miles apart. The Trumbull Steel 
had more mill capacity; they had outgrown the furnace and open 
hearths. Just a few miles away was the Republic with more blast 
furnaces and open hearths than they needed for their finishing mills, 
and they had an oversupply of raw product or semifinish. Now they 
could each one of them buUd and spend millions of money and add 
the thing they didn't have, or by the simple operation of getting 
together the oversupply of raw material went to Trumbull — the 
combined company, of course — and Trumbull supplied the additional 
finish. Now that was what was going on in between the period of 
1921 or 1922, right up to 1930. 

The Chairman. How was that affecting the prices that you were 
getting for your ore? 

Mr. Greene. I was coming to that. That was lessening the 
number of customers all the time; when you decrease the number of 
customers you are making outlet for your iron ore more difficult. 
Now we all saw that going on. 

The Chairman. In other words, as the mergers of the steel com- 
panies tended to bring those companies under unified management 
and to prevent duplication of effort, competition among the various 
units began to disappear and the demand for ore was being steadily 
cut down? 

Mr. Greene. I don't think competition ever disappeared, Senator, 
I think it was simply the smaller the number the greater power they 
had in buying. 

The Chairman. I didn't mean that in any hostile sense at all; I 
was trying to interprat what you just described to me. As I under- 
stood your description it was, here was company A which had certain 
facilities, and company B wh^ch had certain other facilities. Now 
company A, instead of spending a large amount of money to build 
for itself the facilities of company B, chose rather to purchase com- 
pany B and effect a merger? 

Mr. Greene. That is right. 

The Chairman. So that instead of having two units doing the 
work that B was doing, you had only one unit? 

Mr. Greene. Yes. 

The Chairman. And when the merger was made effective therefore 
the possibility of competition between the extended plan of A with 
B was removed, was it not? 

Mr. Greene. That is exactly right, Senator. 

The Chairman. So that the merger did cut down the field of com- 
petition and that in turn you say had what effect upon the price that 
you were paying for your — or you were receiving for your ore? 

Mr. Greene. It just had a tendency to make it more difficult to 
maintain your prices. 

The Chairman. How was that actually reflected in prices? 

Mr. Greene. I would have to refer to the records there. 



CONCENTRATION OF ECONOMIC POWER 10247 

The Chairman. I mean can you testify there was a reduction in 
prices about this time? 

Mr. Greene. Oh, yes; there was, following the Great War there 
was a very material reduction in prices. 

Mr. Feller. Not in 1930? 

Mr. Greene. Not in 1930, because ^he war carried over, but after 
'30; I think it begms in '31. 

The Chairman. Now how would this combination with Oglebay, 
Norton, the exact character of which isn't altogether clear to me 
since Mr. Oglebay has testified that it was merely a managing cor- 
poration that took all its orders from boards of directors; it ap- 
parently exercised no independent discretion of any kind. Perhaps 
Mr. Oglebay may want to correct me on that? 

Mr. Oglebay. Oh, no. 

How did the acquisition of this management corporation which 
was merely reflecting orders which it received from boards of direc- 
tors, help you or Mr. Mather to stabilize the price of ore, since they 
had no jurisdiction over the price at which they sold it? 

Mr. Greene. Before I answer that, may I go on? I hadn't quite 
completed my statement on the other matter, why it made it more 
difficult maybe to sell ore, and that is this: These steel companies 
all had in varying amounts and varying kind their own ownership in 
ore. Now, some companies had a great deal and some had very 
httle. When you put them together you see what I mean. Every 
merger tended to better supply, maybe, those steel copapanies 
and they were less in the market because maybe the oversupply 
of "A" would take care of "B," where before that he would buy 
from the merchant sellers of iron ore. So in addition to the mat- 
ter you just gave us a summary of, in addition to that, you had 
this idea of the increased steel company being 9 times out of 10 better 
supplied with ore of different kinds than the separate units, so there 
was another reason that made it more difficult. 

Mr. Henderson. Was there another reason, Mr. Greene? Was 
there anything like a customary relationship between ore companies 
and steel companies, and if there were a merger, a dominant interest 
would divert the ore contract to the one with which it was dealing 
and it might conceiv^ably divert it away from your organization? 

Mr. Greene. That is very true. 

Mr. Feller. Now, Mr. Greene, it appears then that in the face of 
this, shall we say, threat presented by the merger of steel companies, 
it was the thought of your company to protect its position by increas- 
ing its own size through a merger with an ore company? 

Mr. Greene. That is right. When you say an ore company, you 
mean ore manager. 

Mr. Feller. Yes. Did you in fact coalesce Oglebay, Norton & 
Co. with Cleveland-Cliffs Co.? Did you effect a true merger? 

Mr. Greene. No; we did not. 

Mr. Feller. You kept Oglebay, Norton in the position of being 
an independent company? 

Mr, Greene. Absolutely. Of course, those mergers, beginning 
with about the summer of 1930, ceased to take place largely due to the 
increasing depression, and the two companies have acted exactly as 
if there had been no ownership of one in the other, and they have 



10248 CONCENTRATION OF ECONOMIC POWER 

competed, and I would say that as far as the practical results went, 
they have been nil. 

Mr. Feller. Incidentally, it is true, is it not, Mr. Greene, that the 
contract in 1930 provided that Oglebay, Norton should be operated 
independently? 

Mr. Greene. That is right. 

Mr. Feller. Now, how would it help your company to acquire the 
controlHng interest in Oglebay, Norton & Co., and yet to leave the 
management of Oglebay, Norton & Co. completely free and inde- 
pendent, and at the same time not to let the world know that your 
two companies were related in this fashion? In other words, would 
you get the advantage which you were seeking, the advantage of 
mcreasing your own size so as to cope with your customers who were 
also increasing their size? 

Mr. Greene. It is hard to look back and see today what the condi- 
tions were then, but there was within the next 6 months what seemed 
to be the almost certainty of a creation of a big steel company, I mean 
a company in between the size of the United States and the next 
company. Now, that company with its combined resources would 
probably require a raw-materials company. In the minds, I think, of 
Mr. Oglebay and of Oglebay, Norton & Co. was the idea that this 
association might put them in a position to go in if they wanted or 
stay out if they wanted. I think I shouldn't be testifying for them, 
but I think that is what was in their minds. 

I tliink in the minds of Cleveland-Cliffs was the thought that in that 
company the two of them would exercise more influence and become 
maybe a vital part of it if they worked together, and that is the 
atmosphere that you don't get today and you don't see, but if you 
went back to 1929 and 1930 I am sure you would realize that was a 
more potent factor than we see now. 

The Chairman. Do they work together? 

Mr. Greene. That steel company never was formed, and the cause, 
therefore, of the formation of Cliffs, I would say, maybe one of the, 
if not the most powerful reasons for this relationship was "out the 
window" within a very few months. 

The Chairman. Was there any result at all from the conditions 
described in this letter of Mr. Mather? 

Mr. Greene. I think there were none whatever. 

The Chairman. At any time? 

Mr. Greene. At any time. 

"Mr. Feller. Mr. Greene, you have testified correctly that under 
the contract of 1930 Oglebay, Norton was to be run independently of 
Cleveland-Cliffs. The contract also provides, does it not, that Cleve- 
land-Chffs may in its judgment consolidate one or more departments 
of the business of Oglebay, Norton with similar departments of 
Cleveland-Cliffs? 

Mr. Greene. That, I believe, was a clause of the contract. 

Mr. Feller. Now, Mr. Oglebay, you testified previously that one 
of the reasons why your company was willing to dispose of this con- 
trolling interest was because of its expectation or hope that it would 
receive a larger share of the business, is that correct? 

Mr. Oglebay. I don't follow you. 

Mr. Feller. The expectation or hope that through further con- 
nections, your company would be able to sell more iron ore. 



CONCENTRATION OF ECONOMIC POWER 10249 

Mr. Oglebat. No, I think our thought mostly was that we had a 
picture of this consolidation being effected, and if it was effected that 
we by associating ourselves with Cleveland-Cliff's would have a better 
influence in making better values for the corporations that we were 
managing than if we were totally independent and left by ourselves. 

Mr. Feller. Was your thought there that you would become a 
part of the new consolidation? 

Mr. Oglebay. Oh, I don't think anybody had any thought exactly 
about what it would be. Some people felt if this consolidation were 
effected that Cleveland-Cliffs Iron Co. might be made into another 
Oliver Mining Co. and would be the company that would represent 
the iron ore interests of this larger consolidation. That was in the 
minds of some of us who were simply gossipilig and trying to think 
what might happen. 

In thinking what might happen, we were representing two or three 
large corporations and we just felt, "Well, now, here that might 
happen, we have got everything in the world to gain by sitting around 
the table here with a personal service corporation, and if it doesn't 
happen we have little or nothing to lose in relationship to the big 
amount that we represented." 

This little corporation had very few quick assets and we were 
managing properties that you might think of as being worth $30,000,- 
000 or so, and naturally we were thinking of the welfare of the $30,000,- 
000 rather than the welfare of this personal service corporation. 

Senator King. May I ask a question there without disturbing the 
continuity of your procedure? As I understand it, your organization 
was merely a service organization. It didn't fix the prices of the ores 
which you sold to the various corporations that were producing steel. 

Mr. Oglebay. That is right. 

Senator King. Were there any other service organizations than the 
one in which you were interested? 

Mr. Oglebay. What do you mean ; you mean within our office? 

Senator King. No; in this iron region. 

Mr. Oglebay. I look upon Pickands, Mather Co. as a personal 
service corporation. 

Senator King. Who was it wanted the ore and who was it fixed the 
price for the ore which you and the Mather Co. sold? 

Mr, Oglebay. As I say, a good part of our ore was captive ore; I 
mean owned, so that the owners fixed their prices on that ore, and 
then the larger mine we operate in the name of the Montreal Mining 
Co., that ore is all sold on 10-year contracts and it hasn't any relation- 
ship to any price of any one year. It is based against cost of labor 
and cost of raw materials, and, of course, when we could negotiate with 
z corporation, we would arrive at a price where we were in sympathy 
with each other as to a contract, and then we would go back with that 
contract to our board and call our board together and ask them 
whether they approved of it, and if they did approve of it, we would 
make the contract. 

Senator King. Wliat I am trying to get at is what conduct on your 
part — when I say "your" I mean your service corporation — would 
affect the price of the finished product which was put out by the 
manufacturers of the steel commodities? 

Mr. Oglebay. Oh, gee! 



10250 CONCENTRATION OP ECONOMIC POWER 

Senator King. Did your conduct have anything to do with the 
price that I would have to pay for steel? 

Mr. Oglebay. If it did, it is so small I can't imagine it having any 
ofleefc. 

Mr. Feller, Mr. Oglebay, did it have anything to do with the 
price which would be paid by steel companies for iron ore? 

Mr. Oglebay. Are you speaking now in relationship to the con- 
solidation? 

Mr. Feller. Yes; your company. In accordance with the tele- 
gram which you sent to Mr. White — and by the way, may I offer it 
for the record? 

The Chairman. It may be received. 

(The telegram referred to was marked "Exhibit No. 1358" and is 
included in the appendix on p. 10432.) 

The Chairman. Would you be good enough to read that telegram 
again? 

Mr. Feller (reading from ''Exhibit No. 1358"): 

I have talked with Wade and Greene and they approve of general plan and ask 
the following telegram be sent as representing their thoughts. I think their 
recommendation for specific considerations are entirely proper and have advised 
them in my opinion they would be so recognized (stop) As individuals we are 
heartily in favor of Cleveland- Cliffs company acquiring Oglebay, Norton & 
Company under the proposed plan believing that this merger tends to stabilize 
the market value of ore. 

The Chairman. Does this telegram refer to Mr. Greene, the present 
witness? 

Mr. Greene. Yes. 

The Chairman. Does the telegram express your opinion? 

Mr. Greene. I was in favor of the acquiring of two-thirds of the 
preferred stock of Oglebay, Norton. 

The Chairman. What did you think you were acquiring when you 
were in favor of buying this two-thirds stock? 

Mr. Greene. We were acquiring a well-established and profitable 
service corporation. While their contracts may have been short-time, 
they had made a conspicuous success in managing several properties, 
one or two of them outstanding properties, and we considered that ac- 
quiring an interest in that company and the association with Oglebay, 
Norton and its mines and witn the men who ran that company was 
worth the money and stock we gave them for it. 

The Chairman. In what manner was it worth it? 

Mr. Greene. It was the association. 

The Chairman. What did you pay for it? 

Mr. Greene. We paid 10,000 shares of Cliffs stock, and 

Mr. Oglebay. Nothing more. There was no "and" to it. 

The Chairman. Mr. Greene seems to be a little doubtful about that. 

Mi'. Greene. I am sure he would remember. 

The Chairman. Don't you remember what your company paid? 

Mr. Greene. Ten thousand shares of Cliffs stock. 

The Chairman. And you asked your associates about something in 
addition. I thought I heard you say a million and something. 

Mr. Greene. I was thinking — that is a no-par stock. You see, I 
was thinking, I called it a par value of $1,000,000. Ten thousand 
shares at $100 would be worth a million. 

The Chairman. What was it actually worth? 



CONCENTRATION OF ECONOMIC POWER 10251 

Mr. Greene. Ten thousand shares of Cliff at no par value. 

The Chairman. What was its actual value? 

Mr. Greene. That would depend on the market. 

The Chairman. What was the market at that time? 

Mr. Greene. In my recollection, it has had a low 

The Chairman (interposing). I mean at the time the transaction 
was made. 

Mr. Greene. There were times when it was above par. I couldn't 
tell you now. 1 wasn't active then, Mr. Chairman. 

The Chairman. You were paying a stock that was worth more than 
$1,000,000 for a two-thirds interest in a service corporation which did 
nothing but take orders from the directors of diverse property owning 
corporations. 

Mr. Greene. Their prospectus at that time showed their average 
earnings and they anticipated earnings of around $200,000 a year, 
which would make it not an unattractive investment. Of course, you 
remember we were back in the golden period. 

The Chairman. But Mr. Mather didn't make any mention of the 
investment desirability of this exchange in the letter. He was 
talking about controlling certain tendencies which had prevented 
iron-ore producers from getting a reasonable price for their product. 

Mr. Greene. You are speaking of the telegram. 

The Chairman. I am speaking now of the letter.' 

Mr. Greene. Of the letter. 

The Chairman. Your mention now of the investment value of this 
purchase has never appeared in any of this transaction. All of these 
documents and letters and telegrams have to do with stabihzing the 
ore industry, not in the acquisition of an investment. 

Mr. Feller. May I say at this point, Senator, that the sentence 
which talks about preventing unreasonable tendencies begins by saying 
[reading] : 

The advantages that will accrue to us are that we share in their net profits to an 
appreciable extent, and * * *_ 

In other words, there are two reasons given. 

Mr. Greene. Senator, I think it would be well for all of us to bear 
in mind in connection with that telegram that it referred to Mr. Wade 
and myself, not in any connection with Oglebay, Norton or Cleveland- 
Cliffs. That was entirely due to the Montreal Mine and the question 
of whether the merger of Oglebay, Norton and Cleveland-Cliffs 
would be helpful or detrimental to Montreal Mine — there entered the 
question of just how Montreal Mine would dispose of their ore. You 
see what I mean? It wasn't addressed to Mr. Wade or me with 
any reference to Cleveland-Cliffs although it so happens we were both 
on Cleveland-Cliffs' board. 

The Chairman. In acquiring this two-thirds interest in the manage- 
ment company, did you acquire power, whether or not ever exercised, 
to stabilize the prices paid for iron ore. 

Mr. Greene. I am sure we didn't. 

The Chairman. Then you want us to understand that actually 
there was no meaning in the second part of this sentence in Mr. 
Mather's letter, that it was so much surplusage and might just as 
well have been left out. 

• "Exhibit No. 1356," appendix, p. 10430. 



10252 CONCENTKATION OF ECONOMIC POWER 

Mr. Greene. I am quite sure that is correct. 

Senator King. How could that service company fix the price of 
ore if the ore was purchased by these big manufacturmg steel com- 
panies? This service company didn't use- any of the ore and make 
steel commodities out of it, did it? 

Mr. Greene. I don't see how they could, Senator. 

Senator King. You were merely buying in order to sell to the big 
manufacturing companies, the big steel companies? 

Mr. Greene. I am not speaking for Oglebay, Norton. 

Senator King. This service company. 

Mr. Greene. Yes. 

Mr. Feller. Mr. Oglebay, to clarify the situation somewhat, at 
that time, in 1930, Oglebay, Norton was the exclusive sales agent, 
was it not, for three mines? 

Mr. Oglebay. Yes, sir. 

Mr. Feller. In other words, it sold ore on the open market. 

Mr. Oglebay, according to the figures which you submitted to us, 
and on the basis of the calculations which we have made, it appears 
that in 1929 your company shipped 4.2 percent of the total shipments 
of the Lake Superior iron-ore industry. In 1930, at the time of the 
acc^uLsition, you shipped 3.9 percent. Now, it appears that in 1937, 
which was the first year since 1929 to be compared in the matter of 
tonnage with 1929, your mdustry position was 2.6 percent on the basis 
of shipments. Would you say that your association with Cleveland- 
Cliffs Iron Co. has proved to be profitable? 

Mr. Oglebay. No; I would say it is totally negativ^e. 

Mr. Feller. In other words, the association neither bettered your 
position nor resulted in your position diminishing. 

Mr. Oglebay. We diminished. Our picture diminished, due to the 
adverse conditions in the steel business fr-om '30 to '38. 

Mr. Feller. Of course '37 

Mr. Oglebay (interposing). We did have about three mines more. 
In 1929 we had five mines, and during this period of 8 years of adver- 
sity we abandoned— that is, the various companies that owned these 
three properties abandoned — these properties, and that is the reason 
for the difference of these tonnages, so instead of operating five 
raines, which we did in '29, we were operating two properties in '39. 

Mr. Feller. Mr. Greene, at the present time you have testified 
that Oglebay, Norton is operated independently, I think you said 
wholly independently, of Cleveland-CIiifs. If Cleveland-Cliffs do- 
sired, could it direct the activities of Oglebay, Norton & Company? 

Mr. Greene. I think it has the legal power to do so, but it has 
never exercised it, and doesn't have any intention to do so, so far as 
I know. 

Mr. Feller. Then would it be fair to say, in summary, that your 
company in 1930 acquired two-thirds of the stock, of the voting stock, 
of Oglebay, Norton & Co., which was a substantial competitor, that 
the president of your company at that time stated that the reason for 
the acquisitions were, first, to share in the profits, and secondly, to 
stabilize the market value of ore; that you have since operated 
Oglebay, Norton as an independent company and have not attempted 
to control its policies? Is that a fair summary? 

Mr. Greene. I think, while he may not have mentioned it in that 
letter, I am quite certain that in the notices of the Cleveland-Cliffs 



CONCENTRATION OF ECONOMIC POWER 10253 

Iron Co., and I can't recall now whether it was in the annual statement 
or whether it was the letter sent to stockholders in connection with 
the approval of this item, the very first statement that Mr. Mather 
made over his signature was that the investment was made because 
it was regarded as a profitable and sound investment from the earnings 
standpoint, so that I think that should have been as prominently 
stated in the letter as it was in his communication, because I laiow 
that is what Mr. Mather felt at the time the purchase was made, and 
I agree with the rest of your statement. 

Mr. Feller. I wonder if you could tell us again why you think 
Mr. Mather thought that this relationship should not be given 
publicity. 

Mr, Greene. I think that had largely to do with the relationship 
of the two companies with their customers. 

Mr. Avildsen. Will you explain that, Mr. Greene, a little better? 

Mr. Greene. Well, there are strong friendships, and at least you 
can call them associations, in the steel business. Some of us are as- 
sociated with some companies, and other ore companies are associ- 
ated with others. 

Mr. Avildsen. Could you hope to keep a thing of that sort secret 
very long? Wouldn't it soon leak out? 

Mr. Greene. I thmk over a period of time I have no doubt it 
would become known. As a matter of fact there was so little control — 
not so little; there was no control exercised — that the companies have 
gone along as if this ownership never occurred, and I believe that the 
first time it was known was in the fall of 1935. 

Mr. O'Connell. Mr. Greene, I am not at all clear, from your ex- 
planation, as to what your explanation means as to the reason for not 
giving any publicity to this. Will you be a little more explicit? 
\Vho would have been offended if they knew? 

Mr. Greene. I really think this: As I say, in the steel and in the 
ore business there are certain rather strong associations and certain 
companies and groups of companies buy from one group, and certam 
from another. Now it was probably advisable, or must have ap- 
peared advisable, to the management of Cleveland-Cliffs at that time 
that this matter should not be given publicity. 

Mr Henderson. That is along the lines of the question I asked. 
If one steel company was buying from a group managed by Oglebay, 
Norton and knew that the ore company supplying a rival group was 
a dominant interest there, they might be likely to make a change. 

Senator King. Isn't it just the same situation that we frequently 
have in business, some common buyer will not like John Jones, have 
some personal antipath>' toward him, and if he knew he was associated 
with Dick Jones, with whom he was dealing, he probably would not 
buy from the latter either. It is a personal equation, personal likes 
and dislikes, rather than a question of benefits to be derived from the 
association. 

(The witness nodded in agreement.) 

Mr. O'Connell. Mr. Greene, you testified earlier that prior to the 
acquisition of this stock the Oglebay, Norton Co. was a substantial 
competitor of the Cleveland-Cliffs Co. Is that correct? 

Mr. Greene. Yes. 

Mr. O'Connell. Are you familiar with the prohibitions of section 
7 of the Clayton Act? Did you ever hear of it? 



10254 CONCENTRATION OF ECONOMIC POWER 

Mr. Greene. I have heard of the Clayton Act, but I don't believe 
I know of Section 7 as such. 

Mr. O'CoNNELL. As I understand it, that is a provision that for- 
bids a corporation to acquire stock in a competing corporation if the 
effect may be to substantially lessen competition. I wondered if you 
were sufficiently familiar with the transaction at the time it took 
place to tell us whether or not any consideration was given to that 
aspect. 

Mr. Greene. I feel certain it was submitted to capable counsel and 
passed on. I think if you will look at the figures of the volume of 
business of the two companies together, of the ores sold, you will still 
feel it was way, way below any possibility of getting within the range 
of what I suppose, or have supposed, was the clause in the Clayton Act. 

Mr. O'CoNNELL. You weren't sufficiently familiar with the details 
of the transaction to know just what consideration was given to that? 

Mr. Greene. I couldn't tell you now; I wasn't then active in the 
company and couldn't answer. 

Mr. O'CoNNELL. Would it be possible to direct a question to Mr. 
Feller as to whether any investigation was made by any department 
of the Government in that connection? 

Mr. Feller. Not that I am aware of. I don't know whether any 
Government agency knew of this transaction, and as Mr. Mather's 
letter states, it was desired that not much publicity be given to the 
matter. 

Mr. O'CoNNELL. The reason I raised the point is that there might 
have been other reasons for not giving publicity to the move, other 
than the desire not to have the competitors or suppliers know about 
it. But you aren't in a position to say? 

Mr. AviLDSEN. You say this matter was mentioned to the stock- 
holders in the annual report. Didn't that have the effect of publi- 
cizing the transaction? You say this transaction was reported in the 
annual report of your company, and Mr. Mather referred to it as a 
good deal for the company. 

Mr. Greene. I think I can give you that. 

Mr. AviLDSEN. Didn't that have the effect of publicizing the trans- 
action? 

Mr. Greene. It might not have had so much — I will read it to you: 

The acquisition of Oglebay, Norton & Company, extract from the annual report 
for the year 1930 of William G. Mather, President, to the stockholders of the 
Cleveland-Cliffs Iron Company, dated April 9, 1931. 

This is the quote: 

This acquisition, together with an interest purchased in the strong and ably 
managed Oglebay, Norton & Company, considerably advances our position in the 
Lake Superior iron ore industry. 

That was in the annual report, and of course was known to the 
limited number who were stoclvholders. 

Mr. AviLDSEN. Is it a limited number? How many stocldiolders 
did you have at that time? 

Mr. Greene. Well, I would guess probably a thousand, or nine 
hundred. I think it was in excess .of a thousand. 

Mr. AviLDSEN. Then I would say the transaction was not kept 
very secret. 

Mr, Greene. A thousand or eleven hundred, the secretary states. 



CONCENTRATION OV ECONOMIC POWER 10255 

Mr. O'CoNNELL. I notice in reading again Mr. Matlier's letter that 
he suggested other reasons for not according publicity to it. He says 
[reading from "Exhibit No. 1356"]: 

as such pnblicity might result in opposition on the part of the pubhc, or the con- 
sumers, to a move which they may construe as tending towards an undue control 
of prices. 

Does that suggest to you that possibly that consideration might 
have been pertinent? 

Mr. Greene. Well, I don't know, of course, what was in the 
writer's mind, but as I stated a minute ago, I feel that the total amount 
of business out of all the ores shipped by these two companies was a 
matter of so small a percentage of the whole that it would have no 
public interest, or detrimental interest. 

Mr. O'CoNNELL. You are in effect saying that you are not in 
accord with Mr. Mather's view as expressed in that letter? 

Mr. Greene. I am not. That is right. 

Mr. Feller. Mr. Chairman, I desire to go on and question Mr. 
Greene, with respect to other matters of which Mr. Oglebay would 
have no first-hand knowledge, and may I request that Mr. Oglebay 
be released for the time being? 

The Chairman. Are there any other questions to be asked of^Mr. 
Oglebay before he stands aside? 

Very well, Mr. Oglebay, your presence will not then be required at 
the table for a few moments. Perhaps Mr. FeUer may call you later. 

Mr. Greene. Mr. Chairman, I have been told and I now recall, 
that the Oglebay-Norton merger was announced in the papers, and 
I believe in writing to Mr. Elliott, who is the manager of oiu- mining 
department located at Ishpeming, but who is also the manager of oiu- 
mines on the Mesaba and our mine on the Menominee Range, he may 
haveMt, and the Oglebay-Norton people especially might lave felt, it 
affected adverse!}^ their working organization, and while that isn't 
made very plain in Mr. Mather's letter, you can readil}?- understand 
that if our mining organization (and they are very keenly competitive 
in a sort of technical and professional way) were to indicate to the 
people managing the mines of Oglebay-Norton that they were taken 
over by Cleveland-Cliffs, it woufd have a very detrimental effect on 
their esprit de corps. 

The Chairman. That idea was set forth very clearly in Mr. 
Mather's letter in the second paragraph from the end, and he went 
into it there at such length that it would seem almost to be an inde- 
pendent thought from that conveyed by the sentence to which Mr. 
O'Connell was referring. 

Mr. Feller. Mr. Greene, referring again to the chart entitled 
"Financial Connections Between Major Iron Ore Companies and 
Steel Companies," you will notice that just above the name Cleveland- 
Cliffs Iron Co. occurs the name The Cliffs Corporation. Can you 
tell us what the Cliffs Corporation is and what was the occasion of its 
formation? 

Mr. Greene. The'formation of the Cliffs Corp. goes directly back to 
the statement that I made in connection with certain questions a short 
time ago. There had taken place between '22 and '29 a great many 
mergers in the steel business, and I gave the reasons for those — 
increased freight rates, taxes, overhead expenses and so on — and more 

124491— 40— pt. 18 4 



10256 CONCENTRATION OF ECONOMIC POWER 

especially the desire of the steel companies to broaden their scope of 
products and to reach all markets. 

Now, to accomplish that, as I stated before, you can do it in two 
ways. You could add on to all the existing units the portions they 
didn't possess and you could build additional plants in the other 
principal steel-consuming markets. The other way to do it was by 
merger. Mr. Eaton had, through the investment companies 

CYRUS S. EATON PROJECT FOR MIDWESTERN STEEL MERGER 

Mr. Feller (interposing). Pardon me just a moment. Can you 
tell us the full name of Mr. Eaton? 

Mr. Greene. Mr. Cyrus S. Eaton. He had, through his invest- 
ment companies, acquired large blocks of steel stocks. 

Mr. Feller. Could you tell us which they were? 

Mr. Greene. T doir t loiow as I am competent to say on the stand. 
I know they included Central Alloy 

Mr. Feller (interposing). May I read the list to you, Mr. Greene, 
and you can then check? 

Senator King. I suppose that would be hearsay, or are you speak- 
ing of your own knowledge? 

Mr. Greene. They passed from that into the Clifls. lie may 
have had some others that didn't, but I know he did have tliesc. 

Mr. Feller. They included Trumbull Steel, Republic, Inlaiid Steel, 
Central Alloy, and Youngstown Sheet & Tube. 

Mr. Greene. They included all of those, and Wheehng. He had 
acquired these, and they were held in, say, four investment companies. 
He had worked very hard for maybe a year or two to bring about 
what was commonly called the Midwestern Steel Co., and had gotten 
pretty far along in liis negotiations, as he thought and as we tliought. 

The question then came up of wliether, with this merger and the 
bringing together of the holdings of the ore of those companies, it 
would not be an opportunity for Cleveland-Cliffs to become the raw 
material, or the iron ore, company of that big projected steel company. 
Ill the spring- 
Mr. Feller (interposing). May I interrupt you just a inoment? 
How would tliis projected steel company have ranked in the steel 
industry? 

Mr. Greene. It would have ranked second. 

Mr. Feller. Larger than Bethlehem? 

Mr. Greene. Yes, sir; if they had got all they hoped to get. 
Of course, we were not participating in it; we were gettmg the story 
second-hand. I am making this statement as of what I understood it 
to be. 

That went along for a number of months, and in the spring of '30 
Mr. Eaton represented that be had reached the point where he wanted 
to know whether Cleveland-ClifTs wanted to become the raw material 
company or whether it did not. He not having a definite plan to 
put down on the table to say "Here is what we have," naturally you 
weren't in a position to either accept or dechne any such invitations 

It progressed to the point where the management and the Board 
felt that the chances of his success in bringing about that company 
were very good. 

Senator King. Speaking of your own company now?. 



C(JN(JKN'LM{AT1()N OF KCUNUMIO POWElt 10257 

Mr. Greene. Yes, our own companj'^ — were very good, and when 
he suggested that lie would Uke to know definitely, for two reasons; 
be wanted to consider some other ore ownership if we didn't do it, 
and in the second place he was frank to say that possiblj^ the inclusion 
of Cleveland-Cliffs in that might be helpful in getting the groups of 
the steel companies together. 

There was a meeting held in California in the spring of 1929 at 
wliich the plan of organizing the Cliffs Co., which would tie Cleveland- 
Cliff's in with blocks of stock of companies that there was a reasonable 
feeling would go into that merger with the others, that would be a 
proper step to take then, with the next step, of course, which would 
have to be approved by Cleveland-Chffs, that they could vote to 
become an integral part of it, but that was what I might call a 
preliminary step. ^ 

They therefore arrived at a valuation, tentatively, of Cleveland- 
Cliffs, Cleveland -Cliffs changed its capitalization, issued preferred 
stock to its stockholders and then its stockholders contributed the 
common stock of Cleveland-ClLffs into the treasuiy of the Cliffs 
Corporation, receiving back Cliffs stock share for share in place of 
their Cleveland-Cliffs common. These mvestment companies con- 
tributed listed common stcei stocks to offset the common of Cleveland- 
Cliffs, both of which had a valuation of approximately 40 million. 

Therefore, you had created the Cliffs Corporation as a holding 
company with, at that time, 40 million of common listed steel stocks, 
and all the common stock of Cleveland-Cliffs Iron. 

Now I am givhig approximate figures. All the stock didn't come 
in for a year or 2. I think 200 shares stayed out, and the total stock 
there was a little under 800,000. 

I testified that Oglebay, Norton got 10.000 shares of Cliffs. Ogle- 
bay, Norton technically got 10,000 shares of Cleveland-Cliffs Iron 
common, and immediately deposited it in the Cliffs Corporation and 
got 10,000 shares of Cliffs, so that brought the stock of the Chtts 
Corporation to something like 808 or 810 thousand shares. 

The formation of Cliffs, as you can readily see, was a direct carrying 
out of a bigger plan which, in fact, never materialized. 

Mr. Feller. Mr. Greene, in 1930 a merger did take place, did it 
not, which resulted in the formation of the Republic Steel Corpora- 
tion? Was that a step in this larger plan which, as you just said, 
never fully eventuated? 

Mr. Greene. It was, to a certain extent. 

Mr. Feller. Do you remember wliich companies were merged 
together to form the Republic Steel Corporation? 

Air. Greene. The Republic Steel Company, the Central Alloy, 
the Doimer Steel and the Bourne Fuller. 

Mr. Feller. At that time Republic Steel Corporation was known 
as Republic Iron & Steel Co. 

Mr. Greene. It became the Republic Steel Corporation. 

Mr. Feller. And Mr. Tom Girdler became the head of that cor- 
poration at that time, did he not? 

Mr. Greene. My recollection is he became chairman on April 8, 
1930. 

Mr. Feller. You and Mr. Mather asked him to assume that 
chairmanship? 



10258 CONCENTRATION OF ECONOMIC POWER 

Mr. Greene. I did not. 

Mr. Feller. Oh, I'm soriy. Do you know whether Messrs. 
Mather and Eaton asked him to assmue that chainnanship? 

Mr. Greene. I am not competent to testify to that. I was in the 
banking business. 

Mr. Feller. This is not very important. 

Senator King. Did the RepubHc Steel Co. that was thus formed 
survive? 

Mr. Greene. Yes, sir. 

Senator King. Is it functioning now? 

Mr. Greene. It is functioning every day. 

Senator King. Was it anticipated that the RepubHc Steel Co. 
would take the place of the Midwestern Co. that Air. Eaton had in 
mind? 

Mr. Greene. That was to be one, possibly the largest, unit of five 
or six that would have been in that company. 

Senator King. And that was to be promotive of competition in the 
steel industry? 

Mr. Greene. I think probably it would Help stabilize the steel 
industry. I think it was a sound idea. They were a group of steel 
companies located in the Midwest 

Mr. Feller (interposing). Mr, Chairman, merely to clear up this 
small point, I should like to read for the record a few sentences from 
a memorandum prepared by Mr. E. B. Greene dated May 3, 1935, 
and taken from the files of the Cleveland-Cliffs Co. 

The Chairman. Will Mr. Greene identify it? 

Mr. Feller. Can you identify this as Having been taken from the 
files of your company? It has your name typed at the bottom. 

Mr. Greene. Yes. 

The Chairman. That is from your files? 

Mr. Greene. Yes. 

Mr. Feller. The memorandum tells about a conversation with Mr. 
Girdler and states: 

He (Mr. Girdler) then went on to recite that he had come to Cleveland in no 
small measure due to the fact that he understood that he would be closely asso- 
ciated with the Mather interests; that he had had but little contact with Samuel 
Mather or his firm, but that he had seen a great deal of Mr, Wm. G. Mather 
and had a very strong feeling of friendship and admiration for him and desired 
to do everything he could for their interests; that he regarded Cleveland-Cliffs 
Iron Company and Republic Steel as members of the same intimate business 
family, and felt that the relations should be not only close but mutally profitable. 

Mr. Greene, you have previously stated Mr. Cyrus Eaton's plan 
for large steel consoHdation never went through. 

Mr. Greene. Never went through. 

Mr. Feller. ^Vhen would you say it, shall we say, collapsed? 

Mr. Greene. Well, it collapsed largely due to the depression. 
That was the principal reason. I think there was one other con- 
tributory reason. 

Santor King. Then it collapsed substantiaUy in 1932? 

Mr. Feller. Somewhat earHer, was it not? 

Mr. Greene. It started to go off by, I would say, the late spring 
of '30. The steel business carries over after a depression and comes 
back last. 



CONCENTRATION OF ECONOMIC POWER 10259 

Mr. Feller. However, subsequent to the collapse of this plan, 
your company still desired to see a further consohdation of steel com- 
panies, did it not? 

Mr. Greene. Could you be a little more specific? 

Mr. Feller. Well, I think it would be clearer if I were to introduce 
a memorandum signed by you dated December 11, 1933, certified to 
be a true copy by the secretary of your company. 

Senator King. A true copy of a letter by Mr. Greene? 

Mr. Feller. Yes; I offer that. 

The Chairman. Has the witness identified that? 

Mr. Greene. Yes. 

The Chairman. It may be received. 

(The memorandum referred to was marked "Exhibit No. 1359" 
and is on file with the committee.) 

Mr. Feller. The memorandum states in part [reading]: 

Messrs. William G. Mather and E. B. Greene were to see Mr. Girdler [that is, 
the Chairman of Republic Steel] and urge the proposition on the broad view that 
if we were to cooperate with them in consolidating steel properties, it was only 
logical and fair for them to cooperate with us in managing ore properties. 

It is not necessary to print the whole of the memorandum for the 
record. 

The Chairman. You want only that which you have read? The 
reporter already has that. 

Mr. Feller. In short you were, Mr. Greene pT.opoT>o;j to cooperate 
with Kepublic Steel in consolidating steel properties? 

Mr. Greene. That refers directly, I believe, to our ownership of 
originally 62.5 percent of Corrigan, McKinney, which we purchased 
in 1930, and which we merged with Republic later on. When I said 
that I was referring directly to a steel company in which we had a 
very large investment, that either we would have to go on and spend a 
great deal of money because its principal product w is merchant bars, 
semifinished, or we had to take stock for it in a s 3el company who 
would develop it, just as Republic has, and they have spent many 
millions there putting in mills adjoining, and an ir ral part of, 
Corrigan, McKinney. 

Senator King. As I understand your statement, it dia not refer to 
the CHffs organization or the Cleveland-Cliffs Iron Co. 

Mr. Greene. Cleveland-CUffs is the operating and owning com- 
pany. 

Senator King. You mentioned Corrigan, McKinney, and I sup- 
posed it was a different corporation to which you referred. 

Mr, Feller. May I clarify that? Mr. Greene, what you have 
stated is this, that some time in the thirties, to be precise in 1935, a 
merger was accomplished between Repubhc Steel Corporation and 
another steel company known as Corrigan, McKinney & Co., and that 
Cleveland-Cliffs owned at that time the controlling interest in Corri- 
gan, McKinney & Co. 

Mr. Greene. That is correct. That is what I intended to say. 

Mr. Feller. Now by this merger in 193'5 Repubhc Steel became, 
did it not, the third largest unit in the steel industry? It is such now. 

Mr. Greene. If my memory is correct, it was the third before. 
But it was third by a bigger margin. 



10260 eONCEiNTTRATION OF ECONOMIC POWER 

Mr. Feller. It became a still larger unit. 

Is it correct to say that at that time the Cleveland-Cliffs Iron Co. 
attempted to induce this Otis Steel Co. to enter this merger? 

Mr. Greene. No; that isn't correct. They did nothing to induce 
Otis. Republic, I think, carried — I loiow carried on negotiations 
with Otis, but Cleveland-Chffs was interested in both companies and 
did not endeavor to influence either. 

Mr. Feller. Did Cleveland-Cliffs desire that the Otis Steel Co. 
go into this merger? 

Mr. Greene. I think they would have favored it. 

Mr. Feller. Did the directors of Cleveland-Cliffs take any step 
to convey this desire to Otis Steel? 

Mr. Greene. I am sure they did not, 

Mr. Feller. I show you a memo, headed "Statement of William 
G. Mather to the board of directors of Otis Steel Co." WiUiam G. 
Mather was then the president. The date of it is August 2, 1934. 
At that time was Mr. WilUam G. Mather president of Cleveland- 
Cliffs? 

Mr. Greene. No. 

Mr. Feller. What was his position? 

Mr. Greene, Chairman of the board. 

Mr. Feller, He was chairman of the board. This statement is 
certified to be a true copy by the secretary of j^our company. See 
if you can identify that. It has not your name on it, but it is certified. 

Mr, Greene. I feel confident that it is a true copy. 

Mr. Feller, I offer this for the record. 

The Chairman. It may be received. 

(The exhibit referred to was marked "Exhibit" 1360" and is included 
in the appendix on p. 10433.) 

Mr. Feller. Reading frorr the statement of William G. Mather 
to the board of directors of Otis Steel Co.: 

I desire, in behalf of myself and the other Board-members who are also Directors 
of The Cleveland-Cliffs Iron Company — 

How many such are there? 

Mr. Greene. Then or now? 

Mr. Feller. In 1934. How many members of the board of Otis 
Steel were directors of Cleveland-Cliffs? 

Mr. Greene. I am sure Mr. Mather and Mr. Raymond were and 
Mr. Croxton might have been active then in Cleveland-Cliffs. I 
don't recall just when he severed his connection. I would say three 
directors: 

Mr. Feller (reading from "Exhibit No. 1360"): 

I desire, in behalf of myself and the other Board members who are also Directors 
of The Cleveland-Cliflfs Iron Company, or officials of that Company, to state our 
position with reference to the proposed negotiations with Republic Steel Cor- 
poration and The Corrigan, McKinney Steel Company. We feel, and are advised 
by counsel, that in view of the large ownership of The Cleveland-Cliffs Iron 
Company in the stock of Corrigan, McKinney and its substantial ownership of 
Republic stock, as well as its ownership of shares in Otis Steel Company, it 
would not be proper for us to vote upon or participate in any corporate action 
involving the sale of the assets and business of Otis Steel Company to, or its 
consolidation with. Republic, and in case the time arrives when such questions 
are presented to this Board for determination, we will withdraw, leaving the 
other members of the Board free to act in such manner as they shall deem for 
the best interests of the Company. 



CONCENTRATION OF ECONOMIC POWER 10261 

We are, however, advised by counsel that it is not only our privilege, but it is 
our duty, to express to the other members of the Board our general views as to the 
desirability of giving consideration to this subject so that j^ou may have the 
benefit of such general information regarding the industry as we possess and be 
advised as to how the large stock interest which we more particularly represent 
regards it. 

While no one appreciates more than we the excellent record made by the 
management of Otis Steel Company, especially during the first half of 1934, we 
think, nevertheless, that it would be for the best interests of the Company to 
bring about the consolidation on some fair and proper basis of Otis Steel Company 
with Republic and Corrigan. 

In other words, it is true, is it not, Mr. Greene, that on the basis 
of this statement the officials or the dii"ectors of Cleveland-Cliffs Iron 
Co. who were on the board of Otis Steel urged on the other members 
of the board of Otis Steel the advisability of entering into this merger? 

Mr. Greene. No; I wouldn't say urged. I would say they ex- 
pressed their opmion as to whether or not the future was brighter for 
Otis, one way or the other, that is, the stockholders, but they did 
nothing beyond expressing that opinion and then they withdrew. 

Mr. Feller. I accept that. 

Senator King. Would those companies, if they were merged, com- 
plement each other, supplement each other? 

Mr. Greene. Very much at that time. 

Senator King. One having activities in ores and contracts quite 
different from the other? 

Mr. Greene. You can see that the Otis turned down the merger 
in '34 and the Corrigan, McKinney was acquired in '35. Now it is 
another example of just what I was speakmg about, of mergers which 
are sound economically because they supplement each other and 
take the place of the expenditure of millions of new money. 

Senator King. I assume that some corporations would have large 
transportation facilities, boats upon the Great Lakes or railroads, and 
others, none. Some might have large iron holdings and others, none. 
Some would manufacture one commodity, one form of steel com- 
modity, and make a specialty of that, and others not. But a merger 
or uniting of them would make for economy and for better results all 
around. 

Mr. Greene. That is right. 

Mr. Feller. It was true, however, was it not, that Otis Steel and 
Republic Steel at that time did manufacture products of the same 
character; in other words, that they were competing corporations? 

Mr. Greene. Well, Republic was anxious to have a sheet miU in 
Cleveland, on the lake, and here was Otis with a continuous mill and 
they would have been glad to have acquired it. They afterwards 
acquired Corrigan, McKinney and built the mill. 

Mr. Henderson. Mr. Feller, I don't think we got the answer to 
that question. May I put it this way? There is no question, is 
there, that Otis and Republic were competing in some products? 

Mr. Greene. Which? 

Mr. Henderson. Otis and Republic. 

Mr. Greene. Well, they are all in the steel business, yes, competing 
just like a big seel company competes with any small steel company. 

Mr. Henders.^ N. Is there some special competition between a big 
steel company and a small steel company? 



10262 CONCENTRATION OF ECONOMIC POWER 

Mr. Greene. What I mean is, Republic had a good many products 
and Otis has a very limited number of products. It is a small com- 
pany — "strip sheets and plates," and that is all. 

Mr. Feller. Mr. Greene, do you know what the attitude of the 
management of the Otis Steel Co. was toward their participation 
toward tliis contemplated merger with Repubhc Steel? 

Mr. Greene. I would draw the conclusion from the fact it didn't 
take place that they were opposed. 

Mr. Feller. Did the president of the Otis Steel Co. make known 
to you the fact that they were opposed? 

Mr. Greene. You mean at that time? 

Mr. Feller. At that time. 

Mr. Greene. I don't now recall. I think afterward he made it 
known to me. I don't recall any conversations, I can't locate any 
particular time, but afterward I know he was opposed from what he 
said to me. 

Mr. Feller. I show you a memorandum signed by you, dated 
August 26, 1935.^ That is after the merger was accomplished, is it 
not? 

Mr. Greene. Yes. 

Mr. Feller. It is certified to be a true copy by the secretary of 
your company. Will you identify it, please? 

Mr. Greene. I can identify it. 

Mr. Feller. I should like just for a moment to clear up a point. 
Do you remember exactly when the merger between Republic and 
Corrigan, McKiimey went through? 

Mr. Greene 'Thirty-five. 

Mr. Feller. And the month? 

Mr. Greene. My recollection is, it is August, but I am not certain. 
It was between August and October; actually, September 25. 

Mr. Feller. We have this memorandum which is dated August 
26, 1935, which is prior to the complete consummation. 

Mr. Greene. No; he said September 25. 

Mr. Feller. It was just a month prior. 

Mr. Day.^ The letter to Corrigan, McI inney went out in August 
1^35. 

Mr. Greene. It was definitely agreed upon in August. 

Mr. Feller. But it had not yet been effectively accomplished. 
Now, reading from this memorandum, signed by you, written on 
August 26, 1935, you state as follows — this memorandmn relates to 
conversations between you and Mr. Kulas, K-u-1-a-s, who was then 
president of the Otis Steel, and you say in part [reading]: 

Mr. Kulas, on the other hand, expressed frankly his feeling that Otis Steel 
Company was not especially friendly, that he was violently opposed to the Republic 
merger and that he felt that Cleveland-Chffs would have been glad to have 
forced Otis Steel Company in. 

And then, toward the end of that paragraph, you state [reading]: 

Mr. Kulas said we had only one thing to do and that was not to force him into the 
Republic merger. Every few sentences, Mr. Kulas reverted to the Republic 
merger. 

It is true then, that the Otis Steel Co. was opposed. 
Mr. Greene. I think that is a mild statement. 

1 Not introduced for the record. 

' Luther Day, counsel for Cleveland-CiflS Iron Co. 



CONCENTRATION OF ECONOMIC POWER 10263 

Mr. Feller. The Republic merger, as has been said several times, 
was accomplished in 1935. Subsequent to that merger, did Cleveland- 
Cliffs stand ready to aid or cooperate with Republic in further con- 
solidations or mergers, to your recollection? 

Mr. Greene. I haven't any recollection of any cooperation that 
was asked or offered. I know of none that was under contemplation, 
offhand. 

Mr. Feller. I show you a memorandum signed by you, dated 
April 14, 1936, taken from the files of your company and certified to 
be a true copy by the secretary. Will you identify that, please? 

Mr. Greene. Right. 

Mr. Feller. I offer this.. 

The Chairman. The document may be received. 

(The memorandum referred to was marked "Exhibit No. 1361," 
and is included in the appendix on p. 10433) 

Mr. Feller. This memorandum, a^ain, relates a conversation 
between you and Mr. Girdler, the chairman of the Republic Steel 
Corporation. You state [reading]: 

The writer then said that he wanted to discuss with Mr. Girdler three things: 
first, the big general policy which looked into the future of both companies, 
then going back into the original plan of a midwest steel company and Cleveland 
CliflFs' relation to it, and calling attention to the very large holding in ClifiFs 
Corporation and the possibility that matters of investment in steel companies 
might be arranged to further the growth and prosperity of Republic as well as 
Cleveland CliflFs. 

Is that a correct statement to your recollection, does that refresh 
your recollection, Mr. Greene? 

Mr. Greene. I don't recall it, but I don't question it at all. 

Mr. Henderson, Could I ask a question there? Is it fair to 
assume that all this time you considered the possibility of a midwest 
steel company and had hoped to achieve that m the form of Ilepublic? 

Mr. Greene. I can only express my personal view, that I liave 
had no such hope for a good many years. 

Mr, Henderson. Adverting to this language. 

Mr. Greene. I think that is a general expression of hope as to 
volume of business, that we both prosper, and maybe that was. along 
the lines of feeling that we would like to enjoy mere business from 
Republic. Rather a natural hope on our part. 

Mr, Henderson, That you might get the same volume^ of business 
from Republic that you expected to get from the proposed Eaton 
merger. 

Mr. Greene, Yes, 

Mr. Henderson. And you think it was nothing more than that. 

Mr. Greene, I haven't any recollection of anything more. 

Mr. Henderson, In other words, you had no particular companies 
in mind which you suggested Mr, Girdler make advances to concerning 
coming into the Republic, 

Mr. Greene. I can't now recall anything that was under con- 
sideration or that I had in mind. 

Mr, Feller. Mr, Greene, could you explain the meaning of this 
phrase, this sentence in the memorandum (reading) : 

calling attention to the very large holding in CliflFs Corporation and the possibility 
that matters of investment in steel companies might be arranged to further the 
growth and prosperity of Republic as well as Cleveland-CliflFs, 



10264 CONCENTRATION OF ECONOMIC POWER 

What I should like to ask you to explain is how an investment in a 
steel company otiier than Republic could be used to further the growth 
and prosperity of Republic. 

Mr. Greene. Well, I presume that simply means that I was en- 
deavoring to get a larger portion of Republic's business than they 
might have had in mind. I haven't any specific thing in mind, but 
just the general idea to discuss with him and see if he had anything 
in his mind about this matter of more business. 

Mr. Henderson. How would your holdings in Inland and Youngs- 
town and Otis and Wheeling be an advantage in getting more Republic 
business? 

Mr. Greene. Our biggest holding is in Republic, much our biggest. 
No ; it couldn't. 

Mr. Henderson. I think that was the question Mr. Feller asked. 

Mr. Feller. Yes, that was the question. 

Mr. Henderson. Will you read that language again? 

Mr. Feller (reading) : 

calling attention to the very large holding in Cliffs Corporation and the 
possibility that matters of investment in steel companies might be arranged to 
further the growth and prosperity of Republic as well as Cleveland-Cliffs. 

Mr. Greene. I think it was to find out from Mr. Girdler whether 
he had any plans in mind. I know I didn't have any plan in mind. 

Mr. Henderson. This is your memorandum and your language. 
It is just that you don't recall what you did have in mind at that time 
as to how you could further the business of Republic by your holdings 
in rival companies? 

Mr. Greene. I haven't any recollection. I would put it maybe 
the other way, of whether a further investment in some other company 
might benefit Republic, rather than investment of those 

Senator King (interposing) . Did you have in mind — I will modify 
that in view of your statement. The company mentioned in your 
letter here would refer to your ore company? 

Mr. Greene. Oh, it would refer to the ore business, yes. 

Senator King. And that was the purchase of ore and the selling of 
ore, rather than the manufacturing of steel commodities? 

Mr. Greene. We are not at all in the iron and steel business. 

Senator King. So if there was any union or combination or business 
relations between your company and the Republic, it would be a seller 
upon your part of ores and the purchaser by the Republic Company 
on the other side of the ores wliich you had to sell. 

Mr. Henderson. This memorandum refers to matters of invest- 
ment in steel companies. Did you have in mind at the time that 
perhaps you might througli Cliffs buy into some other steel companies 
and thereby assist the growth of Republic and yourselves at the same 
time? 

Mr. Greene. I think that that must have been my general thought, 
but I had nothing specific in mind. 

Mr. Henderson. You don't laiow of companies that you thought 
of at that time? 

Mr. Greene. None that I recall. 

Senator King. And did you acquire any companies after that time? 

Mr. Greene. None. 

Senator King. You have none now'' 

Mr. Greene. No. 



CONCENTRATION OF ECONOMIC POWER 10265 

Mr. Feller. At the present time, Mr. Greene, you hold stock — 
referring now to the chart ^ — Cleveland-Cliffs Iron Corporation, con- 
sidered as a unit, have stockholdings in Wheeling, Otis, Republic, 
Inland, and Youngstown? That is correct, is it not? 

Mr. Greene. Between the two companies? 

Mr. Feller. Yes. 

Mr. Greene. Correct. 

Mr. Henderson. And they act in the nature of an investment 
trust, do they not? 

Mr. Greene. Cleveland-Cliffs got one or two stocks in different 
ways. They got their stocks from having turned in some furnaces. 
We turned in the Cleveland furnaces to Otis and were paid in stock, 
so what we had formerly was a furnace and what we had later was 
stock. That is in Cleveland-Cliffs. The four stocks that are in Cliffs 
Corporation are Wheeling, Republic, Inland, and Youngstown, and in 
Cleveland-Cliffs we have Otis, a little Wheeling, and a large amount 
of Republic that we got in trade for investments like Corrigan, Mc- 
Kinney, and one or two small investments, TrumbuU Furnace, that 
became part of the Trumbull plant after the company took it over. 

Mr. Henderson. After the acquisition of Corrigan by Repubhc, 
the plant facilities of Corrigan have been utilized pretty completely, 
have they not? 

Mr. Greene. Yes, indeed. In general you can see that the steel 
stocks held in Cleveland-Cliffs are the result of receiving those stocks 
in trade for assets that were turned over to the steel companies. 

Mr. Feller. Is it correct, or would you be able to state, that of 
the five steel companies mentioned, your company is the largest stock- 
holder with the exception of Republic? That is to say, that your 
stockholdings in Wheeling, for example, are larger than that of anyone 
else, and the same with Otis, Inland, and Youngstown. 

Mr. Greene. No; I would question that. We are the largest 
common-stock holder in Republic. 

Mr. Feller. I am considering now voting stock. 

Mr. Greene. WeD, maybe it would be less than that for voting 
stock. Some of these, Otis 

Mr. Feller (interposing). You are the largest holders. 

Mr. Greene. We were not for a number of years, but, I think, a 
larger holding has been dispersed, so I think we are the largest hi Otis. 

In Wheeling we have 30,000 only of common, and what we got in 
the preferred; when that was delinquent we were paid the delinquency 
in common. That is all we have. 

In Inland we are the second or third interest there. It may not 
be so registered, but we are not better than the third. 

And in Youngstown, again I think we may be the largest in a single 
name, but if you were to take a group of holdings we would not be 
the largest there. 

Mr. Feller. Mr. Chairman, I shall go on with other subjects in 
connection with the testimony of Mr. Greene, and I would suggest 
that since those subjects will take considerable time, it might be advis- 
able for the committee to conclude questioning Mr. Greene at this 
time before the recess on matters which have already been discussed. 

The Chairman. You have no further questions? 

1 "Exhibit No. 1353," appendix, p. 10427. 



10266 CONCENTRATION OF ECONOMIC POWER 

Mr. Feller. On these matters which have been elicited up until 
now. 

The Chairman. Do any members of the committee desire to pursue 
this matter now? If there are no questions, then the committee will 
stand in recess until 10:15 tomorrow morning. 

(Whereupon, at 4:40 p. m., a recess was taken until Thursday, 
November 2, 1939, at 10:15 a. m.) 



INVESTIGATION OF CONCENTKATION OF ECONOMIC POWER 



THURSDAY, NOVEMBER 2, 1939 

United States Senate, 
Temporary National Economic Committee, 

Washington, D. C. 

The committee met at 10:30 a. m., pm-suant to adjournment on 
Wednesday, November 1, 1939, in the Caucus Room, Senate Office 
Building, Senator Joseph C. O'Mahoney presiding. 

Present: Senators O'Mahoney (chairman) and King; Representa- 
tives Williams and Reece; Messrs. Henderson, Avildsen, O'Connell, 
and Brackett. 

Present also: Willis Ballinger, representing the Federal Trade Com- 
mission ; John V. W. Reynders, representing the Department of Com- 
merce; Gordon Dean, representing the Department of Justice; A. H. 
Feller, Special Assistant to the Attorney General; John W. Porter, 
Hyman B. Ritchin, Irving Glickfeld, Ward S. Bowman, and Monroe 
Karasik, Department of Justice. 

The Chairman. The Committee will please come to order. Mr. 
Feller, are you ready to proceed? 

Mr. Feller. Yes,. sir. 

Air. Greene, yesterday we had been discussing the acquisition of 
stock interests by Cleveland-Chffs and by the Cliffs Corporation, in a 
number of steel companies, as part of a step to bring about a merger — 
a larger merger of steel companies. Isn't it also correct to say that 
one of the reasons for the acquisition of these stock interests in steel 
companies by Cleveland-Cliffs was to secure a market for iron ore? 

TESTIMONY OF E. B. GREENE, PRESIDENT, CLEVELAND- CUFFS 
IRON CO., CLEVELAND, OHIO— Resumed 

Mr. Greene. I would say not, except as it related to the formation 
of that company. 

Mr. Feller. I am afraid I don't quite understand that. 

Mr. Greene. Well, the idea that was in the minds of the Cleveland- 
Cliffs in forming the Cliffs Corporation was that the larger company 
would be formed and that Cleveland-Cliffs, if they chose to, would 
have the opportunity of becoming a raw-material division, you might 
say, or company, of that larger company. 

Senator King. Is that larger company the one that was envisioned 
by Mr. Eaton or by the Republic, or what company? 

Mr. Greene. It was envisioned by Mr. Eaton, who submitted it to 
Mr. Mather. 

Mr. Feller. In other words, if I understand you correctly, at the 
time of the formation of the Cliffs Corporation, which was about 1929, 

10267 



10268 CONCENTRATION OF ECONOMIC POWER 

it was then hoped that by acquiring these interests in steel companies, 
it would be possible to bring about a merger and that Cleveland-Cliffs 
Iron Co. would then have a larger market for its ore? 

Mr. Greene. It is a little more complicated, possibly, than that. 
It tied the equity of the Cleveland-Cliffs into a portion of the equity 
of four or five steel companies, with the thought that if Cleveland- 
Cliffs did go into that larger unit as the raw-material company, it would 
naturally convert those steel stocks into the stock of the new company 
and would give it a commanding or rather an influential position in 
that new situation, and that if the Cleveland-Cliffs became the raw- 
material division or company of that larger unit, why the needs of 
that company would undoubtedly take care of its support. 

Mr. Feller. And do you consider that your holdings in steel com- 
panies at the present time are an aid in disposing of your ore? 

Mr. Greene. Well, I don't consider they are a detriment, but I 
think we have to work pretty hard to sell our ore in competition with 
the others. I have found it so in the last 6 years. 

Mr. Feller. I show you, Mr. Greene, a copy of the directors' 
minutes of the Cliffs Corporation, dated April 13, 1937, certified to 
be a true copy of the secretary by the Cliffs Corporation.' Would you 
identify that, please? 

Mr. Greene. That is correct. 

Mr. Feller. In these minutes there occurs the statement by the 
president of Cliffs Corporation — that was you — to this effect [reading]: 

The president stated that thjs company and the Cleveland-Cliffs Iron Company, 
the entire common stock of which is owned by this company, are both owners of 
large amounts of stock in steel corporations. He stated that this company was 
not an investment trust in the accepted sense of the term, but was organized for 
the definite purpose of holding certain securities, the ownership of which might be 
helpful in disposing of its ore. 

Now that statemeU't was made in 1937. Would the recollection of 
that statement in any way modify your previous answer? 

Mr. Greene. No ; I said they might be helpful. I stated a moment 
ago it certainly wasn't detrimental. What I meant by that was that 
we exercise no control or effort in any way to bring any influence on 
those steel companies to do business with us. We know that we have 
to meet competitive conditions, and we have to serve them as well, 
if not better, than our competitors, and I think the two are entirely 
compatible. The Cliffs Corporation was formed for the purpose I 
stated, and having been formed, we find ourselves tied into that Cliffs 
Corporation, and we got those stocks. You read just part of it. 
The rest of it shows exactly the point I am going on to make, that we 
wanted to hire a young man as analyst to spend all his time in study- 
ing these steel stocks from the investment standpoint, and for our own 
and confidential use to make a study of them as investments. What I 
mean there by contrasting it with an investment trust, an investment 
trust buys and sells; now we weren't buying and selling; we simply 
held the stocks that we acquired in '29, and we felt it was due to the 
stockholders of the Cliffs Corporation to fully inform them about 
these companies. That was the introduction to suggesting the 
employment of the young man to do that. 

Mr. Feller. Would you say, then, that at the present time your 
interest in these steel companies in which you hold stock is merely to 

• Not introduced for the record. 



CONCENTBATION OF ECONOMIC POWER 10269 

receive the proportionate share of the profits which your stockholding 
represents? 

Mr. Greene. T would say that having: them, that that is the 
reason. I would say if the cause of the Cliffs Corporation formation 
had not existed in 1929 that we would not own those stocks today, or 
would not purchase them. And I also think that my statement is 
borne out by this fact, that we have since the formation of the Cliffs 
Corporation not bought a single share of additional stock in any of 
these companies, with the exception of a small amount of rights under 
the market that we were awarded a few years ago. So that we had 
no intention of carrying on the idea that we bought in '29, or rather — 
not bought, they were acquired in that merger; and they have con- 
tinued to be held, even though the reason for being so has been done 
away with. 

Mr. Feller. Then I take it from your statement that your only 
interest in these corporations at the present time is to receive dividends 
on the stock as dividends accrue? 

Mr. Greene. Well, we would be foolish if we didn't have friendly 
relationships with companies which we are interested and have 
a large investment, to the extent that it is proper. I hoped it would 
bring about friendly relations, but I am quite positive, and I speak 
from personal knowledge of at least 6 or 7 years, there never has been 
any pressure brought on any of those companies to give us business 
except as anyone would have obtained it. 

Senator King. May I ask a question to determine the relevancy 
of this testimony. 

I don't quite understand perhaps all of its implications. Was your 
corporation, the Cliffs Corporation, organized primarily and solely 
in the beginning for the purpose of buying ore and selling ore? 

Mr. Greene. Do you mean Chffs or Cleveland-Cliffs? 

Senator King. Cleveland-Cliffs. 

Mr. Greene. Cleveland-Cliffs and its predecessors go back to, 
well, 1845, 1850, and their sole purpose was to mine ore and transport 
and sell it, and that has been their primary interest. Any other 
things that they go into were due to two things ; first, because we were 
pioneers and went up into a wilderness, and second, because there 
weren't any facilities up. there and we had to get them. Your ques- 
tion leads directly to this: Why do we own timber and have other 
interests? Originally the iron was made up in the Lake Superior 
region, and there were a great many small charcoal bee hive furnaces, 
and then a httle later, as early I tliink as the fifties, they built furnaces 
up there, charcoal iron furnaces. Those furnaces consumed a great 
deal of hardwood, and in order to have the hardwood, you had to 
buy the land. Well, then, quite a good many years later the charcoal 
iron goes out of ft^vor, the better made steel took its place, and 
Cleveland-CHffs was left with those large holdings of land, and on the 
land was the timber. 

We developed and went into certain things to use the hardwood. We 
used it in our mines, we used it in the wooden ware, and the softwood 
we took an interest in, and then mostly disjjosed of it, and the paper 
company, and we began to take an interest in the chemical company. 
As time went on we lessened rather than broadened our interest in 
those things, but they all grew out of the iron-ore business. 



10270 CONCENTRATION OF ECONOMIC POWER 

Now we had a lot of land with some swift-flowing rivers, and we 
developed hydroelectric power for our own use. We were the first 
people in this country to use power in a mine. Electricity had been 
used for Ughting purposes but not as power. Our plant was originally 
only a plant facility. Well, then, the district grew a little bit, other 
people wanted that, and we turned it into a pubhc utility. The 
same way with the railroad. Originally there was a plank road 
with a little 3-ton car pulled by mules down from Ishpeming to Mar- 
quette. Later on, in order to furnish better facilities, we built a 
railroad in conjunction with one of the Jones & Laughlin's mining 
subsidiaries. 

You see, all of these things were tied back to the iron ore and the 
fact that in order to have the charcoal furnaces up there we needed 
land and timber, and that is why the Cleveland-Cliffs, they were a 
pioneer and were able to centralize their operations in one place, 
they were able to own fees, and they built up this picture because of 
that fact, but it all ties back into iron ore. 

Senator King. Your company now is primarily an ore-buying and 
selling company. 

Mr. Greene. Absolutely; yes, sir. 

Senator King. Not an investment company. 

Mr. Greene. No, sir. 

Senator King. You have acquired some stocks in some corporations, 
primarily, I suppose, or at least one of the purposes was to widen your 
market for sale of your commodity. 

Mr. Greene. Yes, sir; that is exactly correct. I am alluding to 
Cleveland-Cliffs Iron Co., not Cliffs. That is exactly what happened. 
In those days, say 1900 to 1915, the companies weren't as well inte- 
grated as they are now, and there were a number of concerns that 
wanted to get blast furnaces that didn't have them. Cleveland-Cliffs 
was then in a position to finance those and to become partners, in a 
way. We helped build, for example, the fiu-nace for the Trumbull 
plant at Warren, and took stock in that and received a contract, . 
formed with them the TrumbuU-Clifi's Furnace Co., of which we 
owned half the stock, as I recall, and they owned half. We made that 
investment for the purpose of selling iron ore. As a matter of fact, 
I think we acted as a sort of agent in the construction, helped them in 
that way, and then helped them run that furnace, as a separate 
company. 

Central Alloy developed a fine business in alloy steel. They were 
buying their pig iron. They wanted to become integrated, so we 
offered to help finance them in the same way. 

W^ell, they said they would prefer we would take the interest in 
stock, so we said all right, and Cleveland-Cliffs took a third interest 
in their company and furnished the money to build their blast furnaces 
and open hearth. 

Senator King. Does the greater part of the iron ore which you sell, 
is it mined from your own properties, or from other properties, 
properties owned by other companies? 

Mr. Greene. It is all mined from our properties, which are owned 
considerably more than a majority, in fee. We only operate one 
property for others. We are owners of fee to an extent considerably 
above 50 percent. 



CONCENTRATION OF ECONOMIC POWER 10271 

Senator King. What competition do you experience in the selling 
of your ores? What competition do you have? 

Mr, Greene. We are seUing, for the most part, our own ore. 
Practically all of it is our own ore. We are merchants of ore and we 
are also the owner of the mineral deposit. 

Senator King. Do you have any competition in the purchases? 
Are there other corporations mining ores that are in competition with 
you in the same markets? 

Mr. Greene. Oh, yes, indeed. We are all competitors. 

Senator King. That is what I am trying to get at, the extent of the 
competition which your company has in finding markets for the ores 
which you mine and sell. 

Mr. Greene. We have very keen competition with somewhere 
between, I should think, eight or nine, all disposing of ore and all of 
them, practically all of them, with a great deal of ore. 

Senator King. Has there been any effort made by your competition 
to fix the price of ore? 

Mr. Greene. No. sir. 

Senator King. Or to create a monopoly for the mining and the 
disposition? 

Mr. Greene. We are naturally, like all sellers, all merchants, 
taking all the steps we can to get as much money for our ore as we can. 

Senator King. And is there competition in that field, Mr. Greene? 

Mr. Greene. Very keen competition. 

Mr. Feller. Mr. Greene, the purpose of the questioning up until 
now was whether these aoquisiuons of stock in steel companies 
were made in part in order to enable you to secure a wider market 
for your ore. That was the question which Senator King put to you 
at the beginning, and I understood you to answer "Yes." 

Mr. Greene. Will you repeat that? I didn't get it. 

Mr. Feller. Senator King, as I understand it, asked you whether 
one of the reasons for the acquisition of these investments in steel 
companies w^as to secure a wider market for your iron ore. Is that 
correct? 

Senator King. That was one of the questions. 

Mr. Feller. And I understood you to say "Yes." 

Mr. Greene. Senator King's remarks were addressed to the 
holdmgs of steel stocks by Cleveland-Cliffs Iron; the matter we were 
discussing was the Cleveland-Cliffs ores. The stocks in Cliffs arose 
in a different way from those in the Cleveland-Cliffs Corporation, the 
story of which I already told you. Does that clear that up? 

stabilization and competition 

Mr. Henderson. Yesterday, Mr. Greene, you testified, and I think 
very well, if I may be permitted to say it, as to the choice which lies 
in a period of integration and merger of an independent company, 
as to what it shall do to mamtani its place in a period of integration 
and merger. Using my own phrasing, you said it had the choice of 
either expanding in order to make nearly all the products of its com- 
petitors, or of associating itself with a group which would give it a 
larger line of products. You felt, on account of the lack of demand 
for all the steel capacity that exists in ordinary times, that it was 
niucli preferable to go the merger method, and that was, I believe, 

J 24491—40 — pt. 18 fj 



10272 CONCENTRATION OF ECONOMIC POWER 

the route that was to be chosen in the Eaton enterprise and that was 
the purpose, was it not, to bring about a large integration which would 
make Midwest rank second in the industry? 

Now, running through the correspondence and the telegrams which 
we had yesterday was this emphasis on the desirability of Cleveland 
and Oglebay Norton joining in an effort to stabilize, and the effect 
it would have on the stability of price. And then you responded 
later, I believe, to a question by Senator King whether this large umt 
that might be put together — he asked you whether it would be pro- 
motive of competition, and you said, "I think it probably would help 
stabilize the steel industry." 

Do you have some distinction in j'^our mind between stability and 
competition? 

Mr. Greene. Yes, yes. 

Mr. Henderson. Would you mind 

Mr. Greene (interposing). Well, I feel some hesitancy in discussing 
the steel business. 

Mr. Henderson. You have shown yourself pretty alert about the 
steel business so far, Mr. Greene. 

Mr. Greene. I think that units that are integrated are better able 
to produce a sound economic condition than companies that are on 
a very different basis. I think that if you have, I believe, the 10 
well-integrated companies would be a great deal better than a hundred 
less well-integrated companies. 

Mr. Henderson. What would be the difference? 

Mr. Greene. I think you have better chances of producing the 
goods at a cheaper cost, which benefits the public, permits you to 
pay better wages, and makes for the prosperity of this country. 

Mr. Henderson. You think, then, that the tendency toward in- 
tegration is likely to have a better effect on cost, and I presume you 
mean consumer price also. 

Mr. Greene. I do. 

Mr. Henderson. Than vigorous competition by a hundred small 
units? 

Mr, Greene. I certainly do. I think the mechanical ability of 
this country has produced what we call mass production, production 
in large amounts, at lessened cost. I think that is one of the greatest 
reasons that we liave prospered in this country. I don't see how we 
could go back to small units and experience the benefits we have 
got now. 

I know very little about those matters, but that is my firm convic- 
tion. 

Mr. Henderson. Then in this drive toward bringing in a new 
large unit in the steel industry, you felt that would get away from 
the kind of competition which was unstabiHzing and get toward a 
sounder basis of production and price. 

Mr. Greene. Well, when you refer to those papers or letters, those 
weren't mine. That was before my time, but I agree with just what 
you stated. 



CONCENTRATION OF ECONOMIC POWER 10273 

Mr. Henderson. But you did follow those up. You remember, 
as I recall, the memorandum of your conversation with Mr. Girdler 
was that [reading!^: 

If we were to cooperate with them — 

meaning Republic — 

in consolidating steel properties, it was only logical and fair for them to cooperate 
with us in managing ore properties. 

In other words, that was in 1933, as I recall, and you were looking 
forward to Republic expanding and getting toward this stabilized 
level and your own organization expanding in the matter of ore 
properties. 

Mr. Greene. My reason for commenting to Mr. Girdler in that 
way was a Uttle bit more selfish than that. Cleveland-Cliffs had 
acquired, and unwisely, a large interest in Corrigan-McKinney. For 
their size thej^ had acquired a 62K-percent interest in a steel company. 
We were anxious to have that steel company, whose main product was 
semifinished, merchant bars — we were very anxious to get that into 
a bigger group, because we were not only financially embarrassed 
ourselves at that time, but that company required the expansion 
which would take a good many millions of dollars, so we were in the 
position of owning something that was sound, excellently located, 
would be a valuable addition to a steel company located in that 
district, but which, in our hands, was something that we wanted to 
convert into another form ^ of investment. 

We had acquired a short-time debt of $25,000,000 due to the pur- 
chase of that, and it was my job to try to get that funded and then 
to try to get it reduced. 

At the present time that is largely accomplished so that I was 
trying to accomplish a definite thing with Mr. Girdler, which was to 
have him take over something I knew was good for him, and at the 
same time was a burden for us. 

Mr. Henderson. But your group also wanted Otis brought into 
Republic. 

Mr, Greene. Well, we wanted — we thought that it was a good 
thing for Otis, but we did not want to bring the slightest pressure on 
them to do it. Let them decide that, because we were on boths sides 
of the fence, and felt we ought not to do more than express our opinion 
to them. At that time Mr. Mather, you remember, made a statement 
of what his opmion was, but said that was all he was gomg to do, 
express his opinion, and he and his associates withdrew from that 
directors' meeting, so they would not be there when the others 
reached that decision, and they decided not to do that. 

Mr. Henderson. Let me ask you this, which follows logically, I 
think, from what you have said as to the effect of integration on com- 
petition and price. Do you feel that the present price of steel is kept 
higher than it would be by reason of the fact that there are numerous 
small competitors in the industry? 

Mr. Greene. Is kept higher, no. I don't. 

Mr. Henderson. I thought you said if you had an integrated com- 
pany, you would have a lower price. 

I Referring to "Exhibit No. 13^," on file with ths committee. 



10274 CONCENTRATION OF ECONOMIC POWER 

Mr. Greene. I think greater efficiency is generally brought about 
by large integrated companies, and I think greater efficiency brings 
about a lower price. 

Mr. Henderson. That is about the same thing. Say the presence 
of a large number of small units, or the absence of a consolidated 
integrated company, whichever way you go, leads to the conclusion 
that the existing status is responsible for higher prices than would 
obtain with an integrated system. 

Mr. Greene. As I said before, I am not qualified to answer technical 
questions, but let me recite just one or two companies, smaller ones, 
that I know something about. 

The Trumbull plant bought their pig iron and had to reheat it. 
When they built this furnace, that molten metal, stOl called pig 
but it is molten metal, is carried right over to the mills and used there. 
That meant an immediate saving of one to two dollars in the cost of 
every ton in an ingot of steel. That is what I mean by economies of 
integration in larger units. 

Mr. Henderson. Let me ask you: You have interests in several 
steel companies, some of them substantial. Do you think that the 
cost of making steel is higher in those companies than it is in Bethle- 
hem and U. S.? 

Mr. Greene. "Well, I couldn't quote any costs. I have no way of 
knowing. 

Mr. Henderson. But you have an impression that if you brought 
those six together there would be a reduction in price due to the 
advantage of integration. 

Mr. Greene. I am not making any comparisons of specific steel 
companies. I am comparing two companies, one integrated and one 
not integrated, and I say the integrated company in my opinion 
would be more profitable than the other. 

The Chairman. May I interrupt you, Mr. Commissioner, to ask 
this question? Mr. Greene, in the light of your experience and 
knowledge, both of the ' ore-producing industry and of financial 
structure of corporations, do you think it would be desirable now if it 
were possible to proceed with the organization of another large 
integrated steel company in the manner that you had planned in 
1930, when these negotiations were in progress? ; 

Mr. Greene. Senator O'Mahoney, I think there would be less 
argument for it. I think the principle holds good, but there is less 
argument for it on account of the great expansions and additions that 
have been made in the meantime. 

The Chairman. By whom? 

Mr. Greene. Oh, pretty nearlj^ everybody. 

Thev have all added to their plants to the extent of many millions. 
When I say all, I mean three-quarters of them have. There has 
been a very heavy investment in additional facilities in the steel 
business; I am quite sure, if you look at the statements of the com- 
panies you will find that their plant accounts have all increased. 

The Chairman. But your independent concerns, the ones in which 
the Cliffs has its investment, are still operating successfully, are 
they not? 

Mr. Greene. Yes; it doesn't mean that they can't be successful, it is 
just a question of 

The Chairman. That, I think, is what Commissioner Henderson 
was trying to develop, whether or not the integrated company is 



CONCENTRATION OF ECONOMIC POWER 10275 

likely to be more successful economically in the interests of every- 
body concerned, than the small independent concerns, the noninte- 
grated concerns. Now I was just curious to know what has transpired 
since this attempt was made, and abandoned, to make it undesirable 
to proceed and what are the circumstances that seem to make it pos- 
sible for the independent companies to continue to operate successfully. 
They are economically sound? 

Mr. Greene. Economically sound, but I wouldn't say that the 
steel business has been profitable in the last 10 years^. 

Mr. Feller. May I just clarify something here for a moment? 
Is it not a fact, Mr. Greene, that in. 1930 all of these companies which 
appear here, Republic, Otis, Wheeling, Inland, Youngstown, were all 
integrated companies as that term is known in the steel industry? 

Mr. Greene. I am not competent to answer that. 

The Chairman. Are they all integrated companies now? 

Mr. Greene. I wouldn't say they were completely integrated; no. 
I think 

The Chairman. But they are not nonintegrated companies? 

Mr, AviLD^EN. Mr. Greene, what is your definition of an integrated 
company? 

Mr. Greene. You are getting over my head. I have stated I am 
not a steel man. 

Mr. Avildsen. 1 don't see how we will get anywhere talking about 
something; if we can't define it. 

The Chairman. You said at the opening of this technical discus- 
sion that it was your conviction that 10 integrated companies would 
operate more successfully in the public interest than 100 nonintegrated 
companies? 

Mr. Greene. Yes, I said that. 

The Chairman. Now, then, you had a definition in mind when you 
made that comparison. Just what did you mean by an integrated 
company? 

Mr. Greene. Mr. Feller asked me to compare specific companies, 
which require you to know just what products they are in. You see 
what I mean? And I am not able to do that, but what I am speaking 
of is a company that has blast furnaces and open hearths, and a reason- 
able degree of entry into the various kinds of products. Now when 
you get down to the question of the degree of integration, I am not 
competent to express any opinion. 

Mr. Feller. May I also ask you this, Mr. Greene? You were 
talking in terms of profitableness of operations. Is it not a fact that 
at least two of the companies which it was contemplated bringing 
into this large unit, the Mid- West Steel organization, at least two of 
them, Inland Steel — well, at least Inland Steel was one of the most 
profitable companies in the business? 

Mr. Greene. I think it has a very fine record. 

Mr. Feller. You think that the large aggregation which would 
liave resulted if Mr. Eaton's plan had been carried through, would have 
been likely to be more successful than Inland? 

Mr. Greene. Well, I think that the success of the new company 
would have been more successful than the average of each of the 
component parts, the average. 

Mr. Henderson. Mr. Chairman, I have one more question. Mr. 
Greene, I understood you to reply to the chairman that conditions 
having changed, the strong ijrge which your group had toward 



10276 CONCENTRATION OF ECONOMIC POWER 

consolidation may not exist today, but regardless of that you found 
yourselves, by reason of this exchange of stock, with holdings in several 
companies and particularly with Corrigan, and you did, following 
along the line of what you thought was sound policy, urge at 
times actions which would bring about a larger integration. I mean 
that you found yourselves in the position of having the stocks and 
since you did have them, you went toward the effective use of them 
of course, rather than merely drawing dividends on them. Would 
that not have produced in an integrated company that might have 
resulted, a different kind of competition from what exists today? 

Mr. Greene. I don't think I am competent to 9,nswer that question, 
but I would like to call attention that Corrigan, McKinney was 
owned by Cleveland-Cliffs, while the other stocks are held in Cliffs 
Corporation, but to answer your question 

Mr. Henderson (interposing). There was an identity of interests, 
was there not? 

Mr. Greene. Quite different; you see we had to dispose of one on 
account of the financial conditions, and the fact that it was a burden. 

Mr. Henderson. Independent of that delicate distinction you 
want to make, which is all O. K. with me, the basic question is this, 
If what you had been led to believe was a proper thing, development, 
of an integrated company had resulted, you would have had a different 
situation as far as competition is concerned, would you not? 

Mr. Greene. You mean the Cleveland-Cliffs? 

Mr. Henderson. Suppose the Republic had been made the basic 
unit and the rest had been brought into it. You would have had a 
quite different situation, not only as regards competition between the 
units that went to make up Republic, but as between Republic and 
the rest of the industry, would you not? 

Mr. Greene. Well, I don't know as I quite understand. 

Mr. Henderson. Well, you have said that probably it would have 
helped to stabilize the steel industry, and I understood you to testify 
that the presence or the absence of integrated companies did produce 
a different kind of competition. 

Mr. Greene. I don't recall saying that. I said I thought it would 
help to stabilize to have competition of, as I said, 10 integrated com- 
panies as compared to 100; I did state that. 

Mr. Henderson. It would be different, would it not? 

Mr. Greene. I didn't say I thought it would be a different kind of 
competition. I think you would still have the keenest kind of compe- 
tition if you had 10 companies. 

Mr. Ballinger. Mr. Greene, do you get competition when you 
get 10 big integrated companies? 

Mr. Greene. I think you do. I think you get the keenest kind of 
competition. 

Mr. Ballinger. Our experience down at the Commission is that 
when integration proceeds free and untrammeled and integration sets 
in so that the number of competitors is reduced iu industry, all at once 
price competition ceases and then we hear arguments from businessmen 
that the industry must be stabilized, and then we run across confiden- 
tial memorandums in the files of businessmen in which they say they 
can't afford competition any more; too big now; be very careful about 
competing; they don't want to wreck one another. Now you don't 



CONCENTRATION OF ECONOMIC POWER 10277 

want to make a statement to this committee that you think there is 
price competition in the steel industry today, do you? 

Mr. Greene. I am not familiar with it. I would say there is com- 
petition in the industry. That would be my personal view. 

The Chairman. What do you mean by stabilization? 

Mr. Greene. Well, I mean that producing a profit and producing 
an article that will render a reasonable profit on invested capital, and 
at the same time permit of paying proper wages. 

The Chairman. Now how does integration produce stabilization? 

Mr. Greene. Well, I was just speaking a minute ago of the case of 
Trumbull Steel saving in having a furnace which would save one to 
two dollars which it wouldn't have if it just had the mill without the 
raw product. 

The Chairman. Well, that was a reduction of costs rather than 
stabilization, was it not? 

Mr. Greene. Well, stabilization permits of an economy in the 
production and means profit and generally speaking in industry, in 
my opinion reasonable profit produces best results. 

The Chairman. Well, now, what would be the effect of integration 
upon the price paid by steel companies and received by ore companies 
for their products? 

Mr. Greene. Well the ore is no different from any raw material 
that goes into the finished article. I don't Imow that I understand 
the question. 

The Chairman. Well, we are talking about integration and its effect 
upon stabilization. Now I am proceeding to what you mean by 
stabilization so far as the ore producer is concerned. Does that 
picture taking bother you? 

Mr. Greene. Yes. I am sorry I don't remember the question. 

The Chairman. Well, I was asking what in your opinion would be 
the desirable effects of integration upon the stabilization of the ore- 
producing interests, and what do you mean by stabilization so far as 
it affects the producers of ore? 

Mr. Greene. Well, I think if it leads to prosperity in the steel 
business — if it leads to increased business in steel, why the ore people 
will automatically benefit by it. 

The Chairman. Do you think that integration produces a better 
market for ore? 

Mr. Greene. Well, speaking of volume; yes. 

The Chairman. I am speaking of volume, too, now. 

Mr. Greene. Well, I don't know about price. 

The Chairman. Well, I won't anticipate that now. I think Mr. 
Feller will be going into that question. 

Senator King. Would this be a fair illustration of the steel business? 
I give it from my personal experience. When I was a very .young 
chap we had a sawmill to produce lumber. We didn't have any 
timberlands, and we had to make contracts with persons who owned 
the timber to get the logs. We thought they charged too much. 
We didn't have the necessary oxen to haul the lumber from the 
mountains, and we had to pay too much, as we thought, in order to 
get the lumber hauled. Thereupon we acquired the timber ourselves 
and we bought oxen and hauled the lumber ourselves. We were thus 



10278 CONCENTRATION OF ECONOMIC POWER 

integrated and we made a little money, whereas when we had to 
depend on all the others we lost. Would that be a sort of illustration? 

Mr. Greene. I think it would. 

Mr. Feller. Mr. Greene, I should like to look very briefly 

Mr. Henderson (interposing). May I ask one more question, 
please, before we leave this? In this interchange between Mather 
and Oglebay, Norton, in which you had no part, stabilization, a better 
price and the like were mentioned in the telegram and letter referred 
to. I think Mr. Oglebay testified here yesterday that the}^ had about 
$200,000 assets for which you people were willing to pay with stock 
having a value of over $1,000,000 for a 66-percent interest. Because 
of the pro rata share of the earnings of Oglebay, Norton, you felt this 
would be a wise investment. Did you have in mind that you could 
get a continuance of that kind of earnings or that you could increase 
them by the jointure? 

Mr. Greene. Well, I think the acquisition of Oglebay, Norton and 
the formation of Cliffs were both due almost entirely to the assump- 
tion that that mid western steel company would be formed. That 
was the real 

Mr. Henderson (interposing). It would help to stabilize price? 

Mr. Greene. No; I think it was not that, but the real reason in 
my opinion, the unconscious reason here, was the fact that it would 
permit of the properties managed by Oglebay, Norton on their part 
to have the opportunity, if they chose, to come into the new company 
as part of their reserve and as Mr. Oglebay testified 

Mr. Henderson (interposing). You think we could safely disregard 
the reference to the stabilization of price? 

Mr. Greene, I think that when we look back at it now we forget 
the atmosphere that existed then, but what they were thinking about 
then was the reason I am giving you, and Mr. Oglebay 

Mr. Henderson (interposing). It might be "business Hterature" 
as a witness testified last week? The president of an insurance com- 
pany testified that there were occasiona,l things in communications 
which he termed "business hterature" and reaUy were not to be taken 
at their face value. ^ Is that what you mean? 

Mr. Greene. No; I rnean this, I think Mr. Oglebay expressed it 
very well when he said he wanted the opportunity of sitting around 
the table and discussing the affairs and relations of the iron ore to 
the new company. I think that was what attracted them. 

Mr. Henderson. That means disregard the emphasis on stability 
of price? 

Mr. Greene. I think so. 

Mr. Feller. Mr. Greene, I would like to look for a moment very 
briefly at your contractual relationships with one or two of the steel 
companies which appear on the chart entitled "Financial Connec- 
tions." In the case of the Republic Steel Corporation, you had a 
long-term contract to supply the Republic Steel Corporation with ore? 

Mr. Greene. We have. 

Mr. Feller. And you supply Republic with a substantial portion 
of their ore requirements? 

Mr. Greene. We do. 



Included in Hearings, Fart 13. 



CONCENTRATION OF ECONOMIC POWER 10279 

Mr. Feller. You also have a long-term contract with the Otis 
Steel Co? 

Mr. Greene. Yes, we have; still running. 

Mr. Feller. And you supply them with a very large proportion 
of their ore? 

Mr. Geeene. Yes; all but what they own themselves, which is 
small. 

Mr. Feller. You do not, as I understand it, have such long-term 
contracts with Wheeling, Inland, or Youngstown; is that correct? 

JMr. Greene. We have a long-time contract with Wheeling. 

Mr. Feller. You have one with Wheeling, but you do not have 
one with Inland and with Youngstown? 

Mr. Greene. To Inland we lease a property, etc. and they operate it 
under what you might call a long-time contract. 

Senator King. Does Wheeling have any ore at aU? 

Mr. Greene. Yes; they have interests in ores. 

Senator King. In other words, you don't furnish them all the ore, 
then, which they use? 

Mr. Greene. Oh, no ; they must get it from a number of sources. 

Senator King. There is competition in the acquisition of ore§? 

Mr. Greene. Keen competition. 

Senator King. Would that be true of the Otis? 

Mr. Greene. Yes; keen competition. 

Senator King. And the Republic? 

Mr. Greene. Very keen competition. 

Senator King. And the Inland? 

Mr. Greene. We don't seU them; we lease them a property that 
they desired to operate, which belonged to us. 

Senator King. And they operate that themselves? 

Mr. Greene. Yes. 

Senator King. Excuse me, ^^r. Feller. 

Mr. Feller. Mr. Chairman, that is aU I. have to ask Mr. Greene 
at this time. I should like to have him stand aside. 

Mr. Greene. Mr. Chairman, may I make one correction? I made 
the statement yesterday that we were the largest stockholder of 
Republic. I am reliably informed that that is not the case; that there 
is a stockholder larger than we are, and that our total holding in that 
company, according to our records, is 7.8 percent, which I think agrees 
exactly 

Mr. Feller (interposing). Do you happen -to know who the 
largest stockholder is? 

Mr. Greene. I couldn't give you the name. 

Mr. Feller. Would this refresh your recollection? As I under- 
stand it, it is a Dutch group? 

Mr. Greene. I think it is; and I want to make a further correction 
that I stated we were the largest stockholder of Wheeling. I want to 
just amplify that by stating that there are stockholders owning pre- 
ferred stock, which as you know is far more valuable than ours, that 
are larger than ours, so that while we may be the largest common- 
stock holder, it is only a matter of thirty-odd-thousand shares out of 
some 577,000; that they have in addition 381,000 shares of preferred, 
and our total holding there is only 3.7 percent. 

Senator King. In which fields does your company, which mines and 
sells ores, operate? Principally in Michigan or Minnesota? 



10280 CONCENTRATION OF ECONOMIC POWER 

Mr. Greene. We are almost entirely on the Marquette range; we 
have 11 mines there and we operate one on the Menominee and one 
on the Mesabi in which we are interested, and one which we just 
manage. 

Senator King. Do you know approximately the number of tons of 
ore consumed by the companies that are producing steel in the district 
in which you have been operating? 

Mr. Feller. Senator King, the bar chart which appears there, and 
which you perhaps have before you, and the accompanying table, ^ ^vill 
show that in 1937 there were 63,000,000 tons of ore. 

Senator King. I wanted to get that in the record. Now the next 
question is what proportion of the ore that is consumed does your 
company mine and sell? 

Mr. Greene. In what year, Mr. King? 

Senator King. During the past 2 or 3 years. 

Mr. Greene. I have those figures. 

Mr. Feller. The record shows that in 1937 the shipments 
amounted to 9.1 percent. 

Senator King. That is all. 

The Chairman. Mr. O'Connell, did you want to ask any questions? 
Congressman WiUiams? Mr. Avildsen? Mr. Reynders? May I ask 
you just one question before you go and one or two perhaps that may 
develop? Your response to a question asked by Senator King was, as 
I understood it, that there is keen competition among these various 
steel companies in which the Cleveland-Cliffs and the Cliffs companies, 
respectively, own a large share of stock? 

Keen competition between the steel companies in which you are 
interested? 

Mr. Greene. I would feel quite certain there is. 

The Chairman. In other words, that competition among the Wheel- 
ing Steel, Repubhc Steel, Youngstown, and Inland is very keen? 

Mr. Greene. Very keen. 

The Chairman. And there is no effort upon the part of the joint 
stock ownership to control or prevent that competition? 

Mr. Greene. None whatever. I can illustrate that by saying that 
occasionally we have occasion to buy steel ourselves for our use in the 
mines, and so forth, and I want to tell you that the criticism we get 
because we can only give it to one company is so immediate and so 
very critical that I know there is keen competition. 

The Chairman. And you want us to imderstand that the directors 
of the Cleveland-Cliffs Iron Co. make no effort to ameliorate that 
competition among these companies in which it has a stock interest. 

Mr. Greene. They make no such effort. 

The Chairman. And the same is true of the CUffs Co. 

Mr. Greene. The same is true. 

The Chairman. Then is it your advice to this committee, as a 
person of prominence in industry, that the competitive system should 
be maintained? 

Mr. Greene. I certainly think it should. 

The Chairman. Do you think it would be inadvisable for Congress, 
by law in any way to weaken the competitive system? 

Mr. Greene. Well, I think the freedom of business from regulation 
is very important, very desirable. 

> "Exhibit No. 1352," appendix, p. 10426, 



CONCENTRATION OF ECONOMIC POWER / 10281 

The Chairman. Well, that isn't exactly the question I asked. I 
say, is it ypur opinion that Congress should not pass any legislation 
which would tend to weaken the competitive system? 

Mr. Greene. I don't know what kind of legislation you refer to, 
Senator, 

The Chairman. I am not referring to anything in particular, but 
we all know that there is an argument going on all through the country 
among persons who are thinking about this thing as to the desirability 
of competition. Some people have advanced the idea that we have 
passed beyond the competitive stage, and that permission ought to be 
granted to industrial executives to at least ameliorate competition, 
particidarly with respect to prices. 

Mr.jGrREENE. Well, I am only expressing my personal views. 

The Chairman. Yes, certainly. 

Mr. Greene. I feel very strongly that a Government-controlled 
economy is a very bad thing. 

The Chairman. Thereagainyoudon't answer my question. There 
are other ways of controlling an economy besides Government action. 
There are some hints that there have been efforts upon the part of 
private institutions to control economy, too, so that my question is, 
Do you think that the competitive system ought to be maintained? 

Mr. Greene. I do. 

The Chairman. Regardless. And it ought to be protected from 
attack, from whatever source that attack comes, whether it is from 
private sources or Government sources. 

Mr. Greene. I believe thoroughly in the competitive system -of 
business. 

The Chairman. Then do you believe in the thorough enforcement 
of the antitrust laws? 

Mr. Greene. I think I would have to be familiar with all the details 
of the law. I am thoroughly in favor of competitive business con- 
ditions. 

The Chairman. Well, you are thoroughly familiar with details of 
the Sherman antitrust law and the Clayton Act and the Federal Trade 
Commission Act. 

Mr. Greene. Not as a lawyer, I am not familiar with it. 

The Chairman. As the ordinary person. 

It is your opinion and your advice to this committee that the anti- 
trust laws ought to be maintained and be made effective. 

Mr. Greene. I would say so. 

The Chairman. I just wanted to get your point of view with re- 
spect to it because it is a matter of great importance. 

Senator King. Do you beUeve competition is better than regimen- 
tation? 

Mr. Greene. Yes, sir. 

Senator King. And you believe the competitive system, while it 
may leave some wrecks behind it in the weaker, by and large compe- 
tition will solve better than any other plan the economic and indus- 
trial problems that we have to meet. 

Mr. Greene. I do. 

Senator King. Would you say from the experience which you have 
had that there is competition in the steel industry? 

Mr. Greene. I would say there is very keen competition. 



10282 CONCENTRATION OF ECONOMIC POWER 

Senator King. You stated that there is competition in the selling of 
ores, and you only sell, as I understand it, 9.1 percent of the ores in 
the area to which counsel have referred. 

Mr. Greene. I want to correct that. We don't sell 9.1 percent. 
That is the shipments, and those shipments are made up of three 
items — our own ores, the ores that are mined from properties we lease, 
and what we mine from partners. Am I correct, Mr. Feller? 

Mr. Feller. That is right. 

Mr. Greene. So that probably the amount that we sold in that 
one, which is maybe the second biggest year in the industry, was 
about 6 percent, or only about two-thirds of the 9.1. The 9.1 in- 
cludes ore that actually belongs to six or eight different steel com- 
panies. It is their ore. 

Senator King. Was their competition among the purchasers of 
ores and the owners of property with respect to the acquisition of 
ores? 

Mr. Greene. Keen competition. 

Senator King. You had competition? 

Mr. Greene. Absolutely. 

Senator King. Did you have to compete to sell the 6 percent to 
which you have referred? 

Mr. Greene. Yes, sir. You have to work from Monday morning 
till Saturday noon. 

Senator King. Some of the steel companies, I presume, from your 
testimony, own their own ore deposits? 

Mr. Greene. Oh, they own maybe — I think the figures that were 
given here by Mr. Hoyt showed that the steel companies own about 
five-sixths of the ore. 

Senator King. If the prices which you and others who are mining 
ore for sale to sellers were too high, were higher than the steel com- 
panies believed warranted, would they mine their own ores? , 

Mr. Greene. Certainly they would. 

Senator King. What proportion of the ores consumed by them are 
mined by these companies named upon the chart here? 

Mr. Greene. Well, now, do you mean mined by them, or do you 
mean shipped? This chart here is the shipment of ores.^ 

Senator King. I am speaking of mining. 

Mr. Greene. I can only give you, as I state, our figures. Our 
figures are that out of the 9 percent, we sold about two-thirds of it, 
and the other third is divided between mines we lease and mines we 
manage for steel company ownership. About 3 percent of it was due 
to those two causes. 

Senator King, The other 91 percent of the ores which are consumed, 
by whom are those ores mined? 

Mr. Greene. Well, five-sixths of them belong to the steel com- 
panies, and one-sixth of them belong to the other merchant dealers 
in ore. 

Senator King. So that in selling the ores which you mine and which 
you handle, that is the 6 percent, you are in competition with the 
mine owners who own five-sixths of the ore deposits and mine the same. 

Mr. Greene. That is correct. If we go over a period of 30 years, 
our shipments all together are 6.4, and I think our own interest over 
30 years is a trifle under 5 percent. 

« Exhibit No. 1351, appendix, p. 10425. 



CONCENTRATION OF ECONOMIC POWER 10283 

Senator King. Then you have to compete in the selling of your 
6 percent with the mine owners who own five-sixths of the ores 
themselves. 

Mr. Greene. We compete with the other merchant sellers. 

Senator King. And all of you, of course, compete with the mine 
owners. That is to say, they have the deposits, and if your prices 
are too high, presumably they would mine them themselves, and they 
do mine some, as I understood you. 

Mr. Greene. You are competing with those steel companies that 
have ore reserves in excess of their needs, plus the merchant sellers. 
There are notable cases of companies whose reserves exceed their 
needs. 

Mr. Henderson. Taking this 6 percent, if you isolate Oliver which 
does not sell in competition with merchants, you have about 10 percent 
of the free market. Oliver takes about 42 percent of production, to 
be compared with your 6 percent. 

Mr. Greene. On the assumption that they have, that would be 
about right. 

Mr. Henderson. One other question. You mentioned the example 
of when you buy steel— do you get bids on that, when you buy steel 
for the iron company? 

Mr. Greene. I am quite sure we check the prices. 

Mr. Henderson. Are they all alike? 

Mr. Greene. No. I am not personally familiar with that. We 
have a buying department, and they go into it very thoroughly. We 
have a competent man that does that. 

Mr. Henderson. You mean the basing pomt price is not followed. 

Mr. Greene. I couldn't tell you that. 

Mr. Henderson. If you can't tell me, I will abandon that line of 
examination. 

Mr. Feller. May I say, Mr. Chairman, that there will be a great 
deal of testimony in this hearing with respect to steel prices and this 
afternoon we hope to begin taking testimony with respect to that. 

The Chairman. In other words, questions from the committee 
with respect to price structures are a little bit premature. 

Mr. Greene, you may stand aside. 

Call the next witness, please. 

Mr. Feller. Mr. George Humphrey, please. 

The Chairman. Do you solemnly swear the testimony you are 
about to give in this proceeding shall be the truth, the whole truth, 
and nothing but the truth, so help you God? 

Mr. Humphrey. I do. 

TESTIMONY OF GEORGE M. HUMPHREY, PRESIDENT, M. A. 
HANNA CO., CLEVELAND, OHIO 

Mr. Feller. Will you give the reporter your full name and the 
company with which you are connected, and your position with that 
company? 

Mr, Humphrey. George M. Humphrey, president of the M. A. 
Hanna Co., Cleveland. 

Mr. Feller. You a,re also a director and chairman of the execu- 
tive committee of the National Steel Corporation? 

Mr. Humphrei. I am. 



10284 CONCENTRATION OF ECONOMIC POWER 

Mr. Feller. Could you iA\ us something very, very briefly, of the 
history, of the M. A. Hanna Co.? 

Mr. Humphrey. The M. A. Hanna Co. was a partnership formed 
in the late sixties and has carried on in the iron ore, coal, and in- 
vestment business ever since that time. 

FORMATION OF THE NATIONAL STEEL CORPORATION 

Mr. Feller. When was the National Steel Co. formed? 

Mr. Humphrey. 1929. 

Mr. Feller. At that time, in 1929, is it correct to say that M. A. 
Hanna Co. was engaged in owning and operating iron-ore mines? 

Mr. Humphrey. At that time M. A. Hanna Co. owned merchant 
blast furnaces,, made and sold merchant pig iron, and owned ore 
mines. 

Mr. Feller. You also at that time owned a fleet of boats operat- 
ing on the Great Lakes? 

Mr. Humphrey. That is right. 

Mr. Feller. At the present time what are your approximate 
assets? 

(Senator King assumed the Chair.) 

Mr. Humphrey. I think about sixty million. 

Mr. Feller. Could you tell us what your functions are today in 
contradistinction to your fimctions in 1929? 

Mr. Humphrey. Well, in 1929, when National Steel Co; was formed, 
our assets that related to the iron ore and pig iron business were turned 
over to National Steel, and we took stock for those assets, in National 
Steel. We became the raw material department of the National Steel 
Co., and National Steel engaged the Hanna Co. to operate and handle 
their raw material properties. 

Mr. Feller. You act, with respect to National Steel, very much as 
Oliver acts with respect to U. S. Steel? 

Mr. Humphrey. I don't know just how Oliver acts. We operate, 
as far as National Steel is concerned — the ore mines and the vessels 
for them. 

Mr. Feller. National Steel owns no stock in M. A. Hanna? 

Mr. Humphrey. It does not. 

Mr. Feller. But M. A. Hanna owns quite a substantial block of 
stock in National Steel? 

Mr. Humphrey. That is correct. 

Mr. Feller. You are the largest stockholder? 

Mr. Humphrey. I believe so. 

Acting Chairman King. You got that stock from the sale of assets 
of the Hanna Co.? 

Mr. Humphrey. That is correct. Senator, and we have held it 
ever since. 

Mr. Feller. To clarify this matter just a bit, could you tell us 
something of the formation of National Steel, what units went into it? 

^Ir. Humphrey. Well, in 1929 we had a merchant pig-iron business 
and we had more ore than we used in our own furnaces, and sold ore to 
other customers. We had a pig-iron business in Detroit. George 
Fink had a sheet-steci business in Detroit, and we decided that would 
be a wise thing to build a steel plant in Detroit which would take our 
pig iron and supply the steel for Mr. Fink's sheets. 



CONCENTRATION OF ECONOMIC POWER 10285 

Mr. Feller. You were also interested in Mr, Fink's business in 
Detroit? 

Mr. Humphrey. We were, and we together formed the Great Lakes 
Steel Co., which was the connecting link between our pig iron, our 
iron ore, and his finished sheets. 

Mr, Feller. And there were at that time, in 1929, three companies, 
the Great Lakes Steel Corporation in Detroit, in which you and Mr. 
Fink were interested, the M. A. Hanna Co., operating iron ore mines, 
and blast furnaces, and thirdly the Weirton Steel Co.? 

Mr. Humphrey. Weirton Steel Co. was one of our largest customers 
for iron ore. We supplied them with iron. 

Mr. Feller. Was Mr. Weir the head of the Weirton Steel Co. at 
that time? 

Mr. Humphrey. He was. 

Mr. Feller. And the merger brought about National Steel, and 
consolidated these three interests, Great Lakes Steel, the iron ore 
properties and blast furnaces of M. A. Hanna, and the properties of 
the Weirton Steel Co.? 

Mr. Humphrey. Each of those units, you see, was supplementary 
to the other unit, and we found that by putting those supplementary 
units together in a single company we would have a stronger, better 
company group than we had as independents. 

Acting Chairman King. Did the identity of those two companies, 
when the consolidation took place, cease? 

Mr. Humphrey. No; the identity is maintained. 

Mr. Feller. Could you tell us the approximate market value of 
your investment in National Steel? 

Mr. Humphrey. Today? 
. Mr. Feller. Yes. 

Mr. Humphrey. I don't Imow that I could. 

Mr. Feller. Would it be in excess of 45 millions? 

Mr. Humphrey. I don't know. You can figure it out; there are 
approximately 600,000 shares. I don't pay any attention to the 
market. 

Acting Chairman King. Has the Hanna Co. any assets whatever 
except the 600,000 shares of stock to which you have referred? 

Mr. Humphrey. Oh, yes; we have other business. We have a 
larger volume in the coal business than we have in the iron-ore busi- 
ness. We are engaged in other lines of activity besides. 

Mr. Feller. You also manage some mines which are owned by 
yourself and some mines which are owned by steel companies other 
than National Steel? 

Mr. Humphrey. Only mines in which the National Steel has 
interest. There are some mines in which National Steel has interest 
with others. 

Mr. Feller. And do you also act as National's exclusive sales agent 
for all the ore produced above the requirements of National Steel? 

Mr. Humphrey. We do. 

Mr. Feller. Mr. Humphrey, 1 should like to show you an exchange 
of correspondence which appears to be between you and Mr. Ernest 
Weir. Who is Mr. Weir? 

Mr. Humphrey. Mr. Weir is the chairman of National Steel. 



10286 CONCENTRATION OF ECONOMIC POWER 

Mr. Feller. These documents were taken from your file. Will 
you please identify them? They have your initials typed on the 
bottom. One of them is addressed to you. They are from your files? 

Mr. Humphrey. Yes; I recognize them. 

THE ROWE MINE 

Mr. Feller. Mr. Humphrey, these three letters deal Vith a mine 
called the Rowe mine. They are dated, respectively, August 14, 1930, 
November 5, 1930, and November 7, 1930. Do you have^n}'- recol- 
lection of the transactions involving the Rowe mine at that period? 

Mr. Humphrey. Yes; I do. 

Mr. Feller. Could you tell us something about it? 

Mr. Humphrey. The Rowe mine is a very low grade property. 
It has a fairly substantial tonnage of somewhat questionable ore 
that has to be beneficiated and requires a substantial plant develop- 
ment and a good deal of experimentation to know whether or not it 
can ever be made merchantable. 

We own — we have bought — something more than half of the fee 
which we own that we regard as a possibility for ore many years 
hence. 

Acting Chairman King. The ore is refractory r 

Mr. Humphrey. It is all mixed up with chert and rock, and it has 
to be separated from the rock to be of any use whatever. 

Acting Chairman King. Is it in Michigan? 

Mr. Humphrey. It is in Minnesota. It is a very difficult thing 
to do. 

Mr. Feller. Merely for the record, Mr. Humphrey, one of these 
letters says you owned a six-sixteenths interest. 

Mr. Humphrey. I should think that would be about it. 

Mr. Feller. Do you recall an offer made by Butler Bros. Mining 
Co., with offices in St. Paul, to operate the mine? 

Mr. Humphrey. Well, Butler Bros, never talked to us on the sub- 
ject. There was another man in Duluth who came to us and said that 
he thought Butler Bros, might be interested to develop that property 
if we would be interested to lease our part portion of it. 

Mr. Feller. May I read yo"u a paragraph from the letter dated 
November 5, 1930, written by you to Mr. Weir: ^ 

Mr. Crosby, of Duluth, came down to see us yesterday to try to induce us to 
join with him and other fee owners in making a lease of the property in which we 
own a six-sixteenths interest, and he and his associates own the balance adjoining 
the Rowe mine. They have agreed with Butler Brothers on a 45-cent royalty 
compared with 20 cents to 25 cents which were offered them, and very high 
minimals as compared to our offer of very nominal minimals for the next ten 
or fifteen years. 

Is it correct to say that at that time you understood that Butler 
Bros, had come to some sort of agreement? 

Mr. Humphrey. That letter says that Mr. Crosby told us that, and 
I have no doubt that that is correct . 

Mr. Feller. What was your attitude v,^ith respect to the operation 
of this mine biy Butler Bros.? 

Mr. Humphrey. I didn't want to see it opened. I thought it was 
very inopportune to open that property, that that property shouldn't 
be opened for 20 years. 

1 Not introduced for the record. 



CONCENTRATION OF ECONOMIC POWET? 10287 

Mr. Feller. Could you tell us why? 

Mr. Humphrey. Because of the character of the ore and the 
difficulties of doing it. It is a very difficult thing to do, and I think 
very foolish to open that sort of property at this time. 

Mr. Feller. You thought, in other words, that Butler Bros., if 
they were to open that mine, would probably lose money? 

Mr. Humphrey. I didn't know whether they would or not. I 
don't know myself of any way of operating the property now. 

(Senator O'Mahoney resumed the Chair.) 

Mr. Feller. I should like to read you a letter dated November 7, 
1930,^ addressed to you and signed "Ernest." "Ernest" would be 
Mr. Ernest T. Weu-? 

Mr. Humphrey. That is right. 

Mr. Feller. The letter reads as follows (reading) : 

I haye read with interest j'our letter of the 5th relating to the possible activity 
of Butler Brothers on the Ciiyuna — • 

The Cuyuna is the range on which this mine is located? 
Mr. Humphrey. That's it. 
Mr. Feller (reading): 

Certainly hope you can persuade them to withhold development, because I am 
afraid there will be too much ore over the next year and possibly two, and once 
they develop they will want to sell it. 

Another reason why they should not want to do anything to crowd the market 
is that it would certainly affect the price of the ore they are now producing. . 

Mr. Humphrey. If you will read, Mr. FeUer, the other letter, you 
will see my reasons for not wanting to do it. 

Mr. Feller. I think that should be read. The letter of November 
5,' which Mr. Humphrey wrote to Mr. Weir, reads, in part, as follows 
(reading) : 

We explained to Mr. Crosby that this was a most inopportune time to open 
another property, that we not only wanted to reserve our own ore for years to 
eome, but we did not want any operation to raise o"ur taxes on our adjoining land 
so as to force us to open them in the near future, that if we did so, we might have 
to cancel some of our other properties which we hold from him, which would be a 
very serious matter for him, and urged him to go back to Butler Brothers and get 
them to postpone any activity for at least five years, stating that we would work 
with them if they were short of ore in the meantime to take care of their require- 
ments on some of the property which we now have operating on some fair ex- 
change basis, to be paid back later. 

Mr. Humphrey. You see, this is an unmerchantable property, and 
it would be very bad to start. 

Mr. Feller. As I understand from this correspondence, and check 
me up on this, you told Mr. Crosby first that this would be a most 
inopportune time to open another property; secondly, that you did 
not want any operation to raise your taxes on adjoining land. Isn't 
that a fair statement? 

Mr. Humphrey. That is correct. The rule of taxation in Minne- 
sota is that unmerchantable idle property takes one rate of taxation, 
and merchantable property takes another. 

Mr. Feller. There is nothing in this letter which gives as a reason 
the fact that the ore was of low grade and could not profitably or 
properly be operated. 

•Not introduced for the record. 

124491— 40— pt. 18 6 



10288 CONCENTRATION OP ECONOMIC POWER 

Mr. Humphrey. Mr. Weir knew that just as well as I did. Every- 
body knows that. 

Mr. Feller. In other words, this letter doesn't tell the whole story. 

Mr. Humphrey. He knows it. He knows just as much about the 
property as I do. 

Mr. Henderson. May I ask a question there? When you say 
unmerchantable, what does that mean? 

Mr. Humphrey. It means that the iron content of this ore in the 
ground is very low, and it is mixed up with rock and dirt, and to make 
it of a grade that you can ship to use in a blast furnace, you have to go 
through an elaborate mechanical process that will separate that rock 
and dirt from the iron ore so as to raise the iron content sufficiently to 
make it worth while to ship. 

Mr. Henderson. And it is your opinion that this is unmerchant- 
able? 

Mr. Humphrey. It is definitely. 

Mr. Henderson. Does Butler Bros, consider it unmerchantable? 

Mr. Humphrey. I think so. Their only hope would be that they 
could build a plant and devise some means of separating it to make a 
merchantable product out of it. We, as I say, know of no way of 
doing that. They perhaps did. I don't know. 

Mr. Henderson. Are they fairly well experienced in the business? 

Mr. Humphrey. Oh, yes; they are good operators. 

Mr. Henderson. So this question of whether it is unmerchantable 
or not is a difference of opinion between your company and Butler 
Bros. 

Mr. Humphrey. There is no question about the unmerchantability 
of the ore. It is an unmerchantable ore. The only question of 
opmion would be whether they could devise some means of treating 
it so as to make it merchantable, and we weren't smart enough to 
devise any. They were discussing it. 

Mr. Feller. May I say some of the partners of Butler Bros, will 
be on the stand shortly.^ The question might be addressed to them. 

Senator King. They haven't developed it, have they? 

Mr. Humphrey. No, sir. 

Senator King. Or found anybody to develop it. 

Mr. Humphrey. No, sir. 

Senator King. There was an abundance of ore then on the market 
with a higher iron content than this. 

Mr. Humphrey. That is correct. 

Mr. Feller. In view of the fact that it is very questionable as to 
whether this ore was merchantable, could you explain Mr. Weir's 
statement in the letter to you that he is afraid tha.t once they develop, 
they will want to sell it, and they should not want to do anytliing to 
crowd the market, since it would certainly affect the price of the ore 
they are now producing. 

Mr. Humphrey. If they went in there and invested what they 
would have to invest, which would probably be several million dollars, 
they would have to go ahead and operate. You can't go into a 
property and open it, even thoygh it is a mistake, and spend all that 
money, and not have to go ahead and try to get it back, and this 
was not a good time to do anything of that kind. 

' p. 10290 etseq.. Infra. 



CONCENTRATION OF ECONOMIC POWER 10289 

Mr. Feller. Mr. Weir's company is primarily interested in the 
matter of ore as a purchaser, is it not, as a consumer of ore? 

Mr. Humphrey, National Steel consiunes ore. It produces all of 
its own ore, and sells some. 

Mr. Feller. Can you explain to us why Mr. Weir should be 
concerned that the price of ore might go down in consequence of the 
operation of the Rowe mine? 

Mr. Humphrey. National Steel Co. is a large owner of ore and is 
desirous of getting as much for its ore as it can. 

Mr. Feller. That is all, Mr. Humphrey. 

The Chairman. Are there any questions to be asked of Mr. 
Humphrey by members of the committee? 

Senator King. At that time, as I understood you, there was an 
abundance of ore from various companies available for blast furnaces 
and for the steel industry. 

Mr. Humphrey. And of very much better quaUty than this. 

Senator King. Could it be mined much cheaper? 

Mr. Humphrey. Yes, sir. 

Senator King. I suppose iron ore is very much like copper ores 
and others, where you have a variety of geological formations, so 
that the ore veins have been shaken up and a lot of detritus and 
materials are thrown into the entire mass, so that to separate and get 
the wheat from the chaff is an almost impossible task, or at least one 
that involves large expense. 

Mr. Humphrey. And it is very difficult, very expensive to do it. 

Mr. O'Connell. I understand the proposal was that Butler Bros, 
would invest their money and attempt to develop this low-grade ore. 

Mr. Humphrey. That was the suggestion that was brought to us, 
and we did not care to participate. 

Mr. O'Connell. You wouldn't have had to participate. 

Mr. Humphrey. Yes; they wanted to take our property, and we 
said we were not interested to go along with them. 

Mr. O'Connell. Would you have participated in the operation in 
a financial way, had Butler Bros.' plan gone through? 

Mr. Humphrey. We would have leased them our property, and 
they would have had to pay us, and we didn't care to take that chance. 

Mr. O'Connell. You didn't care to let them risk their money? 

Mr. Humphrey. It was their money and our money, both. We 
didn't care to have this property opened and have it become on the 
active list, an active operation, so it would be a burden to us, with 
Butler Bros. obUgated to pay us royalty. If it came back to us it 
would be a burden to us, and it would have come back to us if they 
couldn't have made this arrangement pay. 

Mr. O'Connell. It would have come back to you in no worse con- 
dition than it left you. 

Mr. Humphrey. I don't know. 

The Chairman. It would have come back to you taxable at the 
higher rate, and not the lower. 

Mr. Humphrey. And partially opened, and nobody knows in what 
condition. 

Mr. Henderson. The reason Mr. Weir urged on you was that if 
that ore came on the market, it would tend to disrupt the price at 
wliich ore was sold. 



10290 CONCENTRATION OF ECONOMIC POWER 

Mr. Humphrey. It would be that much additional ore, and prob- 
ably be a poor grade. 

Mr. Henderson. Well, if it were a poor grade, would it affect the 
price of your higher-grade ore? 

Mr. Humphrey. You can judge that as well as I. 

Mr. Henderson. I cannot, Mr. Humphrey, because I am not an 
ore man. 

Mr. Humphrey. I was going to give you the figures, Mr. Hender- 
son. You misunderstood. This property would probably produce 
from two hundred fifty to three hundred thousand tons a year in a year 
that would — you know what our figures run, somewhere from thirty to 
sixty five million tons. To that extent it would have had an effect 
on price. 

Senator King. Suppose the operation had proven a failure and ob- 
ligations had been incurred buying machinery and developing me- 
chanical processes for the separation of the ore, the property might 
have been subjected to lien and you, being the owner of the property, 
would have had litigation to protect your interests. 

Mr. Humphrey. That is right; we would. 

The Chairman. Thank you, Mr. Humphrey. 

(The witness, Mr. Humphrey, was excused.) 

Mr. Feller. I should now like to call, Mr. Chairman, Mr. JDmmett 
Butler. 

TESTIMONY OF EMMETT BUTLER, PRESIDENT, BUTLER BROS., 

ST. PAUL, MINN. 

The Chairman. Do you solemnly swear that the testimony you 
are about to give in this proceeding shall be the truth, the whole 
truth, and nothing but the truth, so help you God? 

Mr. Emmett Butler. I do. 

Mr. Feller. Y7ill you give the reporter your full name and the 
company with which you are connected? 

Mr. Emmett Butler. Emmett Butler, president of Butler Bros. 

Mr. Feller. What is Butler Bros.? 

Mr. Emmett Butler. Butler Bros, is a mining company. 

Mr. Feller. And your offices are located in Minneapolis? 

Mr. Emmett Butler. St. Paul. 

Mr. Feller. St. Paul, I am sorry. That is a very bad slip. Could 
you tell us just a little bit about the history of your company, Mr. 
Butler? 

Mr. Emmett Butler. We originated as general contractors, build- 
ing work, ffaally as contractors for the removal of overburden in the 
mining of iron ore, for mining companies, and then took mining leases 
and mined and sold the ore that was produced from the mines. 

Mr. Feller. Do you have any financial connections with any steel 
company? 

Mr. Emmett Butler. We do not. 

Mr. Feller. You own no stock in any steel company? 

Mr. Emmett Butler. I may own some personally, a few shares. 

Mr. Feller. Your company owns none? 

Mr. Emmett Butler. None. 

Mr. Feller. In your opinion, if you owned substantial blocks of- 
stocks in steel companies, would it make it easier for you to sell your 
ore to those steel companies? 



CONCENTRATION OF ECONOMIC POWER 10291 

Mr. Emmett Butler. I don't know. 

Mr. Feller. Do you have smj difficulty in getting contracts with 
steel companies for the sale of ore? 

Mr. Emmett Butler. Well, we don't have any more difficulty, I 
don't think, than is general to sell a product. We have difficulty, 
we are not able to sell our entire capacity output at times. Some- 
times we do. 

Mr. Feller. Mr. Butler, with which company do you have your 
most important contracts for the sale of ore? 

Mr. Emmett Butler. Well, that is a little hard to say. There 
are two or three important outlets, for our ore. 

Mr. Feller. You have a long-term contract for the sale of ore to 
Pickands, Mather & Co.? 

Mr. Emmett Butler. Pickands, Mather & Co. acts more or less 
as our ore agent, I would say, to different companies. 

Mr. Feller. About what proportion of your output is sold to 
Pickands, Mather? 

Mr. Emmett Butler. Roughly a third, I should say. 

Mr. Feller. According to the figures which you submitted to us, 
in 1937 the proportion of sales made to Pickands, Mather was about 
50 percent. 

Mr. Emmett Butler. They may vary from year to year. 

Mr. Feller. They may vary from year to year. 

Senator King. Pickands, Mather & Co. buy and sell ore, do they 
not? 

Mr. Emmett Butler. Yes; I would say so. 

Mr. Feller. Mr. Chairman, I should like also to call Mr. Patrick 
Butler at this time. 

* TESTIMONY OF PATRICK BUTLER, BUTLER BROS., ST. PAUL, 

MINN. 

The Chairman. Do you solemnly swear that the testimony you 
are about to give shall be the truth, the whole truth, and nothing 
but the truth, so help you God? 

Mr. Patrick Butler. I do. 

Mr. Feller. Mr. Patrick Butler, will you give your full name? 

Mr. Patrick Butler. My name is Patrick Butler. 

Mr. Feller. And you are connected with Butler Bros.? 

Mr. Patrick Butler. I am an executive of Butler Bros. I am 
the son of Emmett Butler. 

pickands, MATHER-BUTLER BROS. ORE CONTRACT 

Mr. Feller. Mr. Emmett Butler, the contract that you have with 
Pickands, Mather & Co. provides, does it not, that the Pickands, 
Mather Co. has the exclusive right and option to purchase in each 
and any year, any surplus tonnage which Butler Bros, may have 
available and can ship from said property or any of them, over and 
above the tonnages therefor covered by the outside contracts herein- 
before mentioned. Is that correct? 

Mr. Emmett Butler. With the property, certain subscribed pref- 
erences. That is correct. 



10292 CONCENTRATION OF ECONOMIC POWER 

Mr. Feller. In other words, Pickands, Mather & Co. has an option 
to purchase your surplus tonnage above the contracts which you had 
at that time for the sale of certain properties? 

Mr. Emmett Butler. That is correct. 

Mr. Feller. Mr. Patrick Butler, when your company entered into 
this contract with Pickands, Mather & Co. did you have any opinion as 
to why Pickands, Mather & Co. took this option to purchase your 
surplus tonnage? 

Mr. Patrick Butler. Why I gather that it was to insure themselves; 
it was additional reserve of iron ore. 

Mr. Feller. May I show you this letter? This letter is to Mr. 
Emmett Butler, signed by you, and dated September 4, 1928, taken 
from your files. Do you identify it? 

Mr. Patrick Butler. Yes. 

Mr. Feller. I offer this for the record. 

(The letter referred to was marked "Exhibit No. 1362" and is in- 
cluded in the appendix on p. 10435.) 

The Chairman. It will be received. 

Mr. Feller. I will read the first two paragraphs of this letter. 
[Reading:] 

I talked with Hoyt this afternoon relative to our counterproposal. 

The minimums and maximums as you suggested are agreeable to him. How- 
ever, he wants first call on any additional tonnage our present properties might 
show up. This is to keep us out of the market as much as possible. This first 
call means that should we feel we ought to produce more, or that we are in a 
position to take on additional contracts, that we should offer the ore to them 
before we do so to anyone else. 

Will you explain what you meant by this sentence: "This is to keep 
us out of the market as much as possible." 

Mr. Patrick Butler. That, of course, was a surmise on my part. 
Although the letter says it was not, it must be surmise. I can't 
testify as to what their intentions were in calling for optional tonnage. 
It may have, been a collateral advantage to them in making the deal 
with us. It may have been, as I say, that it would tend to keep us 
out of the market. 

Mr. Feller. If your company were free to sell this surplus tonnage 
to any purchaser and if you offered it at a price below the market 
price, then under this contract Pickands, Mather & Co. could exercise 
its option and control that part of the ore v^hich you were willing to 
sell below the market price? 

Mr. Patrick Butler. If we felt as though we wanted to sell addi- 
tional ore from the surplus ore, so to speak, at a price, at any price, 
we would have to give Pickands, Mather & Co. a refusal at the price 
we were willing to sell. It is definitely so stated in the contract. 

Mr. Feller. Doesn't it follow, then, that Pickands, Mather & Co. 
has the power under this contract to prevent you from selling below 
the market price with respect, that is to say, to ore which is additional 
to that now in the contract? 

Mr. Patrick Butler. Definitely not. 

Mr. Feller. If they wanted to they could take the ore off your 
hands and you couldn't sell it to someone else at a lower price, is that 
correct? 

Mr. Patrick Butler. They could buy the ore from us at the price 
we were willing to sell it. Naturally we wouldn't have the ore to sell. 



CONCENTRATION OF ECONOMIC POWER 10293 

Mr. Feller. Can you explain the basis of your surmise that 
"this is to keep us out of the market as much as possible." How 
would it help Pickands, Mather & Co. to keep you out of the market 
as much as possible? 

Mr. Patrick Butlek. They would only be helped as other iron 
ore merchants would be helped in that there would be less ore offered 
on the market. 

Mr. Feller. And you thought it would be to their interest to have 
less ore offered on the market? 

Mr. Patrick Butler. I would think so; yes. 

Mr. Feller. Was that the basis of your surmise? 

Mr. Patrick Butler. I think it was; yes. 

Mr. Feller. Just to clear up the matter with respect to which 
Mr. Humphrey testified a few minutes ago, Mr. Emmett Butler, 
did you enter into negotiations with respect to the Rowe mine in 1930? 

Mr. Emmett Butler. No; no negotiations were considered. A 
sum was offered to me, I think, but I did not seriously consider it, 
as I recall. 

Mr. Feller. Would you say, then, that Mr. Humphrey was mis- 
taken when he said that there had been an agreement with Butler 
Bros, on the royalty? 

Mr. Emmett Butler. I would definitely say he was mistaken. 

Mr. Feller. Would you say that, too? 

Mr. Patrick Butler. Yes. 

Mr. Feller. That is all I have at the moment. 

(Senator King assumed the Chair.) 

Acting Chairman King. Just one other question. Was it custom- 
ary among the four purchasers and the ore sellers to make contracts 
to acquire all of the output of a given vendor with the provision that 
if the amount exceeded a given standard that the purchaser, or the 
seller, would have an option upon the residue? That is to say, if a 
man made a contract to purchase, say 50,000 tons, mined by the Rowe 
mine, might the contract provide that if there were more than 50,000 
tons mined, that he would have the opportunity to buy the residue? 

Mr. Patrick Butler. Yes. 

Acting Chairman King. And that was the contract you had, as X 
understand it, it didn't preclude you from selling the rest of the ore 
at any price that you pleased. 

Mr. Patrick Butler. That is right. 

Acting Chairman King. But the person with whom you had the 
contract had the call on the ore. 

Mr, Patrick Butler. That is correct. 

Acting Chairman King. Isn't that common in business, you would 
buy a clip and the understanding is, or the expectation is that the clip 
will be, say, a million pounds, but the contract provides that if there 
is any tiling more than a million pounds, the purchaser shall have 
the option to buy the residue? 

Mr. Patrick Butler. That is right. 

Mr. Feller. Mr. Emmett Butler, are you aware of any other con- 
tract in the iron ore business which has a provision similar to the option 
provision in your contract with Pickands, Mather & Co.? 

Mr. Emmett Butler. I am not at the present time. 

Mr. Feller. Mr. Patrick Butler? 



10294 CONCENTRATION OF ECONOMIC POWER 

Mr. Patrick Butler. I can't recall at the present time. We have 
had contracts which called for the output of all the ore in a mine. 

Mr. Feller. Mr. Chairman, this concludes the portion of the testi- 
mony on the iron-ore business which elucida-tes the position of the 
various iron-ore companies and various steel companies. We wUl 
proceed, and perhaps it might be advisable to proceed after recess. 
[Laughter.] 

(Senator O'Mahoncy resumed the Chair.) 

Mr. O'CoNNELL. Will you repeat that for Senator O'Mahoney, 
please? 

Senator King. It was stated that the testimony on the iron-ore 
business was concluded and you suggested we take a recess. 

Mr. Feller. Not with respect to iron ore but wdth respect to that 
portion of the testimony on iron ore which deals with the position of 
the individual companies and relations between certain of these com- 
panies and the steel companies. 

The Chairman. Do any of the committee members desire to address 
any inquiries to either of these witnesses? 

Mr, Feller. Mr. Chairman, after the recess I should like to call 
all of the witnesses who have testified up to this point. In other 
words, there wiU be six. 

The Chairman. Very well. The committee will stand at recess 
until 2:15, 

(Whereupon at 12:10 p, m, a recess was taken until 2:15 of the 
same day,) 

afternoon session 

The hearing was resumed at 2:40 p. m. upon the expiration of the 
recess. 

The Chairman. The committee will please come to order. 

Mr. Feller. I would like to recall the six gentlemen who have 
already been sworn in. 

Mr, Hoy t, Mr. Greene, Mr. Humphrey, Mr. Oglebay, Mr. Emmett 
Butler, Mr. Patrick Butler. 

TESTIMONY OF E. B. GREENE, PRESIDENT, CLEVELAND- CLIFFS 
IRON CO., CLEVELAND, OHIO; ELTON HOYT, II, MANAGER AND 
PARTNER, PICKANDS, MATHER & CO., CLEVELAND, OHIO; 
GEORGE M. HUMPHREY, PRESIDENT, M. A. HANNA CO., 
CLEVELAND, OHIO; EMMETT BUTLER, PRESIDENT, AND PAT- 
RICK BUTLER, BUTLER BROS., ST. PAUL, MINN.; CRISPIN 
OGLEBAY, PRESIDENT, OGLEBAY, NORTON & CO., CLEVELAND, 
OHIO — Resumed 

The Chairman, Are you ready to proceed? 

Mr. Feller. Mr. Chairman, yesterday and this morning we were 
discussing the individual situation of these companies and their 
relation to each other. I should like to go into the relationships, if 
any, which exist among the ore companies, and then go on to the 
question of price of iron ore. 

Mr. Greene, I show you that letter, which purports to be signed by 
you, taken from the files of your companv. Will you identify it, 
please? 



CONCENTRATION OF ECONOMIC POWER 10295 

Mr. Greene. Yes. I identify it. 

Mr. Feller. I offer this for the record. 

The Chairman. Will you read the date of the letter? 

Mr. Feller. The letter is addressed to Mr. Humphrey, and is 
dated September 19, 1934, signed by Mr. Greene. The letter reads 
as follows: 

Many thanks for your note regarding Alec. I am very much pleased to find 
that such men as yourself, Leonard, Elton, and others have been pleased by the 
appointment and so sincerely welcome Alec into our "union". 

I am glad that the iron ore business is so largely in the hands of a small group 
of men who all work on a close and friendly basis. 

The Chairman. The letter may be admitted. 

(The letter referred to was marked "Exhibit No. 1363" and is 
included in the appendix on p. 10436.) 

Mr. Feller. Mr. Greene, is that a proper characterization of the 
iron-ore business? 

Mr. Greene. No; I think not. That was a very friendly and per- 
sonal note I wrote to aclaiowledge a letter from Mr. Humphrey 
expressing his pleasure that we had employed Mr. A. C. Brown, 
formerly of Cleveland, who was up in the machinery business at Bay 
City and who had done conspicuous work in civic matters and educa- 
tion and so on, a very able fellow, and we employed him and put him 
in as first vice president, and he was a personal friend of all of ours. 

Mr. Humphrey thought it was a nice thi^-g to do, and that is all 
there is to that note. The rest of it is facetious, 

Mr. Feller. Is the second sentence facetious? I am referring to 
that specifically [reading]: 

I am glad that the iron-ore business is so largely in the hands of a small group 
of men who all work on a close and frienr'ly basis. 

Mr. Greene. I think we are all friends, and I think we do work 
on a friendly basis, but that is not an improper friendly basis. That 
is on a personal friendly basis. 

Mr. Feller. I had not made any statement about propriety. 

Senator King. How many men were there in the iron ore business 
at that time. 1934? 

Mr. Greene, You mean employees? 

Senator King. No, how many companies were there, or partner- 
ships, in the iron-ore business? 

Mr. Greene. I wouldn't laiow the exact number, but probably at 
least 10, I should say. 

Senator King. Exclusive of the plants of the steel companies? 

Mr. Greene. Yes, indeed; I mean those that sell ore, merchants, 
sellers of ore. 

Mr. Feller. Just to clarify the record, Mr. Greene, I should like 
to identify the various people mentioned. You have already identified 
Air. Brown. Who is Leonard? 

Mr. Greene. Leonard is Leonard Hanna. Those are all personal 
friends^ of mine who probably wrote me a note expressing their 
appreciation, 

Mr, Feller. I think that is clear on the face of the letter. Elton 
would be Mr, Hoyt? 

Mr, Greene. Mr. Hoyt. 

Mr. Feller. Mr. Greene, I show you now a letter which purports 
to be signed by you, addressed to Mr, Elliott, manager of some of 



10296 CONCENTRATION OF ECONOMIC POWER 

your mines, dated August 11, 1934. This letter was taken from your 
files. Will you identify it, please? 

Mr. Greene. I identify it. 

Mr. Feller. Mr. Chairman, I don't think it is necessary to have 
the whole letter printed, but I offer it for the record. 

The Chairman. You mean you offer the letter or a part of the 
letter? 

Mr. Feller. I offer the letter, but not for printing in its entirety. 
I should like to read you the last paragraph. 

(The letter referred to was marked "Exhibit No. 1364" and is on 
file with the committee.) 

Mr. Feller (reading): 

The writer — 

That's you, Mr. Greene — 

feels indebted to Mr. Hoyt and his firm for their fine cooperation in our negotia- 
tions with the Bethlehem Co. the past year. I know you fully concur with the 
writer that close cooperation with our competitors is of great mutual advantage. 

Would you explain that, please? 

Mr. Greene. I am very glad to. I think the whole letter there 
ought to be explained. 

The Chairman. Well, perhaps the whole letter should be read. 
Mr. Feller. Would you like me to read the whole letter? 
Mr. Greene. I think it would be well to read the whole letter. 
Mr. Feller. The letter is addressed to Mr. Elliott. [Reading:] 

You will recall that when the writer was in Ishpeming, we discussed at length 
the general situation and the very great disadvantage, not only to the mines them- 
selves, but to the general situation, should the mines be closed down this summer. 
At that time, you will recall, we prepared data with a view to forwarding it to 
the Bethlehem Steel Company. 

On the writer's return a conference was had with Mr. Henry G. Dalton, with 
reference, not only to their interest in the Athens mine, but also their influence 
with the Bethlehem people in connection with the Negaunee mine. Mr. Dalton 
informed the writer that he had that morning talked with Mr. Buck and told him 
that both Mr. Hoyt and myself had visited the mine and on our return we would 
give him our views on the matter, after checking up with the management at the 
mines, expecially with reference to the labor and tax situation. He asked me to 
defer the matter until Mr. Hoyt's return, and further, as you know, not to suggest 
any operation less than the equivalent of three days per week. 

Upon Mr. Hoyt's return we took the matter up and it was agreed that my 
letter, with yours attached, and all the data should reach Mr. Buck just prior to 
Mr. Hoyt's talk with him. Mr. Hoyt had a long conference with Mr. Buck in 
New York last Thursday, and the writer, who was tied up in merger negotiations, 
talked with both Mr. Hoyt and Mr. Buck over the 'phone regarding the matter. 
We are pleased to advise you that both Bethlehem Steel Company, as to the 
Negaunee, and Pickands, Mather and Company, as to the Athens, have advised 
us that they are willing to continue the operation of these mines on the present 
basis. They decline in both cases to make a firm commitment to operate the 
mines on this basis until next May, as should conditions greatly change, they 
might feel obliged to change their minds. 

You might be interested in a statement Mr. Buck made — that he would expect 
to operate the Negaunee mine just the same as he would conduct his own mining 
operations or as he would authorize the operation of mines under the management 
of Pickands, Mather and Company. 

And then the matter which is read previously. 

The writer feels indebted to Mr. Hoyt and his firm for their fine cooperation 
in our negotiations with the Bethlehem Company the past year. I know you fully 
concur with the writer that close cooperation with our competitors is of great 
mutual advantage. 



CONCENTRATION OF ECONOMIC POWER 10297 

Mr. Greene. Mr. Chairman, I think the facts in this matter are 
these. Where our operations are centraUzed on the Marquette 
Range, where we operate probably somewhere between 7 and 11 
mines, we were very much interested in keeping those mines open 
almost entirely to give the men work and the Neguanee mine is 
owned one-half by the Cleveland-Cliffs, one-half by Bethlehem Steel. 
The operation of that mine has to be on a mutually satisfactory basis. 
The Athens mine, which is alongside of it, is controlled a trifle over 
half by us and the other half with Pickands, Mather. 

The Chairman. Then when you say on a mutually satisfactory 
basis you are referring to the mutuality between the owners? 

Mr. Greene. I mean in that particular mine. The Pickands, 
Mather are the general operating agents for the Bethleheiri. Now 
we wanted to operate that mine 3 days a week to give the men employ- 
ment. We are very keenlj interested in that whole district. We 
knew that the companies did not want, the Bethlehem did not want, 
the ore. It was a matter of running the mine and piling up ore that 
they wouldn't ship. We took it up with them and tried to show them 
that they would favor that larger operation, even though it meant 
stock piling the ore. They were kind enough to agree with our point 
of view and Mr, Hoyt was helfpul in getting it, and I am pleased to 
say that I think that is a good sign of the result you get from friendly 
cooperation. 

Mr. Feller. This letter then, indicates a friendly cooperation in 
the matter of operating a mine which is under joint ownership? 

Mr. Greene. That is correct. There are two mines there. 

The Chairman. What was the date of the letter, may I ask? 

Mr. Feller. August 11, 1934. 

Mr. Greene, I should like to show you another letter which purports 
to be written by you addressed to Mr. Elliott, your manager, dated 
October 17, 1936. This letter was taken from your files, will you 
identify it please? 

Mr. Greene, Identified. 

Mr. Feller, Mr, Chairman, I offer this letter to be printed. 

The Chairman. It will be received. 

(The letter referred to was marked "Exhibit No, 1364-A" and is 
included in the appendix on p. 10436.) 

Mr, Feller. I shall read a portion of this letter and, if Mr, Greene 
cares to, I shall read the whole of it. 

The Chairman. Let us read it all, as long as it is going into the 
record.^ 

Mr. Feller (reading): 

This will confirm our conversation over the long-distance phone last evening. 
Yesterday morning Mr. Elton Hoyt called the writer asking for an appointment 
with him and Mr. Brown, saying he had an important matter to discuss with us. 

At the ensuing conference he stated that he had been north for a couple of 
weeks and had had a long conversation with you in which you mentioned a change 
in working hours. He was somewhat disturbed by this as there has been an 
understanding for several years, originating, I imagine, at the time of the first 
discussions over the N. R. A,, that any changes in pay, hours, working conditions, 
etc. would be discussed among the big employers before action was taken so that 
the industry might present a united front. He further stated that in view of the 
numerous connections our two companies had, that he was surprised that we 
should have made this change without explaining the matter to him. Both Mr. 
Brown and the writer told him frankly of the conference which you had had with 
Mr. Brown when you were in Cleveland on September 22nd, and with the writer 

1 The letter, in its entirety, appears In the appendix. 



10298 CONCENTRATION OF ECONOMIC POWER 

on our boat going north, and that at both these conferences we had inquired 
particularly as to whether the new regulation was the same as that in force at the 
mines of our competitors. Both of us assured him that our new arrangement was 
complying with their condition, and that we had been the only one of the big ore 
companies who brought our men to the surface for lunch, and we saw no reason 
to advise the others when we were simply getting in line with them. 

Mr. Hoyt then went on to say that we had not gotten in line with them but in 
his opinion, and in the opinion of Mr. Salsich, we had given the equivalent of a 
raise in pay inasmuch as we were paying for eight hours and not receiving that 
amount of labor. Mr. Brown then went into it in some detail with Mr. Hoyt but 
Mr. Hoyt insisted that either we were misinformed or that the situation in our 
own mines was not as we stated. 

He left our office, not satisfied that we were correct, but greatly pleased to 
find out that we had not knowingly changed working conditions without notifica- 
tion to them, Mr. Hoyt called the writer later in the afternoon saying that he 
had investigated the matter carefully by telephone, and I think he had talked 
with both his own men and the Oliver Mining men, and stated that the facts of 
the matter were these: that their men reached their working places at 8:00 and 
left the working places at 4:30, and that they were allowed 30 minutes for lunch; 
that our men arrived at the working places at 8:00, left them at 4:00 and therefore 
ate their lunch out of the eight hours time, our men reaching the surface half an 
hour earlier than either the Pickands Mather or Oliver Mining men. He then 
asked us if we were willing to have you meet with either Mr. Chisholm or Mr. 
Chinn, and Mr. Salsich or whoever he nominated, and discuss this matter. He 
said it might not be possible to change our position, but he felt that at least we 
ought to be willing to talk it over. The writer agreed that his request was reason- 
able, and put in a call for you. As you were down in one of the mines we could 
not reach you until after I had reached my home. 

Mr. Chairman, there is further discussion along these hnes. I 
wonder whether it is necessary to continue to read this. 

Senator King. About the hours of labor? 

Mr, Feller. Yes, 

The Chairman.. The letter will be printed in the record and you 
may read the saUent points. 

THE "united front" POLICY 

Mr. Feller. The point about which I should like to ask you, Mr, 
Greene, is this sentence [reading from "Exhibit No. 1364-A"]: 

At the ensuing conference he stated that he had been north for a couple of weeks 
and had had a long conversation with you in which you mentioned a change in 
working hours. He was somewhat disturbed by this as there has been an under- 
standing for several years, originating, I imagine; at the time of the first discus- 
sions over the N. R. A., that any changes in pay, hours, working conditions, etc., 
would be discussed among the big employers before action was taken so that the 
industry might present a united front. 

Mr. Greene, is that a correct statement of an understanding which 
had been reached among the members? 

Mr. Greene. It is my recollection that with the adoption of the 
N, R. A., which I recall as 1933 or 1934, 1 don't remember which — was 
it 1934? 

Senator King. 1933. 

Mr. Greene. That it was not only suggested to us, but I think 
we were more or less mandatory to have similar conditions. I think 
that was one of the underlying principles of the N. R. A. and in order 
to comply with at least the spirit if not the absolute letter of that, we 
used to talk over those things so there would be a comparative similar- 
ity, and I have no doubt that Mr. Hoyt referred back to the N. R. A. 

I don't recall the exact date when the N. R. A. was declared uncon- 
stitutional, but it was perfectly natural that at that period when we 



CONCENTRATION OF ECONOMIC POWER 10299 

were urged by the Government to do it, that we did just those things. 
Maybe this was sUghtly after that, but that is the situation that Mr. 
Hoyt is referring to and I would say that as we got further away from 
the N. R. A. we discontinued it, probably we just naturally discontin- 
ued it. This time, it was shortly after that, we did meet and discuss 
that sort of situation. 

Mr. Feller. You would say, then, at some period after the N. R. A. 
was declared unconstitutional this united front that you referred to 
was dissolved or disappeared? 

Mr. Greene. I wouldn't say the words ''united front" were used 
in the same exact meaning that they are used in present European 
pohtics. [Laughter.! It just meant a similar footing or basis. 

Mr. Feller. Was it facetious? 

Mr. Greene. No, it was using possibly a stronger term than might 
have been apphed, that is all. 

Mr. Feller. Would you say that the united front that you referred 
to in that letter — the letter written in 1938 — still continues? 

Mr. Greene, I just testified that it did not, the idea of meeting 
and discussing those Idnds of conditions. 

Mr. Henderson. May I ask, then, suppose you are going to make 
a change affecting pay or hours or any worldng conditions, do you get 
together with 3^our competitors and talk it -over now? 

Mr. Greene. I would say we did not. 

Mr. Henderson. Not at all? 

Mr. Greene. We might make a casual remark, but don't get to- 
gether as we used to in the days of the N. R. A. 

Mr. Henderson. And as this shows, it was sometime after N. R. A. 

Mr. Greene. Yes; h^it as I say, a custom begun Hke that didn't 
break right off immediately. It is broken off now. 

Mr. Henderson. I am quite sure there were several other industries 
that had that same continuation of poHcy. 

Mr. Greene. It wasn't a very important matter. It was largely 
a matter of keeping the good wiU of our men. The two matters re- 
ferred to are the matter of eating your lunch, and one was whether 
you began your work at your worldng place, or at the collar of the 
mine. They are small matters of administration, you might say. 

Mr. Feller. Would you recall when the last time was when the 
members of the industry met to discuss these matters of pay, hours, 
and working conditions? 

Mr. Greene. Why, I have forgotten. It was several years ago. 

Mr. Feller. Did you meet in 1937? 

Mr. Greene. I don't recall meeting. 

Mr. Feller. I show you a telegram signed A. C. Brown, addressed 
to you at the Waldorf-Astoria Hotel, dated May 8, 1937. This is 
taken from the files of your company. Will you identify it, please? 

Senator King. I assume, Mr. Feller, there is no criticism because 
the companies got together under the N. R. A. and carried out the 
mandate of the N. R. A. with respect to wages and hours and so on. 

Mr. Feller. May I ask you, Mr. Hoyt, was there a code for the 
iron-ore industry under the N. R. A.? 

Mr. Hoyt. We had a code committee that had several meetings, 
I would say half a dozen. We discussed it. We got down to prac- 
tically the last terms, but it was never finally put into effect, but 



10300 CONCENTRATION OF ECONOMIC POWER 

during that period all of the mining companies were adhering to the 
propos.ed code. 

Mr. Feller. Did the proposed code provide for identity of working 
conditions and identity of pay? 

Mr. HoYT. That I can't remember. 

Mr. Feller. Senator, may I state in answer to your question, that 
none of my questions imply criticism. 

Mr. Greene. I can't identify it, because I haven't any recollection 
of it. I notice the certificate of our secretary that it is a copy of a 
telegram in our files, and I don't question that, but I have no recollec- 
tion. 

Mr. Feller. You don't question the fact that it was taken from 
your files. 

Mr. Greene. I do not. 

Mr. Feller. I offer this. 

The Chairman. It may be received. 

(The telegram referred to was marked "Exhibit No. 1365" and is 
included in the appendix on p. 10437.) 

Mr. Feller. The telegram reads: 

Very important meeting Tuesday morning Pickands Mathers office same 
personnel previous meeting and in addition Butler representatives will be present 
EUiott cannot attend account of meeting on Mesaba but will send Jackson believe 
important you should be here Stop After discussing with Veach I telephoned 
Elliott compromise suggestion I made you by telephone today which he says 
helps situation but still is not convinced though entirely willing to do his very best 
Stop Schneider advises he wired you Waldorf yesterday regarding White he tells 
me thinks he is all right but not had whole lot of experience and is pretty green 
White wishes to discuss with Bob and Chris and will advise Schneider Monday 
Schneider told him any definite arrangement would have to be considered after 
your return. 

Mr. Greene, as you notice, there is nothing in this telegram which 
gives any clue to the substance of this meeting, the matters under 
consideration, but am I correct in assuming that this is an account of 
a meeting of various members of the industry, including at least 
your representatives, Pickands, Mather, and Butler? 

Mr. Greene. By whom is the telegram signed? 

Mr. Feller. A. C. Brown, addressed to you at the Waldorf- 
Astoria Hotel. 

Mr. Greene. The date? 

Mr. Feller. May 8, 1937. 

Mr. Greene. I haven't any recollection, Mr. Chairman, of that 
telegram, or I don't know what it refers to. The names in there 
confuse me. I am not sure what two or three of them are. I regret 
to say I haven't any recollection of that telegram. 

The Chairman. Do you have any recollection of any of the sub- 
stance of the message? 

Mr. Greene. I don't know what it refers to. 

Mr. Feller. Mr. Greene, if I were to tell you that at that time the 
United Steel Corporation was contemplating increasing its wage rate, 
would that refresh your recollection? 

Mr. Greene. It might be but, no, Schneider is the manager of our 
marine department, and I can't imagine — and Bob and Chris might 
be that, but I am not positive. 

Mr. Feller. Do you have any recollection of that, Mr. Hoyt, of 
any such meeting in May of 1937, in New York? 



CONCENTRATION OF ECONOMIC POWER 10301 

Mr. HoYT. I haven't any recollection of a meeting as of that partic- 
ular date, Mr, Feller, but we have had meetings in our office and 
general discussion. What that particular one was I don't remember 
offhand. 

Mr. Feller. Mr. Patrick Butler, do you recall any such meeting in 
New York in May 1937? 

Mr. Patrick Butler. I don't recall attending any such meeting. 

Mr. Feller. I am informed that the meeting was in Cleveland. 
I am not sure of that. 

Mr. Oglebay, do you recall any meeting in May of 1937? 

The Chairman. May I suggest to the witnesses that responses 
ought to be verbal. We can't record the nods of the head very well. 

Mr. Oglebay. I do not. 

Mr. Humphrey. We don't seem to be mentioned. I don't think 
we were there. 

Mr. Feller. You were not mentioned specifically. It merely 
says [reading]: 

same personnel previous meeting and in addition Butler representatives. 

Mr. Hoyt, do you recall the nature of the meeting which members 
of the industry had during 1937, perhaps the early part of 1937? 

Mr. Hoyt. I remember a number of different meetings on a good 
many different conditions and things. We have had representatives 
of the industry on such things as silicosis, and labor conditions and 
taxes. It might be any one of those. 

Mr. Henderson. It might be any one of those, because you did, at 
that period, have frequent meetings to discuss things which were 
common to all of the ore companies. 

Mr. Hoyt. I wouldn't say frequent meetings, but any matter that 
came up of general interest to the group, such as taxation or silicosis, 
we have had a number of meetings on that sort of thing. 

Mr. Henderson. Mr. Greene, since it is suggested that your 
marine man, Mr. Schneider — is that it? — was there, might it have had to 
do with any increase in the rates of pay on your steamship lines? 

Mr. Greene. That is possible, but I just don't recall, you see. I 
was in New York, and I just haven't any recollection. It might be, 
but the ore companies and Schneider rather confuse me. I haven't 
any recollection of it at all. It could be that, Mr. Henderson, but I 
don't know. 

Mr. Feller. Mr. Greene, you testified previously that the united 
front which was formed during the discussions in the early days of 
the N. R. A. continued for some time after the N. R. A., and then 
lapsed or dissolved. At any rate, it is not continued today. 

Mr. Greene. I didn't testify to that. I said we started those 
discussions under the N. R. A., and whether or not they were cut off 
shortly when the decision of the Supreme Court came, I don't know. 
I rather think they ran on. I couldn't tell you. 

Mr. Feller. You don't know just how long they did run on. 

Mr. Greene. No; I haven't any idea. 

Mr. Feller. But they are not running on today. 

Mr. Greene. They are not. 

Mr. Henderson. Could I ask a question there? Mr. Hoyt, did 
all the principal ore companies sign the President's reemployment 
agreement on minimum wages and maximum hours? 



10302 CONCENTRATION OP ECONOMIC POWER 

Mr. HoYT. I don't think we did, on account of working on the 
code at that time. 

Mr. Henderson. You remember the F. R. A., as it was called, was 
in the fall of 1933, in which employers were asked by means of cards 
that were distributed by the postmasters to agree to certain minimum 
standards, minimum wages and maximum hours? 

Mr. HoYT. I think that the reason perhaps that we didn't was 
because our hours and wages were in excess of those minimums at 
that time. 

Mr. Henderson. But yo-li indicated that you had these code com- 
mittee meetings, and you did establish certain standards that you all 
adhered to. 

Mr. HoYT. It is my recollection that would be the case. 

Mr. Henderson. That' is, growing out of your discussions, you did 
set certain standards that had to do mth things ordinarily covered by 
a code, but you never got to the adoption of a code. 

Mr. HoYT. No; we did not. 

Mr. Henderson. Did you have any meeting after the Supreme 
Court decision in which you agreed to continue those standards? 

Mr. HoYT. No, sir; but we have continued them, and I don't know 
of any specific meeting that was held to do it. Up in that Lake 
Superior country, with' the mines as close together as they are, it is 
pretty difficult for a mine on one side to be doing one thing, and one 
next to it the other. It has been the custom to be fairly uniform over 
a long period of years. 

Senator King. The standards that you had applied in the various 
mining companies there, prior to the N. R. A., in wages and hours, 
were lugher than those prescribed by the N. R. A.? 

Mr. HoYT. Well now, when was the N. R. A.? Was that 1933? 

Senator King. Yes; '33. 

Mr. HoYT. I tliink about that time there was an increase; I tliink, 
sometime in '33; the hours were changed from 10 hours to 8 hours for 
surface labor. The underground men had been on an 8-hour basis 
(the miners), for a long period of time and in order to adjust the 
surface labor to an 8-hour basis, there was some increase of pay which 
brought their hourly rate up on a relative basis. 

Mr. Feller. Mr. Hoyt, could you tell us which companies were 
usually represented at these meetmgs that you have mentioned? 

Mr. Hoyt. Well, I would say that on certain questions practically 
everybody in the industry was present. 

The Chairman. Would it break the continuity of your examination 
if I should direct a few inquiries to Mr. Grec'^e with respect to this 
telegram? 

Mr. Feller. Not at all, sir. 

The Chairman. You will observe that it is dated at Cleveland on 
May 8.^ It is addressed to you at the Waldorf-Astoria Hotel, signed 
by Mr. Brown. The first sentence refers to a very important- meeting 
of the industry. Do you have any recollection of any meeting of the 
industry at or about that time which would justify the characteriza- 
tion of being a very important one? 
Mr. Greene. No, I don't. 

The Chairman. If you will glance through the telegram a little 
further down, you will notice a statement by Mr. Brown that he 
telephoned to Mr. Elliott. Mr. Elliott is your manager, is he not? 

1 Referring to "Exhibit No. 1365," appendix, p. 10437. 



CONCENTRATION OF ECONOMIC POWER 10303 

Mr. Greene. That is right. 

The Chairman. Where are his offices? 

Mr. Greene. Ishpeming, Mich. 

The Chairman. He says in that telegram that he telephoned to 
Mr. Elliott with respect to a compromise suggestion which he had 
made to you on the date of the telegram on the telephone. Do you 
have any recollection at all of any situation or any discussion with 
Mr. Brown which would justify him in saying that he had telephoned 
to Mr. Elliott .about a compromise suggestion which he had made to 
you that day? Apparently he was in Cleveland, you were in New 
York, and Mr. Elliott was in Ishpeming. 

Mr. Greene. Yes; he was. 

The Chairman. Does that revive your recollection at all? 

Mr. Greene. No; it doesn't. It is confusing, Mr. Senator, because 
here are Jackson and Elliott, who are confined entirely to the mining 
business, yet Schneider to boats. It just doesn't make sense. 

The Chairman. As I read the telegram, all the references to 
Schneider and to White are distmct from the first part of the telegram, 
I think that that might be divided into two paragraphs dealing with 
two different subjects. At least I can see no connection between 
them on the face of the wire. So, just overlookmg all reference to 
Mr. Schneider, does the first part of the wire arouse any recollection 
of any kind? 

Mr. Greene. It does not. You see, I wasn't at the meeting or the 
previous meeting, and whatever it was, I have completely forgotten. 

The Chairman. Of course it is obvious that the author of the 
telegram was dealing apparently with a matter which he regarded 
as very important, and concerning which he telephoned to New York 
and he telephoned to Ishpeming, and he had offered a compromise 
to you and he then detailed that-compromise to Mr. Elhott, and in 
the wire he says that Mr. Elliott wasn't entirely convinced that the 
compromise should be accepted or was a good one; and it has all 
vanished from your mind? 

Mr. Greene. I haven't the slightest recollection. 

Mr. Feller. Mr. Hoyt, will you tell us why members of the indus- 
try think it necessary to have uniform labor conditions in the ore 
mines? Supposing one of the companies should desire to introduce 
shorter hours. Why should it have to consult the other members of 
the industry? 

Mr. Hoyt. I don't think it necessarily has to consult them, but as 
I mentioned before, the mining country is so set up that in operating 
mines adjoining each other, any of the large operators making a 
change in wages or hours, the other mines adjoining and in that dis- 
trict would immediately have to follow. 

Mr. Henderson. Let me ask you, when you had these discussions 
on labor and taxes and other things affecting the industry, did you 
have rnuch difficulty in getting to a general agreement about labor 
conditions? 

Mr. Hoyt. I can't remember if the general discussion on labor con- 
ditions 

Mr. Henderson (interposing). Take it on any specific labor con- 
dition. 

Mr. Hoyt. I have talked with a great many people in the industry 
at different times. 

124491 — 40 — pt. 18 7 



10304 CONCENTRATION OF ECONOMIC POWER 

Mr. Henderson. Well, did you get a uniformity, as you say? 

Mr. HoYT. We get it automatically. 

Mr. Henderson. I am, talking about when there is a proposal for a 
change. Do you have much difficulty in getting general agreement 
as to the desirability of the change? 

Mr. HoYT, Very often, sir; it is published in the newspapers that 
one or more of the large steel companies have increased the base labor, 
and I would say automatically from that point on the rate up in the 
Lake Superior district is also modified. 

Mr. Henderson. You might have your industry meeting and 
consider a change which had come around on account of the steel 
companies' posting a new rate, and therefore the desirability of meeting 
that? 

Mr. HoYT. I don't remember of ever having an industry meeting 
where we sat and just discussed whether the rate should go up or the 
hours should change, except in connection with the code. Indi- 
vidually I have talked to a great many operators many times on con- 
ditions affecting labor, 

Mr. Feller. Do the words *'a united front". have some meaning in 
the industry? 

Mr. HoYT. It had definitely at that time, because we were coming 
down here, the code committee; I think there were five to meet with 
the representative of the N. R. A. and we wanted to be able to tell 
them that the industry was doing such and such and so and so, and 
definite. 

Mr. Feller. In other words, that term was in use at the beginning 
of the N. R. A.? 

Mr. HoYT. I never heard of the term excepting as you read it 
out here. 

Mr. Feller. Mr. Greene, may I pass you this letter? It is dated 
May 24, 1938; piuports to be written by you, and is addressed to Mr. 
Elliott. Wni you identify it, please? Do you identify it? 

Mr. Greene. I do. 

Mr. Feller. I offer this letter, Mr. Chairman. 

The Chairman. The letter may be received. 

(The letter referred to was marked "Exhibit No. 1366" and is in- 
cluded in the appendix on p. 10438.) 

Mr. Feller. I should like to read you, IVIr. Greene, this sentence 
[reading]: 

During the troublesome times which started with, say the NRA, right up to 
the present time, the interests of Pickands, Mather and ourselves have been 
working in the closest harmony, and the combined eflforts of these two interests 
have brought about a united front in the ore industry. I am speaking from 
absolute personal knowledge of these matters. 

I want to recall to your mind the fact that tliis letter was written 
May 24, 1938. Is it correct to say that the "united front" continued 
at least until that date? 

Mr. Greene. I am again referring to the same thing there. Unfor- 
tunately, the iron-ore industry was pretty flat from about the summer 
of 1930 until shortly before that time it was wTitten, and each year 
I had to take up with the Bethlehem and with Pickands, Mather the 
question of the operation of the Athens & Negaunee mine and each 
time I wanted to operate that mine more than either one of them 
wanted to do, and I was grateful to both the Pickands, Mather and 



CONCENTRATION OF ECONOMIC POWER 10305 

especially to Mr. Hoyt, for not only agreeing as to Pickands, Mather's 
operation of the Athens, but also assisting and recommending to 
Bethlehem that our judgment in that matter prevailed. 

And I have always felt grateful to those two companies for having 
permitted us to operate those mines, collecting an undue amount of 
ore, and rather against their judgment permit us to give that employ- 
ment. I am again referring to that same matter. 

Mr. Feller. Mr. Greene, in these meetings were prices discussed? 

Mr. Greene. Were what? 

Mr. Feller. Were there any discussions of the prices of iron ore? 

Mr. Greene. I don't recall any. 

Mr. Feller, And the term "united front" would apply, then, to 
matters other than price? 

Mr: Greene. Absolutely. That refers to the operation of the 
mines and to the matters that Mr. Hoyt referred to, silicosis and so on. 

THE LAKE ERIE BASE PRICE 

Mr. Feller. Mr. Hoyt, as I understand it, the shipment of ore is 
a seasonal business, is it not? 

Mr. Hoyt. That is correct. 

Mr. Feller. And it depends on the weather on the Great Lakes? 

Mr. Hoyt. Well, it depends on the open season of navigation on 
the Great Lakes. 

Mr. Feller. That is right. When does that season begin? 

Mr. Hoyt. It varies. I would say on the average, May 1; some- 
times earlier, sometimes a little later. 

Mr. Feller. And when does it usually conclude? 

Mr. Hoyt. Around usually the middle of November; sometimes 
later when we are pressed for ore. 

Mr. Feller. Now, Mr. Hoyt, it is true, is it not, that one of the 
standard terms in the iron-Ore industry is the Lake Erie base price? 

Mr. HoYT, Yes, sir. 

Mr. Feller. Could you tell us what the Lake Erie base price is? 

Mr. Hoyt. The Lake Erie base price is a result of the negotiations 
that go on between the ore sellers and their customers which result 
in an agreement between them as to a price that will prevail as 
between them during a certain year or in many cases as it might 
maintain between them on a long-time contract. 

Mr. Feller. Is it correct to say that the Lake Erie base price is 
the price at which iron ore is sold during the season, determined by 
the first substantial chance sale of the season? 

Mr. Hoyt. No, sir. 

Mr. Feller. In other words, if a sale is made at the beginning of 
the season at a certain price, a substantial sale, the Lake Erie base 
price may vary durtag that season? 

Mr. Hoyt. No; that isn't true. You said a substantial "chance" 
sale. That was the term that I didn't agree with. 

ivir. Fel,l£.r. It is the word "chance" with which you do not agree? 

Mr. Hoyt. Yes. 

Mr. Feller. Then let me put it this way. When the first sub- 
stantial sale of the season is made, does the price at which that sale 
occurs become known to the industry? 



10306 CONCENTRATION OF ECONOMIC POWER 

Mr. HoYT. It does; for example, if I have negotiated with our 
customers and arrived at a satisfactory pi;ice, to me, I am anxious to 
get that set and published as rapidly as possible on account of deter- 
mining the balance of the tonnage that we have on the contract 
based on that Lake Erie price. 

Mr. Feller. Then the Lake Erie base price for the balance of that 
season would be the same price that was arrived at in this first sub- 
stantial sale which you negotiated? 

Mr. HoYT. It would be the same base, Mr. Feller, but from this 
base price, or we will say 51.50 standard guaranteed ore; there are 
many deductions for quality, for analysis; sometimes for structure; 
sometimes and very often for a long-time obligation that it sells — 
that the purchaser is willing to commit himself for over a period of 
years. 

Mr. Feller. Let me see if I understand that, then. A substantial 
sale is made at the beginning of the season, let us say by } ov.r company. 
That sale we will say consists of iron ore having a 51.50 iron content. 
That would then be published, would it not, in the trade journals 
and would be the Lake Erie base price for the year? 

Mr. HoYT. No, sir; because none of these orders run exactly on the 
analysis of 51.50. In other words, the standard as set up is the 
custom in the trade over many years of base ores, old range Bessemer, 
Mesaba Bessemer, old range non-Bessemer, Mesaba non-Bessemer, 
which are 51.50 as a base ore; that is a theoretical base. Now when 
the ore is delivered from any of these mines they are guaranteed to 
the average that that mine is expected to produce. It may be 52 
percent; it may be 50^ and there are adjustments as between the base 
price for a 51.50 ore and the ores actually delivered. 

Mr. Feller. Yes. In other words, the price for 51.50 ore, which is 
the standard, as you said, for the industry, would be determined by 
this first sale, first substantial sale, and every sale that is made there- 
after, the price would depend upon the variation of the iron content 
from the 51.50 standard? 

Mr. HoYT. That would be true, but it might vary for other reasons 
as well. The one thing that you have to keep in mind, Mr. Feller, 
in this business, you say it is a seasonal business. It is a very defi- 
nitely seasonal business. In the early spring the purchasers of ore have 
to figure out their very best estimates for their requirements, not on 
a month-to-month basis, or 4 months or 6 months, but to take them 
through until the opening of the next season of navigation. Just on 
that alone you can see that the steel companies and other purchasers 
of ore have to estimate a great deal on what their requirements are 
going to be. 

Now usually they make the very best guess they can on their 
present operating rate, as to how it wUl continue through the open 
season, but normally they would expBct to take down^enough ore to 
run their blast furnaces through the winter in t^ event that 
sudden changes in conditions in the steel industry occurred. Further 
than that you must remember that in making these various kinds of 
pig iron and kinds of steel a great many different kinds of ores have 
to be used. In other words, it is a mixture in the blast furnace; it 
may be four to five grades, with special grades thrown in, that he 
has-|-that the purchaser has — to take into consideration when he is 
making his estimate. 



CONCENTRATION OF ECONOMIC POWER 10307 

It is impossible to make pig iron — I won't say it is impossible, but 
these various special grades of pig iron, out of just one ore. Therefore, 
he is bringing down maybe five or six different kinds and he is also 
hmited by the amount of a dock space either at lower lake docks or 
at his own plant. That is the reason why we consider it, and you 
have said properly that it is a very seasonal business and it is also 
one of the reasons that makes a very great fluctuation in the ore 
industry from year to year. 

Mr. Feller. Well, again may I ask you this. It is correct to 
say that there is a standard price which is published in all the journals 
concerning themselves with the ore industry, which is called the Lake 
Erie base price; that that price is based upon a 51.50 iron content 
in the ore and further that that price, that standard base price, the 
Lake Erie base price, is determined by custom in the industry, by 
the first substantial sale of each season? 

Mr. HoYT. By the first substantial sale of each season which would 
be the result of the negotiations say between our company and the 
steel company, and it might very easily be a tonnage applying on a 
long-time contract, or it might be in years before the recent times 
on just ordinary spot sale, but during the last seven or eight years, 
since '31, the ore industry has been burdened down with an accumula- 
tion of ore which was brought about by the general basis of under- 
standing in business generally back in '27 to '29, that things were going 
on perhaps indefinitely on that basis, and since that time the iron ore 
industry has been sufferiug with, you might say, overproduction and 
overinventories, untU we will say the year 1936 it began to come out 
of it; '37 it looked as if it was coming out, and before '37 was over there 
was a change, very violent change, so that the shipments in '37 
were some 63,000,000 tons and m '38 dropped down to 19,000,000 tons. 

Mr. Feller. Now I understand that it is correct to say that the 
standard price in the industry is the Lake Erie base price. That this 
price is determined on the basis of the first substantial sale of the 
season, which may, as you have stated, be a spot sale or may be on a 
long-term contract; that is correct. 

Mr. HoYT. It is. It is published, recognized price in the trade. 

Senator King. May I ask for my own information? Suppose two 
men came with say 1,000,000 tons, or any given quantity of ore, to 
the boat for sale. 

Mr. HoYT. To the what, sir? 

Senator King. By boat; it is shipped by boat, isn't it? 

Mr. HoYT. Yes, sir. 

Senator King. And the ore of one assayed 65 percent iron content 
and a httle sulphur, a little phosphorus, and other metals, and the 
other, B's ore, assayed 50 percent, plus this 20, would there be any 
difference in the price? 

Mr. HoYT. Very definitely on the base price, Senator. As I ex- 
plained, 51.50 is a base guarantee in which all ores are figured. The 
unit value is arrived at by dividing the base published price by 51.50, 
and you arrive at a unit value; roughly, we will say 10 cents a unit. 

The Chairman. What is a unit? 

Mr. HoYT. A Unit of natural iron. In other words, it is a value for 
a unit of natural iron. 

Now, if the ore should figure 65 percent in iron, naturally, you 
would multiply that unit value by the 65 percent. 



10308 CONCENTRATION OF ECONOMIC POWER 

Senator King. Supposing the ore contained deleterious matter. I 
don't know whether any of the ore does contain phosphorous or some 
other refractory elements. Would that affect the value of the ore? 

Mr, HoYT. It would make it very much harder to sell. For 
example, if an ore runs high in silica, it is very customary, if you 
want to sell it, to make some reduction for that silica. In the same 
way the high phosphorous ore on the Menominee range sells on a 
base differential lower than the old range, the Mesabi' range. 

Senator King. I know in the West if there is phosphorous or if 
there is arsenic or some deleterious refractory element you are penal- 
ized a considerable amount because of the diflficulty in working out 
the ore and freeing it from those deleterious substances. I was 
wondering' if the same principle applied with respect to your iron ores. 

Mr. HoYT. The same principle apphes, sir. 

Senator King. So that one iron ore would have the same value as 
another, depending on whether there were any deleterious elements 
in the ore. 

Mr. HoYT. Yes. 

Mr. Henderson. Mr. Hoyt, after this base price of 51.50 has been 
fixed by the first substantial sale, that becomes the price, then, which 
is charged for that particular quaUty bv all other ore sellers, does it 
not? 

Mr. Hoyt. I can say this, that it is pretty definite that if that 
price has been published, no other ore seller can get a higher price 
than that from his customers, because he will just simply end by 
losing the trade. 

Mr. Henderson. I can understand that, but does that become the 
accepted base price in the industry? 

Mr. Hoyt. The accepted base from which the prices covering 
respective and individual ores are figured. 

Mr, Hendersg*^. Mr. Greene, suppose Mr. Hoyt's company had 
the first negotiated contract, and that was published. Would that be 
your price then for the balance of that season? 

Mr. Greene. Well, most of our ore is sold under time contract, 
but our contracts are based on that price, just as Mr. Hoyt says, and 
if we had a current sale we would try to get that price. We would do 
the best we could. 

Mr. Henderson. Is that true, Mr. Humphrey, of your company? 

Mr. Greene. We have a great many prices. We get as near as we 
can to them. 

Mr. Humphrey. We start with that as a base and we figure from 
that the premiums and penalties, and finally arrive with our customers 
at a value of the ores that we have to sell. That may be our price or 
another price. 

Mr. Henderson. But for exactly the same grade above or below 
51.50 it would tend to be, throughout the trade, the same price, would 
it not? 

Mr. Hoyt. It would tend to be, but I haven't any idea that it 
necessarily would follow, sir. 

Mr. Henderson. But the tendency would be for that to be the 
base from which any negotiation took place? 

Mr, Hoyt, That's right. Any negotiation would take place from 
that price. 



CONCENTRATION OF ECONOMIC POWER 10309 

Mr. Feller. It is correct to say, is it not, that the Lake Erie base 
price is the delivered price? It also includes the freight from the 
upper lake to the lower lake port? 

Mr. HoYT. It includes that as a pubhshed base, but by deducting 
the lake freight, rail freight, and unloading charges in the trade you 
can bring that same price back to an f. o. b. mine price. 

Mr. Feller. How is the freight rate determined? 

Mr. HoYT. The freight rate is determined on the basis of the owner 
of the vessel tonnage, who hasn't tonnage, and the operator of a mine 
or steel company who has ore and coal, possibly, and not tonnage, 
getting together and agreeing on a rate that is satisfactory to them. 

Mr. Feller, And does that rate become the standard for the indus- 
try for the balance of that season? 

Mr. HoYT. During the early part of the season the people from the 
trade papers are constantly in the offices of the iron ore people and 
coal people and vessel people to get this information as soon as it is 
available, and when it is published they find out about it, it gets 
known, it sets the rate. It doesn't mean that someone isn't going to, 
if they want to, take a lower rate. It becomes a published rate which 
is used in the trade. 

Mr. Feller. Mr. Oglebay, to complete the record on this point, do 
your term contracts contain a price which is related to the Lake Erie 
base price? 

Mr. Oglebay. Some of our contracts do. The majority of our 
contradts have no relationship with the Lake Erie selling price. 

Mr. Feller. Would it be correct to say that perhaps (you may 
disagree with this) five of your contracts are related to the Lake Erie 
price and four are not? 

Mr. Oglebay. I don't know that. That is a long relationship, I 
think, as to tonnage, but in detail I don't know whether that is true 
or not. 

Mr. Feller. Mr. Emmett Butler, may I put the same question 
to you? Are your contracts also related to the Lake Erie base price? 

Mr. Emmett Butler. Yes, sir. 

Mr. Feller. To keep the record straight, our information is that 
you have three contracts which are not. 

Mr. Emmett Butler. Three contracts which are not? 

Mr. Feller. The others apparently are. 

Mr. Emmett Butler. I would like to answer it truthfully. We 
have two contracts, I am sure, that are related to market price, one 
that is not. We had three last year. 

Senator King. Suppose that a company consumes the mineral, the 
ore, manufactures steel, owns its own vessels and hauls its own ore 
and its own coal from the mining district to the place where the mills 
are operated, who fixes the price that they charge? 

Mr. Emmett Butler. You mean 

Senator King (interposing) . They fix their own price? 

Mr. Emmett Butler. As far as I am concerned, they fix their 
own price. 

Senator King. And there are a number of companies who own their 
own boats and ship their own ore? 

Mr. Emmett Butler. That is right. 



10310 CONCENTRATION OF ECONOMIC POWER 

Senator King. Do you know what relation those prices bear to 
the prices that are charged by the other persons who are hauling for 
the mine owners? 

Mr. Emmett Butlee. I don't know definitely, but I imagine they 
are pretty much in line. 

Mr. Feller. Mr. Chairman, i offer for the record two charts 
prepared by the Department of Justice. One chart is entitled "Iron 
Ore Prices, 1925-1939." The source is Lake Superior Iron Ore 
Association and the prices, as it is explained on the chart, are base 
prices per gross ton of Lake Superior Iron Ore at Lake Erie ports — 
Mesaba non-bessemer ores^ — 51.50 iron natural content. 

T also offer for the record another chart entitled "Lake Freight 
Kates on Iron Ore, 1925-1939." The source is Lake Superior Iron 
Ore Association, and the footnote states that the rates are per gross 
ton — to lower lake ports from head of Lake Superior — includes 
unloading charge. 

The Chairman. The charts may be received in evidence. 

(The charts referred to were marked "Exhibits Nos. 1367 and 1368" 
and are included in the appendix on pp. 10439 and 10440). 

Senator King. I would like to ask one question. Mr. Hoyt, do 
you know what proportion of the ore hauled from the mining section 
which we jusf referred to, is hauled in boats owned by the companies 
that are utilizino: the ores for proper purchase and what are hauled 
by freight companies that are not mine operators, but engaged purely 
in the hauling of ore? 

Mr. Hoyt. It would be a guess, Senator, but it might be somewhere, 
I would think, between 30 and 40 percent that would be hauled in 
vessel companies which were not connected directly with the steel 
companies or the producers, but that is a guess. 

Mr. Feller. To clarify the record further, Mr. Hoyt, we nave asked 
the various gentlemen the relations between the Lake Erie base price 
and the contract sales. There is also another type of sale, is there 
not, the spot sale? 

Mr. Hoyt. Yes, sir. 

Mr. Feller. The Lake Erie base price is used in making spot sales, 
is it not? 

Mr. Hoyt. That would depend on the individual. As far as our 
concern, it involves spot sales on the Lake Erie price. 

Mr. Feller. Mr. Greene? 

Mr. Greene. Yes. 

Mr. Feller. Mr. Ermnett Butler? 

Mr. Emmett Butler. Yes. 

Mr. Feller. Mr. Oglebay? 

Mr. Oglebay. Yes. 

Mr. Feller. Mr. Humphrey? 

Mr. Humphrey. I'm sorry, I didn't hear the question. 

Mr. Feller. The question is whether the Lake Erie base price is 
used in making spot sales by your company. 

Mr. Humphrey. Yes; I think it is, that is the basis. 

Mr. Greene. That is the basis; I would like to make that clear. 

Mr. Feller. Yes; that was the meaning of my term as used. 

Mr. Humphrey. That is where we begin the credits and debits, 



CONCENTRATION OF ECONOMIC POWER 10311 

PRICE RIGIDITY 

Mr. Feller. Mr. Chairman, if the members of the committee 
would look at the chart entitled "Iron Ore Prices," ' I might state farther 
here, the line wliich begins at the left-hand side of the chart is at the 
level of $4.25. That was the Lake Erie base price of 51.50 iron ore 
m 1925, 1926, 1927, 1928. In 1929 the Lake Erie base price was at 
$4.50 and it was also at $4.50 in each succeeding year through 1936. 
In 1937 the Lake Erie base price was $4.95 and remained at that price 
in 1937,' 1938, and 1939. 

Looking at the companion chart entitled "Lake Freight Rates on 
Iron Ore,"^ the line beginnmg at the left-hand side of the page is the 
freight rate at 83 cents in each of the years from 1925 through 1936. 
In 1937 the lake freight rate on iron ore was 93 cents and it continued 
that way in 1938 and 1939. 

Mr. Hoyt, can you explain the fact that the Lake Erie base price 
remained at precisely the same level for 4 years between 1925*and 1928 
and then for all the years between 1929 and 1936? 

Mr. Hoyt. I don't think I can explain specifically except generally, 
prior to 1928, except that that was the best price that could be arrived 
at at that time on the basis between the customer and the purchaser, 
or the customer and the seller. But 1929, as you remember, costs 
had gone up, prices had gone up, and the steel industry was running 
at a high rate and we were able to get a higher price for 1929. 

I think we are all famiUar with what happened at the end of 1929 
and from that period on the whole Lake Superior district — as I have 
touched upon before — and the steel industry generally, was laden 
down with iron ore, both that they had at their properties at lower 
lakes, and through overdevelopment of mines which had taken place 
in the 4 years prior to 1929. It was, I can state definitely, that the 
steel business, up until about 1925, had gone along over a long period 
of time on a pretty satisfactory basis, as far as volume was concerned, 
and with the boom conditions in that period steel companies went 
out and were anxious to increase their ore reserve because they felt 
they would need additional resources back of their steel plants if this 
steel rate went on which at that time we were all, I think, foohsh 
enough to believe it would. It was during that period that we 
entered into the contract with Butler Bros, for Bethlehem Steel Co. and 
ourselves, or, in other words, not ourselves but for Dalton Ore Co. 
in order to give them additional ore reserves against the future. 

Now, starting in 1930, from 1930 to 1931, there was unquestionably 
the thought, generally speaking, as I remember it, that prosperity 
might be pretty close around the corner and to try and keep things 
at a level during that period. In 1931 or 1932 the coUapse came and 
the steel industry took forward in that year three milhon and a half 
tons of ore, and you had to go back to 1884 or very close to that 
period, to find a comparable year. 

That was an industry that had been set up to produce I don't 
know how much tonnage, but at least they had been able to ship 
sixty-plus million tons and there isn't any doubt that they could 
have shipped a considerably larger tonnage. That meant that every 
steel company, every owner of ore, was faced with the problem of 
tremendous carrying charges on these idle properties during that 
period. Taxes, as I remember offhand, in Minnesota in 1932, on the 

' "Exhibit No. 1367", appendix, p. 10439. 
2 "Exhibit, No. 13(58". appendiT. n. 10440. 



10312 CONCENTRATION OF ECONOMIC POWER 

basis of tlae ore shipped, were over $7 a ton, and in Michigan, say, 
over $2 a ton, on the ore that was shipped in that year. 

There were minimiuns that had to be met on these mine leases 
and there was a constant endeavor on the part of the whole iron ore 
industry to keep the labor situation — to keep all of their old employees 
aUve and fed and clothed. 

Now, it was impossible to operate the open-pit mines and produce 
ore from them, but everybody that had an opportunity to do stripping 
or other useful work which did not have its producer, employed their 
men that way. They did their best to employ the underground mines 
and pile the ore up in a stock pUe, although it was difficult, under the 
conditions, to operate them better than 2 days a week. 

Everybody in the industry was in the same situation whether 
he was a buj'^er or a seller, or a steel plant, or an ordinary merchant 
producer, and the long-time contracts that had been entered into 
during the heyday of the late twenties became a matter of negotiation 
between the buyers and the sellers or the parties to the contract. 

Mr. Feller. Mr. Hoyt, are you familiar with the course of steel 
prices in the years 1930, 1931, and 1932? 

Mr. Hoyt. I am not. I would like to finish, Mr. Feller. 

Mr. Feller. Yes, please, I am sorry, I thought you had finished. 

Mr. Hoyt. I was answering your question. 

For example, on purchase contracts a steel customer, say, would 
come to us and would want an adjustment. He couldn't take 
tonnage. We told him he would have to take tonnage or we would 
be in great difl&culty. We had obligations to meet, as I have ex- 
plained, at our properties, and as a result of that we would come to 
an agreement that they would pay us as high a price as we could 
get and we would relieve them of some tonnage. It was a question 
of compromise, and that condition went through pretty nearly this 
whole period until the steel business began to pick up in 1936. 1 would 
say that during that period the spot sales were practically nil, and 
it is pretty obvious why. 

Mr. Feller. I would like to make a statement for the committee. 

Mr. Hoyt has testified in answer to the question as to the behavior 
of steel prices that he wasn't familiar with that. If the committee, 
will turn to page 27 of the pamphlet introduced, chart 8,' it gives the 
finished steel composite price index from 1926 through 1939 by months. 

Mr. Henderson. As I understand, from your previous testimony 
Mr. Hoyt, the way in which this price, as it appears on the chart,' 
is arrived at is by the first substantial contract negotiated in the be- 
ginning of the season. Was that true of the prices in 1929, 1930, 
and up to 1936? 

Mr. HoYT. I know it was true in one or two instances, and I 
assume it must have been true in the other years. 

Mr. Henderson. You testified there was a surplusage of ore 
above ground in all of those years, and yet the volume that was 
sold seemed to have had no effect on that negotiated price at the 
beginning of each year. 

Mr. Hoyt. I explained, I think, that there were no what Mr. 
Feller referred to as "spot sales." The tonna,ge brought down was 
the result of negotiation on these long-time contracts, compromised 
in many instances as to what the purchaser could take forward and 
what the seller would agree to consider as the limit. 

« •• Exhibit No 1349", at appendix p.El0420. 



CONCENTRATION OP ECONOMIC POWER 10313 

Mr. Henderson. Aren't a number of the contracts made from 
year to year? 

Mr. HoYT. Not on the long-time contracts. 

Mr. Henderson. No; but it was testified I think by some of the 
witnesses that they have these year-to-year contracts. Isn't that 
what it is, Mr. Oglebay, with most of the contracts of the companies 
that you manage? 

Mr. Oglebay. No; we have no — I should say in the last 10 years 
we have made only two spot sales. One in '37 and one '38. 

Mr. AviLDSEN. I believe he testified as to employment contracts 
being year to year. 

Mr. Oglebay. That is right. We have sold spot sales in '37 ana 
we have sold it this year, but those were the only two sales we have 
made since '29. 

Mr. Henderson. Mr. Butler, how about your sales during this 
period from '29 to '36? Were they on long-term contracts? 

Mr. Emmett Butler. For the most part. 

Mr. Henderson. What was the long-term contract, was it supposed 
to be at the Lake Erie price; was it made each year? 

Mr. Emmett Butler. Not the long-term contract; they had a re- 
lation to the Marquette price. 

Mr. Henderson. Mr. Greene, how about what you sold in the 
open market? 

Mr. Greene. We had a few spot sales over these years, but they 
weren't important in amount or number. 

Mr. Henderson. Mr. Humphrey. 

Mr. Humphrey. We had very few, Mr. Henderson, and very small 
tonnages. 

Mr. Henderson. Did you have the same experiences, Mr. 
Humphrey, with the steel producers as far as your contracts are con- 
cerned? Did they agree to pay this uniform price in each of those 
years? 

Mr. Humphrey. I don't think you quite understand, Mr. Hender- 
son. This uniform price that is traced here is the base price. 

Mr. Henderson. That is right. 

Mr. Humphrey. From that base price there are all sorts of allow- 
ances made. That does not mean that all the ore moves at that 
price, a great tonnage moves below that price and at varying amounts 
below that price, I don't think there are very many ore moves above 
the price, but there is a great deal of ore that will move at or somewhat 
below for all sorts of reasons. 

Mr. Feller. But related to that price? 

Mr. Humphrey. It has a relation to the price, that is the base you 
begin your computations. But these gentlemen have in their files a 
lot of contracts for ore and they can show you there are many, many 
prices for ore in this business. It is not a uniform price. 

The Chairman. Do these prices vary in a uniform degree according 
to the content of the ore, from the base price? 

Mr. Humphrey. That is one of the provisions of variation, but there 
are also a number of other provisions for variation which are not 
uniform. 

The Chairman. Now, let us take this chart which has been pre- 
pared by the Department of Justice. > The line which is drawn upon 
the chart represents the base price for 51.50. 

> "Exhibit No. 1367," appendix, p. 10439. 



10314 CONCENTRATION OF ECONOMIC POWER 

Mr. Humphrey. Non-bessemer ore. 

The Chairman. That is natural content. Now, let us assume a 
content of 55. Is that a normal content? 

Mr. Humphrey. There are such ores. 

The Chairman. Would you name to me an ore which is well- 
known throughout? 

Mr. Humphrey. An ore can run very easily, there are ores that 
run up as high as 55, there are ores that run down as low as 47 or 48. 

The Chairman. Would 52 or 53 be a normal ore? 

Mr. Humphrey. There are ores within all of those limits. 

The Chairman. Generally speaking, out of your experience, if this 
chart were plotted for 53 percent ore, would the line follow the general 
trend represented here for 51.50? 

Mr. Humphrey. It would follow the same line except it would be a 
little higher or a little lower if you took into account only adjustments 
for iron content. 

The Chairman. Yes. 

Mr. Humphrey. But there are other items. 

The Chairman. What are they? 

Mr. Humphreys. There are penalties for silica, phosphorus. 

The Chairman. If the penalties were assessed that would be the line 
below this line. 

Mr. Humphrey. Those are not all standard; there are penalties or 
premiums dependent upon whether it is for one year or a period of 
years or a high minimum. Now all of those things vary from this 
price and an ore that I might deUver and an ore that someone else 
might deliver would not follow this line at all. 

The Chairman. When you say it would not follow thfe line, you 
mean it would have no relationship to the line? 

Mr. Humphrey. It might not at all, so an allowance we made 
might not be made for someone else. 

The Chairman. Divergence for this line would depend, I take it, 
upon the presence in the ore of some unusual material for which there 
was a penalty or a premium which would not be characteristic of 
other ores? 

Mr. Humphrey. That would be a matter of agreement between us 
and our customers or it might also vary because we had sold it for a 
period or because our customer agreed to take a large tonnage a year 
or something of that kind. We might make any concession that we 
and our customer would agree to. 

The Chairman. It is perfectly obvious that there might be natural 
conditions in the properties owned and managed by your company 
which are altogether different from those operated by Pickands, 
Mather, for example. 

Mr. Humphrey. Not only natural but commercial. We might 
make an allowance that Pickands, Mather would not make. 

The Chairman. I think I understand. Now let us eliminate those 
natural conditions of content which would bring about a premium or 
penalty, and consider the normal run of ore as found, generally 
speaking, throughout the ore countiy. Then, with the prices depend- 
ing now largely upon the natural iron content, would they vary from 
this chart, would they follow this chart generally speaking? 

Mr. Humphrey. I think not. I think they would follow in a way, 
but they would vary in quite a wide degree, depending upon the 



CONCENTRATION OF ECONOMIC POWER 10315 

various agreements that had been come to between various buyers and 
sellers with respect to their particular contracts. 

The Chairman. What would be the variation between spot con- 
tracts and term contracts? 

Mr. Humphrey. The spot sales would be, as a rule, higher than the 
term contracts. There are broader concessions. The spot sales 
would more closely follow the line; the term contracts would vary 
more from the line. 

The Chairman. How far would the term contracts vary from the 
line? 

Mr. Humphrey. They might vary a good many cents a ton. 

The Chairman. Then what is the significance of the base price in 
the industry as a whole? 

Mr. Humphrey. It is the base from which all calculations are 
started. That is where you begin. 

The Chairman. That is uniform throughout the industry? Every 
producer of iron ore will use this base for the beginning of all cal- 
culations? 

Mr. Humphrey. I think it is simply this, Mr. Chairman, that 
when any seller finds that another seller has made a certain price and 
has goods for sale at that price, he realizes at once he can't get more 
for his goods of an equivalent value and of an equivalent kind than 
that man is willing to take. He can get less, and make arrangements 
to get less, but he can't get more, so that when somebody agrees with 
their customer and has ore for sale, and "Sells ore at a price, it is pretty 
generally recognized that you can't get more for it at that time. 
There is just one other thing that you ought to have in. mind about 
this and that is this, that ore is not sold continuingly over the year. 
While it is delivered over the whole summer months, it is all sold, and 
the commitments are all made, very early in the spring and within a 
very short space of time. 

Now, those commitments can't readily be changed throughout the 
rest of the year. The tonnages can be increased or decreased, but 
generally spealdng the purchasers have to take the same tonnages of 
ore and deal with the same people throughout the rest of the year, 
and on the same basis that they start with, do you see, because of the 
dark space and because of the transportation and because of the 
closed season of navigation, so that these prices are the prices pre- 
vailing and at which you start to do your business and to make 
your calculations over a short period of a few days or a few weeks in 
the spring when the business is done and completed for the year. 
Then you wait for the next year. 

The Chairman. Then is it a spot contract or a term contract that 
determines this Lake Erie base price? 

Mr. Humphrey. It can be either. 

The Chairman. Well, then, if it can be either and the spot contracts 
are, as I understood you to testify, normally higher than the term 
contracts, how are we to accoimt for the practical uniformity of this 
base price through this long period? 

Mr. Humphrey. You would start from the same base in both in- 
stances. It would be the same base. A spot sale and a term sale 
would be made at the same base. The difference in actual money paid 
would be arrived at by variations from that base. 

The Chairman. I didn't make myself clear. Mr. Hoyt testified, 
and my mind was pretty clear about it after listening to him, that the 



10316 CONCENTRATION OF ECONOMIC POWER 

Lake Erie base price was determined by the first substantial sale at 
the opening of each season. That is correct, is it not? 

Mr. Humphrey. That is correct, as a rule. 

The Chairman. Now, then, if there is a difference between the spot 
price and the contract price and the spot price is higher, and if, as you 
say, this may be determined by either a spot sale or a term sale, I am 
at a loss to explain the practical uniformity. 

Mr. Humphrey. The difference that you fail to grasp, I think, is 
this, that the price in both instances is a computed price starting from 
the same base. It is the same base, do you see. In other words, 
whether it is a spot sale or whether it is a contract sale, you start with 
the same base. If the spot sale is made at the base price — — 

The Chairman (interposing). What I am trying to find out is how 
do you determine that base? My understanding is that the base is 
determined by the first sale. Now you tell me it is not the first sale, 
it is something else which has not appeared. 

-Ir. Humphrey. The first sale is determined by the price agreed to 
between the buyer and the seller as a base for that first sale. 

The Chairman. Then, if you will look at this chart,» you will observe 
that between the years 1929 and 1937 there was no variation whatso- 
ever. 

Mr. Humphrey. That is accounted for, as Mr. Hoyt has explained 
to you, because of the fact that during this period our customers were 
obligated to us, under contracts in amounts which they could not per- 
form. They were coming to us and asking concessions from us. We, 
on the other hand, with our reduced tonnages, had costs that were very 
high. We were asking concessions from them and price was a matter 
of mutual agreement between the buyer and the seller, both of whom 
were under obligations to the other, because they had overbought and 
were overcommitted over a period of time because of the very low 
tonnage of 1931 and '32. 

The Chairman. Well, then, the base price was not fixed in the 
maimer that has been described. It was fixed in some other manner. 

Mr. Humphrey. It was fixed usually in those periods on a settle- 
ment based on the long-term contracts upon which the money was 
paid, and you started from that base to make the sale for that year 
under that contract. 

Mr. Henderson. How did it come about, though, that it always 
fell at that particular price in each of those years, in a world that was 
experiencing a tremendous amount of change, in which costs, outside 
of these freight rates, were being changed, in which the volume was 
being changed, and in which the prospects were different at the begin- 
ning of each of the contracting seasons. How do you explain why it 
happened to come out just at that point, that the first substantial 
contract arranged in each year turned out exactly at the same point? 

Mr. Humphrey. That was the best compromise base that could be 
got to do what was fair to buyer and seller under the respective obliga- 
tions. 

Mr. Henderson. Did all the respective buyers and sellers negotiate 
and come to this as a composite thought? 

Mr. Humphrey. No; I think what happened was that some buyer 
and seller would agree to settle on tiiat basis, and all the others 
followed suit. 

« "Exhibit No. 1367." 



CONCENTRATION OF ECONOMIC POWER 10317 

Mr. Henderson. Was there any understanding as to how that first 
contract would get made in each year, so that it might serve as the 
basis for the other ore sellers? 

Mr. Humphrey. No; I think not. 

Mr. Henderson. Doesn't it strike you as strange, as it does me, 
that it should happen to turn out that way each year? 

Mr. Humphrey. I don't think so, Mr. Henderson, when you think 
that in a good many of thes« years we had costs at our mines, because 
of the reduced volume and excessive overhead, that were way in excess 
of the prices. 

Mr. Henderson. I can understand that very easily. 

Mr. Humphrey. And the reason we had those high costs was be- 
cause our customers, who were obligated to us, to take from us — I am 
talking about ourselves now — tonnages of ore that if they had taken 
them would have given us low costs, refused to take those tonnages, 
couldn't take those tonnages. 

Mr. Henderson. But it turned out that so far as each of you is 
concerned, this adjusted basis got to be, and stayed for years, at 
exactly the same price. Taking into account all the things you have 
spoken about as being true as to the obligations of the producers to 
take a certain contractual amount of ore, with as many buyers and 
as many sellers in any other commodity you would expect most 
certainly that that base price would have changed a jot or a tittle, 
would you not, some time during that period? 

Mr. Humphrey. I think the changes that took place, instead of 
being made in the base, were made in the allowances that were made 
up or down. 

Mr. Henderson. I am quite sure of that. 

Mr. Humphrey. And I think the base itself, when you had this 
matter of dispute it was quite a natural thing, when you couldn't 
agree on a change, to continue on the same base you had been pre- 
viously on. 

Mr. Henderson. I can understand that as between you and all the 
parties with whom you deal, but what I still haven't got a satisfactory 
explanation of is why it came out for all of the sellers and all of the 
buyers at this particular base point. Was there a feeling that this 
was just nominal? Let me ask you this. Was there any discussion 
among the 10 principal ore sellers about how to arrive at this base 
price? 

Mr. Humphrey. We discussed many times, of course, what the 
conditions were and how movements would be and what the tonnage 
would be, and people's obligations, but what would happen would be 
that if we settled with our customer on a base, couldn't agree on a 
change in base and therefore went along for one more year trying to 
work ourselves out of our trouble on this base, somebody else — or, if 
somebody else agreed on that and we heard of it and we had to make 
some little adjustment, we would make the adjustment not in the base 
but in the additions or subtractions to or from that base. 

Mr. Henderson. Would you hear about the prospect of continuing 
that rate before the first substantial sale of the season in each of these 
years? 

Mr. Humphrey. You would hear a lot of talk about it; you and 
your customers would talk and you would hear a good deal of discus- 
sion about whether you could get more or less ore in a particular year, 



10318 CONCENTRATION OF ECONOMIC POWER 

but you wouldn't know what it would be until somebody did it and 
you re^d it in the newspaper, 

Mr. Henderson. You haven't answered the question as to whether 
or not there were any definitive discussions among the sellers about 
this base price. 

Mr. Humphrey. I have talked to practically all of the sellers and a 
good many of the buyers almost every year about prospects and con- 
ditions and prices and what could happen, but when we come right 
down to brass tacks, so far as we are concerned we had to settle wdth 
some customer that was buying our ore, and agree vnth him. 

Mr. Henderson. And that depended upon the strength of your 
bargaining position. You are telling me that the actual price that 
was made easily could be something different from this, but as to the 
basis of this, there is a uniformity that probably derives from the 
conversations you have had. 

Mr. Humphrey. That went along ^rear after year. 

Mr. Feller. You are also, in addition to your connection with the 
iron-ore company, connected with National Steel, as you previously 
testified. 

Mr. Henderson. Mr. Greene, you heard the question, I think, that 
I asked Mr. Humphrey. 

The Chairman. Do you recall the question? 

Mr. Greene. I think I recall the question. 

Mr. Henderson. Is that the way you understand, as far as your 
company is concerned, this nominal base price was arrived at in those 
years? 

Mr. Greene. Yes, If I understand correctly, you asked him about 
the '32 price, why it stayed. I know in our case that our customers 
much preferred to get relief in volume rather than in price, and they 
readil}^ agreed to maintaining a higher price under their contract and 
asking for no help there, if we would give them relief in volume. 

Mr. Henderson. And then you negotiated from that base on 
anything else? 

Senator King, Frequently above the base, and sometimes below? 

Mr. Greene. Never above the base. 

Mr. Henderson. Mr. Patrick Butler? 

Mr. Patrick Butler. Our general procedure was the same. We 
gave relief in tonnage, mostly, and sometimes gave relief in price. 

Mr. Henderson, Mr, Humphrey testified that there were frequent 
discussions as to this matter, and that is how it happened to get to 
this fixed price through all these years. 

Mr. Humphrey. I didn't say that that is how it happened. I 
said I had a number of discussions and we finally decided what we 
would do. 

Mr. Henderson, And I asked you if that is how we explained this, 
and I think the answer given was yes, 

Mr. HuMPHREi, I didn't think, Mr. Henderson — or, if that is what 
I said, it was not correct. 

The Chairman. This is a matter of implication. Will the reporter 
please read the questions and answers? 

(The series of questions by Mr. Henderson and answers by Mr. 
Humphrey immediately preceding the chairman's last question of Mr. 
Greene wa^ read by the reporter.) 



CONCENTRATION OF ECONOMIC POWER 10319 

Mr. Humphrey. That was your suggestion, Mr. Henderson, not 
my answer. 

Mr. Henderson. You said that went along from year to year. 

Mr. Humphrey. These discussions; yes, sir; and this method of 
doing business. 

Mr. Henderson. Did that method have an effect on what turned 
out to be the continuance of the Lake Erie price from year to year? 

Mr. Humphrey. I don't understand. 

Mr. Henderson. I am referring now to these conversations which 
you have from time to time on tonnage and prospects, and so forth, 
and I was asking you if those had something to do with the fact that 
this price in this period from '29 to '37 turned out to be exactly the 
same price, as far as the contract price is concerned? 

Mr. Humphrey. The conversations we had with our customers 
eventually resulted in our agreeing on a price with them which was 
the same base price year after year, and from which variations were 
made. 

Mr. Henderson. Well, the question I asked, did the conversations 
have anything to do with the fact that this coincidence took place 
in the continuance of that year-to-year, exactly the same, price? 

Mr. Humphrey. It was as a result of the conversations we had with 
our customers that we finally made a deal with those customers. 

Mr. Henderson. Well, how about these discussions you have with 
your competitors? Did they have anything to do with the fact that 
this uniform price continued in that period? 

Mr. Humphrey. No; when we finally have to make a sale to a 
customer, it is our agreement with that customer that settles it. 

Mr. Henderson. But do you know how the first substantial con- 
tract in these years was negotiated? 

Mr. Humphrey. No, I do not. 

Mr. Henderson. And you don't know anything at all 

Mr. Humphrey (interposing). Some of them, I don't recall each 
one now. I knew at the time. 

Mr. Henderson. Have you had any discussions with your com- 
petitors about the desirability of that uniform base continuing? 

Mr. Humphrey. Well, I don't know what effect my conversation 
might have on them, but I do know that when you finally make a sale 
that it is the conversation between you and your customer that settles 
the mattu 

The Chairman. Mr. Humphrey, what puzzles me about it is simply 
this, that looking at this chart one finds that there were only two 
variations in the base price. In the period from 1925 to 1939, that 
is to say, during 14 years there were only two changes in the base price. 
I am reminded of the fact that when the discussion was opened by a 
(question directed by Mr. Feller at Mr. Hoyt, Mr. Feller asked him if 
it were not a fact that the Lake Erie base price was determined by the 
first substantial chance sale in each year, and Mr. Hoyt objected to 
the use of the word "chance," and I think with apparently very good 
reason, when one looks at the chart. Now how does it come that 
through this period of 14 years there is an absolute uniformity of the 
base price if that base price depends upon conversations year by year, 
or contracts at the opening of each season? 

Mr. Humphrey. Suppose you are my customer, and we are negoti- 
ating for the sale of ore this year, and I say to you, "Now we will start 

124491 — 40— pt. 18 8 



10320 CONCENTRATION OF ECONOMIC POWER 

with last year's base price, which was $5.95." That is the base from 
which we start. Now you owe me the obligation of taking from me a 
substantial tonnage of ore. You can't comply with that. I say to 
you, "Well, we will adjust for iron content and I will make you an 
allowance of 25 cents from the base price provided you wUl take 
150,000 tons this year; if you will only take 100,000 tons, I won't 
allow you anything." But if you would take 250,000 I might allow 
you 35 or 40 cents, and after negotiations and discussion we finally 
settle on a tonnage that you can take at a price that you will pay. 
That all comes from the sariie base price. 

The Chairman. Last year's base price? 

Mr. Humphrey. And then that would become this year's base price. 

The Chairman. Now then, your conversations are independent 
from the conversations that Mr. Hoyt has, I assume? 

Mr. Humphrey. Entirely. Mine are with my customers. 

The Chairman. And his are with his customers? 

Mr. Humphrey. That is right. 

The Chairman. Although from time to time you gentlemen among 
one another may discuss price, may you not? 

Mr. Humphrey. The price may go higher or lower or what condi- 
tions are, what justifications there might be for increasing or decreasing. 

The Chairman. There is that possibili*"-y, that that has happened? 

Mr. Humphrey. It has happened. 

The Chairman. Yes; now then, if there are six different ore sellers — 
acting independently with these conversations with consumers — and 
the base price is made by the first substantial sale, how does it happen 
that during all of this period there was such a degree of uniformity, 
although the first substantial sale might have been made by any one 
of the six? 

Mr. Humphrey. Well, they could start with that same base and 
arrive at a different answer than you and I arrive at. 

The Chairman. Of course, they could. 

Mr. Humphrey. That is the way in the last analysis the ore moves 
on. 

The Chairman. You see what you are telling us is, or at least the 
implication that I get from what you say is, that this price is deter- 
mined normally and naturally by conversations that take place each 
year? 

Mr. Humphrey. That is correct. 

The Chairman. And it is difficult for me to understand how there 
could be such absolute miiformity if there were not some permanent 
factor entering into this matter which actually determines the result, 
because here we have one rise in 1929, another rise in 1937, and except 
for those two rises it was uniform and the rises were uniform. 

Mr. Humphrey. Well, you see from 1932 on it was a compromise 
each year. 

The Chairman. I beg your pardon; my attention was diverted. 

Mr. Humphrey. From 1932 on it was a compromise each year. 

Mr. Feller. Mr. Chairman, I should like to introduce a letter 
which might be helpful in this situation. Mr. Patrick Butler will 
look at this, please? Will you identify that as coming from your files? 

M . Patrick Butler. Yes. 

Mr. Feller. May I have it, please? 

Mr, Patrick Butler. Yes; I want to make myself familiar with it. 



CONCENTRATION OF ECONOMIC POWER 10321 

Mr. Feller. The letter is dated April 10, 1934, signed by Mr. 
Patrick Butler, addressed to Mr. Emmett Butler. The letter reads as 
follows: 

I saw Hoyt yesterday at which time he told me the ore magnates had decided 
to retain last year's market price. This price will be held regardless of what Ford 
does. We mailed our bid to Ford yesterday as did the others. 

Hoyt says Pickands- Mather hope to take their minimum from us of 200,000 
tons plus all the stockpile which we figure to be 117,000 tons. 

Archibald is to be in Detroit the last part of this week and I am holding myself 
in readiness to meet him there. 

I offer tliis for the record. 

The Chairman. The letter may be received. 

(The letter referred to was marked "Exhibit No. 1369" and is 
included in the appendix on p. 10441.) 

Mr. Henderson. Mr. Hoyt, did you ore magnates get together that 
year and decide to attain last year's market price? 

Mr. Hoyt. It is the first I heard of it, Mr. Henderson. 

Mr. Henderson. Do you have a practice at all of discussions of 
any kind as to what that price would be? 

Mr. Hoyt. I haven't any doubt, Mr. Henderson, that we have had 
many discussions on all the factors that enter into price in the hope 
that we can get, or could get during that period, the ore industry 
straightened out to a point where we could run on a normal basis and 
make some money. Now I had talked with Mr. Butler very often 
about the ore price situation. 

Mr. Henderson. And the other gentlemen here? 

Mr. Hoyt, Very generally with the other gentlemen. 

Mr. Hendersojn Wouldn't it be the natural thing, Mr. Hoyt? 

Mr. Hoyt. May I just finish, Mr. Henderson? 

Mr. Henderson. Pardon me. 

Mr. Hoyt. Because with Mr. Butler, it has been testified to he has 
sold Pickands, Mather, and while it wasn't testified to until I men- 
tioned it today, Betlilehem Steel, a large tonnage of ore over a long 
period of time. I am naturall57^ in a position with Mr. Butler in that 
instance of a purchaser, not as a seller, and I am arriving at a fair 
price with hiin on the basis of adjustment in tonnage as against the 
requirements. Now to say that I have never discussed with any of 
these gentlemen here whether we hoped we could get a higher price 
or not, that would be ridiculous ; of course I have. 

Mr. Henderson. That would be a natural thing to do in the situa- 
tion with which you are confronted, with a very low tonnage and 
large stocks. 

Mr. Hoyt. And with tremendous carrying charges which for 2 or 3 
years were pretty serious matters to a number of the people interested 
in ore. I have without any question, if there was any place where 
someone else had a contract with the same person I had, I might 
say, "Well, who can get the best deal out of this?" I might very 
easily do that. 

Mr. Henderson. Now, considering the trade's seasonal character, 
there is most certainly an advantage in having a stable base when the 
continuing price is made within a few short weeks about May, is 
there not? 

Mr. Hoyt. Unquestionably. 



10322 CONCENTRATION OF ECONOMIC POWER 

Mr. Henderson. It would be the normal thing, would it not, in a 
time of great uncertainty, that you would prefer to have something 
stable on which you could tie? 

Mr HoYT. Oil, absolutely. 

Mr. Henderson. And wouldn't it be natural, then, that you would 
by conversations about prospects and the like, let it become known 
to your competitors and they would probably let it become known to 
you, the desirability of having last year's base retaiued, and then 
negotiating up and down the ladder? 

Mr.HoYT. I can't agree with that, because, Mr. Henderson, there 
are many times when these ore contracts, and perhaps there is some 
difficulty, Senator, in your interpretation of a sale. Now my con- 
tention is that during this period from '30 to '31 to '36 to '37, there 
were practically no new sales on account of the fact that the ore 
business was in a condition of stagnation. What I mean by a sale, 
either spot or contract, is an adjustment of a contract already in 
effect. In other words, I would negotiate with a customer of mine 
not for a new contract, but on a contract that I already have in effect, 
and see what price he will pay me for that. I don't know whether that 
clears up that fact of what we mean by first substantial sale. 

Mr. Henderson. It would still be of advantage to know what the 
base is. Let me put it this way. If there had been a lower base 
which would have reflected the changes in volume and what the 
inventory was, it would have seriously affected your contracts. You 
would have had a lower base from which to negotiate, would you not? 

Mr. HoYT. Right; that is correct. 

Mr. Henderson. So you are interested in what that price gets to be? 

Mr. HoYT. I am interested, Mr. Henderson, in getting the very 
highest price I can for the material that was shipped from the mines 
in which I have an interest. 

Mr. Henderson. That is a legitimate interest ; yes. 

Mr. HoYT. Now when you take in a normal year 85 percent of the 
ore, as near as can be estimated, in the Lake Superior district, goes 
directly from mines to consumers who own the ore either directly or 
through interests of mining companies, and then you come into a 
year like '32 or '33, you can easily see that there is practically no ore 
which is subject to what you have called spot sales. In other words, 
what the volume is is left entirely subject to negotiation as between 
the buyer and the seller on his long-time contract. 

Mr. Henderson. Now this committee — one of its principal tasks, 
as I see it, is to undertake to get an explanation of how prices are made? 

Mr. HoYT. Yes, sir. 

Mr. Henderson. Because they seriously affect the whole industrial 
activity, l^ow here is a price which runs directly counter to the be- 
havior of prices duriug that whole period. It certainly ran entirely 
different from the price of finished steel in that period. 

Mr. Reynders. May I make a comment in regard to that? There 
was this difference in the price range, but I think we should bear in 
mind that these people were selling a diminishing asset; in other words, 
they have a minimum which sooner or later will be exhausted. Now 
it is up to them to determine whether they are willing to dispose of a 
diminishing asset here on a basis of a dropping market, as is indicated 
in the finished steel prices. 



CONCENTRATION OF ECONOMIC POWER 10323 

. Mr. Henderson. The behavior of this price in that period differs 
very much from that of prices of other things, such as copper, which 
have the same characteristics you mention. What I am saying is, we 
are not so much interested in whether there was a concert of agree- 
ment or whether there was anything shady in the transaction. What 
we are trying to find out is what was responsible for the uniformity of 
the base price in that period since price is of such material importance 
in industrial pohcy. I suggested to you that it would be the most 
natural thing in the world, since you have a definite interest in the 
price being the same or a httle higher, that there be conversations 
current among your competitors as to the desirability of keeping the 
price at about the same level. I also suggested that probably these 
discussions are responsible for the fact that the first negotiated con- 
tract each year came out exactly as it was the previous year. Now is 
that incorrect? 

Mr. HoYT. Well, I would say the way you state it it was incorrect, 
but it could easily happen, Mr. Henderson, that out of one or two 
conversations that sort of thing might be arrived at, but I think the 
point that you are overlooking really, when you compare it \vith cop- 
per or pig iron or steel, is what we have tried to explain about the 
difl&culty of this iron ore business being tied up to a lake shipment. 

Mr. Henderson. And these long-term contracts? 

Mr. HoYT. And going down through the Lakes. 

Mr. Henderson. And these long-term contracts needed ad- 
justment? 

Mr. HoYT, I am not commenting on that now; I am commenting 
on the seasonal nature of the business where a consumer negotiates or 
settles, if he has his own ore, on his requirements for a year ahead of 
time, not from month to month or day to day or week to week, but a 
year ahead of time. Now take for example, Mr. Henderson, in '37. 
They brought down 63,000,000 tons of ore in '37. The consumer of 
the ore, the average consumer, expected the rate of steel operation to 
continue through that year at the high rate it was going the first 
4 or 5 months. He had no indication, at least according to the 
general information available, that there was going to be a slump. 
Therefore he wasn't really figuring on a year's supply of ore ; it turned 
out he was figuring on a 2 year's supply of ore because he got it down — 
the slump came so late that he got the ore down before he had time to 
stop it; therefore he had that accumulation. 

Mr. Henderson. But the prospects in all these other years were 
different from that year, and I am suggesting that if they were different 
during that short compressed period for making contracts, and if they 
followed these factors you suggest, the price would have been, as I said 
before, some jot or tittle change? 

Mr. HoYT. There were no sales during that period in the sense 
that you sell copper or pig iron or steel, from day to day. It was 
practically the actual fact, Mr. Henderson, that this ore was just 
accumulated from the '31 period and had just hung over the steel 
industry like a tremendous burden. Now 

Mr. Henderson (interposing). That is the reason why I suggested 
that even with those conditions in any other commodity there would 
have been some change. 

Senator King. May I ask one question of Mr. Humphrey? You 
stated in giving your description of that apparent uniformity that 



10324 CONCENTRATION OF ECONOMIC POWER 

there were concessions made, and were not those concessions — did 
not those concessions amount to a considerable deviation from a 
straight line in the ultimate cost to the buyer and the ultimate return 
to the seller? 

Mr. Humphrey. That is exactly correct. 

Senator King. So that it wouldn't be a uniform line so far as the 
seller was concerned? 

Mr. Humphrey. That is exactly right. That is what I tried to 
explain. 

Senator King. When he made those concessions that line would 
exhibit many variations? 

Mr. Humphrey. The actual cash paid by the buyer for the ton 
of ore to the seller was not a straight line. 

Senator King, Would it in some instances materially depart in a 
straight line? 

Mr. Humphrey. I think so. 

Senator King. Were there concessions each year during that period 
and modifications and changes from the base line? 

Mr. Humphrey. Yes. 

Senator King. Speaking of your own business? 

Mr. Humphrey. Yes. 

Mr. O'Connell. May I ask one question to be sure I understand 
this? Do I understand that in the year 1933 that if you sold any 
given quantity of 51.50 non-Bessemer ore, that it would not follow 
this line quite closely? 

Mr. Humphrey. When we settled with a customer under our con- 
tract in one of those years, the contract might — one contract might 
be on the basis of that line. They would start from that line and 
then they would vary, depending upon the allowances or the pre- 
miums or the penalties that were involved in the contract that changed 
the price from that line. 

Mr. O'Connell. But assuming that there was no penalty or 
premium? 

Mr. Humphrey. They are in all contracts. 

Mr. O'Connell. Always penalties and premiums? 

Mr. Humphrey. Always penalties and premiums. 

Mr. O'Connell. It would result in a substantial character of this 
line if we were to take your prices and compare them with a particular 
kind of ore of another company, selling the same type of ore. 

Mr. Humphrey. I don't know what would happen in another 
company, but you would see that our prices would vary. 

The Chairman. I understood Mr. Humphrey to testify in re- 
sponse to my inquiries that when these unusual factors of difference 
are eliminated and the price is based upon the usual factors of ad- 
vance, the percentage of iron content, for example, the lines would 
approximate this line. 

Mr. Humphrey. If there were no unusual variations. 

The Chairman. Eliminating the unusual variations. 

Mr. Humphrey. But in most cases there were those other varia- 
tions. 

Senator King. In view of the variations which occurred, which 
you stated would result in a departure from the straight line, would 
you say that those variations, plus the conditions which prevailed, 
and the conduct of the various parties, the buyer and the seller, 
amounted to competition? 



CONCENTRATION OF ECONOMIC POWER 10325 

Mr. Humphrey. It was very definite competition. 

Senator King. So you would say you were then in the competitive 
market in the seHing of your ores? 

Mr. Humphrey. We were in a competitive market all of the time 
in the sale of our ores; not only were we competing with other sellers 
of ore, but in many instances we were competing with our customers' 
own production of ore. In other words, your customer himself, in 
many instances, owns ore and if he is to buy ore from you, you must 
agree on a price with him that makes it more attractive for him to 
buy your ore than to mine his own. 

Senator King. Then he would pay less for your ores, when he had 
ores to sell of his own he would want to market his own ores first. 

Mr. Humphrey. He may not be a seller, he may just mine for his 
own consumption but he may mine for only a portion of his own 
consumption or for all of his own consumption, depending upon what 
he does. 

Mr. Henderson. Mr. Chairman, I want to ask Mr. Patrick Butler 
a question. 

The Chairman. May I ask you to wait a moment until I clear this 
up? 

Mr. Humphrey, I understood you to testify that this base price is 
fixed from year to year largely by the conditions which you have, so 
far as you are concerned, with your consumers. 

Mr, Humphrey. Well, it may be that it is however — if we agree 
with our customer on a base and get cleared first, then that becomes 
the base that is published. 

The Chairman. Yes; but that is done from year to year. 

Mr. Humphrey. Maybe somebody else does it and we start in our 
negotiations with our customer from a pubUshed base. 

The Chairman. I didn't mean to say you were the leader or any- 
thing of the kind. 

Mr. Humphrey. Sometimes it is one and sometimes the other. 

The Chairman. But it is done from year to year, 

Mr, Humphrey. That is right. 

The Chairman. Now, Mr. Hoyt, in explanation of the uniformity 
of this line explained, as I understood him, that the iron ore industry 
was in such a condition due to the falling off of activity in the steel 
industry that a large volume of ore was overhanging the market and 
that there were not actually annual sales? 

Mr. Hoyt. That is correct. 

The Chairman. Now are the two statements in harmony with one 
another? 

Mr. Hoyt. Yes, sir; because I explained, Senator, that from our 
point of view an annual sale or an adjustment of a long-time contract 
which I had in effect, we wiU say at the start of this period — in other 
words, suppose I had sold one of these steel companies a very large 
tonnage of ore, we will say, over a 10-year period and I was in the second 
year of the 10 years, I had to go and work just as hard on that 
customer to arrive at a price under that long-time contract as if I was 
making a new sale. 

The Chairman. But at a final price? 

Mr. Hoyt. All right; but my contract, for example, says that he 
will take the ore forward at, we will say, 50 cents below the published 



10326 CONCENTRATION OF ECONOMIC POWER 

base price, so when he says to me, "Alright; I will take this ore this 
year at 50 cents below the base price," I have no hesitation in telling 
the newspaper man who comes around that I have made a sale at that 
price, because the long-time contract is based on it. It takes into 
consideration the fact that I as a seUer have a minimum where I have 
to spend over a period, we will say of 5 or 6 years, a large amount of 
money to develop it. I don't want to take the risk, if I am subject 
just to sale from year to year, so I go to him and say, "If you will take 
from me so much ore each year for a period of years, I will give you 
50 cents off the base price." 

The Chairman. Now, when you say to your customer that you will 
give him so much off the base price, and you do that year by year iti 
fixing the actual return that you get for the sale of your ore, I can 
imderstand that as explaining the eventual price which you receive, 
but I can't understand it as an element in fixing the base price, be- 
cause you begin with an assumption of the base price, the determina- 
tion of which, the method of determination of which, is the precise 
question that I am trying to get an anwer to. 

Mr. HoYT. I have given you the answer as I see it, Senator, 

Mr. Henderson. Do you teU your customer how that base price is 
going to be arrived at? 

Mr. HoYT. I go down there and I tell him frankly and I say, 
"Now, listen: I want to get under the conditions this year the best 
price I can," and he says, "Well, I have a great inventory of ore here 
and I don't want to take any," and we come to an agreement, and 
finally he says to me, "All right, you let me off some tonnage, and 
I wUl pay you the same price 1 paid you last year," which is $4.50, 
we will say, but 50 cents under the base price. Now it has been 
customary in the trade that that kind of negotiation establishes the 
base price. I can't tell you more than that. That is just the custom. 
It is done. 

Mr. Henderson. I want to ask, Mr. Patrick Butler, do you recall 
the circumstances under which you wrote this letter of April 10, 1934? ^ 

Mr. Patrick Butler. No; I can't recall that definite conversation. 
I have been in personal contact almost personally for 15 years, and 
that particular one doesn't come to mind. 

Mr. Henderson. This particular one to the [effect that the ore 
magnates would decide whether or not they would retain last year's 
market price? 

Mr. Patrick Butler. Definitely I did not mean that the ore 
magnates got together and decided on the price. That is shorthand 
conversation from one person that knows how the market price is 
arrived at, to another person that is familiar with how the market 
price is arrived at. I meant in that case, if I was going — if I were 
writing a letter to you, Mr. Henderson, I would say that the negotia- 
tion between the ore concerns and their customers have not developed 
into setting a price for this year, or it has in this case of this letter. 

Mr. Henderson. Yes; but there would have to be some basis for 
that decision. How do you understand that the retention of the 
same price is decided? Is it Mr. Hoyt's version or Mr, Humphrey's 
version? 

Mr. Patrick Butler. I didn't see any difference between their 
versions. 

1 ReferriBg to "Exhibit No. 1369", appendix, p. 10441. 



CONCENTRATION OF ECONOMIC POWER 10327 

Mr. Henderson. You didn't see any difference in their versions? 

Mr. Patrick Butler. The market price, as I understand it, is 
arrived at by the negotiation of the iron-ore producer and the con- 
sumer. 

Mr. Henderson. Well, it was said in one case it was the current 
year's base price, and in the other case it was said it was last year's 
base price. 

Mr. Patrick Butler. I don't follow that difference. 

Mr. Henderson. And then it turns out that all the contracts are 
on a uniform base. 

Mr. Patrick Butler. It might be for the current year or it might 
be the current price for the contract that took place over a term of 
years. 

Mr. Henderson. I understand your testimony is that this means 
something different to your dad, to whom it was addressed, than it 
does to me? 

Mr. Patrick Butler, I would think so; yes. That letter, the 
implication or the idea that you would get from that letter would be 
that the ore producers, the large ore producers, get together. 

Mr. Henderson. Don't avoid that word "magnate," Mr. Butler. 

Mr. Patrick Butler. The ore magnates got together and estab- 
lished the price. That would be the thought that you would derive 
from it. I am under no impression, or I don't believe my father is, 
that the ore magnates get together and establish the price of ore. It 
must be on the face of it a subject of negotiation, not between ore 
magnates, but between ore magnates and their customers, not as 
between themselves. 

Mr. Henderson. Suppose a competitor wanted to establish a lower 
base price that year and you rushed some tonnage down on the first 
negotiated contract, and you made a lower base price. That would 
affect every one of your competitors, wouldn't it? 

Mr. Patrick Butler. I would think so; yes. 

Mr. Henderson. That never takes place, does it? It didn't take 
place in all those years. 

Mr. Patrick Butler. I have never wanted to establish a lower 
price for iron ore. 

The Chairman. Do you ever establish the prJce? 

Mr. Patrick Butler. Not that I know of. 

Mr. Henderson. I can understand that. You might want to 
move your tonnage as other industries do, and therefore make a 
variation in price. What I am suggesting is that this particular base 
price doesn't act like other prices in a competitive order. 

Mr. Patrick Butler. I think you are right when you say that; the 
base price doesn't vary as the price of other cormnodities ; no. 

Mr. Henderson. But the actual price arrived at revolves around 
that line. 

Mr. Patrick Butler. It is based on that line. It is a base price. 

Mr. Henderson. And therefore if that line is high or low, the 
revolution around it will tend to be high or low. 

Mr. Patrick Butler. I would think that is correct. 

The Chairman. Mr. Hoyt, when does the season open? 

Mr. Hoyt. On the average. May 1, Senator. Sometimes in April, 
if it is a very early spring. But over a period of years you can depend 
on the season opening about May 1. 



10328 CONCENTRATION OF ECONOMIC POWER 

The Chairman. Would yeu care to make any comment on the fact 
that according to this letter Mr. Patrick Butler wrote to his father on 
the 10th of April in such a maimer as to assume that the price for 
that year had already been fixed, though the season was not yet 
open? 

Mr. HoYT. These discussions, Senator, as to ore requirements, may 
start in January or February, as far as that goes. It depends on the 
kind of year it is, and whether there does look to be an increase in 
volume. Then they start to figure much earlier. 

The Chairman. Bearing in mind that on the average the season 
opens on about the 1st of May, bear in mind that the uniform testi- 
mony here has been that the base price is fixed by the first substan- 
tial sale after the season has opened 

Mr. HoYT (interposing). No, sir; not after the season has opened. 
That is not in the testimony. At least I never said that, and I 
haven't heard it said. Not after the season opens. 

The Chairman. The first substantial sale of the season. 

Mr. HoYT. It might be made in January; yes, sir. 

The Chairman. Might be made in January. 

Mr. HoYT. I don't know that it has ever been made that early, 
but it might be made. 

The Chairman. Let's read the first sentence of Mr. Butler's letter. 
[Reading from "Exhibit No. 1369"]: 

I saw Hoyt yesterday at which time he told me the ore magnates had decided 
to retain last year's market price. 

That seems to me to refer to a future act, to a condition that would 
arise in -the future, and not to a matter which had already been 
closed Do you think that is a justified interpretation of the sen- 
tence? 

Mr. Hoyt. Senator, I don't know anything about Mr. Butler writ- 
ing to his father, and how he does it or anything of that kind, but 
may I ask this question? Do you think that this distinguished 
group here could sit in a room and decide that the steel companies, 
and a great many of them, wiU pay them a fixed price for the ore? 

The Chairman. I am not making that impUcation at all. 

Mr. Hoyt. That is really what* it amounts to, as far as I can see. 

The Chairman. No, no. I wouldn't want you to think that I had 
had that in mind at aU. 

Mr. Hoyt. Mr. Henderson's question led me to believe that. 

Mr. Henderson. I am saying this, that there is something very 
unusual about the situation. 

Mr. Hoyt. Wo tried to explain it to you, Mr. Henderson, on this 
whole general situation. 

Mr. Henderson. You have explained to me how the actual price 
get^ made, but you haven't explained to me satisfactorily how that 
particular contract, that Lake Erie rate, turned out to be exactly 
the same every year. 

The Chairman. If it is satisfactory to the committee, we will 
recess until tomorrow morning at 10:15, and then perhaps we will 
take this matter up with clear minds. 

(Whereupon, at 5 p. m., the committee recessed until the following 
day, November 3, 1939, at 10:15 a. m.) 



INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER 



FRIDAY, NOVEMBER 3, 1939 

United States Senate, 
Temporary National Economic Committee, 

Washington, D. C. 

The committee met at 10:30 a. m., pursuant to adjournment on 
Thursday, November 2, 1939, in the Caucus Room, Senate Office 
Building, Representative B. Carroll Reece presiding. 

Present: Representative Reece (acting chairman); Senator O'Ma-c 
honey (chairman) ; Representative Sumners (vice chairman) ; Senator 
King and Representative WiUiams; Messrs. Henderson, AvUdsen, 
O'Connell, and Brackett. 

Present also : Gordon Dean, representing the Department of Justice ; 
John V. W. Reynders, representing the Department of Commerce; 
A. H. Feller, special assistant to the Attorney General; John W. Porter, 
Irving Glickfeld, Hyman Ritchin, Ward S. Bowman, and Monroe 
Karasik, Department of Justice. 

ActLQg Chairman Reece. The Committee wiU please come to 
order. Are you ready to proceed, Mr. Feller? 

Mr. Feller. Mr. Chairman, I should like to call the witnesses who 
were testifying when we recessed yesterday. 

TESTIMONY OF E. B. GREENE, PRESIDENT, CLEVELAND- CLIFFS 
IRON CO., CLEVELAND, OHIO; ELTON HOYT H, MANAGER AND 
PARTNER, PICKANDS, MATHER & CO., CLEVELAND, OHIO; 
GEORGE M. HUMPHREY, PRESIDENT, M. A. HANNA CO., CLEVE- 
LAND, OHIO; EMMETT BUTLER, PRESIDENT, AND PATRICK 
BUTLER, BUTLER BROS., ST. PAUL, MINN.; CRISPIN OGLEBAY, 
PRESIDENT, OGLEBAY, NORTON & CO., CLEVELAND, OHIO— 
Resumed 

iron ore pricing 

Mr. Feller. Mr. Chairman, yesterday afternoon there was some 
discussion as to the significance of the Lake Erie base price for ore. 
I think it is pertinent to read into the record at this time a paragraph 
from a letter sent by Mr. Irving S. Olds to Mr. Thurman Arnold, 
Assistant Attorney General, dated August 31, 1939; Mr. Irving Olds 
being coimsel and director of the United States Steel Corporation. 
The paragraph which I will read indicates the basis on which the Ohver 
Iron Mining Co., the largest operator of iron mines in the country and 
a wholly owned subsidiary of the United States Steel Corporation, 
bills other subsidiaries of the United States Steel Corporation for ore 

10329 



10330 CONCENTRATION OF ECONOMIC POWER 

The letter reads as follows : 

The Oliver Company bills in the constituent steel manufacturing subsidiary 
ores delivered for their account at the established Lake Erie base price less certain 
structural and . shrinkage allowances. In determining the actual price of any 
particular grade of ore an adjustment up or down from the base price has to be 
made on account of variables for iron phosphorus, and a penalty is applied to 
high silica ore. 

In this connection the Oliver Company i& subjected to a penalty amounting to 
seven and one-half cents per unit of silica in excess of 10 per cent dry silica. The 
prices thus arrived at, and at which the ore is so billed, are therefore the published 
Lake Erie prices, and such prices are entered upon the books of the company as 
the selling price of the ore. 

That is the end of the quotation from Mr. Olds' letter. 

I think it will appear, therefore, that the pubhshed Lake Erie base 
price is, at least in the operation of the United States Steel Corporation, 
a significant factor in the cost or selling price of steel, and if you will 
refer to the booklet which was introduced at the beginning of the 
hearing, you will see that approximately 2 tons of ore are used in 
the production of 1 ton of steel. 

Mr. Oglebay, could you identify this letter, please, as coming from 
your files? It was written by Mr. Hilton, vice president of the Steel 
Co. of Canada, and addressed to Mr. Bourne of your company. 

Mr. Oglebay. Yes; I do. 

Mr. Feller. I should Hke to read this letter for the record. I 
don't think it will be necessary to print it as an exhibit. It bears 
the heading, "Ore Prices," and is dated May 2, 1939. [Reading:] 

I have been going to write you about the iron ore price structure since last 
season's prices were reaffirmed this year. We are frankly quite disappointed as 
these prices seem to us higher than any level which current business conditions 
will justify. There does not appear to be any possibility of a general increase in 
price of finished steel. In fact, the sporadic outbreaks of price cutting from time 
to time would indicate the contrary might be expected. Sales of merchant iron 
are dwindling year by year in proportion to the decreased gray iron foundry melt. 
We are in this position. Unlike the majority of United States Steel producers, 
a relatively small proportion of our total ore requirements comes from ownership 
properties. It is true that, on the other side of the ledger, we do not have the 
investment in ore properties which the other companies have. Our purchases of 
ore have, in the main, been covered by long-term contracts, but since these are 
based on fixed differentials of some kind below the prevailing season market 
prices, this does not help a great deal if the season prices are maintained at 
fictitiously high levels. 

In this connection could you give me any estimate of the amount of ore which 
is sold on some basis predicated upon the open market price during a typical 
season? I would expect that only a very limited portion of the total season 
movement would fall into this category. 

On the other side of the picture, we have to compete with United States pro- 
ducers, and the type of competition existing in the steel trade in the U. S. at the 
present time is making itself felt here continually, as in a number of lines we are 
forced to compete on a duty-free basis. Many of these American producers, of 
course, draw the bulk or aU of their iron ore supplies from ownership properties, 
some of which at least enjoy very advantageous costs. Frankly, we believe that, 
in any kind of open competitive buying, the price level for iron ore would be sub- 
stantially below the levels set for this year's market prices. 

We are further of the opinion that, should any substantial lowering of price 
leVels for steel products occur, the question of the established market price for 
Lake Superior ores ought to be reconsidered in the light of such a condition. 

We would be very much interested in the views of your company regarding the 
foregoing. 

The letter is signed "H. G. Hilton," who is, as I stated before, vice 
president of the Steel Co. of Canada, Ltd. 



CONCENTRATION OF ECONOMIC POWER 10331 

Mr. Oglebay, 1 should like to ask you whether you agree with two 
of the remarks made in this letter. One is the remark that season 
prices are maintained at fictitiously high levels. Would you care to 
have the letter? 

Mr. Oglebay. No; I don't. 

Mr. Feller. Do you agree with that remark? 

Mr. Oglebay. I had better answer that as I see it, in the way m 
which we answered it to Mr. Hilton. 

Mr. Feller. Would you tell us that, please? 

Mr. Oglebay. This contract calls for dehvery of 150,000 ions of 
ore per year, and he was asking us to ship this year somewhere approxi- 
mating a minimum of 50,000 tons and, as a maximum, 75,000 tons. 
Others to whom we were to ship ore from this mine also were 
requesting us to ship far less ore than their contracts called for. This 
placed the mine in a position where the production would not meet 
its cost. So we said to Mr. Hilton that in using the yardstick of this 
price, as of 1939, we thought we were perfectly fair, in that that in 
itself, the price that we would get from him for the ore would hardly 
allow us to pay expenses at the mine. 

(The vice chairman assumed the Chair.) 

Mr. Oglebay. That is the answer that we made to Mr. Hilton. 
, Mr. Feller. What about the word "fictitious"? Would you say 
that the market price is fici-itious, either at a fictitiously high level or 
a fictitiously low level? 

Mr. Oglebay. I have the feeling that this is not a market price as 
applied to our office, and I will have to look at it from that point of 
view. We use the Lake Erie selling price with some of our long-term 
contracts, including the contract with the Steel Company, of Canada. 

And in the last 7 or 8 years those who had contracts with us have 
asked for adjustment in shipping from the mine that did not allow 
the mine to produce sufficient ore to hardly carry it, so that as a yard- 
stick applying to our office I would say that price was not too high, 
but probably too low, in fairness to the effect it had on our costs. 

Mr. Feller. What I asked you was whether you thought the price 
was fictitious. I understood you to say that the price had relatively 
little significance so far as the transactions of the ore business are con- 
cerned. Isn't it a fact that in those contracts which are related to 
the Lake Erie base price, or the market price, like the contract with 
the Steel Company, of Canada, the contract provides for a price which 
bears a fixed relationship to the market price; that is, so many per- 
cent off the market price? 

Mr. Oglebay. That is right; yes. 

Mr. Feller. Consequently if the market price were to go down the 
buyer, the consumer of the ore, would have to pay less, would be able 
to pay less, would he not, as the market price varied? 

Mr. Oglebay. That is true. 

Mr. Feller. In other words, then, the market price does have very 
definite significance in connection with such a contract. 

Mr. Oglebay. It does from one point of view, but from the other 
point of view this company was not taking all the ore that was called 
for in the contract and they were asking us for an adjustment down- 
ward for less in quantity than they were obligated to take, thereby 
increasing our costs. It was not necessary for us to accept this price 



10332 CONCENTRATION OF ECONOMIC POWER 

or any other price. We could, of course, adjust on probably some 
other base, because they did not want to fulfill their contract for the 
delivery as called for in the contract. 

Mr. Feller. Was there such an adjustment made? 

Mr. Oglebay. Yes; there was. 

Mr. Feller. Wliat was the adjustment? 

Mr. Oglebay. Oh, you mean the price? 

Mr. Feller. Yes. 

Mr. Oglebay. No; we accepted the price as of 1938. 

Mr. Feller. Mr. Patrick Butler, I should like to refer back 

The Vice Chairman (interposing). Wait, if you don't mind. Is it 
in the record with reference to the adjustment, the details of the ad- 
justment in regard to quantity delivery, quantity acceptance? I have 
heard some testimony about it, but is it in the record? 

Mr. Feller. The record contains statements by several of the 
witnesses. 

The Vice Chairman. No; I mean this witness. Unfortunately I 
just got in. This witness testified that the contract which he had with 
his purchaser was not compHed with because the purchaser did not 
take quantity according to contract. I understood this witness to 
say that there had been some adjustment but not as to price I was 
asking if it was clearly in the record as to what adjustment is made as 
to quantity acceptance. 

Mr. Feller. No; the record does not contain the exact amount. 
Could you state that, Mr. Oglebay? 

Mr. Oglebay. We accepted the price as of '38. 

The Vice Chairman. You have been testifying that there was 
some failure on the part of the purchaser to receive ore from you 
according to the contract. 

Mi". Oglebay. Well, in my testimony what I wanted to imply was 
that we had the privilege 

The Vice Chairman (interposing). No; I am asking you 

Mr. Oglebay (interposing). No; we did not, we accepted- 



The Vice Chairman (interposing). You didn't answer my question. 
I asked you what adjustment you made with regard to quantity 
dehvery. 

Mr. Oglebay. We made none. We accepted their shipping 
schedules which were less than the contract called for. 

The Vice Chairma^. I am asking you what |Was that difference. 

Mr. Oglebay. Their contract called for the dehvery ot 150,000 
tons. 

The Vice Chairman. How much did you accept? 

Mr. Oglebay. They took 75,000. 

The Vice Chairman. That is what I have been trying to get in the 

cord. 

ESTABLISHMENT OF THE BASE PRICE 

Mr. Feller. Mr. Patrick Butler, I should like to revert to the letter 
which was introduced at the close of yesterday's session.^ As you 
recall the first paragraph of that letter reads as follows: 

I saw Hoyt yesterday at which time he told me the ore magnates had decided to 
Retain last year's market price. This price wiU be held regardless of what Ford 
iocs. We mailed our bid to Ford yesterday as did the others. 

Exhibit No. 1309", appendix, p. 10441. 



CONCENTRATION OF ECONOMIC POWER 10333 

That is the end of the quotation. Now, Mr. Butler, considerable 
discussion was had yesterday with respect to the first sentence. I 
should Uke to ask you with respect to the following two sentences. 
What did you mean by the statement: "This price will be held regard- 
less of what Ford does." I take it that "Ford" refers to the Ford 
Motor Co. which is a large buyer of iron ore. 

Mr. Patrick Butler. That is right. Will you read that sentence? 

Mr. Feller (reading): 

This price 



This price 

that is to say last year's market price 

wiU be held regardless of what Ford does. 



wiU be held regardless of what Ford does. 

Mr. Patrick Butler. That to my mind means that regardless of 
what Ford does — what price Ford pays for his ore, the pubhshed 
market price would remain the same as it had in previous years. 

Mr, Feller. Now I take it that the custom in the industry, as 
has been testified to yesterday, is that the price at which the first 
substantial sale of the season is made becomes the Lake Erie base 
price. I take it from your testimony that if the Ford Motor Co., by 
virtue of its bargaining position, were to make the first substantial 
purchase of the season at a price less than the preceding yeaffe market 
price, that the industry would not recognifeie that as the established 
Lake Erie base price. 

Mr. Patrick Butler. I don't know that to be a fact — whether the 
industry would recognize it as the first substantial sale and set the 
market price, set the Lake Erie price. 

Mr. Feller. What other meaning could y6ur answer to my 
previous question have? Your answer was that the last year's 
market price would remain the market price regardless of what 
Ford did. 

Mr. Patrick Butler. The only deduction I can make is that 
there would be a sale prior to the Ford sale. 

Mr. Feller. Supposing Ford were the first purchaser, 

Mr, Patrick Butler, If Ford were the first purchaser and that 
price was published, that, I think, would establish the market price 
of the ore for that year. 

Mr. Feller. Then the market price would not be held regardless 
of what Ford did? 

Mr, Patrick Butler. It could be. If the iron ore people and 
their customers thought that the price that Ford paid did not reflect 
the economic conditions of the industry at that time, I would think 
they would be perfectly free to say that they would not recognize 
the Ford sale as binding upon them on their contracts for that year. 

Mr. Feller. Then I take it that the custom is one that could be 
broken very easily if the price were not suitable to the producers of 
iron ore. 

Mr. Patrick Butler. I wouldn't gather that. 

Mr. Feller. Isn't that the implication from your statement? 

Mr. Patrick Butler. No, 

Mr. Feller. You said that if the sellers of iron ore decided or 
judged that the price at which the Ford purchase had been made 
did not reflect the economic conditions in the industry that they 
would not recognize that price although the record clearly indicates 



10334 CONCENTRATION OF ECONOMIC POWER 

that the first substantial sale of the season is by long established 
custoni the market price for that season. 

Mr. Patrick Butler. I would like to give an example of what I 
mean by saying that they would not have to recognize the Ford sale 
as the market price for that year. Suppose in one year a producer 
went to the Ford Motor Co. and, on account of economic conditions, 
he was so pressed to sell ore, I don't beUeve that that sale under 
pressure should govern the price — that comparatively small tonnage — 
of all the other ore brought down that year. 

Mr. Feller. How do you determine whether a sale is made under 
pressure or not? 

Mr. Patrick Butler. There are times, as far as I am concerned, 
when we are more anxious to sell ore than others; I mean, in 
other words, our burden of doing business is heavier than in other 
times and we are more anxious to make sales at one time than at 
anothei". 

Mr. Feller. Do you recall any given year in which the first 
substantial sale of the season was considered by the industry to have 
been a sale made under pressure and consequently the price would 
not be recognized for the balance of the season? 

Mr. Patrick Butler. I do not. 

Mr. Henderson. Might I ask a question then? 

Mr. Feller. Yes. 

Mr. Henderson. Mr. Butler, what do these contracts you have 
read have as their basis? 

Mr. Patrick Butler. We have two types of contracts in effect 
now. One of them is that a contract has a base price plus a percent- 
age of the difference between that base price and the published Lake 
Erie price. That is one type. The other type of contract is based — 
calls for a base price plus increase for variables in labor and supplies. 

Mr. Henderson. Suppose I had a contract with Butler Bros, of 
the first type, and the first substantial contract was with Ford that 
year and it did not get to be the first one published, what would be my 
contract rights with you? 

Mr. Patrick Butler. On the published. 

Mr. Henderson. It would be on the published? 

Mr. Patrick Butler. Yes. 

Mr. Henderson. Therefore, if under pressure you say a substantial 
contract was made, if it could be kept from getting published it 
wouldn't affect these contracts which you and other ore sellers have. 

Mr. Patrick Butler. It wouldn't affect the contracts that we have. 

Mr. Henderson. Mr. Hoyt testified yesterday, I think, and I 
think Mr. Humphrey did, as to how this price got into a publication. 
I think you said, Mr. Hoyt, or maybe it was Mr. Humphrey, that 
after you ^had negotiated one of these continuing contracts you called 
in the press and told them about it. 

Mr. Hoyt. That is correct. 

Mr. Henderson. And that becomes the published price. Do you 
have any general understanding in the industry — or did you have, 
particularly in this period when there admittedly was pressure of the 
over hanging volume — that no price below the previous year's base 
price would be published? 

Mr. Hoyt. Absolutely not. 



CONCENTRATION OF ECONOMIC POWER 10335 

Mr. Henderson. But you fellows pretty much have control as to 
whether or not the contract gets published, is that not so? 

Mr. HoYT. I wouldn't say so, Mr. Henderson. 

' Mr. Henderson. Let me put it this way. Isn't that how the 
trade journals get the information? Do they not get it from the sellers 
rather than from the buyers? 

Mr. HoYT. Absolutely, from the sellers but they might get it just 
as easily from a sale to Ford as they would from anybody else. 

Mr. Henderson. Do you recall any year in which they did get it 
from Ford? 

Mr. HoYT. No, sir; I don't. 

Mr. Henderson. Do you recall any year of the years covered by 
this chart, '25 to '39,^ in which the publication did not arise from 
information given out by one of the ore companies? 

Mr. HoYT. I don't think I can answer that specifically, but my 
guess would be that it wo uldn't — that it didn't — but I would Uke 
to. explain one thing, Mr. Henderson, for the basis of this discussion. 
Ford Motor Co. has part of its own ore supply and buys relatively 
small tonnage. They always send out formal inquiries when they 
are about to buy ore. To be perfectly frank with you, if those in- 
quiries come in and there is pressure on the market, as Mr. Butler 
has described, and I think in one of these exhibits Mr. Feller has 
shown that there were seven or eight other ore companies shipping 
in the neighborhood of a milUon eight hundred thousand tons, I 
would go to my customer and try and settle with him on a price satis- 
factory to him and publish it, because I don't want some chance sale 
on a pressure basis to settle tonnage which was from all the properties 
in wliich I might have an interest. 

Now if I can't do that, if I can't arrive at anything like that, why 
imquestionably so far as I am concerned, I would feel that a chance 
sale to Ford, if it became known would set the price, the base price. 

Mr. Henderson. But you have a little advantage in getting one 
of those contracts negotiated in advance of the Ford closing, have you 
not, and that is true of some of the other ore companies, on account 
of the relationsliip which you have as an ore company with the steel 
companies? 

Mr. Hoyt. No, sir; I wouldn't say so. 

Mr. Henderson./ You mean you think you stand in the same rela- 
tionship exactly to the steel company as somebody who does not have 
an interest? 

Mr, HoYT. That would depend on the steel company you are re- 
ferring to. 

Mr. Feller. You have an interest in Youngstown? 

Mr. HoYT. Yes. 

Mr. Feller. Your senior partner is also chairman of the board. 

Mr. HoYT. That is correct, but we don't sell Youngstown ore; we 
operate the properties for them. I couldn't possibly establish a 
published base price on a negotiation which Youngstown had. 

Mr. Henderson. Let me ask Mr. Greene. Mr. Greene, do you 
have the same procedure as far as the Ford contract or some other 
chance sale is concerned? Let me put it this way. You have heard 
Mr. Hoyt's testimony, and if you were afraid that a sale under pressure 

I "Exhibit No. 1367," appendix, p. 10439. 
124491 — 40 — pt. 18- 9 



10336 CONCENTRATION OF ECONOMIC POWER 

to Ford might be the first of the season and might get pubHcation 
and therefore be the base, would you feel it desirable to get a contract 
negotiated and published? 

Mr. Greene. I from my personal experience wouldn't know about 
that, but 1 think Mr. Hoyt has testified correctly on that. I don't 
know of that happening but I feel that we would make every effort 
to make a sale if we could. 

Mr. Henderson. I think I would, too. 

Mr. Greene. And naturally at the best price we could obtain. 

Mr. Henderson. Yes; I tliink I would too if I were in your shoes. 
Then this question I asked Mr. Hoyt as to the possibility of your 
concluding a contract, you would have an advantage, for example, 
over Mr. Butler in making a contract, would you not, on account of 
your ownership in some of the steel companies? 

Mr. Greene. No, I don't think so. They keep us at full arm's 
length. I tliink the relations would be perfectly friendly but when 
it comes to buying ore I have a pretty tough lot of buyers because I 
don't think there is any special consideration given us as a result of 
our relationship with the steel companies. I think we stand right on 
a competitive basis. 

Mr. Henderson. If you stood on a competitive basis, isn't it 
likely that in some one of those years competition would have varied 
that price? 

Mr. Greene. I thought you were addressing one of the others, 

Mr. Henderson. Let me put it another way. In any one of those 
years when there was pressure stock available, did you lose any con- 
tracts to the pressure. group? 

Mr. Greene. I tliink, if I understand your question correctly, 
throughout that period, beginning with '31 or '32, and lasting for 
several years, we were under pressure to reduce the volume or the 
price, and we adjusted with our customers on a basis of volume, and 
not on a basis of price. The reason for that was that we needed the 
money to run. If we had to keep our mines open and run, in our 
particular case udth a very large debt, we had to deliver some ore to 
run our mines and pay our men, and so we adjusted these matters in 
volume. 

Mr. Feller. Mr. Greene, when you speak of adjustment in volume, 
do you mean that for the same price you gave more ore? 

Mr. Greene. Not more ore, less ore. 

Mr. Feller. In other words, your concession was this, was it not? 
It was a relaxation of the term of the contracts which required the 
purchaser to take so much ore per year. Is the purchaser still under 
obligation to take that ore, the delivery of which was deferred in those 
years? 

Mr. Greene. That is exactly what I mean. They wanted relief 
and we had to have cash, and while we say we had a contract for 
300,000 and they wanted to take nothing or 100, we said, "We'll let 
you off" — we went pretty carefully into what they needed and how 
much cf a burden it was, and then we said, "We'll let you off, say, 
two-thirds or a half; the price is the same." 

Mr. Feller. We'll let you off for this year, but the extra third 
that you didn't take this year you will take in succeeding years in 
installments? 



CONCENTRATION OF ECONOMIC POWER 10337 

Mr. Greene. There couldn't be said to be any standard. In some 
cases we just added that onto a year after the expiration of the con- 
tract. Sometimes we got an additional amount added. Each one 
was separate. You had to have a meeting of minds. There wasn't 
any standard of adjustment. Each one of us sat do\vn and maybe 
spent days working this thing out. It was pretty important to us 
and it was fairly important to them. 

Mr. Henderson. Because you took the practical way, rather than 
go on your contract. 

Mr. Greene. That is right. 

Mr. Feller. But with respect to that ore which the purchaser took 
in that particular year, the cost to him was exactly the same? 

Mr. Greene. As provided in his contract; yes. 

Mr. Henderson. Well now, I didn't get the answer, Mr. Feller, 
to the question I asked. In any of these years, when there was tliis 
overhanging volume, did you lose any of your customers because of 
sales under pressure? Did you lose any of your customers that did 
not have a long-term contract? 

Mr. Greene. Those that didn't have a long-term contract, the 
conditions were so bad there were very few sales. Undoubtedly 
we lost some. They didn't need the ore. They had too much in- 
ventory. There is no question about it. 

Mr. Henderson. Did you lose any to anybody else that you remem- 
ber? 

Mr. Greene. I presume so. 

Mr. Henderson. You don't know definitely. 

Mr. Greene. Yes; I could name, I think, one or two 

Mr. Henderson (interposing). I wouldn't ask you to name them. 

Mr. Greene. I am not familiar with the details. I have no doubt 
we lost customers. People took our business from us the same as they 
do in every other business. 

variations from the base price 

Representative Reece. Some of us couldn't be here yesterday 
afternoon, due to the situation in the House, and in looking over the 
record I observe the discussions had with reference to the base price, 
and I gather from these discussions, and together with what has been 
said this morning, that the base price is not the price at which the ore 
is uniformly sold throughout the year, that it is adjusted in accordance 
with varying conditions, so that the customers actually pay a different 
price from what is stated as a base price. Is that correct? 

Mr. Feller. The conditions are physical conditions of the ore. 
In other. words, the base price is a standard price which is figured on 
the basis of a certain iron content. Now, if there is more or less iron 
content, adjustment is made up or down in accordance with the 
amount of iron which exceeds or is less than the standard. Also 
there are adjustments made ^\ath respect to certain impurities in the 
ore. For example, if there is too much phosphorus, you pay a penalty 
for that. In other words, the conditions are conditions in the charac- 
ter of the product, physical characteristics. 

Representative Reece. But are there other conditions, such as 
relate to the varying quantities of ore that might be taken under the 
contract? That is, I mean to say, conditions arising out of the acts 
of the purchaser, rather than the seller. 



10338 CONCENTRATION OF ECONOMIC POWER 

Mr. Feller. Congressman, I take it what you mean is, are there 
such things as quantity discounts or differentials. 

Representative Reece. Yes; from the base price. 

Mr. Feller. As apprears in the record, there are two types of sales 
made in this industry. One is the spot sale, a sale made without a 
contract. You just come to the seller and you buy so much ore. As 
I understand it, there are no quantity differentials in this industry. 
Perhaps one of the witnesses might check up with respect to that. 
There are no quantity differentials with respect to the spot sales. 
Now, on the long-term contracts it was testified to yesterday that 
under these long-term contracts in many instances a reduction is 
made from the Lake Erie base price in order to give a consideration 
for the fact that a great quantity of ore is taken over a long time, but 
that deduction appears to be in most contracts uniform. In other 
words, if the Lake Erie base price were to go up, your contract price 
would also go up. If the Lake Erie base price were to go down, 
your contract price would also go down. It appears then, and I 
think it is correct to state, that the ore moves c^enerally speaking in 
relation to the Lake Erie base price. 

Representative Reece. Thank you. 

The Vice Chairman. While you are making that explanation, 
would you add another, and that is, is it in the record yet — if it is I 
won't ask the question — as to the variation in proportion to quantity? 
I believe it is in testimony here that there are also variations dependent 
upon increased labor costs, increased production costs, variations of 
the base price. I understood one of the gentlemen to testify to that 
effect. 

Mr. Henderson. I think Mr, Patrick Butler covered that. That 
was the second type of contract you spoke of. That is a sort of 
managerial contract in which there is an adjustment for certain costs. 

Mr. Feller. I may explain. Congressman, that there are two types. 

The Vice Chairman. I was asking about that one proposition. Is 
it in the record as to the difference in price dependent upon quantity 
contracted for in the contract? 

Mr. Feller. Yes; the record states that. 

Representative Reece. If this could be summarized in a few words, 
I wouldn't be averse to hearing it, although it is jn the record. 

Mr. Henderson. Both Mr. Hoyt and Mr. Humphrey gave very 
excellent accounts yesterday. 

Mr. Humphrey. Mr. Henderson asked me a good deal of questions 
about tliis yesterday, and apparently I didn't make myself clear, 
because you don't seem to have in your mind, Mr. Feller, that there 
are variations and allowances from the price, based on exactly the 
conditions Mr. Reece is talking about. For quantity, for the term 
that the contract may be, or for just trade allowances, just for an 
allowance to get the business. That is true of the contracts I am 
speaking about, variations from the base price which are made to get 
the business that are competitive allowances. There are any number 
of allowances that are made, premiums and penalties that are figured 
on the physical qualities of the ore and that are also figures based on 
the commercial conditions under which the ore is sold, whether it is 
for a long period or a short period or for a large quantity or a small 
quantity, or just a trade concession in order to get the business 
competitively. 



CONCENTRATION OF ECONOMIC POWER 10339 

The Vice Chairman. Do you think you are clear in the statement 
which you have made for the record with reference to the variation 
dependent upon quantitj'^ purchases. You think that is clear in the 
record? 

Mr. Humphrey. I hope with what I have said just now it is. 
Apparently these gentlemen haven't understood it. 

The Vice Chairman. Let me ask you one other question, and see 
if this is clear in the record. When you speak of variations from the 
base price made in an effort to make the sale, what difference is there 
between that sort of situation and some one else negotiating with 
regard to the sale of a commodity without regard to a base price? 

Mr. Humphrey. There isn't a bit of difference. We start with the 
base and make whatever concession you and the purchaser agree on. 
You make adjustments in various ways and finally arrive at a price 
that the purchaser pays. 

The Vice Chairman. Is there any favoritism depending on who 
your customer is, with reference to what difference there is in adjusting 
your price? 

Mr. Humphrey. You may make a sale under as favorable condi- 
tions as possible, trying to get the best price you can. 

The Vice Chairman. My question is: If you have two people 
come mto your office at the same time, and each of them is just 
about as hard to sell as the other, do you have customers who have 
less difficulty in persuading you to make a better price? 

Mr. Humphrey. You mean through some association we have 
with them? 

Th# Vice Chairman. I don't care what kind of route you go. 

Mr. Humphrey. Not as far as we are concerned, no. The differ- 
ence would be, in our case, if conditions were different. If we sold 
one customer at one time and another at another, conditions might 
make it harder. 

The Vice Chairman. If they all got there on Wednesday morning 
at ten o'clock, your conditions would be the same. 

Mr. Humphrey. They would be the same, and if we sold them under 
the same terms, I see no reason why we would not get the same price. 

Mr. Feller. May I ask you this: In the case of a spot sale, sup- 
posing the purchaser came into the market and said, **I want to buy 
a lot of ore from you, Mr. Humphrey, at a spot sale," what price 
would you quote? 

Mr. Humphrey. I think I would drop dead. [Laughter.] 

Mr. Henderson. By that I guess you mean, Mr. Humphrey, that 
any steel producer in a position to make a large contract is already tied 
up with one of the large companies to a large extent. 

Mr. Humphrey. Not for his entire requirements. We have already 
outlined to you gentlemen that about 85 per cent of this ore moves 
between the o\\'ner of the ore in the ground, and the owner of the plant 
to which it goes, and that what is being sold is a relatively small 
amount. 

We also explained to you that which perhaps isn't clear, that in 
making steel or making pig irqn you have to have various kinds of 
ore. There isn't any one ore that is found that I know of that ^ou 
can just put that one ore in and make pig iron out of it of the kind 
you want to make steel with. You have to have, because of its 
physical characteristics or its chemical characteristics — in the making 



10340 CONCENTRATION OF ECONOMIC POWER 

of steel and in the making of pig iron, you go into thousands of a per- 
cent, hundredths of a percent, in certain qualities or certain elements 
of that ore. 

Now, to get a proper burden for your furnace that will make the 
chemical product that you want, you must balance your burden and 
you must have ores of varying chemical analyses which are weighted 
out, and it is a long and dijfficult calculation and they are weighted 
out, and those various ores are brought together to get you the result 
you want of a mixture of chemical elements. 

There are a good many cases where people don't have — well, they 
may own a large tonnage of ore. They may have a large tonnage on 
hand, but they don't have exactly the kind of ore with a certain in- 
gredient in it, or lack of ingredient in it, that is necessary to make the 
kind of steel they have to make. In that case they look around to 
see who has that and buy it from them. That is a matter of negoti- 
ation between the buyer and the seller, and the seller buys that ore 
and has it. 

Mr. Feller. I should like an answer to my question other than 
the somewhat depressing one that you gave. Suppose a seller next 
year — business, we hope, will be good — or a purchaser, rather, of ore, 
comes to you and says, "I would like to buy 10,000 tons of ore on a 
spot sale." What would the price to him be? 

Mr. Humphrey. If the market was strong I would hope to get an 
increase in price over what we are getting this year. 

Mr. Feller. It would be the market price, would it? 

Mr. Humphrey. It would be whatever price I agreed upon with 
that purchaser and made a sale at. 

Mr. Feller. Based upon the Lake Erie base price? 

Mr. Humphrey. After a sale had been established? If somebody 
had previously sold ore at a price so I knew there were other people 
that had ore available. Let's say ore had been sold at $4.95 when 
I was talking to my customer. If somebody had previously sold ore 
at $4.95 I would know right then that there was no use in my trying 
to get a higher price from any customer, so I would meet that price. 

Mr. Feller. I am talking about a customer here who comes to 
you and says, "The Lake Erie base price is $4.95. I would like to 
take 10,000 tons of ore from you at $4.60," what would you say? 

Mr. Humphrey. If the market was strong I could say no, because 
I would hold it and sell for more money, or feel that I could. 

Mr. Feller. Was there ever a case in which you sold ore below 
the Lake Erie base price, as it had been established for the season? 

Mr. Humphrey. I can't tell you. There is no reason why I 
couldn't, but I don't think I would, because I think I would feel that 
I should get that price. 

Mr. Feller. I should now like to resume 

Mr. Henderson (interposing). I want to get back to the line and 
would like to ask the following questions. I would like to ask Mr. 
Oglebay, in any of the years between '29 and '37, did you make a 
substantial contract below the last year's Lake Erie price before the 
new year's price was established? 

Mr. Oglebay. No. 

Mr. Henderson. I should Uke to ask Mr. Emmett Butler the same 
question. Did you understand my question, Mr. Butler? 

Mr. Emmktt Butler. No; I would Uke to have you repeat it. 



CONCENTRATION OP ECONOMIC POWER 10341 

Mr. Henderson. In any of the years from '29 to '37, when, as Mr. 
Patrick Butler and others have said, pressure sales were liable to occur, 
<iid you make any substantial contract lower than the last year's price 
which was not published, and thereby did not become the price for 
the next year, as it would have if published? 

Mr. Emmett Butler. I don't recall any now; no. 
• Mr. Henderson. Exclusive, maybe, of Ford. 

Mr. Emmett Butler. We sold Ford, I think, at the published price 
in 1930. 

Mr. Patrick Butler. May I add here we also sold Ford at less than 
the published market price? 

Mr. Henderson. Was that, in any of those years, before the season 
price had been established? 

Mr. Patrick Butler. No; that was after the season price had been 
established. I am quite sure of that. I would have to check my 
records. 

Mr. Henderson. In addition to Ford, did you sell? 

Mr. Patrick Butler. Yes; we have sold spot sales at less than the 
market price. 

Mr. Henderson. At less, and that did not become the price for that 
season because it did not get published? 

Mr. Patrick Butler. Those prices, as I recall it, were made after 
the price had been established. 

Mr. Henderson. You see what I am getting at. I am trying to 
find out in addition to Ford — I ask you and Mr. Oglebay because you 
are more likely, because of your contractual relations, to have made 
those — where would the pressure sales be likely to have come from? 

Mr. Patrick Butler. Other than from 

Mr. Henderson (interposing). Other than from the industries here 
represented? 

■ lAr. Patrick Butler. Pressure sales were apt to come from us, 
from our company, and from four or five different other mining 
companies. 

Mr. Henderson. You say you did make some spot sales at less 
than the published price. 

Mr. Patrick Butler. Yes. 

Mr. Henderson. In any of those years was it in advance of the 
establishment of the season's price? 

Mr. Patrick Butler. I don't believe it was. I am quite sure it 
wasn't. 

Mr. Feller. I should like to ask you, Mr. Butler, specifically with 
reference to the sales made to Ford at less than the established market 
price: Do you recall whether you made such a sale in the year 1929? 

Mr. Patrick Butler. You have the record there. I think we sold 
Ford in 1929. I believe that was made at the market price. 

Mr. Feller. Do you remember whether you made a sale to Ford 
below the market price in the year 1931? 

Mr. Patrick Butler. I think we did in 1931. I am not sure, 
I would have to check my records. 

Mr. Feller. I should like first to show you a letter written by you 
to your father, Mr. Emmett Butler, dated March 28, 1929. Will 
you identify that, please? 

Mr. Patrick Butler. Yes, I identify it. 



10342 CONCENTRATION OF ECONOMIC POWER 

Mr, Feller. I offer this for the record, Air. Chairman. 
The Vice Chairman. It may be received. 

(The letter referred to was marked "Exhibit No. 1370," and is 
included in the appendix on p. 10441.) 
Mr. Feller. The letter reads as follows: 

I had a talk with Elton Hoyt yesterday afternoon and he talked me out of 
quoting Ford on any of our grades at less than the full market price. He said 
the market for standard ores is still a little shaky and that it would be dangerous 
to quote Ford anything under the full price. 

On the Hume quotation, there would be too much danger of the Corporation 
learning that we were using any other basis for figuring other than that we submit 
to them. And I'm afraid that our goose would be cooked if Shiras ever heard of it. 

In light of the above I am submitting today quotations on Hume, Knicker- 
bocker, Louise, Kevin and Butler silicious at the full season's prices. 

To clarify a bit, Mr. Butler, the corporation is the United States 
Steel Corporation? 

Mr. Patrick. Butler. That is right. And Shiras was the ore 
agent at that time for the Carnegie Steel Co. 

Mr. Feller. I should like to ask you whether it is the custom for 
you to consult with Mr. Hoyt or anyone else before quoting Ford. 

Mr. Patrick Butler. I would say it was not the custom. 

Mr. Feller. But you did in that year. 

Mr. Patrick Butler. I did in 1929. Bear in mind we had a 
contract with Mr. Hoyt's company, and the price of that, under our 
contract, was based on the market price of ore. If I recall the con- 
versation out of which this correspondence grew, I endeavored to find 
out from Mr. Hoyt if any price we quoted Ford would have an effect 
on the market price, and which would adversely affect the price we 
would obtain from him. 

Mr. Feller. That is the contract with reference to wliich you wrote 
in a letter which is in the record that a certain clause in that contract 
was made in order to keep you out of the market. 

Mr. Patrick Butler. No; it was not in reference to that. 

Mr. Feller. Not in reference to that contract? 

Mr. Patrick Butler. It was in reference to that same contract; 
yes. 

Mr. Feller. Does it follow from your answer that because you 
have this contract with Mr. Hoyt that you consult him regularly 
with respect to any sales which you make which may affect the market 
price? 

Mr. Patrick Butler. No; that does not follow. 

Mr. Feller. But you have done so occasionally. 

Mr. Patrick Butler. I have; yes. 

Mr. Feller. I show you a letter written by you to your father 
dated August 4, 1931, taken from your files. Will you identify it, 
please? 

Mr. Patrick Butler. Yes; I identify it. 

Mr. Feller. I offer this, Mr. Chairman. 

The Vice Chairman. It may be received. 

(The letter referred to was marked "Exhibit No. 1371," and is. in- 
cluded in the appendix on p. 10441.) 



CONCENTRATION OF ECONOMIC POWER 10343 

EFFECT OF CUTTING THE MARKET. PRICE 

Mr. Fei.ler. The letter is dated August 4, 1931. 1 shall read an 
extract from it. [Reading:] 

I believe it would be a dangerous thing to quote below this year's market, 
whether it be for this year only or a term of years. For one reason I believe that 
any price, no matter on what basis, quoted for this year would establish next year's 
market price. The Ford business is the only open market business left and 
if this is not maintained I do not know what would become of our long term con- 
tracts that are based on a market price. Then also, if we took away the business 
from Pickands, Mather on a price concession we would incur the wrath of Jim 
and also give the old line companies an excuse to do likewise. Now that Quinn 
is practically out of business I believe the ore market can be more closely con- 
trolled. 

We are the only people that can furnish them a tonnage of low phos., ore and I 
am of the opinion that we can use this as a club to move our other grades in the 
same way that Cleveland-Cliflfs uses their monopoly on open hearth ore. 

That is the end of the quotation, 

I should hke to continue reading. Tliis is important: 

I appreciate your anxiety to land this business but I believe it would be a 
dangerous thing to cut the price in any way whatsoever. We will, however, con- 
sult with the Big Four beforehand to assure ourselves that they will not try any 
such tricks. 

There are a number of terms in this letter that I should Uke to have 
clarified. First, who are the "Big Four?" 

Mr. Patrick Butler. That is Pickands, Mather; Oglebay, Norton; 
Cleveland-CHffs; and M. A. Hanna. 

Mr. Feller. Reference is made to Jim. 

Mr. Patrick Butler. That is James A. MacKilhken, representing 
the fee interest in some of the properties we lease. I don't know 
whether he was at that time or not, but he has from time to time 
shipped ore on his own account. 

Mr. Feller. Why should this gentleman be wrathful if you took 
away business of Pickands, Mather? 

Mr. Patrick Butler. At that time Pickands, Mather were sales 
agents for liis ore. 

Mr. Feller. May I also ask you who Quimi is? 

Mr. Patrick Butler. He was Clement K. Quinn, who at that 
time was an independent mine operator, or producer. 

Mr. Feller. You say he is practically out of business, meaning 
that he had ceased operations. 

Mr. Patrick Butler. He had practically ceased operations at that 
time. 

Mr. Feller. Referring to this letter again, what did you mean by 
saying "it would be a dangerous thing to quote below this year's 
market?" 

Mr. Patrick Butler. It was dangerous in this respect, that if it 
became known that Ford obtained prices — this was in August — 
below the market price, it would fix the price in the succeeding year. 

Mr. Feller. Then you thought it best not to sell- Ford below the 
market price then? 

Mr. Patrick Butler. That's right. 



10344 CONCENTRATION OF ECONOMIC POWER 

Mr. Feller. I take it that that covers the two or three sentences 
which follow, the sentence referring to the "dangerous" thing. You 
go on to say [reading]: 

Then also, if we took away the business from ?ickands, Mather on a price con- 
cession we would incur the wrath of Jim and also give the old line companies an 
excuse to do likewise. 

Now, did you mean that if you cut the matket price, Pickands 
Mather would take the opportunity to retahate upon you, or in any 
way bring pressure upon you? 

Mr. Patrick Butler. No. 

Mr. Feller. Why were you afraid of the wrath, of Jim then? 

Mr. Patrick Butler. No; Pickands, Mather would quote Mac- 
KiUiken's ore to Ford. Now, if we went in and made a price conces- 
sion to Ford wliich took the business away from MacKLilhken, then I 
beheve MacKilhken might not feel very kindly toward us. 

Mr. Feller. What would he do to you^ 

Mr. Patrick Butlep There are any number of ways in which a 
fee owner might make it unpleasant for an operator. 

Mr. Feller. He was the o «v^ner of the fee of some certain proper- 
ties which you were operatirg? ^ 

Mr. Patrick Butler. He was representative of the company that 
held the fee. 

Mr. Feller, and as such representative it was in his interest to 
see to it that the owners of the fees got royalties? 

Mr. Patrick Butler. TJiat's right. 

Mr. Fellel. Now, what you recommended doing in this case was 
that you not sell ore to Ford. Didn't that result in cutting down 
the royalties which the fee owners received? 

Mr. Patrick Butler. If we made the sale to Ford 

Mr. Feller (interposing). Your fee owners, represented by Mr. 
MacKOliken, would then have received some royalties. 

Mr. Patrick Butler. On that particular tonnage; yes. 

Mr. Feller. Then you recommended — I have not yet established 
whether you made the sale or not. By the way, did you make the 
sale in that year? 

Mr. Patrick Butler. I don't believe so, Mr. Feller. I would 
have to look at our records to be sure. 

Mr. Feller. We will take it, then, that you recommended 

Mr. Patrick Butler (interposing). I recommended that we do 
not make the sale below the market price. 

Mr. Feller. Then is it not correct to say that your recommenda- 
tion that no sale be made to Ford below the season price was made 
because you were afraid of incurring the wrath of Pickands, Mather? 

Mr. Patrick Butler. No. 

Mr. Feller. Mr. MacKillikcn represented certain Pickands, 
Mather interests; did he not? 

Mr. Patrick Butler. 1 think Mr. MarKilliken represented the 
-fee owners m properties operated by Pickands, Mather. 

Mr. Feller. And you assumed that Mr. MacKillikcn, faced with 
a choice of protecting the interests of the fee owners in properties 
which you operated, and protecting the interests of fee owners in 
properties operated by Pickands, Mather, would use the latter 
alternative? 



CONCENTRATION OF ECONOMIC POWER 10345 

Mr. Patrick Butler. I don't follow you there, Mr. Feller. You 
are asking me to say what choice MacKilliken had m the matter, 
and 1 can't testify as to that. 

Mr. Emmett Butler. I might say that the amount of royalty that 
the fee owners whom Mr. MacKilliien represented got, depended on 
our sales price of the ore. 

Mr. Feller. That is certainly correct, but if you sold no ore to 
Ford there would be less of a royalty than i*" you sold it at a cut price. 
Isn't that correct? 

Mr. Emmett Butler. I think that is correct, so it was a matter of 
their decision of whether they would rather maintain a price, a rea- 
sonable price, or forever establish a price that was unreasonably low. 

Mr. Feller. Does it follow, Mr. Butler, that if a price, a sale, 
were made at a particular price, that that would establish the price 
for(»ver? 

Mr. Emmett Butler. I don't know. 

Mr. Feller. In other words, you are, or at that tune were, appre- 
hensive that if this market price should go down, it might stay down? 

Mr. Emmett Butler. Yes. 

Mr. Feller. And consequently you made your efforts to see that 
that price remained at that level? 

Mr. Emmett Butler. Yes. 

Mr. Feller. Mr. Patrick Butler, further on in that same para- 
graph of the letter of August 4, 1931, occurs this statement [reading 
from ''Exhibit No. 1371"]: 

Now that Quinn is practically out of business I believe the ore market can be 
more closely controlled. 

Controlled by whom, did you mean? 

Mr. Patrick Butler. In the sense that there would be less ore 
offered on the market, in the case where there would be a lesser supply 
of ore. 

Mr. Feller. I understand that that is the reason why it could be 
more closely controlled, but who would do the controlling? 

Mr. Patrick Butler. I had nobody in mind that would do the 
controlling. 

Mr. Feller. Did you mean the Big Four? 

Mr. Patrick Butler. No; I did not mean the Big Four. 

Mr. Feller. I should also like to ask you, with respect to the 
statement at the end of this letter [reading] : 

We will, however, consult with the Big Four beforehand to assure ourselves 
that they will not try any such risks. 

Is that customary? 

Mr. Patrick Butler. It was part of my job to find out what my 
competitors were doing, if I could find out by visiting with them or 
drawing deductions from anything I could learn about it was my job 
to find out what they were going to do or what they had in mind so 
far as price was concerned, and make my price accordingly. 

Mr. Feller. Is it correct, then, that it is part of your job to consult 
with your competitors before. you submit a bid to Mr. Ford? 

Mr. Patrick Butler. "Consult" is not exactly the word. I like 
to find out always what they are going to do. 



10346 CONCENTRATION OF ECONOMIC POWER 

Mr. Feller. In a letter which was introduced yesterday ^ the 
statement occurred, as you may recall, "We mailed our bid to Ford 
yesterday, as did the others." That letter was written in 1934. Did 
you, at that time, find out, or did you at that time inquire, as to what 
price the others were going to bid at? 

Mr. Patrick Butler. I don't recall that specifically. 

Mr. Feller. I should like you to identify this letter, Mr. Butler. 
It is signed by you, addressed to Mr. Emmett Butler, dated March 
25, 1931. The letter was taken from the files of your company. 

Mr. Patrick Butler. Yes ; I identify it. 

Mr. Feller. I offer it for the record. 

The Vice Chairman. It may be received. 

(The letter referred to was marked ''Exhibit No. 1372" and is 
included in the appendix on p. 10442.) 

Mr. Feller. I shall read this letter [reading]: 

As I wired you this morning the 1930 prices will be submitted to Ford by the 
Big Four and ourselves. Oglebay-Norton have been unable to keep Nelson & 
Associates from making a cut on their product. This cut is supposed to be about 
fifteen cents a ton. Oglebay-Norton will not quote on this grade and will refuse 
to take a commission on the sale of it. It is the consensus of opinion that too 
much is at stake to meet this competition and as usual I have agreed to stay 
in line. 

For the record may I say that the letter contains, in typewriting, 
the words "Oglebay-Norton win not cut * * *." The word "cut" 
is stricken out and the word "quote" is written over it in ink. I shall 
read that again: 

Oglebay-Norton will not quote on this grade and will refuse to take a com- 
mission on the sale of it. It is the consensus of opinion that too much is at stak^ 
to meet this competition and as usual I have agreed to stay in line. 

It is our opinion that Ford will not buy frpm any property that has not shipped 
before, even at a reduction in price. 

We expect action on Ford's bids the first ])art of the coming week. Copies of 
our quotations will be sent as soon as I can get them back from Wj^man, who is 
in Detroit at present. 

Mr. Butler, in the month of March 1931, did you consult with the 
Big Four as to the bids which they were going to make to Ford? 

Mr. Patrick Butler. Evidently I did. 

Mr. Feller. What was the consensus of opinion that was re- 
ferred to? 

Mr. Patrick Butler. Evidently in my talks with the Big Four I 
gathered, as I said, that there was too much at stake to meet this 
competition. 

Mr. Feller. And as usual, you agreed not to cut the price. That 
is what you mean by staying in line. 

(The witness, Mr. Patrick Butler, nodded in the aflSrmative.) 

The Vice Chairman. Was there an answer to that last question? 

Mr. Henderson. The witness nodded. 

Mr. Felleb.'^ using the words "as usual" is it correct to say that 
you are indicating that it was a matter of custom or of standing prac- 
tice that you would consult with the others, and would agree with 
them not to cut prices? 

Mr. Patrick Butl:^r. I have told others that I would quote a 
certain price. 

Mr. Feller. HaVe they asked you to stay in line? 

» "Exiiibit No. 1369," appendix, p. 10441. 



CONCENTRATION OF ECONOMIC POWER 10347 

Mr. Patrick Butler. No; they have pointed out to me that if I 
did quote below the market price it might affect the market price, 
and hence affect the price that we would get under our contracts. 

Mr. Feller. Well, Mr. Butler, as a man who has been in the ore 
bushiess a long- time don't you think they assumed that you knew 
that if you cut the market price it would affect the price? 

Mr. Patrick Butler. Yes. 

Mr. Feller. Why should they go to the trouble of pointing this 
out to you? 

May I make my question just a bit fuller? 

Mr. Patrick Butler. I don't say that, they did go to the trouble. 
It was part of the general discussion. 

Mr. Feller. Now I should like to get a somewhat clearer picture 
of these general discussions. In these general discussions, as I 
understand from your testimony, someone would say to you, "If you 
sell below the market price, it will affect the market price, or it will 
affect the price that you get for your product," and you then said, "I 
agree not to cut." Now as an ore man, wasn't it always obvious to 
you that if you cut the price you would get less for your product? 

Mr. Patrick Butler. Uiider certain conditions that is true. 
Under other conditions 1 could assure myself that if I cut the price 
in a certain instance, it would not affect- the market price, and I 
testified before that I have made sales under the market price which 
I felt reasonably confident when I made that quotation would not 
affect the market price. 

Mr. Feller. Then I take it in these discussions, what you sought 
was instructions from the others as to what would be the effect on 
the market price. 

Mr. Patrick Butler. I wouldn't put it as instructions. 

Mr. Feller. Exactly what would you say in these discussions? 

Mr. Patrick Butler. In the discussions I had 

Mr. Feller (interposing). May I just amend that to make it a 
bit more specific. Let us take the situation which occurred at the 
time this letter was written. Apparently there was consultation of 
some kind with respect to the bids that would be submitted to Ford. 
Now, did you at that time say to the Big Four, "I am going -to' quote 
Ford at the following price?" 

Mr. Patrick Butler. I may have. I don't recall. 

Mr. Feller. Have you ever done that? 

Mr. Patrick Butler. I can't say that I have or that I have not, 
either way. I may have said, "I am going to quote last year's price." 

Mr. Feller. Or you may say, "I don't think I will stay in line 
this year." 

Mr. Patrick Butler. I don't recall ever saying that. 

Mr. Feller. How would this question come up as to whether yon 
had agreed to stay in line or not? 

Mr. Patrick Butler. I would say, I think I have said to them, 
"I am going to quote last year's market price." 

Mr. Feller. Is that what you mean by agree? I take it that the 
word "agree" indicates that somebody made a proposition to you, or 
made a statement to you, and tlmt you agreed with that statement. 

Mr. Patrick Butler. In quoting from these letters, Mr. Feller, I 
was not looking forward to the time I would be sitting here, and I 
was not as choice in my language as I might Iravc been. 



10348 CONCENTRATION OF ECONOMIC POWER 

Mr. Henderson. I think what he is saying, Mr. Feller — we had a 
great-to-do about semantics at one time. Semantics were intended to 
clarify language, and what we have been running into is business 
semantics, and what Mr. Patrick Butler termed business shorthand 
for some things. For example, this imited front wouldn't mean the 
same thing in connection with this industry as it would mean before 
the Dies Committee.* 

Mr. Feller. Mr. Ogh bay, this letter, which I have just been dis- 
cussing with Mr. Patrick Butler, states [reading]: 

Oglebay, Norton will not quote on this grade, and refused to take a commission 
on the sale of that. 

Do you recall that? 

Mr. Oglebay. I do not recall that specifically, but it seems to me 
that this brings a rather interesting question of enlightenment before 
the committee. Mr. Nelson represented a property called the Green- 
way property. He had got three or four leases together, and com- 
bined that in the one property, and later we took the lease of that 
property. It shows the difficulty in carrying on here in the last few 
years. We put $750,000 in this Greenway properly. We didn't 
movr a pound of ore from the property, and abandoned it and lost our 
$750,000. That is our association with this Greenway lease, or the 
association with Mr. Nrlson. 

Mr. "Henderson. That is Ogh'bay, Norton monoy. 

Mr. Oglebay. No; I meant the companies we operate in our office, 
Montreal Mining Co., Columbia Steamship Co., and one or two of our 
smaller com{)anies decided to form a corporation to take over the 
lease of the Greenway mine and operate it. We stripped it, equipped 
it, spent about $750,000 on it, and couldn't move sufficient ore to pay 
its minimum charges, so we lost it. 

At this time Mr. Nelson was negotiating with us for this lease. 
This is sort of off the record. I doubt very much whether Mr. Nelson 
had a mine that would be able, really, to meet the qualifications neces- 
sary for Ford delivery, but that is just a sort of thought as I look back 
on it. We never sold 1 pound of tliis ore to anybody, and lost in our 
association three-quarters of a million dollars. 

The Vice Chairman. To whom did you lose that mine? 

Mr. Oglebay. It went back to the fee owners. 

The Vice Chairman. Is anybody operating it now? 

Mr. Oglebay. No. I would hke to just sort of put in the record, 
too, that this "Big Four" and "United Front" — what we are, we 
^.orate two mines, Oglebay, Norton. One of them is the Castile 
mine, and that is owned, two-thirds of it, by the American Rolling 
Mill Co. and the Wheeling Steel Corporation. They take all the ore 
from that property. That property produces as its maximum about 
400,000 tons. The second property we operate in our office is the 
Montreal Mining Co., which at its maximum produces about a million 
t is, averaging in the last few years anywhere from five hundred to 
e^^ht hundred thousand tons, and that property is associated with 
lour companies that take about 90 to 95 percent of its production, 
liat is the Jones & Laughlin, Wheelhig Steel Corporation, American 
Rolling Mill Co., and the Steel Co. of Canada. So we aren't very 
prominent in this selling proposition, as you might call it. 

J A Special Committee On Un-American Actfvlties, pursuant to H. Res. 282, 76th Cong., 1st sess., Rep- 
fbiahtatlve Dies (Texas), chairman. 



CONCENTRATION OF ECONOMIC POWER 10349 

Now then, we also, during these intervals of the last 5 years, or 7 
years, did operate two other properties, and from neitlier one of those 
properties could we sell sufficient ore to meet the minimum require- 
ments for operation, and we had to abandon them. I just wanted 
to have a sort of a feeling on the part of the committee here to have a 
realization of what I am when it comes to the Big Four in ore values, 
and a few other things. 

Mr. Feller. I take it then, you think the term "Big Four" should 
be amended to be "Big Three"? 

Mr. Oglebay. It certainly shouldn't include us. 

Mr. Henderson. I take it that is what you were trying to do when 
you sold two-thirds of your interest to Mr. Greene's people. You 
\/ere trying to get into the Big Four class? 

Mr. Oglebay. Trying to. 

Mr. Henderson. Perfectly legitimate, I might say. 

Mr. Feller. Mr. Oglebay. you told us Nelson & Associates were 
Using money. Why did you want to induce them not to sell at cut 
p 'ice? 

Mr. Oglebay. I don't remember the details of this. As I said, I 
dtn't believe that they were in a position to make very much of a 
d( livery, because afterward we took over these properties in order to 
prepare them to produce ore. We spent $750,000, so that this was in 
the early negotiations, before the property was ready to produce, and 
we ourselves never sold any ore or moved any ore from the property, 
so I doubt very much whether Nelson was really in a position to make 
deliveries to Ford, but I am not confident of that, and I don't remem- 
ber it in sufficient detail to have the accurate facts, 

Mr. Feller. Do you recollect conversations which you had with 
Nelson & Associates to induce them not to sell ore at particular prices? 

Mr. Oglebay. No; I do not. Nelson was rather an odd fellow, 
and he was constantly coming into our office and visiting the people, 
but he didn't have a mine that was able to produce in any quantity, 
so it isn't of very much moment, as I see it. 

The Vice Chairman. This mine that you surrendered, was the 
surrender due to the quality of ore which could have been found by 
sufficient exploration before you went to work on it, or due to market 
conditions? 

Mr. Oglebay. No, sir; it was a mine that the fee owners wanted 
$75,000 a year minimum as rental to them. And as 1 remember, there 
was about $40,000 a year in taxes, so that the property had a standby 
expense of approximately $125,000 to $150,000 a year. 

Now, in order to meet that, plus the cost of mining, plus the cost 
of royalties, it was necessary for us to move quite a nice tonnage — 
around three to four hundred thousand tons of ore a year, and we 
couldn't sell that ore to anybody at that time in that tonnage that 
would allow us to mine at a profit, so we had to just give up our lease. 

The Vice Chairman. Then it was due to the market conditions. 
Was it due to the quality of the ore, or the fact that the market 
wouldn't absorb it? 

Mr. Oglebay. My own personal experience here i i the last 7 or 8 
years with these three properties that we all abandoned, is that 
tbere was so little what might be called spot sales that it wasn't of 
very much moment. That is, ore that was sold hke Ford ore, and then 
we ti^ up with any associations like Jones & Laughhn and Wheeling 



10350 CONCENTRATIO:' OF ECONOMIC POWER 

Steel Corporation, in the last seven or eight companies have had, either 
through ownership of their own properties or through obligations of 
long-term contracts, more ore than they could nicely handle, so that 
none of those companies was in a position to buy additional ore, no 
matter how attractive a price might be made them. 

The Vice Chairman. Let me ask this question. Was there such 
a percentage of the purchase of ore tied up with contracts that you 
couldn't attract to this property enough contracts, cither spot sales 
or basic contracts, whatever you call it, to dispose of enough ore to 
keep it going? 

Mr. Oglebay. That is the answer, yes. We lost, through our in- 
ability to do that, $750,000. 

The Vice Chairman. It wasn't due to lack of preliminary explora- 
tion, or to quality of the ore, but when you got your ore ready to sell 
you found everybody else either tied up with contracts — well, tied up 
with contracts. 

Mr. Oglebay. Either contracts or through ownership. Every 
steel corporation you go to today, I would say 

The Vice Chairman (interposing). They weren't in the market. 

Mr. Oglebay. Our experience is that you go to a corporation today 
and they, through cither ownership of their own ores or obligations 
they have, arc covered for about 75 percent of their ore requirements. 
In the last 7 or 8 years their ore requirements haven't exceeded 
40. percent, so they haven't a great problem of taking care of their 
obligations or meeting the positive idleness which caused us to abandon 
this Greenway property. If this Greenway property had been in the 
hands of a large corporation they would have retained that property 
and paid this hundred thousand dollars a year, but being a small 
corporation like ourselves there were not the funds available to go along 
and get this hundred thousand dollars for a couple years or 3 years. 

limited market for ore sales 

The Vice Chairman. What percentage of the consumers of ore now 
produce their own ore; or rather, may I ask it this way — are dependent 
upon production coming from mines that they themselves own and 
control — would you say? 

Mr, Og^^ebay. I would say it is approximately 85 to 90 percent. 

Mr. Feller. In terms of tonnage. 

Mr, Oglebay. In terms of tonnage. 

The Vice Chairman. That is what I am talking about, too. 

Mr. Oglebay. I would say this, as just a salesman trying to sell 
his shoes, I don't know where you would go today to make a contract 
with anybody, any of the large corporations, for the purchase of ore. 
I think you would find every one of them with obligations, cither 
through long-term contracts or through association ownerships, that 
they have all the ore at the present time that they need. Now, if 
business comes back and we have a few more years like '37 and the 
latter half of '39, then that story will change. I am only speaking now 
of the history of the ore business from '30 to '39. 

The Vice Chairman. Do you believe that improved conditions 
might make it possible for a mine situated as this ]nine was that you 
had Lo close up to stay in business. 



CONCENTRATION OF ECONOMIC POWER 10351 

Mr. Oglebay. I don't think we would look forward to any new 
corporation. I would say this, just as Mr. Humphrey has outlined 
here 

The Vice Chairman (interposing). If it has been outlined, I don't 
want to go into it. 

Mr. Oglebay. I mean tliis is true, I think 

The Vice Chairman (interposing). You have answered my ques- 
tion. 

Mr. Oglebay. When the operations of the steel company exceed 
80 percent, then I mean they would probably be in the market for 
certain grades of ore, but I would say that until the steel companies 
are operating somewhere approximating between 75 and 80 percent 
there is little need for further ore. 

The Vice 'Chairman. That explains it. 

Mr. Henderson. When did you give up the Greenway property? 

Mr. Oglebay. I would say about 4 or 5 years ago, but I don't 
remember the actual date. It was in 1929. 

Mr. Henderson. Is that since Cliffs bought into your group? 

Mr. Oglebay. Yes. 

Mr. Henderson. Did you have any negotiations with Chffs about 
them taking it over? 

Mr. Oglebay. No; I mean as Mr. Greene has outlined Cliffs were 
also sort of lacking as to funds during these years. 

Mr. Henderson. He might have sold some steel stocks. 

Mr. Oglebay. They weren't very valuable, too. 

Mr. Henderson. I am not trjmig to pin anything down by this. 
I am just wondering whether or not the thing seemed so unattractive 
even to the combined group, yourself and Cliffs, that it wasn't attrac- 
tive enough to make an effort to keep it. That is the point I am 
getting to. 

Mr. Ogelbay. I think you might say this, Mr. Henderson, that it 
is a great problem today with the ores that are owned by Cleveland- 
Chffs Iron Co. and the ores that are owned in our office to sell at a 
sufficiently attractive price to make these investments profitable. 
You only have a few customers and if you lose one of them it is very 
diflBcult to replace him because you have to find tliis fellow, this large 
corporation, that is in need of additional ores, and as we have just 
stated 85 or 90 percent of their requirements are taken care of by 
ownerships of long-time contracts; it doesn't leave much of a chance 
for new business. 

Mr. Henderson. I think that is one of the most significant tlmigs 
that has been brought out in the testimony of the last few days. 

Mi. Feller. Mr. Patrick Butler, I should like to have you identify 
two letters, one signed by you addressed to your father, dated March 
27, 1929, and the other signed by Mr. C. L. Wyman, addressed to 
Mr. Emmett Butler, dated April 16, 1935. Both of these letters were 
taken from your files. 

Mr. Patrick Butler. Yes; I identify them. 

Mr. Feller. I offer these. 

The Vice Chairman. AU right. 

(The letters referred to were marked "Exliibits Nos. 1373 and 1374" 
respectively, and are included in the appendix on pp. 10442 and 
10443.) 

124491—40 — pt. 18 10 



10352 CONCENTRATION OF ECONOMIC POWER 

PRICE DISCUSSIONS 

Mr. Feller. I shall read one paragraph from each letter. The 
letter dated March 27, 1929, and signed by you reads as follows 
[reading from "Exhibit No. 1373"]: 

I am seeing Hoyt this afternoon to find out what we shall quote on manganif- 
erous ore and possibly to get his approval of our offering Hume as a straight iron 
ore. Also, if we can't quote Kevin 10 cents to 15 cents ofiF without stepping on 
Bennett's or his corns. 

Is it your custom to seek Mr. Hoyt's approval as to the price at 
which you are going to sell ore? 

Mr. Patrick Butler. You will recall, Mr. Feller, that Mr. Hoyt 
and Mr. Hoyt's company had an option on our surplus ores. That 
was what I referred to. 

Mr. Feller. Do you recall the date of that contract? 

Mr. Patrick Butler. Negotiations took place throughout the 
late summer and fall of 1928 and I think the date of the contract was 
in January '29. 

Mr. Feller. Do you conceive that by virtue of that contract you 
have to seek Mr. Hoyt's approval as to the kind of ore that you 
offer to others? If you will recall, this statement reads "to get his 
approval of our offering Hume." I take it that is a grade of ore? 

Mr. Patrick Butler. Yes. 

Mr. Feller. "As a straight iron ore." 

Mr. Patrick Butler. Hume grade is a manganiferous ore; it 
contains about 5 percent of manganiferous. If it was considered as 
an iron ore 

Mr. Feller (interposing). As I recall it, as the record, I believe, 
indicates, the contract gives Mr. Hoyt's company an option to pur- 
chase surplus ore. Is there anything in the contract which provides 
that Mr. Hoyt must approve the prices at which you sell to others? 

Mr. Patrick Butler. No. 

Mr. Feller. Have you so construed the contract? 

Mr. Patrick Butler. No. 

Mr. Feller. But you have adopted the practice of asking him 
whether or not you can sell ore to somebody else at a particular price? 

Mr. Patrick Butler. When I contemplated, selling ore from the 
properties which I specified in the contract, selling ore to others, I 
would tell Mr. Hoyt that I contemplated selling ore to others under 
his option agreement and he could take that price or not as he saw fit. 

Mr. Feller. I should also like to read a paragraph from the letter 
dated April 16, 1935, signed by C. L. Wyman. Who is he? 

Mr. Patrick Butler. Mr. Wyman is my assistant in Cleveland. 

Mr. Feller. The paragraph that I refer to reads as follows [reading 
from "ExhiDit No. 1374"]: 

The Ford Motor Company Inquiries came in today calling for 120,000 tons of 
b^sic with phosphorous under .10 and 60,000 tons of high phosphorous ore. 

I checked up with Hanna's and Pickands, Mather today and find that there has 
been no decision — 

For the reporter, the word "decision" is written in in ink and under- 
neath it the word "discussion" in type has been scratched out — 

there has been no decision as to what this year's price will be, except that there 
seems to be some difference of opinion as to whether or not the surcharge on 
freight rates will be absorbed and the same market price named as existed over 
the past several years. 



CONCENTRATION OF ECONOMIC POWER 10353 

Is it your understanding, Mr. Patrick Butler, that in April of 1935 
there had been a discussion or consultation or meeting of some kind to 
decide what the year's price would be? 

Mr. Patrick Butler. I think that would refer, if I can interpret 
Wyman's letter for him — he called up somebody in the Hanna Co., 
and somebody in the Pickands, Mather Co., and asked them if their 
prices had been established for the year, if the prices they made to 
their customers had been made — I mean if their negotiations with 
their customers had been had. I imagine that is what happened. 

Mr. Feller. Do you recall whether he asked them what prices 
he was going to charge? 

Mr. Patrick Butler. I suppose he asked them, "What is this 
year's market price." 

Mr. Feller. Wouldn't he know that by reading the trade journals? 

Mr. Patrick Butler. This was evidently prior to the time that 
the price for that year, 1935, was published. 

Mr. Feller. If no sale had been made, how could anybody loiow 
what the market price could be? 

Mr. Patrick Butler. They don't know. 

Mr. Feller. When is this price published, right after the first 
sale? 

Mr. Patrick Butler. Yes. 

Mr. Feller. Then if there was no published price at that time, 
can we not assume that there had been no sale; consequently no 
market price under the custom of the industry? 

Mr. Patrick Butler. That is right, if there had been no sale — 
evidently at that late time, by April 16, there certainly had been 
no negotiations leading up to an establishment of the market price. 

Mr. Feller. What Mr. Wym^n would be doing, then, would be 
asking Pickands, Mather and Hanna's, "What will be the market 
price?" 

Mr. Patrick Butler. Yes; I would imagine so. 

Mr. Feller. How would either of them know which was going 
to make the first sale? 

Mr. Patrick Butler. I don't say that they would know who was 
going to make the first sale. He was asking for information as to 
what their best guess was as to what the market price would be. 

Mr. Feller. You don't think that there was at that time any 
concensus, any discussion, any consultation among other members 
of the industry? 

Mr. Patrick Butler. I imagine there was discussion among other 
members of the industry, I don't know. 

Mr. Feller. Mr. Hoyt, may I ask you whether it is customary 
in this industry for your competitors to ask you at w^hat price they 
should sell their product? 

Mr. Hoyt. I say it is not. 

Mr. Feller. There have been references in several of the letters 
which have been introduced recently to consultations which Mr. 
Patrick Butler has had with you. Is that an exception to the answer 
you have just given? 

Mr. Hoyt. I think it is perfectly evident by this correspondence 
between Pat and his father that he was naturally interested in our 
attitude on the long-term contract which we have mentioned several 
times covering the large tonnage that we bought from certain of 



10354 CONCENTRATION OF ECONOMIC POWER 

his properties of which we had an option on additional ore, and 
any change in the market price would obviously att'ect the result 
under his contract. 

Mr. Feller. Then your consultations with Mr. Butler would be 
only because you have a contract with him? 

Mr. HoYT. That is right. 

Mr. Feller. In cases where you have no such contract, there 
would be no such consultation? 

Mr. 5oYT. I can't say that because manganiferous ore is a special 
grade produced from, the Cuyuna Range, and I have often talked 
with Mr. Butler as to the prices and basis for selling manganiferous 
ore, which is not standard, which might be btained. 

Mr. Feller. Mr. Greene, may I pass you this document? It is 
signed by H. A. Raymond, addressed to you, dated April 23, 1935, 
and is taken from your files. Will you identify it, please? 

Mr. Greene. I do. 

Mr. Feller. I offer this for the record. 

The Vice Chairman. It may be admitted, and with reference to 
the other two letters from which you read, I wonder if the writers 
of those letters or the gentlemen present would like to have the whole 
letter go in, or just the quotations from them. 

Mr. Feller. I should like to have the whole letter go in. 

The Vice Chairman. Then the three letters may be admitted for 
the record. 

(The letter referred to was marked "Exhibit No. 1375" and is in- 
cluded in the appendix on p. 10444.) 

Mr. Feller. Mr. Greene, do you have a contract with Mr. Hoyt's 
company similar to the contract Air. Butler has with Mr. Hoyt's 
ocmpany? 

Mr. Greene. No, sir. 

Mr. Feller. I should like to read this letter: 

Mr. Hoyt called up today and after asking if Alex was in town, asked if I would 
come up to speak with him a minute. He told me of his talk with you last night 
and the agreement that he would see Mr. Girdler this morning. He said he had 
just been talking with him for an hour and a half, asking Mr. Girdler if he did not 
think it Avould be a good thing for tlie whole Industry if the emergency freight 
charge be borne by the buyers of ore. He said that Mr. Girdler told him that if 
he would get Mr. Block and Mr. Weir to agree that adding the emergency freight 
to the ore price this year would be of psychological help in getting a better price 
for steel in the third quarter, that he would be in favor of it. 

Here may I pause to identify these gentlemen. Mr. Girdler is the 
head of the Republic Steel Corporation, is he not? 

Mr. Greene. Chairman of the board. 

Mr. Feller. And Mr. Block? 

Mr. Greene. Which Mr. Block? Mr. L. E. is chairman and then 
P. D. is president of the Inland Steel. 

Mr. Feller. In other words, it is either of the two Mr. Blocks? 

Mr. Greene. One or the other. 

Mr. Feller. And Mr. Weir? 

Mr. Greene. Chairman of the board of the National Steel. 

Mr. Feller. (Reading from "Exhibit No. 1375"): 

He said that. of course Mr. Girdler and he both realized [regardless of the fact 
that Mr. Wysor is in Bermuda] that he, Hoyt, could not get any such assurance. 
Mr. Girdler felt that if this were not the case, the increase in freight rate should 
not t? added to the price of ore. Mr. Hoyt then said he would go back and think 
it over and ^r^ narting said to Mr. Girdler: "Well, then, if I announce in the papers 



CONCENTRATION OF ECONOMIC POWER 10355 

that the price of ore is the same as last year, with the ore companies absorbing the 
increase in freight rate, I can consider that we have sold you a tonnage of ore at 
last year's price." Mr. Girdlor's reply was: "Yes, we have made a deal." 

Therefore, Mr. Hoyt said he wanted to announce in the papers this afternoon 
that the ore price has been set at $4.50 for this season, and asked if that would 
be alright for our company. I told him that I would have to call you on the 
telephone, and that it might be that you would prefer to have another talk with 
Mr. Girdler along the lines of if we are going to absorb this freight they ought to 
give us an increase in tonnage. Mr. Hoyt felt strongly that this matter must be 
completed today and that you would be in just as good a position to make such a 
plea after the prices are fixed, with the argument that the ore industry has ab- 
sorbed $2,500,000 of increased freight rate and ought to get some help. I told 
him, of course, that is not correct, that nearly 90 percent of the ore is ownership 
ore, which naturally has to bear the increase, but he said it is the ore-mining end 
of the industry that is standing it and he thought that was a fair statement. I 
told him that I felt that you would like to talk with Mr. Girdler before having the 
price set but he said he thought it was important to get it done immediately. He 
then went on to further say that if a lower price would bring more business he 
would be in favor of making some lower price, but he thought we would have to 
wait until there was a real prospect of getting the larger tonnage and he thought 
that very likely ore prices will be lower, but that as this is a year when we are 
mining merely to give employment, and with so little to gain, that it was a bad 
time to make any change. He suggested that if he did not hear from me by 
4 o'clock they would go ahead and announce the price and asked what I thought 
you would think of that. I said that I felt that would not be the right thing — 
that you surely should be advised and reiterated that I did not think the delay 
of a day would make any diflference. 

Do you recall this, Mr. Hoyt? 

Mr. Hoyt. Recall the subject of that letter? 

Mr. Feller. Recall this particular incident. 

Mr. Hoyt. Yes, sir. 

Mr. Feller. I take it that this letter correctly states the conver- 
sation that you had with Mr. Raymond. 

Mr. Hoyt. I can't testify as to that because that is quite a long 
tune ago. As to the facts of my discussion with Mr. Girdler it is 
perfectly correct. 

Mr. Feller. Do you recall then discussing the matter with Mr. 
Raymond? 

Mr. Hoyt. I think unquestionably I do. 

Mr. Feller. Do you recall discussing it with other members of 
the iron-ore industry? 

Mr. Hoyt. Now, Mr. Feller, you asked me a few moments ago 
if it was the custonFof the industry for one to consult with the other 
as to the place that they should sell their ore and I answered "no." 
Mr. Greene and I both have a contract — when I say "we" I mean our 
companies — with Republic. I said to Mr. Greene, "Now, can you 
get a better deal with Mr. Girdler than I can?" and he said, "I don't 
know." 

"Well," I said, "I am going down there and see what I can do." 

I went down and discussed with Mr. Gu'dler on that basis and it is 
perfectly obvious the arrangement that Mr. Girdler and I worked 
out affecting this long-time contract and having talked to Mr. Greene 
in the first place I called him up and found him out of town and I 
talked with Mr. Raymond and I told him just as it states there that 
I was satisfied with that price and that I was going ahead and an- 
noimce it unless he could give me some good reason why I shouldn't, 
and that is what happened. 

Mr. Feller. And that price would be the price not only to Republic 
Steel Corporation but the market price for that year. 



10356 CONCENTRATION OF ECONOMIC POWER 

Mr, HoYT. It would be the market price based on our long dis- 
cussions of yesterday, 

Mr. Feller. Could you tell me why Mr. Greene should not want 
to sell Republic at a different price from the price that you sold? 

Mr, HoYT. Because he had a contract, as I understand it, which 
was based on some allowance off the base price. 

Mr. Feller. Then in effect he delegated to you the duty or power 
of making the base price by your negotiation with Republic? 

Mr. HoYT, He didn't delegate or give me the powjer or anything 
else. I took it myself. 

Mr. Feller. Didn't I understand you to say that Mr, Greene 
asked you to go down to Republic? 

Mr. HoYT. No; I didn't say that. I said to Mr. Greene, "Now, 
who can get the best deal with Mr. Girdler?" I didn't say what the 
result of that was. In any event I went down there, 

Mr. Feller. Then you' thought it advisable to inform Mr. Greene 
as to the deal that you had made. 

Mr. HoYT. Absolutely. 

Mr. Feller. In other words, you told him then 

Mr. HoYT (interposing). I didn't tell him; I told Mr, Raymond. 

Mr. Feller. You told an oflBcial of Mr. Greene's company. 

Mr. HoYT. That is right, 

Mr. Feller. Wliat would be the market price? 

Mr, HoYT. I told him what my discussion was with Mr. Girdler 
and that I was going to give it to the papers. 

Mr. Feller. That was to be the market price? 

Mr. HoYT. If it were pubUshed and recognized. 

Mr. Feller. It would have been the market price in any event. 
The statement in this letter indicates that that would be the market 
price. 

Mr. HoYT. The base price. 

Mr. Feller. Don't you consider that a consultation with one of 
your competitors with respect as to what the market price should be? 

Mr. HoYT. That isn't the question. The question was on consul- 
tation as to the price at which they should sell and to that I answered 
no. 

Mr, Feller. According to the custom in the industry, the sale 
would be at the market price and the market price would be the price 
at which you made this sale to Republic. 

Mr. HoYT. That would be my market price, but it doesn't in any 
way prevent Mr. Greene and the Cleveland-CUffs from making any 
price they want. 

Mr. Feller. You mean there isn't any legal compulsion? 

Mr. HoYT. No ; there is no compulsion or arrangement of any kind. 

Mr. Feller. But the custom in the industry is that the market 
price is estabhshed by the first sale, and as has been testified here, 
that is very generally followed. 

Mr. HoYT. That may be true, but it doesn't in any way prevent 
Mr. Greene from selling his ore at any price he wants if he is not 
satisfied with the pubHshed market price and the base. 

The Vice Chairman. May I ask you about how long this particular 
line of interrogation will probably last? I do it because it is nearly 
12:30 now. 

Mr. Feller. I am almost finished. 



CONCENTRATION OP ECONOMIC POWER 10357 

The Vice Chairman. You have only 5 minutes. 

Mr. Feller. I should like to try to conclude just as soon as 
possible; if possible, early this afternoon. 

The Vice Chairman. What I am trying to find out is, woidd you 
as soon recess now until this afternoon? I am thinking of these 
gentlemen. Sometimes you are just about ready to ask the question 
you have been leading up to for about half an hour, and if that is the 
case we will go on. 

Mr. Feller. I think we might as well adjourn now. 

May I make a request on behalf of the witnesses, Mr. Chairman, 
that we attempt to conclude this testimony relatively early this 
afternoon because I think all of these gentlemen would hke to get out 
of town. 

The Vice Chairman. I am sure they are ready to quit now, as 
far as they are concerned. [Laughter.l 

The committee will stand in recess until 2:15. 

(Whereupon, at 12:30 noon, a recess was taken until 2:15 p. m. of 
the same day.) 

afternoon session 

The hearing was resumed at 2:30 o'clock, upon the expiration of 
the recess. Senator Joseph O'Mahoney, chairman of the committee, 
presiding. 

The Chairman. The committee will please come to order. Mr. 
Feller, are you ready to proceed? 

Mr. Feller. Yes, sir. 

Mr. Humphrey, I should like to attempt to clear up a number of 
points with respect to the question of the variations from the Lake 
Erie base price which are contained in the long-term contracts. Are 
there any published Usts of variations on account of differences in 
physical specification or grade? 

Mr. Humphrey. There are tables, I think, that are worked out for 
differences in phosphorus. 

Mr. Feller. Are those customarily used by the industry? 

Mr. Humphrey. They are used whenever they come into play, 
the very low phosphorus for which premiums are paid becoming less 
and less used in the trade, but when they are used, premiums are paid 
for very low phosphorus. 

Mr. Feller. And those premiums, in the custom of the industry, 
would be uniform on the basis of that table? 

^ Mr. Humphrey. If the table was adopted as the basis of nego- 
tiations. 

Mr. Feller. If it were adopted in the contract. 

Mr. Humphrey. It could or could not be, just as the contract 
happened to provide. 

Mr. Feller. For the record, may I state that the practice of the 
United States Steel Corporation subsidiaries, that is, the Oliver Iron 
Mining Co., in billing to the operating subsidiaries of the United 
States Steel Corporation, the letter of Mr. Irvmg S. Olds to Mr. 
Thurman Arnold dated August 31, 1939,' which has already been 
referred to, states in part as follows [reading]: 

On page 223 of Mining Directory of Minnesota, 1939, will be found Table 13, 
entitled "Ore prices for varying iron content calculations of Lake Erie selling 

> See p. 10329, supra. 



10358 CONCENTRATION OF ECONOMIC POWER 

values," which table explains in some detail the calculation of Lake Erie selling 
values. 

Mr, Henderson. Mr. Feller, I understand that letter was read into 
the record before I came in this morning. Do I understand that 
the practice of Oliver or the Steel Corporation is to bill their sub- 
sidiaries on the basis of the Lake Erie price? 

Mr. Feller. That is what this letter stated. 

Mr. Henderson. So that when a price has been arrived at, that 
becomes the billing price also for United States Steel, even though 
they are not in the market competing with the rest of the trade. 

Mr. Feller. That would appear to be correct. 

Now, Mr. Humphi-ey, one other point. I should like to read for 
the record the provisions of one of your contracts, those provisions 
which have to do with the method of calculating the price under the 
contract. In order to preserve the secrecy of business arrangements, 
I shall omit the name of the company with which this contract was 
made, that is to say, the name of the purchaser, and I shall also omit 
reference to the number of cents of variation from the Lake Erie 
base price. I shall indicate that by saying "blank cents." 

This contract provides as follows [reading]: 

The price per ton for standard Mesaba non-Bessemer ore delivered hereunder 
shall be the average established market price per ton for ores of the same kipd 
and grade sold for delivery at Lake Erie ports during the season of Lake naviga- 
tion current at the time of shipping, as established for the then^ current single 
season sale and delivery by large ore dealers of Cleveland, Ohio, including Hanna, 
less blank cents per ton, and subject to analytical adjustment as hereinafter 
provided. 

The base unit value for ore to be delivered hereunder shall be determined by 
dividing said established Lake Erie market price per ton less blank cents per ton 
for an ore which averages 51.50 per cent iron in its natural condition," by 51.50. 
The price of this ore is named and accepted on the expectation that it will average 
51.50 per cent in metallic iron in its natural condition. Taking this as the 
standard of quality, it is agreed that in each season any total average variation 
therefrom in metallic iron in its natural condition shall be entitled to recognition 
and adjustment by increase or by abatement in price as the case may be, at the 
rates per unit per ton hereinafter specified; When the ore contains 50 per cent or 
more of metallic iron, the value per uijit or fraction thereof shall be at the rate 
known as the base unit value, when less than 50 percent but not less than 49 per 
cent for such unit or fraction thereof of decrease only, the said base unit value 
shall be increased at the rate of one-half thereof, and when less than 49 per cent 
for each unit or fraction thereof of decrease only said base unit value shall be 
increased at the rate of 100 per cent thereof. 

That is the end of the quotation. 

Mr. Humphrey, do I understand correctly that in the case of long- 
term contracts which are related to the Lake Erie base price,_ the 
parties agree on a formula at the time the contract is entered into; 
they agree on a formula of variation from the Lake Erie base price 
and that formula then establishes the standard variation from the 
established price during the life of the contract? Is that correct? 

Mr. Humphrey. Unless that is changed, if all of the terms are 
provided for for the period of the contract, that would be true. If 
some of the terms were less for annual adjustment, they would be 
adjusted annually. You can have just as many forms of contract as 
people can agree upon. There is no standard contract. 

Mr. Feller. I refer back to the statement you made this morning 
[reading]: 

There are any number of allowances that are made, premiums and penalties 
that are figured on the physical qualities of the ore and that are also figured on the 



CONCENTRATION OF ECONOMIC POWER 10359 

commercial conditions under which the ore is sold, whether it is for a long period 
or a short period or for a large quantity or for a small quantity, or just the trade 
concession; in other words, get the business competitive. 

When making that statement you were referring, were you not, to 
the terms which would be incorporated in the long-term contract? 

Mr.- Humphrey. The basis upon which ore was sold. Those are 
the things that are taken into consideration. 

Mr. Feller. In making your contract. 

Mr. Humphrey. ' In making the sale. 

Mr. Feller. In making the long-term contract. 

Mr. Humphrey. In making any sale. 

Mr. Feller. Including a spot sale? ^ , 

Mr. Humphrey. One of the things you take into account is the 
length of time over which the ore is to be delivered. If it is to be 
delivered spot, that is one kind of a sale. If it is to be delivered over 
another period that is another kind of a sale. 

Mr. Feller. If to be delivered over another period, it is a long-term 
contract. 

Mr. Humphrey. And it can be in varying lengths of time. 

Mr. Feller. What tjipes of variations in time could there be in a 
spot sale? 

Mr. Humphrey. I don't know what variations you mean. 

Mr. Feller. There are any number of allowances that are made, 
premiums and penalties that are figured on the physical qualities of 
ore. Those would of course also be true in the case of spot sales. 

Mr. Humphrey. All those would be true in spot sale. 

Mr. Feller. And that arc .also figured based on the commercial 
conditions under which the ore is sold, whether for a long period or 
short period or for a large quantity or small quantity, or just a trade 
concession in order to.get the business competitively. In the case of a 
spot sale, is the custom in the industry to take into consideration what 
you refer to here as commercial conditions under which the ore is sold? 

Mr. Humphrey. Commercial conditions can be taken into consid- 
eration. The length of time is entirely out of a spot sale because a 
spot sale is for a single season's delivery. But there is no reason 
why other conditions can't be taken into account. 

Mr. Feller. Quantity, would that be a condition which is cus- 
tomarily taken into account in a spot sale? 

Mr. Humphrey. It can be a very different thing to seH a big 
tonnage or a little tonnage. 

Mr. Feller. Is it in fact? 

Mr. Humphrey. I think each instance is ditlerent irom the other. 
I don't think there is any definite rule. When you have spot sales in 
any quantity you have a very strong market, and as a rule, under the 
conditions prevailing in a strong market, you can get the fuU price 
with no concessions of any kind, and obviously when conditions will 
permit getting the full price, you get it. 

Mr. Feller. Let me ask you this: The market today is strong, is 
it not? 

'Mr. Humphrey. Well, 1 wouldn't say so; no. 

Mr. Feller. Is it not true that at the present time the largest 
tonnage of ore which has ever moved on the Great Lakes is now 
moving? 

Mr. Humphrey. Oh, no. 



10360 CONCENTRATION OF ECONOMIC POWER 

Mr. Feller. It is very large, is it not? 

Mr. Humphrey. What is happening is that here at the end of the 
season people are trying to hurry down ore to carry them through a 
winter of larger operations than had been anticipated. That doesn't 
mean that more ore has been sold. That means there have been more 
specifications on orders; there is no activity to the ore market. If you 
are talking about moving more tonnage on present specifications or 
enlarging specifications, yes; they have been; uut there have been no 
sales that I know of. 

Mr. Feller. I ask you then this, a* d it is of necessity, then, a 
hypothetical question: If today a steel company came to you and said, 
"We would like to buy 10,000 tons of ore on spot sale," and another 
company came to you and said, "We would like to buy 20,000 tons of 
ore on spot sale," would there be a difference in price because of the 
difference in quantity? 

Mr. Humphrey. Today, we could get the top price from both of 
them if we had the facilities to make delivery before it freezes up. 

Mr. Feller. Do you recall any instances in which you gave con- 
cessions on the basis of quantity in the case of a spot sale? 

Mr. Humphrey. Well, I can't right now, but I wouldn't want to 
say it without checking up. 

SIGNIFICANCE OF ^'ORE PRICES TO INTEGRATED AND NON-INTEGRATED 

STEEL PRODUCERS 

Mr. Feller. Now, Mr. Humphrey, as you have testified, you are 
not only in the iron-ore business, you are also connected with the steel 
business and with one of the very large units in that business. I should 
like to direct your attention to the difference in the situation of a large 
integrated steel company possessing its own mines, and the small steel 
company which does not possess its own iron ore mines but must buv 
the ore from one of the companies represented here or one of the small 
companies that have been mentioned earlier. 

If an increase were made in the Lake Erie base price of ore, is it 
not true that the large integrated company producing its own ore 
would receive a substantial competitive advantage over the small 
company which had to buy its ore in the open market? 

Mr. Humphrey. In what respect, Mr. Feller? 

Mr. Feller. The large integrated company would be mining its 
own ore and would not have to pay the Lake Erie base price. Isn't 
that correct? 

Mr. Humphrey. That is correct. 

Mr. Feller. The Lake Erie base price has been increased. The 
small company would now have to pay that increased price. 

Mr. Humphrey. That's right. 

Mr. Feller. And unless this increased price were commensurate 
with an increased cost of mining in the mine of the large company 
there would be a competitive advantage in favor of the large company. 

Mr. Humphrey. I don't know whether there would be a competitive 
advantage or not. The large steel company has a very large invest- 
ment and very heavy fixed charges on the facilities that it has to own 
and maintain to ship its own iron ore. Now, if in times that are good, 
that end of the business is a profitable business, the company that 
owns iron ore has a profitable end to its business. In times such as 



CONCENTRATION OF ECONOMIC POWER 10361 

we have been goin^ through in a number of the past years, the com- 
pany that bought its iron ore had a competitive advantage over the 
one that owned it, because it wasn't laden down with fixed charges on 
small volume and it didn't have a lot of money in assets that weren't 
earning an adequate return. 

Mr. Feller. I think there is a good deal to what you say, but 
isn't this true, that the large integrated steel company would prefer 
to see the Lake Erie base price at a relatively high level if it were 
considering the competitive advantage which it might have over the 
small producer? 

Mr. Humphrey. Mr. Feller, if you have your money invested in 
any business it is to the advantage of that business to get as high a 
price for your product as you can, up to the point where your price 
is injurious to your business, and it isn't a bit different whether you 
own iron ore and a steel company owns it, or whether you own it 
independently, or whether you are in the grocery business. You are 
motivated by exactly the same thing. 

Mr. Feller. We are not talking, now, about the price at which 
the steel itself is finally sold. Assuming the sale price of steel as 
between the large integrated company and the small company not 
having ore mines, the higher, under any conditions, the Lake Erie 
base price, the more disadvantageous becomes the situation of the 
small steel producer as against the large steel producer. Isn't that 
correct? 

Mr. Humphrey. Only if the iron ore end of the business is a profit- 
able end of the business. ~ You can w^ell conceive, and there have 
been many years, several years just past, wdiere owning your iron ore 
your cost of your iron ore was in excess of the price that others were 
paying for it. 

Mr. Feller. Again I will agree with you there. What it comes 
down to, then, is this, that in times when the Lake Erie base price is 
less than the cost of mining iron ore, the large company is at a disad- 
vantage — the large company owning its ore. In limes when the Lake 
Erie base price exceeds the cost of mining iron ore, in other words in 
times when Xhe iron ore business is profitable, then the small company, 
is at a disadvantage. 

Mr. Humphrey. Then the steel company that has an interest in 
iron ore is in a profitable business which the other fellow isn't in. 

Mr. Feller. How about a steel company which is not selling the 
iron ore, but which is using it in its own plants? 

Mr. Humphrey. That same thing is true whether he is selling it as 
finished product or as a raw material. He is in a profitable business 
that the other fellow isn't in. 

Mr. Feller. In other words you agree with the statement I have 
made, that the relative advantages depend upon the amount of profit 
margin in the iron^ore field. 

Mr. Humphrey. In a business, and if I am in a profitable business 
and you are not, then I have an advantage over you. 

Mr. Feller. I should like to ask you, Mr. Humphrey, to identify 
this letter taken from your files. It is signed "Ernest." The di- 
rectory, I believe, shows Ernest is Mr. Ernest T. Weir, of the Na- 
tional Steel Co. It is dated January 18, 1930. 

Mr. Humphrb'^ Yes; I recognize this. 

Mr. Feller. I offer this to be printed, Mr. Chairman. 



10362 CONCENTRATION OF ECONOMIC POWER 

The Chairman. The letter may be received. 

(The letter referred to was marked "Exhibit No. 1376," and is in- 
cluded in the appendix on p. 10444.) 

Mr. Feller. The second paragraph of this letter reads as follows 
[reading]: 

Don't you think in view of the very keen interest in the ore situation, and the 
fact that everybody is after even the smallest properties, that it ought to be a 
good time to get the price of ore up 25 cents a ton? Even if pig iron and other 
conditions are not just as good, it seems to me the move should be made, indicat- 
ing that ore is in a strong position and able to start out on a basis of higher prices 

That letter was written by Mr, Weir. 

Mr. Humphrey. To me. 

Mr. Feller. Yes, to vou. 

Mr. Humphrey. We have wished many times we could get the 
price up; that conditions would justify it. 

Mr. Feller. I beheve joii have already explained for the record 
why Mr. Weir, whose busmess is chiefly that of producing steel from 
iron ore, is interested in raising the price of iron ore. Could you 
repeat that again? 

Mr. Humphrey. We are in the iron-ore business, and we want just 
as high a price for our iron ore as we think the business and conditions 
will justify. 

Mr. Feller. By "we," you mean 

Mr. Humphrey (interposing). Ernest Weir and myself. 

Mr. Feller. Do you consider Mr. Weir to be in the business of 
selling iron ore? 

Mr. Humphrey. W^e are partners in the same business. 

Mr. Henderson. In the same ore business? 

Mr. Humphrey. Most of the iron ore, as I testified at the very 
beginning, which is handled by the Hanna Co., is owned by the 
National Steel Corporation, and we are stockholders m the National 
Steel Corporation, with Ernest Weir. We are partners in the business 
which owns tliis iron ore. W^e are together in the same business. 

Senator King. Then if you increased the price of ore, you would 
diminish the prices of the finished product. 

Mr. Humphrey. I don't think. Senator, that the price of the raw 
material has much effect on the price of the finished product. They 
are separate commodities, and their prices in detail at least are fixed 
by competitive conditions on those respective commodities. 

Senator King. Was Mr. Weir or liis company buying ore? 

Mr. Humphrey. No; Mr. Weir and I are in the same company. 
This is a letter between the two of us in the same company which 
owns iron ore. 

Senator King. Are any of the companies, interested in buying ore, 
or are they merely in the production and selhng? 

Mr. Humphrey. We produce iron ore, most of which we use and 
our surplus we sell, or some additional ore we sell. 

The Chairman. When you say that Mr. Weir is a partner with 
you in the ore business, do you mean Mr. Weir personally or the 
National Steel? 

Mr. Humphrey. The National Steel owns the ore business and the 
steel business, and Mr. Weir and ourselves are stockholders in the 
joint enterprise. 

The Chairman. What about the Hanna Co.? 



CONCENTRATION OF ECONOMIC POWER 10363 

Mr. Humphrey. The Hanna Co., as I explained — perhaps you have 
forgotten — when the Hanna Co. properties went into the National 
Steel Co. we took stock for them and the management of the operation 
of those companies was retained in the same people, in the Hanna Co. 
that acts as an agent for the operation of the ore and raw-material end 
of the National Steel Co.'s business. 

The Chairman. So that any profit that might accrue from an 
increased price of crude would be reflected in the profits of the steel 
company. 

Mr. Humphrey. That is correct. 

The Chairman. And one would tend to oft'set the other; is that 
what you mean to indicate? 

Mr. Humphrey. No. We would hope to make money from both 
ends of the business. We hope to make money from the iron ore 
end of the business and we also hope to make money from the steel 
end of the business. 

The Chairman. Yes, but if the steel company were paying a higher 
price for ore, that would be reflected, other things being equal, in a 
smaller profit for the steel company. 

Mr. Humphrey. What he has in mind here I think was getting up 
the price of the ore on the product which we are selling. As between 
the two companies, so far as the National Steel Co. is concerned, the 
change in the ore price wpuld ultimately make no difference in the 
final profit. Do you see what I mean? But it would make a differ- 
ence in the total profit if we made more profit on the ore we sold 
to others. 

The Chairman. It wouldn't make much difference to the steel 
company whether the price was up or down, since it was taking the 
ore for its own purposes. 

Mr. Humphrey. That is correct. 

The Chairman. But it would be advantageous to the steel company 
if the price were up on those quantities of ore which were sold to 
others than the National Steel Co. 

Mr. Humphrey. That is correct, because that end of our business 
would thereby become more profitable. 

Mr. Feller. You testified in answer to the Senator's question 
that it would make no difference to National Steel Corporation in the 
final selling price of the product what the price of the ore was, but if 
the price of the ore was increased wouldn't a company competing 
with the National Steel Corporation bidding to buy its ore on the 
open market, competing with National Steel Corporation in the sale 
of finished steel products— wouldn't such a corporation find that its 
profit margin had been reduced by the amount of the increased 
price of ore? 

Mr. Humphrey. If its finished product price remained the same, 
yes. If anybody, Mr. Feller, has to pay more for their raw materials 
and there is no change in their finished product price, why they don't 
make as much money as they did before. 

The Chairman. By and large I suppose it is an advantage to a steel 
company to have its own ore supply. 

Mr. Humphrey. Senator, we think that is so. Now over the past 
few years there have been times when we weren't quite so sure of it, 
when we were laden down with extremely heavy charges. We are 
interested in one mine, for instance — and mind you we are small 



10364 CONCENTRATION OF ECONOMIC POWER 

people in this business — where the taxes are about $1,800,000 a year. 
Now if our production in that mine is cut down from 3,000,000 tons 
to 500,000 tons, we aren't so happy about being in the iron ore business. 
On the other hand, if we can get a good volume and the iron ore 
business is strong and profitable, and is profitable on its own merits, 
then we are glad we are in that business. 

The Chairman. Then the other picture is also true, I assume, that 
a steel company which does not own its own ore supply is at a dis- 
advantage if the price of ore is kept up, so far as its competition is 
concerned, with a steel company which has captive mines. 

Mr. Humphrey. It is just as I explained to Mr. Feller, if you are 
not in the ore business and I am in the ore business, if the ore busi- 
ness is unprofitable you have an advantage; if the ore business is 
profitable, I have an advantage, because I am in a profitable business 
that you aren't in. 

The Chairman. Naturally, if the ore business is unprofitable, that 
changes the whole picture. 

Mr. Humphrey. Then the other fellow is better off. 

Senator King. May I interrupt? I am interested in your state- 
ment about the high taxes. Was that tax paid to the State? 

Mr. Humphrey. Yes, sir. 

Senator King. On just one property? 

Mr. Humphrey. One mine. 

Senator King. Is that in Minnesota? 

Mr Humphrey. Yes, sir. 

Senator King. A-million how many thousand? 

Mr. Humphrey. Eight hundred thousand. 

Senator King. Nearly $2,000,000 taxes. Was that for 1 year? 

Mr. Humphrey. Yes, sir. 

Senator King. Would it be the same every year? 

Mr. Humphrey. Yes, sir. Well, it varies somewhat. Theoreti- 
cally as the ore diminishes the taxes are reduced; practically your 
tax rate sometimes goes up as last as your ore goes out. 

Senator King. Is it a tax upon production or upon the property? 

Mr. Humphrey. It is a property tax. 

Senator King. How do they reach the value? 

Mr. Humphrey. That is a long and involved formula that the 
States have to go into and they have engineers that examine the 
properties and it is a very complicated procedure that is gone through 
and fixed finally by the State tax commissions. 

Senator King. Even though you lose money in the production and 
sale of your ore, you would have to pay the tax. 

Mr. Humphrey. Absolutely. 

Senator King. And you have to pay a Federal tax as well as a 
State tax? 

Mr. Humphrey. Federal tax if we make any profits. 

Senator King. And an income tax upon the individual. 

Mr. Humphrey. That is correct. 

Senator King. A corporate tax in the past. 

Mr. Humphrey. And a lot more others. 

Senator King. Undistributed profits tax. 

Mr. Humphrey. Yes, sir. 

Senator King. Social security tax. 

Mr. Humphrey. Yes, sir; many that you have forgotten. 



CONCENTRATION OF ECONOMIC POWER 10365 

Senator King. No, I haven't forgotten them. I don't want to 
enumerate them because you might claim too many credits now. 

Mr. Feller, Mr. Greene, I should like to have you identify this 
letter dated April 18, 1935. It is signed by Mr. H. A, Raymond and 
addressed to you. Incidentally, Mr. Greene, I have forgotten whether 
or not the record identifies Mr. Raymond. Could you stiate again 
who he is? 

Mr. Greene. Mr. H. A. Raymond is our manager of ore sales. 

Senator King. May I ask a question, Mr. Feller? Mr. Humphrey, 
would it be possible for the producers of ore to furnish us in a dia- 
grammatic form the number of ore producers and their names, the 
number of tons of ore produced by them or shipped by them during 
the past 8 or 10 years, to whom shipped, the owners of the companies 
that buy and sell the ore and the percentage of ownership in the buying 
and in the selling organizations? I would like to know just the 
relation between all of these factors, all of these organizations and 
parties that produce ore and that sell ore. I want to know the 
names of the sellers and the amount sold by each corporation, each 
company, to whom sold, and then the proportion of ownership in the 
selling company and the proportion of ownership in the buying 
company, because in a number of these companies the sellers are 
buyers and the buyers are sellers. I would like to have a diagram, 
if I could have one, showing the relation of all those engaged in the 
mining and selling of ore, those who are purchasing ore, where partner- 
ships and corporations exist in the buying and the selling and have 
that diagram show that fact. 

Mr. Humphrey. I don't know whether Mr. Feller has all the data 
necessary to make that in the detail in which you express it, but I 
should think from the data he has he could develop pretty much 
what you are after. 

Mr. Feller. May I say here. Senator, that we do have a good deal 
of that information; however. Senator, the exact identity of all the 
customers and how much is sold to each of the customers is one of the 
most preciously guarded business secrets, and unless there were some 
compelling reason for putting it into the record, I think that there 
would be some objection on the part of the members of the industry 
who have already asked us to keep confidential a good deal of that 
sort of information. For that reason when I read the provision from 
a contract recently I omitted the name of a customer and also certain 
figures as to price. 

Senator King. I wasn't asking about prices. For instance, the 
gentlemen to whom I just addressed this question is both a buyer and 
a seller; that is, the company which uses part of the ore is also a 
producer of the ore. I should like to know just who the buyers were 
and who the sellers were of that organization with which he is 
affiliated. 

Mr. Humphrey. You are asking a very difiBcult question, not of us 
because it is easy as far as we are concerned because at the present 
time we produce all of the ore that we use except such as we might 
need for some special purpose which is insignificant, but in many of 
the cases how much they buy and how much they produce for their 
own consumption varies from year to year, depending on the pricer. at 
which they can buy and the desirability of the ore that is available 
for them and how much they want to run their own n ines and that 



10^66 CONCENTRATION OF ECONOMIC POWER 

sort of thing, so there are a lot of compHcations in the question which 
you a^e asking. It would be much easier for 1 year. That is a lot of 
information vou are asking for. You might do it for 1 year. 

Mr. Heni>ebson. The Senator would be interested in the statement 
which you and others have supplied as to how much of this goes to 
the companies that own the ore. Your estimate was about 85 percent. 
I think, wasn't it? 

Mr. Humphrey. That is on the average. Now, in a lean year I 
think you would find that a higher figure. 

Mr. Henderson. Mr. Hoyt estimated over 90 percent. 

Mr. Humphrey. In a big year I think you would find it a lower 
figure, but in a lean year when volume is down and naturally people 
in that year take as much as possible from their own properties to keep 
these big charges down, I think you would find that perhaps over 
90 percent in a lean year moved back and forth between owning 
companies. 

Mr. Henderson. You would be interested in the testimony of 
Mr. Oglebay tliis morning which is in the record to the effect that thej^ 
attempted to develop a mine which would seek new outlets and spent 
upward of three-quarters of a million dollars, and then abandoned 
it because of the difficulty of finding steel producers that did not have 
existing arrangements of some kind. 

Senator King. Perhaps the testimony that has already been 
adduced will meet with the views I have expressed in the question, 
I am sorry I wasn't here this morning, but the committee loiows that 
Senator O'Mahoney and jnyself were compelled to be absent to attend 
a funeral. 

Mr. Feller. Senator, we have here a tabulation which was made 
by one of the companies of sliipments in the year 1938, The tabula- 
tion was made by the Clevelajid-ClifFs Iron Co. and my recollection 
is that it was not given to us under the seal of confidence but under an 
agreement that it might be introduced into the record. This table 
contains the names of various ore companies and it gives the names of 
various customers who are steel companies or iron companies, and it 
tells how much of the ore which was sold by each of the ore companies 
to each of these customers was ownership ore, ore sold under term 
contract, and ore sold on the open market. The department can not 
vouch for these figures and I don't know whether the Cleveland-Cliffs 
Iron Co. could vouch for these figures. 

Mr. Greene. I would like to say we cannot. Those are just 
estimates. 

The Chairman. Wlio made the estimates? 

Mr. Greene. I presume our ore sales department, and it is; made 
from intimate knowledge only of their own company. They are 
guessing about the rest. 

Mr. Feller. Would you care to have this in the record? 

Senator King. If it throws any light on this subject, but if it is a 
mere guess I don't think it would be appropriate. 

Mr. Hoyt. I would say definitely as far as our business is concerned 
it would be merely a guess without any knowledge at all, I would 
think that it might be harmful in arriving at the facts you 
are considering. 

Senator King. What I was more interested in was in trying to 
ascertain how much of the ore that is mined is mined b"^ and sold to 



CONCENTRATION OP ECONOMIC POWER 10367 

and used by companies which produce steel. That has been stated 
and that is more important. If I have definite information as to 
those matters, that would answer the point I made a moment ago. 

Mr. Greene. Mr. Chairman, I would feel very strongly that that 
ought not to go in the record unless it went in the record with the 
statement that it is the personal opinion only of a salesman who has 
gathered that. 

The Chairman. That is all right, Mr. Greene. It is not going in, 
inasmuch as it has been described as not a very rehable bit of informa- 
tion. It would appear from all that has been said that a substantial 
amount of the ore which is mined, is mined on properties owned by 
steel companies. Is that correct? 

Mr. Humphrey. Eighty to ninety percent. 

The Chairman. That, I think, is what Senator King is driving at. 

Now let me go one step further. \^Tiat part do the steel companies 
owning these resources of ore-^Dlay in fixing the price or in determining 
the price? I don't want to use that word, which may have an adverse 
connotation. Would you care to answer that? 

Mr. Humphrey. I can answer for ourselves. Insofar as ourselves 
are concerned, the- officers of the ore company are also officers of the 
steel company, and we fix the price on the ore that we offer for sale. 
We decide whether we will take the price that we can get for it and 
sell it, or whether we won't. 

The Chairman. Do you fix that price by and large — of course I 
know you can't lay down a definite rule which would apply in all cases, 
but by and large do your officers fix that price from the point of view 
of the steel company or from the point of view of the ore company? 

Mr. Humphrey. We do it from the point of view of the ore com- 
pany, because we are in the ore business and if we can't make money 
in the ore business we don't do business. 

The Chairman. So that so far as you are concerned, the steel com- 
pany does not attempt to influence the price of ore for the purposes of 
its supply, but it is content to take its profit, if there is to be a profit, 
from the profits derived by the ore company. 

Mr. Humphrey. That is correct. 

The Chairman. How about your opinion? 

Mr. Greene. Well, we are not in the same position. We are 
merely merchant sellers of ore. 

The Chairman. I realize that, but I am asking for your opinion so 
far as the knowledge, your knowledge, goes of how the factor works. 

Mr. Greene. I would only hke to make this comment, that inas- 
much as all the steel companies own some portion of their ore, they 
have an excellent guide as to the purchases they make outside, and 
we as ore sellers know that is the fact and we know our price has to be 
in line with their costs. 

The Chairman. Is it advantageous to the merchant producer of 
ore to have this situation in which the steel companies, the fabricators, 
own so large a proportion of the supply? Is that disadvantageous 
to you? 

Mr. Greene. I don't think we ever thought of it because it has 
existed so long we have just accepted that as a condition. We know 
our figures are going to be carefully checked by any steel c )mpany. 
If we offer them ore, our price has to be in line with tlieir costs, 
because they are in tho same business. They are mining oto; I mean 
not for sale, but they are doing that very thmg. 



10368 CONCENTRATION OF ECONOMIC POWER 

The Chairman. They know from their own experience what the 
costs ought to be and what you ought to charge? 

Mr. Greene. Exactly. If our price is unreasonable they don't 
buy any ore from us. 

The Chairman. Is there any pressure, not necessarily active pres- 
sure but is there any natural pressure, arising from this condition 
which you have described, to keep the price of ore down for the mer- 
chant producer? 

Mr. Greene. No more than there is always pressure by the buyer 
to buy as well and as cheaply as he can, and the part of the seller to 
realize the best. It is just normal, only we know we have to be in 
hne with their costs. 

The Chairman, Would you care to say whether or not the steel 
companies as a whole exert any active influence in fixing or deter- 
mining the price of ore? 

Mr. Greene. If you say exert any individual effort I would say 
no. They exercise an influence as a whole because we recognize this 
situation and we know what we have got to do to get their business. 

The Chairman. Then your testimony, as I understand you, is 
that the influence of the steel companies is merely that of a normal 
purchaser. 

Mr. Greene. That's right. 

The Chairman. And that there is no effort upon their part to 
influence unduly the price that is paid for ore. 

Mr. Greene. That is correct. 

The Chairman. Well, does it make any difference, in your opinion, 
to the steel company, whether this base price of which we have been 
speaking is up or down? 

Mr. Greene. I think it has got to be within reason. I think like 
all competitive business, the steel company wants to feel that the 
costs for any material is on a line with their competitors. 

The Chairman. Is this price fixed by the merchant producers of 
ore? I don't Uke to use the word "fixed," I am constantly using it, 
but I don't mean it in the common sense — is this price determined 
by the merchant producers of ore without regard to the opinion of 
the operators of the ore mines which are owned by the steel companies? 

Mr. Greene. That couldn't be the case, because iu every contract 
it is a result of long-time negotiations between that particular com- 
pany and you, so that in all times they have got the upper hand, and 
what you are trying to do is to get as much as you can for your product, 
with a well-informed buyer. 

The Chairman. So that viewed from all sides, you want the com- 
mittee to understand that the steel companies, either as fabricators 
or producers, do not attempt to influence the price of ore except as 
normal purchasers. 

Mr. Greene. That is right. 

The Chairman. Mr, Butler, what is your opinion about it? 

Mr. Patrick Butler. I don't know anything about what the steel 
companies have in mind, but I think the statement of Mr. Greene, 
and your interpretation of his statement, is correct. 

The Chairman. 1 wasn't trying to interpret it except in the sense 
of trying to understand it. 

Mr. Patrick Butler. I am in general agreement with your dis- 
cussion with Mr. Greene. 



CONCENTRATION OF ECONOMIC POWER 10369 

The Chairman. If there were no captive mines, what would the 
effect be on the price of ore? 

Mr. Patrick Butler. I don't believe, I don't know, but I don't 
believe there would be much difference from the condition that 
exists now. 

The Chairman. Can you sell your ore for the price that you think 
it is worth? 

Mr. Patrick Butler. Not always — in fact, very seldom. 

Senator King. May I ask one question of either one? I will ask 
the gentleman over here: Have you discovered in these negotiations 
between the steel companies and the producers of ore any disposition 
to favor the steel company at the expense of the ore-producing com- 
pany, or to increase the profits or protect the profits of the ore pro- 
ducers at the expense of the steel companies? 

Mr. Humphrey. No; I have not. I agree with Mr. Greene that 
this business stands on its own bottom, and as to the ore that is sold, 
that is a strictly competitive situation between well-informed buyers 
and sellers who are trying to get together and who do get together for 
the sale of their product. 

Now, the only difl'erences, as I see it, between this and any other 
situation is that in this case you have a good many buyers who don't 
have to buy, who can mine their own stuff unless they can buy at 
what they think is an attractive basis. 

Mr. Feller. Mr. Chairman, a few moments ago Mr. Greene 
identified a letter written by Mr. Raymond to him.^ I should like 
to read just one paragraph. 

The Chairman. Will you give us the date of the letter now? 

Mr. Feller. It is dated April 23, 1935, written by Mr. H. A. 
Raymond, addressed to Mr. Greene. 

The paragraph I have in mind reads as follows: 

There are two distinct methods of handling the Republic situation. The first 
one would be to support present prices and urge them that for the reasons Ernest 
Weir outlines, present prices- should be supported, and that if we are going to 
help support them, they must do their part, not only by agreeing to take their ore 
at those prices and stop the Wysor "chiseling," but they also ought to give us a 
larger tonnage. 

Mr. Greene, do you recall what the reasons were that were outUned 
by Mr. Weir? 

Mr. Greene. Yes, sir; I can tell you very clearly, I think, why we 
said that was chiseling. It is a very complicated situation. In 
'35 I spent most of my time in New York as we refinanced $25,000,000 
of short-time loans into a long-time bond issue, and I was trying to 
accomplish that, so I can't give you all the details. You will recall 
that Republic Steel was formed in April of 1930, and it was a com- 
bination- of four companies. Those four companies had themselves 
had some enlargements, so that there was a very complicated situation 
in their ore contracts which we had. 

Now, in some plants we had all their business, in others we had a 
half. They anticipated the normal operations of these plants. After 
Republic got going, they naturally wanted to centralize their opera- 
tions where their costs were cheapest, and they began to shift around, 
and the question arose, and rather a contentious one, between our- 
selves and Republic, as to carrying out, in the fairest spirit, where they 
should manufacture and who should get that ore. 

> "Exhibit No. 1375," appendix, p. 10444. 



10370 CONCENTRATION OF ECONOMIC POWER 

And what Mr. Raymond felt there was that Mr. Wysor who was 
the president of Repubhc, was shifting the business away from us and 
contrary to the spirit and maybe the letter of those contracts, and he 
was bitterly complaining about it, that they ought not to be. 

Now some of the matters could be interpreted two ways. You 
could say it was clearly our business, or you could say that it was about 
60-40. They wanted a reduction in price to assume this and that, 
and if the whole letter was read — it is a long letter, it has a lot of figures 
in it, but it is all on this matter — it all indicates that Raymond felt 
that they were asking for something that wasn't quite fair when they 
said "Take off 25 percent, and so, so and so." That is what he is 
referring to. 

It is resulting from a series of ore contracts, some small and some 
large, finally resting in the hands of new Republic, who desired to 
change the operations, and wisely so from their standpoint, of those 
plants. . Do I make that plain. Senator? 

The Chairman. I think I understand what you are saying 

Mr. Feller. I don't quite recollect now whether you answered 
the specific question as to whether you recall what Mr. Weir's reasons 
were for supporting the price. 

Mr. Greene. I think the same question came up in the testimony 
somewhere else. I think Mr. Weir had expressed the reason which 
was in line with what Mr. Humphrey testified, that when he had an 
overage in a lean year to sell, he would like to see ore prices main- 
tained. I think it was just an expression of opinion as to the policy 
of selling ore. 

Mr. Feller, ivlr. Chairman, I have just a few more documents to 
introduce and then, as far as I am concerned, I shall be through with 
this part of the hearing. 

Mr. Greene, I have here a copy of a letter signed by Mr. Brown, 
who is in your organization, is he not — Alex C. Brown? 

Mr. Greene. Yes, sir; vice president. 

Mr. Feller. Addressed, "Dear Ed." That would be you? 

Mr. Greene. That is probably myself. 

Mr. Feller. Dated February 28, 1937. Would you please iden- 
tify this? 

Mr. Greene. I identify it. 

Mr. Feller. I offer this for the record, Mr. Chairman. 

The Chairman. The letter may be received. 

(The letter referred to was marked "Exhibit No. 1377" and is 
included in the appendix on p. 10445.) 

Mr. Feli.er. ^ shall read this one paragraph: 

The question uf lo...' market price of ore will surely come to a head shortly. 
This should be settled before there is any chance of Ford buying ore because it is 
becoming more and more likely that the large order placed by Ford each year at 
cut prices may become the accepted market price. Our interest in the market 
price is, of course, very much less than it used to be but this year it is of particular 
importance because of our Wheeling and Otis negotiations. 

Could you tell us, Mr. Gr6ene, what you meant by "This should be 
settled before there is any chance of Ford buying ore"? How would 
that be settled? 

Mr. Greene. I think it is pretty obvious that we were anxious to 

get as much for our ore as possible, and that if we thought that a 
uyer and seller could arrive at a reasonable price, lq accordance with 



CONCENTRATION OF ECONOMIC POWER 10371 

the testimony here, very many times, a rate wa<? established that might 
be helpful in view of some pending negotiations we had. 

Mr. Feller. How would the market price be settled? 

Mr. Greene. I don't know; it isn't settled; I think that is not the 
corrp.ot way to put it. When a sale takes place in the early part of 
the season on a substantial amount of ore. and becomes knov^n, why 
that establishes the market price. 

Mr. Feller. Mr. Pa.trick Butler, I have here a letter that appears 
to have been written by you — no; it does not. The letter was taken 
from your files and is written to you. You are the addressee. It is 
dated March 28, 1934. The salutation is "Dear Pat" and the signa- 
ture is "Affectionately," and then there is a blank. There are typed 
initials on the copy wliich we have but they are obscured. Can 
you identify it and perhaps tell us who the writer was? 

Mr. Patrick Butler. Yes ; this is Emmett Butler's letter, addressed 
to me. Those initials in the left-hand corner are "EB" I think. 

Mr. Feller. I offer this for the record. 

The Chairman. The letter may be received. 

(The letter referred to was marked "Exhibit No. 1378" and is in- 
cluded in the appendix on p. 10446.) 

Mr. Feller. Mr. Emmett Butler, I should like to read one para- 
graph from this letter. 

Senator King. That is a letter to his son, is it? 

Mr. Feller. Yes. [Reading:] 

I think possibly this would be a good time to say to our customers, particu- 
larly — 

I suppose it should be M. A. Hanna & Co., those initials are rather 
obscure; no — 

particularly P. M. and Hanna Co., "What are you going to do with this year's 
business, and what price are you going to put on ore?" They wUl, no doubt, 
answer to that that they do not know because they have not had their ore meet- 
ing, and stall beyond the date that Ford has fixed to close the bidding and prob- 
ably slip in a bid in the meantime. Why not tell them that we want to move 
tonnage and that we are either going after the Ford business in our own way 
or they are going to guarantee us an additional tonnage over their minimum 
equal to that of Ford's inquiries? 

Can you elucidate that paragraph? 

Mr. Emmett Butler. Yes; I want to make a general statement 
about all of the letters that have been introduced here between my 
son and myself. In some cases they may mean nothing, simply a ; 
discussion between a father and a son, perhaps as to the poUcy of 
the company. In this particular letter, the reason for thai para- 
graph was this: In the year of '32 we had a contract for the delivery 
of a substantial tonnage of ore. That tonnage was cut because of 
the steel company's inabiUty to use as much tonnage as they had 
contracted with us to buy. In the year of '33 it was determined and 
agreed on between Mr. Hoyt and Mr. Humphrey and Butler Bros. 
that- the price would be reduced, the market price so far as we were 
concerned would be reduced 50 cents a ton. Coming into the season 
of '34, I was naturally anxious to know whether they were going to 
take a volume tonnage, specified in the contract, and whether they 
were going again to ask us to reduce the price. 

I may state that the reason for the reduction of price, and the 
reason that the adjustment was made, was to be helpful to me, as 



10372 CONCENTRATION OF ECONOMIC POWER 

well as themselves. They did not need the ore. Does that answer 
your question? 

Mr. Feller. Yes. 

Senator King. The contracts then were varied from time to time 
depending upon whether the steel company had demands for its pro- 
duction capacity. 

Mr. Emmett Butler, As you know, Senator, the years of '32 and 
'33 were very poor years, not only in the ore business but in every 
other business. People were pretty well keyed up as to whether 
their contracts were going to be effective at all or not. That is the 
reason for these discussions. 

Senator King. And were contracts from time to time during that 
year or succeeding years or preceding years modified between the 
ore companies and steel companies? 

Mr. Emmett Butler. I think that has always been true of every 
contract. 

Senator King. Departures from that apparently stable line above 
and below, depending upon conditions? 

Mr. Emmett Butler. That is right. 

lake freight rates on iron ore 

Mr. Feller. Mr. Chairman, I have just a few questions left with 
the matter of freight rates. I call the committee's attention to the 
chart entitled, "Lake freight rates on iron ore." ^ Mr. Hoyt, your 
company manages a fleet of boats on the Great Lakes that carries 
iron ore. 

Mr. HoTT. That is correct. 

Mr. Feller. Mr. Greene, your company does, too, does it not? 
You own a fleet? 

Mr. Greene. We own a fleet and we manage smaller fleets. 

Mr. Feller. And you, Mr. Humpjirey? 

Mr. Humphrey. Yes, sir. 

Mr. Feller. You alsp manage a fleet? 

Mr. Oglebay. Yes. 

Mr. Feller. Mr. Hoyt, is it not cori?ect to s^y that the Lake Erie 
base price includes a freight rate? 

Mr. Hoyt. The base price includes — delivery to Lake Erie includes 
the freight rate. 

Mr. Feller. It is a delivered price. The record already contains 
the fact that the Lake freight rate on iron ore as published in the 
standard sources was 83 cents in each of the years from 1925 to 1936, 
and then 93 cents in 1937 and 1938 and 1939.. Can you explain, Mr. 
Hoyt, the similaritj of that rate in each of that series of years? 

Mr. Hoyt. I thmk I stated yesterday or the day before that the 
freight rate was arrived at as between a buyer and a seller, one who 
has ore to haul, no tonnage, another who has tonnage and no ore to 
haul, the same general principle, you might say, of the base ore price. 

Mr. Feller. In other words, the factors which explain the behavior 
of the ore price would explain the behavior of the freight rate. 

Mr. Hoyt. That is a pretty general question. I don't know quite 
what you mean by factors. There are a great many different condi- 
tions. It is a matter of negotiation as between the fleet and someone 
who wants to ^ip ore. 

« "Exhibit No. 1368," appendix, p. 10440. 



CONCENTRATION OF ECONOMIC POWER 10373 

Mr. Feller. The fact, however, remains, does it not, that the 
freight rate was the same over a period of 1 1 years? 

Mr. HoYT. That is true. It is also true that the raUroads' rates 
have been the same. 

Mr. Feller. Are these freight rates on the Great Lakes on iron ore 
regulated by any governmental agency? 

Mr. HoYT. No; they aren't. 

Mr. Henderson. Is there a new rate negotiated each year? 

Mr. HoYT. Yes, sir. 

Mr. Henderson. Is it on the same basis as the first substantial 
contract for the movement of ore? 

Mr. HoYT. It would be published on the same basis. 

Mr. Henderson. And if you happened to have the first one, that 
would become the published rate? 

Mr. HoYT. It would be if we had any tonnage that was not tied 
up under contract. In other words, the Interlake steamship that we 
operate has a contract for carrying ore. It couldn't establish a 
freight rate on that contract. It would have to be on some outside 
open negotiations with someone who wanted to have us carry ore 
and we wanted to carry it for them. 

Mr. Henderson. In most cases it would be negotiated with a com- 
pany which was likely to own the ore also, as has been testified, is 
that it? 

Mr. HoYT. Own the ore, but not the boat. 

Mr. Henderson. Not the boat, that is right. 

Mr. HoYT. It might own the ore but it wouldn't own the boat. 
In other words, it would be the ore on one side and the boat on the 
other, coming to an agreement as to the rate. 

Mr. Henderson. That is what I mean. Do you know in how 
many of those years you were the first to negotiate the contract? 

Mr. HoYT. No; I don't. 

Mr. Henderson. Were you in any of them? 

Mr. HoYT. I think we probably were. 

Mr. Henderson. Mr. Oglebay, do you recall whether yours was 
the leading rate in any years? 

Mr. Oglebay. We never have been. 

Mr. Henderson. How about you, Mr. Greene? 

Mr. Greene. I don't think so, because we have both ore and boats. 

Mr. Henderson. Mr. Humphrey? 

Mr. Humphrey. We are sometimes seller of vessel capacity and 
sometimes buyer, depending upon the season. 

Mr. Henderson. I mean in these years covered by the charts. 

Mr. Humphrey. In a year when we would be a buyer of vessel 
capacity we might well make the rate. 

Mr. Henderson. Maybe you haven't understood me. Do you 
recall being the leader in any of these years? 

Mr. Humphrey. I am quite sure we were in some years and I can't 
tell you in which ones. 

Mr. Henderson. Were you in 1939? 

Mr. Humphrey. I would have to look it up. 

Mr. Henderson. Mr. Hoyt, do you know who was in 1939?.. 

Mr. HoYT. No; I don't, Mr, Henderson. 



10374 CONCENTRATION OF ECONOMIC POWER 

Senator King. When you were the buyer of space for shipments 
did you bargain to get a cheaper rate or did you accept a standard 
rate which had been initiated at the beginning of the shipping season? 

Mr. Humphrey. Very much the same reasons appUed to that as 
apphed to the rest of the business. ■ When we would be buyers, we 
would accept the season's rate because we would be buyers in a big 
year._ In other words, we have boats for a substantial part of our ore, 
and in years when there is a bigger movement than we can carry in 
our own boats then we have to buy some vessel capacity and in those 
years the rates would be strong and we would be in a position where 
we would make the best deal we could with the vessel owner. 

Senator King. Do you recall whether or not at an earlier date than 
those we have been speaking about there were shipments of ores from 
this ore field by rail to the steel mills? 

Mr. Humphrey. There was very little of that because the difference 
between the rail and the vessel, the all-rail rates and the vessel rates 
is quite a wide difference. 

Senator King. That is the rail rates were much greater than the 
water rates. 

Mr. Humphrey. To most destinations. 

Senator King. Would that be the case from the ore deposits of 
which we have been speaking to the steel companies along Lake 
Michigan? 

Mr. Humphrey. Practically all of them. 

Mr. Henderson. Mr. Hoyt, is the matter of what the rate is of 
importance to you? 

Mr. Hoyt. It is to anybody interested in vesseling business, Mr. 
Henderson. 

Mr. Henderson. Then is there any of the six of you who can re- 
member who estabhshed the rate this year? 

Mr. Hoyt. I am sorry, I haven't that. 

Mr. Henderson. It just strikes me a little peculiar that here is 
something which aflfects every ton of iron ore is moved by your com- 
pany, in which you have a specific interest in what the return is on 
your steamships and nobody can tell who was the bellwether in the 
instant year, let alone any other year. 

Mr. Humphrey. I don't think it was any of us. 

Mr. Hoyt. There is a lot of coal moved on which this rate might be 
based. 

Mr. Henderson. On which this rate might be based? 

Mr. Hoyt. There are differentials as between different ports. 

Mr. Henderson. Is there any one of those years in which the 
rate on something other than ore served as the basis for establishing 
the season rate? 

Mr. Hoyt. I think there have been instances when a large volume 
of coal was covered and rather automatically the ore rate went into 
effect along with it. 

Mr. Henderson. At the same rate? 

Mr. Hoyt. No, sir; but on a differential which is long established 
in the trade. 

Mr. Henderson. Do you have the same practice that at the begin- 
ning of the year when you negotiate a contract for Lake freight rates 
you annoimce it to the trade? 

Mr. Hoyt. That has been the practice. 



CONCENTRATION OF ECONOMIC POWER 10375 

Mr. Henderson. And that is how it gets estg-blished? 

Mr. HoYT. Yes, sir. 

Mr. Henderson. As I understand you, that gets to be the accepted 
rate base? 

Mr. Humphrey. Yes; but we aren't the only people who buy vessel 
capacity, you understand that? 

Mr. Henderson. Oh, yes. 

Mr. Humphrey. There are others except just us who are here. 

Mr. Henderson. But you accept that rate when you are out buy- 
ing space, that was your testimony. 

Mr. Humphrey. That is correct. 

Mr. Henderson. And, Mr. Butler, that is the rate applied to what 
you move also, is it not? 

Mr. Patrick Butler. Part of it. Some of our ore is sold at the 
mine, some at upper lake ports. A good part of it is sold at the mine, 
and another good fraction is sold at upper lake ports, and a small per- 
centage of it is sold at lower lake ports and that tonnage, the smaller 
tonnage we move at lower lake ports, the freight rate would have an 
effect on the price we receive. 

Mr. Henderson. Mr. Oglebay, this rate applies to what you move 
for your managed company, does it not? 

Mr. Oglebay. Yes; our boats move our own ore. 

Mr. Henderson. You move it entirely? 

Mr. Oglebay. Yes. 

Mr. Henderson. And this is the rate, however. I understood jour 
testimony was you never have established the rate. 

Mr. Oglebay. We have accepted the rate. 

Mr. Henderson. Do you know who established the rate this year? 

Mr. Oglebay. No; I don't. 

Mr. Henderson. You read it in the trade paper and that was the 
rate that was applied? 

Mr. Oglebay. I don't know whether I read it in the paper. We 
all started doing business, the coal people and the ore people. 

Mr. Henderson. Do you happen to know how the rate got raised 
in 1937? There is something which was a change from a period of 
10 years, and do you laiow who was the leader in that year? 

Mr. Oglebay. No; I don't. 

Mr. Henderson. I guess we are not going to get any information, 
Mr. Feller. 

Mr. Feller. Mr. Hoyt, your fleet also carries grain, does it not? 

Mr. Hoyt. Yes. 

Mr. Feller. Are you familiar with the course of freight rates on 
grain on the Great Lakes? 

Mr. Hoyt. They vary, depending on the amount of grain that is to 
be moved and the scarcity of ore tonnage that is moving that year. 

Mr. Feller. The rates on grain vary tremendously in accordance 
with the amount of grain to be moved, but the rates on iron ore do 
not vary at all. 

Mr. Hoyt. I wouldn't say they do not vary at all. They went up 
in '37, and the reason for it was that the costs on the ships had gone 
up materially, and there was a large tonnage of ore holdings when the- 
season started in '37. I imagine there might have been 70,000,000 
tons of ore that were going to be moved. 
.Mr. Henderson. Who negotiated the new contract? 



10376 CONCENTRATION OF ECONOMIC POWER 

Mr. HoYT. There is no new contract ; there is no contract about it. 
It would be a question of my saying "Will you take this rate?" and my 
customer saying he would, or anybody else that had it. 

Mr. Henderson. But you don't recall who it was? 

Mr. HoYT. I am honestly not trying not to answer your question. 

Mr. Henderson. I am honest too in being bewildered that nobody 
seems to pay attention to a thing of such importance as this. The 
same rate seems to come into being almost automatically every year 
without any mortal guidance at all. 

Mr. HoYT. Now, Mr. Henderson, there are only two or three people 
here and there are a great many people on the inland lakes shipping 
business. We are just in the ore business here. We have vessel 
connections. I can't tell you the details of who made the arrangement. 

Mr. Henderson. You are saying you don't know, and I am saying 
I am honest in being bewildered about it. I think we can drop it 
there, tince there is no evidence in the record to show, as is the case 
in the development of the lake business, as to how some of those get 
estabUshed. 

Senator King. How many persons or companies employ boats upon 
the Groat Lakes in shipping tonnage of all kinds — coal and ore and 
manufactured commodities, and grain and so on? 

Mr. HoYT. I think there are three hundred and eighty-odd bulk 
freighters that would be engaged in the ore and coal and limestone 
trade. 

Senator King. What proportion of the 380 would be engaged in 
the hauling of ore exclusively from these mines of which we have been 
speaking? 

Mr, HoYT. I think most of the boats; I can't speak for the Pitts- 
burgh Steamship Co., which is owned by the Steel Corporation, but 
most of the vessel fleets carry ore and coal. In other words, they 
want the coal on the return trip to lower the cost. 

Senator King. Some of the steel companies own their own boats? 

Mr. HoYT. Yes, they do. 

Senator King. And carry their own ore? 

Mr. HoYT. Yes, sir. 

Senator King. Do they attempt to fix the prices, or do they fix 
prices, and your company, for instance, falls in with the minimums 
which are established by the steel companies' boats? 

'Mr. HoYT. I don't Imow of any effort on their part, Senator. As 
I tried to explain, it is the custom in the trade that is built up over a 
period of years where someone who has boats and wants tonnage 
makes an arrangement with the man who has tonnage and hasn't the 
boats. 

Senator King. Have you any information as to whether the rates 
between given ports are the same which are impressed upon the com- 
modities by the steel companies' boats and by the boats with which 
you are connected? 

Mr. HoYT. The steel companies' boats, pure and simple, would not 
be interested in the rate except as it gave them a credit on that part 
of their business. 

Senator King. That is what I am trying to get at. Do you know 
whether they established a credit which was comparable in its results 
with the credit which would follow from the operation of your boats? 

Mr. HoYT. No, sir; I don't. 



CONCENTRATION OF ECONOMIC POWER 10377 

Senator King. Have you ever tried to find out whether their costs 
in transportation were the same as yours, or greater or less? 

Mr. HoYT. I don't believe there is very much variation, Senator, 
except for the difference in management, which is difficult to deter- 
mine. You have so many men on the boats and it takes so much fuel 
to run them back and forth, and so on and so forth. 

Senator King. Have you made any inquiry to ascertain whether 
the costs, the charges which are made by the boats of the companies 
whose representatives are here, compared with the cost of other boats? 
You said there were several hundred that are upon the Great Lakes. 

Mr. HoYT. I haven't made any investigation. Senator, but I would 
assume that the costs couldn't vary very much on the same sized 
boat. 

Senator King. Then you think that the cost for hauling coal, as 
an illustration, by other boats than those represented by those 
gentlemen who are present, would be substantially the same as the 
costs which your boats would charge for hauling ore? 

Mr. HoYT. Not charge; I understood you said "costs." 

Senator King. Cost, yes. 

Mr. HoYT. I understand they would be about the same. 

Mr. Henderson. When Oliver accepts the base rate it is accepting 
also the lake freight rate which is a component of the Lake Erie base, 
is it not? 

Mr. HoYT. You will have to ask Mr. Olds,^ Mr. Henderson. I don't 
know how they would handle that. 

Mr. Henderson. I am not asking about the account. Let's put 
it this way 

Mr. HoYT (interposing). That-is what it would be. 

Mr. Henderson. The Lake Erie base has as one of its components 
the lake freight rate, does it not, and the testimony from a letter 
written by Mr. Olds is that the corporation uses that rate as a basis 
for its charge to subsidiaries. Was that not correct? 

Mr. Feller. Yes. 

Mr. HoYT. But that might mean after deducting the lake freight, 
the unloading charges and the rail freight to bring the ore back to an 
f. o. b. mine price. That isn't inconsistent with that price. 

Mr. Henderson. Let me ask you the first question: That freight 
rate, the lake freight rate, in that year when 69,000,000 tons ijioyed, 
is likely to have been a component of the price exclusive of Oliver. 
Take any that you moved for your company, that freight rate was 
a component of the Lake Erie base, which was the basis for your own 
contract? 

Mr. HoYT. I don't quite understand what you mean by a com- 
ponent. The rate paid to the Interlake Steamship for carrying the 
ore in that year was the published lake rate. 

Mr. Henderson. But this rate for the iron-ore price includes that, 
does it not? 

Mr. HoYT. Mr. Henderson, that is a base as if all the ore were being 
delivered at Lake Erie; as such it includes a lake rate, but it does not 
mean that ore is not sold at a great many different spots at the mine by 
deducting that rate and making your contract on an f. o. b. mine 
basis or r. o. b. vessel basis. 

The Chairman. Would you let me interrupt? 

Irving S. Olds, counsel, TJ. S. SteeljGorp. 



10378 CONCENTRATION OF ECONOMIC POWER 

Mr. Henderson. If I can get this one thing I will have at least 
something. But if a steel company bought it f. o. b. and then bought 
space to deliver it at Lake Erie terminals, it would pay that rate, 
would it not, because that is the going rate? 

Mr. HoYT. It would depend on the deal that they made with the 
man that was going to float the ore for them. So far as we are con- 
cerned, if they wanted us to float it in the Interlake steamships, they 
would pay that rate. 

Mr. Henderson. You have about 45 boats, is that it? 

Mr. HoYT. Yes, sir. 

Mr. Henderson. Cleveland-Cliffs has 24? How many do you 
have, Mr. Oglebay? 

Mr. Oglebay. We have 17. 

Mr. Henderson. How many do you have, Mr. Humphrey? 

Mr. Humphrey. Eleven. 

Mr. Greene. We have 23; that is an error. 

Mr. Henderson. There are upwards of a hundred boats, and what 
they get for the transportation charge is included in that Lake Erie 
base, isn't that correct? 

Mr. HoYT. Well, the base is set up as if it did include it, Mr. 
Henderson, but it does not mean necessarily that they pay that rate 
unless they have come to that settlement with the fleet that is going 
to carry the ores. It is the established rate generally recognized. 

Mr, Henderson. Yes, I think I understand that. 

The Chairman. Mr. Hoyt, in order to clarify my own mind, may 
I call your attention to the two charts which have been introduced in 
the record and which are standing on the easels. One of these is 
entitled "Iron Ore Prices" ^ and the other "Lake Freight Rates On 
Iron Ore," ^ and the graph shows a very stable condition of each line. 
That is to say, the ore price changed only twice in a period of 14 or 
15 years, while the freight rate changed once in that same period. 
The base price for iron ore, the Lake Erie base price, includes the 
freight rate. 

Mr. Hoyt. On a delivered basis at Lake Erie. 

The Chairman. That's right, so that when this base price is fixed 
for any particular year, it contains the freight rate. 

Mr. Hoyt. That wouldn't be generally so, sir. The lake freight 
might have been established before the Lake Erie price or afterward. 

The Chairman. Well, it is unimportant when it was established, 
but that base price includes freight? 

Mr. Hoyt. Yes, sir. 

The Chairman. So that when you are undertaking to determine 
what the base price is, or when circumstances determine it, the. 
freight rate is known. 

Mr. Hoyt. No, sir; I just said it might not be known. 

The Chairman. Then are we to understand that the Lake Erie 
base price may be altered after it has been anonunced by reason of a 
discovery of a change in the freight rate? 

Mr. Hoyt. No, su-; but if I have agreed with my customer that I 
will deliver him ore at lower lake ports at a certain price, I have 
committed myself to do that, whether the lake rate is established or 
not. 

« "Exhibit No. 1367," appendix, p. 10439. 
> "Exhibit No. 1368," appendix, p. 10440. 



CONCENTRATION OF ECONOMIC POWER 10379 

The Chairman. Of course, if these charts are correct and we assume 
they are, having been taken from authoritative journals of the trade, 
it is clear that there wasn't any such variation as you describe in the 
base price. There may have been variations in the prices which you 
received but those variations are depending upon premiums or con- 
cessions, premiums, or penalties. We are not concerned with that 
now. I am concerned only in trying to get it clear in my own mind 
as to how the iron-ore price which includes the freight rate price 
can be determined from year to year without knowledge of what the 
freight rate is. In other words, is it possible for those who reach a 
conclusion as to what the base price is going to be for a particular 
season to reach that conclusion without knowing what the freight 
rate is going to be. 

Mr. HoYT. Just as I have said, sir, I made a commitment to my 
customer that I will deliver him that ore. Now if the lake freight 
had not as yet been determined, I might be gambling on whether it 
was going up from the j ear before or down. 

The Chairman. But obviously when you make that commitment, 
it is followed by everybody else. Now that is the testimony here 
and the indication of the chart, because you have said that the Lakfe 
Erie base price is that price which represents the first substantial 
transaction for the year. 

Mr. HoYT. That is correct. 

The Chairman. So when that first substantial transaction is made, 
it must of necessity, it seems to me, include the freight rate, or am 
I utterly incapable of understanding. 

Mr. HoYT. No, sir; very far from it, but the fact remains as I 
have said before, Senator, keep in mind that we are talking about 
this base Lake Erie price. All right, now that is $4.50. I say to^y 
customer, "I will deliver ore to you at $4.50." Now the lake freight 
in that particular year might have been established prior to that time, 
and I know it was going to be; on the other hand, it might not have 
been established and if I didn't know, I was gambling — I was taking 
the chance if it were up I would have to pay the excess and not the 
customer, and if it were down we would get the benefit. 

The Chairman. What sort of a gamble were you undertaking, 
Mr. Hoyt, when the testimony is here that every other ore seller was 
using the same base price that you established? 

Mr. Hoyt. The same base price. 

The Chairman. Yes. 

Mr. Hoyt. Delivered at Lake Erie port. 

The Chairman. Including the freight rate. 

Mr. Hoyt. Yes; but it is delivered at Lake Erie ports. 

Mr. Henderson. There was some testimony this morning, Mr. 
Chairman, in connection with a specific price that probably established 
the Lake Erie base, and a few questions to Mr. Hoyt might clear this 
matter up. 

The Chairman. I wasn't here to hear that testimony. 

Mr. Henderson. Tliis morning, if you recall, we had a letter from 
Mr. Raymond to Mr. Greene relative to the conversation you had with 
Mr. Girdler. 

Air. Hoyt. Correct. 



10380 CONCENTRATION OF ECONOMIC POWER 

Mr. Henderson. Now you were anxious to have that firm coirmiit- 
ment you had from Mr. Girdler made the basis for the Lake Erie 
base that year. 

Mr. HoYT. Correct. 

Mr. Henderson. And you couldn't wait a day or so on that until 
Mr. RajTuond or you had talked directly with Mr. Greene. 

(Mr. Hoyt nodded his head in the affirmative.) 

Mr. Henderson. You wanted to announce $4.50 as the rate. 
Now in that year, 1935, were you the leader and did the announcement 
of that rate which you had negotiated with Mr. Girdler become the 
rate? 

Mr. Hoyt. That is absolutely so. 

Mr. Henderson; In that year did you. know that the freight rate 
would be the same as it had been the year before? 

Mr. Hoyt. That I can't tell you, Mr. Henderson, but it might 
easily have been that. I did not know it. 

Ml . Henderson. But you had at that time in 1935 a record running 
back to 1925 at least that the rate had never been other than the same. 

Mr. Hoyt. That is correct. 

Mr. Henderson. So that you knew pretty well that when you 
were getting $4.50 at Lake Erie terminals that included the rate 
for the Lake Erie freight. 

Mr. Hoyt. That was my hope, certainly, sir. 

Mr. Henderson. I don't want to destroy that smooth line of the 
Lake Erie rate, but you were trying to get Mr. Girdler to take the 
emergency freight rate and bear it himself? 

Mr. Hoyt. Yes, sir. 

Mr. Henderson. And you were not successful. 

Mr. Hoyt. In other words, whit I wanted to do was to have him 
agree to pay me a higher price that year than he had the year before 
by the extent of the emergency freight rate. 

Mr. Henderson. Was that about 11 cents? 

Mr. Hoyt. Something like that; yes, sir. It may be a little more. 

Mr. Greene. That is right. 

Mr. Henderson. Then so far as the Lake Erie base is concerned 
that year, it ought to be 11 cents lower, should it not? 

Mr. Hoyt. No, sir; as he would not agree to that as has been 
testified. It meant that the ore people that year absorbed that 
extra freight charge. 

Mr. HeiJderson. Just as they absorbed in that year also the 83- 
cent rate? 

Mr. Hoyt. Yes, sir. 

Mr. Henderson. So that when you negotiated that contract you 
knew pretty well that that $4.50 was going to include the 11 cents 
emergency and very probably the rate which had been in effect for 
quite a long time? 

Mr. Hoyt. Well, I hoped it would; yes, sir. 

Mr. Henderson. But before when you had negotiated a contract 
which became the Lake Erie base, you had confidence, did you not, 
that that would continue? 

Mr. Hoyt. You naean the lake freight? 

Mr. Henderson. Yes. 

Mr. Hoyt. I can't say I had it as a matter of confidence. I tried to 
explain that. 



CONCENTRATION OF ECONOMIC POWER 10381 

Mr. Henderson. Let me ask just one more question on that. 
When you were talking to Mr, Girdler the letter states he told you to 
get Mr. Block — whom I understand is from Inland — and Mr. Weir 
from National — to agree that adding the emergency freight to the ore 
price this year would be of psychological help in getting a better 
price for steel in the third quarter and that he would be in favor of it. 
Is that correct? 

Mr. HoYT. That is what Mr. Girdler stated. You might read the 
balance of it, though, Mr. Henderson. I replied I couldn't do that — 
I think, something to that effect. In other words, that was a joking 
way of telling me if I could go out and do the impossible, he would 
pay it to me. 

Mr. Henderson. But there was a recognition on both your parts 
that an increase in this price, this 11 cents, or any increase in the ore 
price was likely to be used as a basis for an increase in steel prices or 
a justification for it. 

Mr. HoYT. No, sir. 

Mr. Henderson. How did he interpret that psychological help? 

Mr. HoYT. He put this up to me: 

If you can go and persuade these steel people that by raising the price of ore 
you will raise the price of steel, I will raise the price of ore, but if you can't — 

Which he obviously knew I couldn't, jiot being in the steel 
business, he said: 
I will pay you what I paid you last year. 

That meant that already my cost to the mine had gone up by 11 
cents. 

The Chairman. Let me interrupt, please. I want you to know the 
committee feels very much indebted to you for the manner in which 
you responded to our questions. I should like to ask each of you 
if you have the opportunity for you to state to the committee what 
function you think competitors ought to be free to perform in con- 
sulting with one another with respect to matters of price. I am always 
conscious of the fact — I think all of our members are conscious of it — 
that in these inquiries there is a feeling upon the part of those who are 
called before us that the committee is endeavoring to find out some 
wrongdoing. That isn't the case at all. Our interest in all of the 
phases of the various industries that come before us is prompted by a 
desire to learn what, if anything, can be done to bring about a greater 
degree of prosperity for business as well as for the rank and file of the 
people of the United States. That is the purpose of all these inquiries, 
particularly the purpose with respect to the manner and form of the 
determination of prices. Perhaps Mr. Henderson and other members 
of the committee may pursue this matter while I am gone. My 
imderstanding is that the committee at the conclusion of this hearing 
will recess until Monday morning. Would you care to state who the 
witnesses will be? 

Mr. Feller. The witnesses next Monday will be, first. Professor 
de Chazeau, an authoritative steel economist who will testify with 
respect to steel prices in the war situation. He will be followed by 
witnesses of the United States Steel Corporation. 

I may also say at this point. Senator, that I have no more testimony 
to elicit on this phase of the hearing. 



10382 CONCENTRATION OF ECONOMIC POWER 

QUESTION OF MODIFICATION OF EXISTING LAWS TO ALLOW MORE 
FREEDOM FOR BUSINESSMEN 

The Chairman. May I say, Mr. Hoyt, that I have glanced over 
these various letters this morning. On the letters presented this 
morning your name appears frequently. It would appear that 
various members of the industry have at least consulted you occasion- 
ally or frequently with respect to what the price should or should 
not be. Perhaps you might by reason of that experience be well 
qualified to suggest to the committee what businessmen ought to 
be free to do without fear of violatmg the antitrust laws.^ 

Mr. Hoyt. You mean you would lil^e me to answer that question, 
sir? 

The Chairman. I think it might be illuminating if some expression 
of that kind were to be made, but I am sorry that I can't stay here 
at the moment for it. If these questions proceed I might be back, 
if you will have tne patience to stay. 

(Mr. Henderson assumed the Chair.) 

Mr. AviLDSEN. Mr. Hoyt, I would like to suggest if you would 
like to take a little time to think about that and submit a written 
statement to the Committee of your opinion on that subject, you 
might prefer to do that. 

Mr. Hoyt. I think I would like to do that. 

Mr. AviLDSEN. I realize it is a very serious question and we would 
like your considered judgment, not just an offhand opinion. 

Mr. Hoyt. I think I would rather do it. 

Mr. AviLDSEN. How do you feel about it, Mr. Henderson? 

Acting Chairman Henderson. I didn't hear the statement. 

Mr. AviLDSEN. I say that is a pretty big order to ask a man to 
express an opinion on how far a businessman should go. I said 
we would like to get Mr. Hoyt's opinion and if he would like to take 
a little time and submit a written statement to the Committee, it 
might be of more value to the Committee to have his considered 
judgment. 

Acting Chairman Henderson. I am anxious to get it, but I want 
to check on what the Senator has said. Perhaps we would be able to 
get both, Mr. Avildsen, because when you get a statement, you 
don't have the advantage of the competent witnesses before you for 
exchange of views andinterrogation. 

Mr. Avildsen. Except that Mr. Hoyt would be glad to come 
back to the committee, I am sure. 

.Mr. O'Connell. I think it is entirely a question of what Mr. Hoyt 
is willing to do. If you feci in a position to make any comment in 
answer to Senator O'Mahoney's question, I think we would be very 
much interested in hearing it.^ 

Mr. Hoyt. I am frank to say I have been in the iron ore business, 
as you know, for the last nearly 30 years, and I have considered 
myself from that standpoint as trying to do the best I can to make the 
business interests in which I have a connection, and in which other 
people have an interest, as profitable as possible. 

Now I don't know as I have thought it out from the standpoint of 
economics. I don't consider myself an economist, and 1 would 
hesitate to make an extemporaneous speech on a subject as big as 

» See footnote 1, p. 10386, Infra. 



CONCENTRATION OF ECONOMIC POWER 10383 

that right offhand this afternoon. I would much prefer to think it 
over and give you a statement on it. 

Acting Chairman Hendersotst. Maybe if I indicate some of the 
things that I am interested in personally, and in wliich I think other 
members of the committee are also interested, it might serve as 
something of a basis for your comment. I am not going to try to 
summarize this hearing. I think, however, Mr. Hoyt and other 
members of the industry, that the suggestion wliich Mr. Reynders 
put forward as to the depleting nature of the product which you 
deliver, may put your commodity and your business transactions into 
a different frame of reference from a manufactured product. Cer- 
tainly in the development of legislation relating to coal, for example, 
which is a disappearing resource, and so far as the conservation and 
disposition of oil are concerned as our previous hearing showed, 
different considerations have entered. You not only have a different 
type of cost, as Mr. Humphrey indicated, but you have a question 
also as to whether or not you will dispose of that resource at what the 
price happens to be. And then there is another consideration which 
was mentioned in the letter to Mr. Greene by Mr. Raymond which I 
think perhaps makes your industry have a somewhat different status. 
I refer to that portion of the letter in which he says [reading]:^ 

* * * * this is a year when we are mining merely to give employment, and 
with so little to gain, that it was a bad time to make any change. 

I think those of us who were familiar with the working conditions 
and what the demand for employment was in the Upper Peninsula 
and the Minnesota regions are somewhat cognizant of the effort 
made by the mining companies to give employment and in that way 
suffered a considerable outlay of their assets. 

I think it is clear from the testimony and the evidence that has been 
introduced that there are discussions constantly going on in your 
industry as to the conditions of the exchange of your product, and 
that the question of what is the base price is of large importance 
since all your contracts are tied to it. It would be decidedly fatuous 
for anybody to assume, it seems to me, that a normal and sometimes 
an extraordinary amount of effort would not be exerted by responsible 
executives in the industry toward getting and maintaining a continued 
price which let them make their adjustments in terms of tonnage, and 
the like. 

I would like to comment also that of course what is introduced 
here is very fragmentary. We might as well face it that it is just 
what the investigators happened to get, and some of it may have a 
meaning which when read in public has a different shorthand inter- 
pretation to others. But taken by and large, the job of an investigat- 
ing group is at best a matching of wits. Because of the circumstances 
under which business is operated and the laws to which the Senator 
has referred, there is a matching of wits as to what evidence can be 
adduced, but it is certainly clear to me that there are price consulta- 
tions and a certain amount of leadership in the selling of ore. 

Another thing which might affect considerations as to what public 
policy should be toward conversations affecting pricing policies, is 
the fact that within a small number of companies, nearly all of the 
important outlets are combined. As Mr. Oglebay testified, the 

» "Exhibit No. 1375", appendix, p. 10444. 
124491— 40— pt. 18 12 



10384 CONCENTRATION OF ECONOMIC POWER 

opportunity for getting a large outlet for the development of an 
independent mine is relatively small, and that means that each one of 
you producers, as I see it, is pecuHarly aware of the effect of what you 
do on the business of others — I think it was said there are 10 in 
this industry. You can't escape that what you happen to do about a 
contract, particularly in the way of price posting, is going to be of 
serious import to your competitor, and if the Ford contract in any one 
year, due to the known bargaining abihty of large, able companies, 
did result in a rate wliich you could not accept, you would either have 
to abandon the existing method of determining the base rate or alter 
the way in which you compete. I think that that is very evident 
from the testimony. 

I tliink another thing that needs to be taken into account in any 
statement you would submit to the committee is the relationship 
that exists between the ore companies and the steel companies. The 
testimony has shown very definitely that the joint ownership of ore 
and steel companies is a factor, and I think while the evidence before 
us doesn't establish it to any great verity and exactness, there is no 
doubt but that a producing steel company does have as part of its 
cost at least some of the cost of its ore company. Therefore there is 
an influence, maybe psychological as Mr. Girdler put it, but certainly 
an influence upon the steel price, and whether the price is low or high 
is of decided interest, because of the relationship that exists between 
the ore companies and the steel companies. A low price would be 
decidedly disadvantageous, not only from the standpoint of the realiza- 
tion on the ore itself, but also on the price of the finished product, 
because a steel company does not collect for its ore until it has collected 
for that finished product. That is where it collects. 

I think if the representatives of companies that do not have relations 
with steel companies want to comment they might very well indicate 
to the committee some of the problems that they encounter in trying 
to get business as against the companies that do have those relation- 
ships. One of the things that impressed me, running through Mr. 
Patrick Butler's letters as they were presented here, was the situation 
with wliich that company evidently was confronted. Butler Bros, 
had to make a decision from time to time whether they would go 
along, whether it was the better part of expediency in the continuance 
of a long-established company to go along, or whether or not the time 
hadn't come, as Mr. Emmett Butler said, to make their own price 
rather than let somebody else make it for them. That is always the 
problem of a small unit competing against either a larger unit or a 
unit that has decided outlet advantages. 

This is merely a running characterization, entirely impromptu, of 
some of the tilings which I see have been brought forward in this 
hearing. If Mr. Humphrey or Mr. Greene, Mr. Butler, or Mr. 
Oglebay or yourself want to comment on any of those, I would be 
glad to have them now, or have you submit them later. 

Mr. HoYT. I would like to make just one comment, Mr. Henderson, 
and being an iron-ore peddler I would hesitate to make any general 
statement after the statement that you have so ably made. I do feel 
this one thing that I would like to leave very definitely with you and 
the committee. Mr. Feller and his associates have in their files copies 
of actual contracts covering deliveries of ore and prices received as 
between u customer and seller. Tlicy have been very courteous in 



OONCENl'KATtON OFlSCONOMtC POWEU 10385 

saying that was, you might say, a trade secret of the individual com- 
panies in the industry, and it woiild be a very unkind tiling to lay 
them out as a matter of pubhc record, so that 1 would know what my 
competitors have done with people I have tried to sell ore to over a 
period of time. I assure you, however, that from my general Imowl- 
edge of the industry that those contracts are about as varying in 
amount, varying in tonnage and price and all of the other qualifica- 
tions as could be found in any absolutely competitive industry. 

Now any further statement, I feel that I would rather submit at 
some other time.^ I will come down again if you would like me to, 
but I did want to just leave that word with you as a distinction be- 
tween what has been testified to to such a great extent and where the 
confusion has grown up in the minds of the committee as to the differ- 
ence between a base, which has been a trade custom over a period of a 
great many years, and the dollars and cents actually received from a 
customer by a seller. 

Mr. Patrick Butler. Mr. Henderson, maybe it might clarify some 
questions in the minds of the committee if I made this statement: It 
seems that my correspondence seems to be the entering wedge for 
most of this testimony. In some of my letters I referred to consulting 
Hoyt or Humphrey as to price. I hope the committee will bear in 
mind whenever I discussed price, iron-ore prices or market prices, with 
either Mr. Hoyt or Mr. Humphrey, I was in the position of a seller 
talldng to a customer. They both bought ore from us. 

Acting Chairman Henderson. Comment on that would open up a 
large area which would lead into the Ford business and what the eft'ect 
of that Ford business is on the rest of the industry. 

Mr, Patrick Butler. The Ford business might be a factor 

Acting Chairman Henderson (interposing). You weren't talking 
to them, Mr. Butler, when you were talking about the Ford contract, 
of selling them the Ford contract, were you? 

Mr. Patrick Butler. No; I was taMng about 

Acting Chairman Henderson (interposing). So you were not talk- 
ing to them as a seller in that case? 

Mr. Patrick Butler. Indeed I was. 

Acting Chairman Henderson. Seller to them? 

Mr. Patrick Butler. Selling to them, because what I quoted Ford 
might have an eft'ect on the price they would pay me, because my price 
to them was based on the market price. 

Acting Chairman Henderson. Certainly; I think that was very 
clear. 

Mr. Patrick Butler. I didn't know whether it was or not. I 
wanted to make it clear. 

Mr. Avildson. Mr. Feller, could you tell the committee anything 
about the prices in these contracts to which Mr. Hoyt referred. Are 
you familiar with them?' Would you substantiate the statement he 
made that there is a substantial variation in the prices? 

Mr. Feller. It is perfectly correct to say that these long-term con- 
tracts contain prices which result in a different cost to the various pur- 
chasers of ore. If there has been any misunderstanding about that, 
I am sorry. We attempted to make it clear there were variations in 
those contracts. The point to which we were directing our attention 

1 In a letter dated Nov. 9, 1939, addressed to Senator O'Malioney, Mr. Hoyt submit tci his response to tJie 
question. The letter is included in the apjx'ndix on p. 10463. 



10386 CONCENTRATION OF ECONOMIC POWER 

was that in most of these contracts — let me amend that to say in many 
of these contracts — the Lake Erie base price was the standard. Con- 
sequently we were not saying anything with respect to the uniformity 
of the price charged to the various producers. 

What we were directing our attention to was the movement of price 
over a period of years, and for that reason we concentrated our atten- 
tion on the standard of the industry, which is the Lake Erie base price. 
There has been no testimony given here that I can recall to the effect 
that the prices were uniform to all buyers. They are not. 

Mr, AviLDSEN. You mean the Lake Erie base price is something 
like a catalog price and there are various discounts given to people 
from the catalog price. Is that it? I really don't understand. 

Mr. Feller. There is a good deal of evidence in the record which 
could be consulted in answer to this question. As has been pointed 
out in the case of many of these long-term contracts, the buyer and 
seller of ore sit down together and negotiate a contract, negotiate cer- 
tain terms. In many cases it is a term of the contract that, "We will 
sell you so much ore per year at a price which will be so many cents 
below the Lake Erie base price," and there are other provisions in 
metallic content and for other physical characteristics. 

Now, in the following year if the Lake Erie base price were to go 
up the contract price would follow accordiugly. If the Lake Erie 
price were to go down, the contract price would follow accordingly. 

Mr. Greene. Mr, Henderson, I would like to make a little addi- 
tion, not of a general nature. There was a certain reference in a 
letter to one of our principal customers, and both Mr. Raymond in 
his letter, and I, expressed some rather strong terms, the contentious 
difficulties we had had over that contract. I should have added that 
we both recognized that the contract based on the operation of those 
individual units was almost impossible, and shortly after that that 
contract was replaced by a general contract, and those difficidt and 
contentious matters were removed. 

Acting Chairman Henderson. So far as the Republic is concerned, 
they do have a dual consideration as to the treatment of the price 
they pay for ore. Is that not so? That is the language that was 
read. If they have a high price for the ore they have a good realiza- 
tion on that so far as their mines are concerned; however, when it 
gets into the basis for their pricing of finished products, it does tend 
to make the price higher. If they have a low cost for ore they would 
have a lower base for the ore cost in their price, and they would have 
a wider margin, and therefore the steel company would pick it up. 
Is that not correct? 

Mr. Greene. If I understand you correctly, I think it is. 

Acting Chairman Henderson. Mr. Humphrey, do you desire to 
make any comment or observation? 

Mr. Humphrey. I think, Mr. Henderson, that all the facts that I 
can give you have been brought out, that I have in mind ; and as to a 
recommendation that might be made to the committee, I would much 
prefer to think that over. I think, guided by the remarks you have 
made which are very interesting, we might be able to make some sug- 
gestions, but I would like to think about it and study it over. 



CONCENTRATION OF ECONOMIC POWER 10387 

IRON ORE RESERVES 

Mr. AviLDSEN. Mr. Feller, has there been any evidence introduced 
here as to the known reserves of iron ore, how many years' reserves 
there are in sight, and so forth? 

Mr. Feller. No; and as a matter of fact I should like to answer 
that in a somewhat carefully prepared statement that I have, as I 
anticipated that question somewhat earher. I should lil^e this for the 
record [reading]: 

The Department of Justice made inquiries into the problems pertaining to the 
total amount of available iron ore reserves and the ownership thereof. Upon 
the department's request, all the major ore companies submitted figures showing 
their estimated reserves. These figures were for the most part the same ones 
which the companies had previously submitted to the States of Minnesota, 
Michigan, and Wisconsin for taxation purposes. 

According to the Minnesota Mining Directory for 1939, the total reserves for 
the whole area were about 1,400,000,000 tons of merchantable ore. This total 
represents ores which are mined in open pits, and therefore can be fairly well 
estimated, and also ores which are mined underground, and are more difficult 
to estimate. 

This, along with other diflSculties inherent in the nature of the problem, has 
prompted the department, with the iron ore industry's approval, to use figures of 
ore shipments rather than ore reserves in order to show the relative importance 
of the component parts of the industry. 

I should Uke to add to that, that it is my imderstanding that the 
Federal Trade Commission is about to release a report shortly which 
will cover the question of available iron ore reserves. I should also 
like to add to that, that I understand that there are varjdng estimates 
of the length of time that it would lake to exhaust the available ore 
deposits. The Lake Superior Iron Ore Association directory states, 
on page 12 [reading]: 

The Lake Superior region is expected to supph' most of the iron ore requirements 
of the United States for an almost unlimited time. 

That is the end of the quotation. I may say that other sources 
are much less optimistic about the length of time which this supply 
would take us to exhaust. 

Acting Chairman Henderson. Mr. Emmett Butler, do you desire 
to make any statement now, or do you wish to avail yourself of the 
opportunity of submitting something later? 

Mr. Emmett Butler. I may avail myself of the opportunity later. 

Acting Chairman Henderson. Mr. Oglebay? 

Mr. Oglebay. I rather think I would, later. 

Mr. Avildsen. I think it would be interesting to get the opinion 
of these men as to the amount of known reserves of iron ore. You 
say there is a difference of opinion, Mr. Feller. Would you mind 
asking these gentlemen their opinion? I could. Would you tell us, 
Mr. Hoyt, what your opinion is as to the known reserves? 

Mr. Hoyt. I think in the opening statement that I made I indi- 
cated that there had been shipments from the Lake Superior district of 
about 1,700,000,000, and it was estimated generally that there was 
about 1,400,000,000 of known reserves. Of that amount about 
1,245,000,000, according to the recognized figures, are in the State of 
Minnesota, and about 150,000,000, or somewhere in that neighborhood 
are listed in Michigan, and 5,000,000 or so in Wisconsin. That is, of 
known ore of commercial grade, 



10388 COr^CENTRATION OF ECONOMIC POWER 

I also added in that statement that there were unknown quantities 
of low-grade ore which would not now be commercial, but that as the 
processes of beneficiation which the whole industry has been working 
upon for many years improve, and the high-^rade ore supply is less, 
this low-grade ore being made conamercial wdl have taken its place, 
and that is the reason for the statement that Mr, Feller made, that 
this ore up here in the Lake Superior district would take care of the 
requirements of the steel industry for an unknown period. 

Mr. AviLDSEN. That is your opinion, too? 

Mr. HoYT. That is my opinion. 

Mr. AviLDSEN. You don't believe we have a problem of a con- 
servation of a natural resource? 

Mr. HoYT. I don't believe we have. 

Mr. AviLDSEN. Is that the opinion of the rest of the gentlemen? 
Is there any comment otherwise? 

Mr. Humphrey. I think the only opinion to be added to that is 
that the farther you go in the treatment of lower grade ores, the higher 
the cost becomes. There is a cost factor that naturally the higher 
grade ores of today are cheaper than ores probably will be as benefi- 
ciated, although they have made great strides in beneficiation in 
reducing cost, and there may be developments in that field that will 
offset it. 

Mr. O'CoNNELL. I might address a rather collateral question to 
IVlr. Hoyt. My thought was occasioned by a reference in one of Mr. 
Raymond's letters to the fact that during this year the industry was 
mining merely to .give employment, and it occurred to me that you 
might have some general information as to the results of technological 
change in the production of ore and its effect on employment levels in 
the industry. Do you see what I have in mind? 

Mr. Hoyt, Well, back in '32', the period of '32-3-4, there was no 
question that operations were carried on, particularly in '32 and '33 
and every effort was made by the mining companies to continue some 
sort of operation to keep their employees alive and fed and clothed. 
As I have stated before, so far as the open pit mining is concerned, 
development and all such work was carried on to a maximum amount 
up to resources available which did not lead to the production of ore, 
which could not be shipped down the lakes. 

Mr. O'CoNNELL. My particular inquiry was intended to be a little 
broader than that. I wondered if you had any general or specific 
infoiTnation as to the effect^ of technological change in the production 
of ore on emplojTnent in the industry, in the iron ore production 
industry generally, over^a period of years. Has the result of tech- 
nological change been to substantially decrease the number that can 
be reasonably employed in the iron ore industry? 

Mr. Hoyt. I haven't any figures. Of course there have been a 
great many improvements in ore mining as there have been in all 
other industries, better methods of mining, using underground tuggers 
and things of that sort as against the pick and shovel, and larger units 
in the open pit mines in the way of shovels and so forth. I haven't 
any information available in my mind as to how that has affected the 
general number of employees. 

Mr, O'CoNNELL, I had heard it said that as in other industries, 
technological developments in the iron ore industry had proceeded to 
such an extent that the necessary employment to produce a given 



CONCENTRATION OF ECONOMIC POWER 10389 

quantity of ore was very substantially less than it was in recent years, 
than it was a few years ago, let us say, or 10 years ago. 

Mr. HoYT. Offhand, so far as our company is concerned, taking the 
same mines we were operating 10 years ago on a full basis of produc- 
tion, and comparing those same mines with, say, the operation in '37, 
I think there was a difference of just a few hundred men out of, say, 
3,500. 

Mr. O'CoNNELL. I have no other questions. 

Acting Chairman Henderson. If there are no other questions I 
think we can recess now until Monday morning at 10:15. 

Mr. Feller. Yes, sir. 

Acting Chairman Henderson. Thank you, gentlemen. 

The committee will stand in recess until Monday morning at 10:15. 

(Whereupon, at 4:40 p. m;, Friday, November 3, 1939, the com- 
mittee stood in recess until 10:15 a. m. Monday, November 6, 1939.) 



(Testimony on the Iron and Steel Industry is resumed in Hearings, 
Part 19.) 



APPENDIX 

Exhibit No. 1349 
MAJOR CHARACTERISTICS OF THE IRON AND STEEL INDUSTRY 

(This pamphlet has been prepared primarily for the convenience of the members 
of the Temporary National Economic Committee. It obviously does not con- 
stitute a complete description of the industry. In its preparation the most 
authoritative and accessible secondary sources have been utilized.) 

Major characteristics of the iron and steel industry, which it is well to bear in 
mind during the course of the hearings, are the character of the productive process, 
the relative importance of the industry, the great variety of products manufac- 
tured, the geographic concentration of production facilities, the domination of a 
few important companies, the cost structure of the industry, and the method of 
pricing steel products. Each of these subjects is discussed briefly in the following 
sections of this pamphlet. A final section on the performance record of thp 
industry completes this presentation. 

1. The Manufacture of Iron and Steel Products 

FLOW OF materials 

The production of steel begins at the blast furnace, where iron ore and other 
materials are melted to emerge as raw iron, commonly known as pig iron. Pig 
iron is further purified in Bessemer or open-hearth furnaces together with scrap 
iron and scrap steel to produce molten steel of specified chemical composition. 
The latter is solidified in moulds to form ingots, which are then subjected to 
rolling, pressing, drawing, and other operations at controlled temperatures. 
The finished rolled products may then be further finished by coating (e. g., with 
tin or zinc) or by further fabrication into a multitude of products adapted to 
particular uses. 

This flow of materials through successive stages of production to finished rolled 
steel products is illustrated in Diagram I prepared by the National Resources 
Board. Quantities of materials consumed and products manufactured in 1937 
were used in the construction of the diagram and are indicated in millions of gross 
tons. In addition to depicting the various raw materials used in production of pig 
iron, the diagram indicates the output of by-products, the importance of scrap in 
the manufacture of steel, the dominant use" of pig iron and ferro-alloys for steel 
making and of steel ingots for finished products, the role of exports and 'mpbrts, 
the more important rolling mill products and the major consuming industries. 

integration of processes 

The production process analyzed in Diagram I may be carried out completely 
in the various departments of a single plant or in various plants of a single com- 
pany. Such plant or companies with pig iron, steel making and rolling facilities 
are known as "integrated." On the other hand, some plants or companies begin 
with the production of steel (using purchased pig iron and steel scrap) and roll 
steel products. These are "semi-integrated." Finally there are plants or com- 
panies which either produce pig iron exclusively for sale (merchant furnaces) or 
manufacture further rolled or finished products from purchased rolled steel entirely. 
These are "non-integrated." 

definition of the industry 

Broadly speaking, the iron and steel industry comprehends the manufacture of 
crude iron and steel and the rolling of finished steel products, beginning with the 
blast furnace and ending with the finished hot-rolled product. In an economic 

10391 



10392 



CONCENTRATION OF ECONOMIC POWER 



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UNITED STATES STEEL CORPORATION -1937 

STRUCTURE AND ORGANIZATION BY FUNCTION 

TOTAL ASSETS $1,918,729,28900 



_Oll^a NAT URAL GAS 

1614 ACTIVE GAS WELLS 
264 ACTIVE OIL WELLS 
1561 MILES PIPELINES 
9,611,321,000 CU FT OF GAS 
97 324 BBLS. CRUDE OIL 
614,313 GALS. OF GASOLINE 
PRODUCTION IN 1937 



GYPSUM a FLUO RSPAR 
gypsum capacity 200,000 

tons per year 
fluorspar capacity 15,000 

ton; per year 



LIMESTONE, DOLOMITE, 
CEMENT ROCK, CLAY 



38 QUARIES, MINES 6 PITS 
CAPACITY 20,000,000 TONS 
PER YEAR 



IRON ORE 



89 DEVELOPED MINES 
30,286,632 GROSS TONS 
PRODUCTION IN 1937 



k___^ . , , 



79 MINES OPERATED 
24,503,805 NET TONS 
PRODUCTION IN 1937 



MANGANESE ORE 



MINE IN BRAZIL 
CAN SUPPLY 'a OF CORPORA- 
TION'S REQUIREMENTS FOR 
10 YEARS 



ZINC ORE 

2 MINES 

SUPPLY APPROXIMATELY 17% 

OF CORPORATION'S 

REQUIREMEMENTS 



FIRE BRICK PLANTS 






BY-PRODUCTS 



214,853 NET TONS-SULPHATE OF 

AMMONIA 
197,447 NET TONS-BENZOL PRO- 



— < J 



COKING PLANTS 



1865 BEE-HIVE OVENS 
3633 BY-PRODUCT OVENS 
14,189,725 NET TONS PROD 



WATER SUPPLY 



12 RESERVOIRS 
4 FILTRATION PLANTS 
6 PUMPING STATIONS 
95 MILE PIPE LINE 



I, ♦ 



OWNED TRANSPORTATION FACILITIES 






iail; 

1070 MILES OF MAIN ime TRACK 

(OWNtp OR LEASED) 
26l6MlllES0F2NDa3RD TRACKIOWNEO OR 
LEASED),TRACKS OPERATED UNDER TRACK- 
AGE RIGHTS. YARD TRACKS AND SIDINGS 
1050 STEAM OR DIESEL LOCOMOTIVES 
50,947 FREIGHT TRAIN CARS 
42 PASSENGER CARS 
1554 UNITS OF WORK EQUIPMENT 



MARINE: 

27 STEAMERS IN OVERSEAS TRADE 

75 GREAT LAKES STEAMERS 

IS RIVER STEAMERS 

484 BARGES 

13 TUGS 

30 SERVICE CRAFT 8i EQUIPMENT 

DOCKS AT LAKEPORTS 



-i—<- 



I 

i 
i 

f 
i 



it- 



CEMENT PLANTS 



SLAG 

CEMENT, R R BALLAST, ROOFING, 
ROAD BUILDI NO a CONCRETE WORK 



PIG IRON 



14,193,133 CROSS TONS PROOUCEO. 20,470.000 
CROSS TONS CAPACITY OF PIC IRON AND 
FERRO MANGANESE 



<> ►._. 






^ 



J.. 



SLAG 




STEEL INGOTS S CASTINGS 




STEEL SCRAP 


FERTILIZER 


18,532,278 GROSS TONS PRODUCED 
25,790,000 GROSS TONS CAPACITY 
(36% OF INDUSTRY) 


PURCHASED a PROOUCEO 







MANUFACTURED FOR SALE 
AS SEMI -FINISHED 



1.977294 GROSS TONS PROOUCEO 
15 5% OF TOTAL CORPORATION 
TONNAGE 



SEMI-FINISHED STEEL 



3,678,753 TONS PRODUCED 
28.8% OF TOTAL CORPORATION TON- 
NAGE 
RAILS^PLATES, SHAPES^ AXLES, CAR 
WHEELS, FINISHED STRUCTURAL 
WORK 



7.106,220 TONS PRODUCED 
55.7% OF TOTAL CORPORATION 

TONNAGE 
MERCHANT BARS, HOOPS, SHEETS, 
STRIF! WIRE 6i WIRE PRODUCTS, 
TUBULAR GOODS, TIN PLATE, SPIKES, 
NUTS, BOLTS, RIVETS, NAILS, ETC. 



FABRICATION & ERECTION 



t-rF 



DOMESTIC SALES 



91% OF GROSS SALES IN 1937 






EXPORT SALES 



WTJL S4L£S IN I93T-$I,V86,76Z,4?7 EXCLUSIVE OF INTERCOMPANY SALES 



WEMREO PBIMARILT FROM THE REGISTRATION STATEMENT OF THE CORPORATION FILED WITH THE SECURITIES S EXCHANGE COMMISSION k 

124491 — 40— pt. 18 (Face p. 10393) No. 1 



1.1938 AND FROM THE CORPORATION'S 1937 ANNUAL REPORT. 



CONCENTRATION OF ECONOMIC POWER 10393 

analysis of price and distribution characteristics, hqwever, this definition is 
inadequate, for it comprehends a wide range of products which differ funda- 
mentally from each other in value per unit (and, therefore, in economic mobility), 
in scale and technique of production, in the geographical dispersion of consuming 
areas with relation to centers of production, in size and geographic concentration 
of customers, in the availability of potential substitutes for a given use, and in 
methods of distribution employed. Although most steel is "tailor made" to 
exact specifications within narrow limits of tolerance — and, therefore, is almost 
completely homogeneous for any given specification irrespective of source — 
multiplicity of product characteristics requires a breakdown of the "iron and 
steel industry" into almost as many "industries" as there are products. For cer- 
tain broad purposes, however, iron and steel may be classified in five general 
categories; pig iron, semi-finished steel, tonnage steel, alloy and tool steel, and 
further fini^ed steel. Broad differences in the economic characteristics of these 
classes of products are described in the section entitled "Products." 

On another account restriction of the definition of the industry to blast furnaces, 
steel works and roUmg mills is unsatisfactory. In actual practice few if any 
integrated producers restrict their activities to these stages in the productive 
process. Ownership and control extend back through the manufacture of coke 
to raw materials such as iron ore, coal and limestone quarries. Through by- 
products of the coke oven and the blast furnace, steel companies become important 
producers of gas, ammonium sulphate, coal-tar derivatives, and, partially as an 
outlet for slag, of cement. Vertical integration has led them into transportation 
where some are important owners of railroad and water transportation facilities 
(both ocean and inland waterway). Outlets for steel are assured by entrance 
into construction and manufacturing (including shipbuilding, bridge and other 
structual fabrication and erection, and the manufacture of culverts, office equip- 
ment, and other steel commodities) as well as the further finishing of rolled steel 
products (such as the manufacture of wire and wire products — nails, staples, and 
fencing, pipes and tubes, tin plate, formed-roofing products, etc). Distribution 
is provided for by the acquisition of chains of iron and steel warehouses. 

Throughout the history of the industry the trend has been toward greater 
rather than less integration of this type. Although this conception of the industry 
violates the boundaries of many other industries, it is one that must be employed 
for many purposes. Available pubhshed data on investment, capitalization and 
earnings are given on a company basis which will not permit a functional break- 
down. Illustrative of the complexity of the operations of such integrated iron and 
steel companies are the two charts (I and II) showing the approximate organiza- 
tion of the two largest steel companies — the United States Steel Corporation, a 
holding company, and the Bethlehem Steel Company, an operating company. 

2, The Relative Importance of the Iron and Steel Industry 

Among the major industries in the United States, the iron and steel industry 
is one of the most important in value of product, value added by manufacture and 
number of wage earners employed. In 1937, it was ranked first according to each 
of these criteria by the Census of Manufactures. (See Table I. It should be 
noted, moreover, that the census classification substantially understates £he rela- 
tive importance of the industry as it is customarily defined.)' 

In terms of total invested capital (as shown in Table II), the iron and steel 
industry ranks third among the most important American manufacturing indus- 
tries. Me&sured by output of pig iron and crude steel, the United States has long 
been the most important producer in the world. In 1937 this country accounted 
for roughly 37% of world pig iron production and 38% of the output of crude steel, 
almost 2J4 times the production of its nearest rival, Germany. (See Table III.) 

3. Products 

A diagrammatic picture of major products and types of mills at various stages 
in the manufacture of steel is given in Chart III. More detailed than the flow 
chart shown in Diagram I, it may be advantageously compared with the latter. 
Attention is directed particularly to the enumeration of some of the by-products 
of steel manufacture in the blast furnace and the steel works. 



> In the census tabulations blast furnace departments are separately classified and are excluded from the 
figures shown. Data are confined to steel works and rolling mill products and, although this includes 
further finished iron and steel products (pipe, wire, tinplate^etc.) when produced In departments of estab- 
lishments which roll iron and steel, it excludes such operations when carried on independently of a rolling 
mill even though under the same ownership. 



10394 



CONCENTRATION OF ECONOMIC POWER 



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CONCENTRATION OF ECONOMIC POWER 10395 

Table I.- — Relative Importance of Leading Industries in the United States, 1-9S7 





Wage Earners 


Value of Product 


Value Added by 
Manufacture ' 


Industry 


Average 
No. for 
the Year 


Rank 


Amount 
(Thousands 
of Dollars) 


Rank 


Amount 
(Thousands 
of Dollars) 


Rank 


Steel Works and Rolling Mill Products 

Cotton Woven Goods (over 12 inches wide).. 


479, 342 
336, 104 

323,928 
284,814 

257,660 


1 

2 

3 
4 

5 


$3,330,491 


1 


$1, 496, 747 


1 


Lumber and Timber Products (not elsewhere 
classified) . 










Motor Vehicle Bodies and Parts 


2,080,018 


5 


804,945 

979, 232 
701,949 


4 


Electrical Machinery, Apparatus and Sup- 


3 


Motor Vehicles, Not Including Motorcycles.. 


3,096,219 
2, 787, 358 
2, 546, 746 


2 
3 
4 


6 


Meat Packing, Wholesale.. 








Petroleum Refining 










Printing, Publishing, Newspaper and Peri- 






1,003,010 


2 















1 Calculated by subtracting cost of material, containers, fuel, purchased electric energy, and cost of 
contract work from value of product. 

Source: Census of Manufactures, 1937. 



Table II.- 



-Capital Investment ' in the Seven Most Important Manujacturing 
Industries, 19S6 



1. Iron and Steel Industry. ,^ $4,153,672,051 

2. Petroleum 5,554,722,000 

3. Food (manufacturing) 4,535,678,000 

4. Chemical and Allied Products 3,424, 186,000 

5. Textiles 2,903,287,000 

6. Motor Vehicles, complete or parts 2,461,969,000 

7. Tobacco 897,458,000 

1 Bonded debt plus capital stock plus surplus. 

Sources: Figure for Iron and Steel taken from Annual Statistical Report of the Iron and Steel Institute 
for 1937, Other figin-es taken from the Bureau of Internal Revenue's report, Statistical Income (Vol. II) 
for 1936. 



Table ] 


11. — World Production of Iron Ore, Pig Iron, 


and Steel 






Producing Country 


Percent of World Production 




1936 Iron 
Ore 


1937 Pig 
Iron 


1937 Crude 
Steel 


United States. 


28.8 
3.8 
16.3 
7.6 
19.3 
»2.8 
21.6 


36.7 
15.4 
14.2 
8.4 
7.6 
6.0 
11.8 


37 9 


Germany 


14 7 


Soviet Union.. . 


13 1 


United Kingdom 


9 8 


France . . 


6 9 


Belgium-Luxemberg ' 


4 8 


Other 


13 8 







1 Belgium and Luxemberg are considered a unit. 
' Statistics not available for Belgium 1936. 

Source: Compiled from the Annual Statistical Report of the American Iron and Steel Institute. 

No list of iron and steel products is adequate to show the variety of products 
actually manufactured. Pig iron is produced in various grades, and steel ingots 
to specified chemical composition. But more important, each rolled product is 
manufactured to detailed specifications of gauge, width, length and finish. 

In a previous section it was noted that iron and steel products for some purposes 
may be classified broadly in five categories: pig-iron, semi-finished steel, tonnage 
steel, fuither- finished steel, and alloy and tool steel. Generally speaking this 
classification parallels the base values for these classes of products m Table IV. 
Two things are notable in this table: (a) the spread in values between the classes 
themselves ranging from a low of $20.50 per gross ton of basic pig iron to a high 



10396 



CONCENTRATION OF ECONOMIC POWER 



of over $1500 per gross ton for high speed steels; (b) the difference between the 
high and low values in each class which increases as the more finished stage is 
approached, although the high price of high speed tool steels is in a large part due 
to the cost of the various alloying material used. Obviously pig iron is more 
homogeneous than finished rolled products; further finished products are still 
further differentiated. 

PIG IRON 

Although approximately 90% of all pig iron manufactured is produced by inte- 
grated firms, most of the pig iron entering the open market is manufactured by 
nonintegrated merchant furnaces. Production of pig iron in 1937 by grades is 
shown in Table V together with the proportion of each grade manufactured for 
sale. Basic and Bessemer and low phosphorus, the grades used in the manufac- 
ture of steel, constituted 86% of the total output and 93% of these grades were 
consumed in the same works, mostly in molten state. Foundry, malleable and 
forge irons by reason of their low value and large bulk are characteristically dis- 
tributed from small merchant furnaces in relatively local markets. 

SEMIFINISHED STEEL 

Carbon steel ^ ingots are sold in the open market only in ngeligible quantities. 
The production of ingots by type of process together with the proportion of alloy 
steel in each class is also shown in Table V. Semi-finished steel (blooms, billets, 
and slabs and sheet bars), although primarily used by the producing company in 
the manufacture of finished rolled products, is sold to non-integrated companies 
on long term contracts. In 1937, out of 3,784,978 gross tons produced for sale, 
2,164,981 tons were shipped to members of the industry for conversion into 
further finished products. This figure includes an indeterminate amount of inter- 
plant transfers among plants of the same or subsidiary companies. 



Table IV. — Range in Base Value of Product 
[Prices September 8, 1938 per gross ton] 





Low 




High 


Pig Iron 

Basic Pig • .. .. 


$20.50 
39.00 
58.24 
62.72 


Low Phosphorus 

Black Plate 3 


$25 50 


Tonnage Steel 

Rerolled Light Rails' 


70.56 


Further Finished Products* 
Bright Wire' 


E.xtra Special Transfoimer Sheets' 

High speed tool steel ' 


171 36 


Finished Alloy Steel 

Open hearth grade alloy bars ' 


1,500.80 









1 Price at Birdsboro, Pa., quoted per gross ton. 

' Price F. O. B. milles quoted per gross ton. 

' Base price at Pittsburgh quoted $3.15 per 100 lbs. 

• The range on further finished products has been calculated from the following products: Cold rolled 
sheets, galvanized sheets, electrical sheets, long ternes, tin plate, special coated mfp. ternes, cold rolled strip 
commodity cold rolled strip, cold rolled spring steel, bright wire, galvanzed wire, spring wire and staples. 

» Base price at Pittsburgh quoted as $2.60 per 100 lbs. 

• Electrical sheets f. o. b. Pittsburgh quoted $7.65 per 100 lbs. 
' Base price at Pittsburgh quoted at $2.80 per 100 lbs. 

• Price F. O. B. Pittsburgh quoted at $0.67 per lb. 

Note. — Prices quoted are base prices only. The actual range in price is much wider because of the uFe, 
of extras in pricing for such specifications as extra quality, width, close tolerance, chemical requirements 
etc. 

Source: The Iron Age. 



' Carbon steel is the standard product of the industry and is differentiated from alloy and tool steel by 
the range of nickel, chromium copper and other alloying elements specified In its chemical composition. 



CONCENTRATION OF ECONOMIC POWER 10397 

Table V. — Production of Pig Iron and Steel Ingots by Grades and Classes, 19S7 

PIG IRON PRODUCTION 



Grade 



Total 

Basic 

Bessemer & low phosphorus. . 

Foundry 

Malleable 

Forge 

All other (incl. direct castings) 



Production 
in gross tons 



36,129,596 

24, 780, 789 

6, 315, 382 

2,826,238 

2, 151, 106 

22,399 

69, 682 



Percent of 
total pro- 
duction 



100.0% 
68.6 
17.6 

7.8 
6.9 
0.1 
0.2 



Percent for 
sale by grade 



18.0% 
6.8 

7.6 
86.9 
86.3 
97.9 
63.2 



STEEL INGOT PRODUCTION 



Class 


Production 

in gross tons 

(including 

aUoy) 


Percent of 
total pro- 
duction 


Alloy pro- 
duction in 
gross tons 


Percent 
alloy by 
classes 


Total -.-- 


50, 318, 151 

46,052,980 

■ (46,719,607) 

(333, 473) 

3,499,927 

934 

814, 310 


100.0% 

91.6 

(90.9) 

(0.7) 

6.8 

0) 

1.6 


2,975,598 

2, 382, 053 

(2,281,365) 

(100, 688) 


6.9% 
6.2 


Open hearth 


Basic - -. 


(5.0) 
(30. 2) 


Acid - -- 


Bessemer 


Crucible 


241 
693, 304 


25.8 


Electric 


72 9 







J Less than 0.05%. 

Source: Annual Statistics Report of the American Iron and Steel Institute. 



TONNAGE STEEL 

This class of products comprehends carbon steel commodities such as plates, 
shapes, rails, sheet piling, bars, sheets and strip. Table VI shows the output 
pf the more important hot rolled steel products in 1937 together with the per- 
centage of alloy output. The outstanding feature of the table is the high per- 
centage of light steel products manufactured, especially sheets, strip, black plate 
(for tinning), and that of merchant bars. These products reflect the importance 
of the automobile industry and the container industry as consumers in recent 
years as contrasted with the relative quiescence of demand from the railroads and 
steel construction. Among the products listed skelp and wire rods occupy a 
unique position. Because they are the semi-finished stage in the manufacture of 
pipe and wire respectively, operations which are usually considered within the 
steel industry, they are sometimes classed as semifinished products. With few 
exceptions these hot rolled carbon products are produced predominantly in 
large integrated plants and are sold in large volume to a relatively few important 
customers. Thus, of 124 companies having capacity to produce these products, 
18 integrated companies accounted for 85% of all hot rolled finished products. 

FURTHER FINISHED STEEL PRODUCTS 

The production of the major categories of further finished iron and steel prod- 
ucts in 1937 is shown in Table VII. 

This class of products is characterized generally by a large participation of 
semi- and non-integrated producers, a larger number of sellers, a wider market 
(especially for wire and wire products, tinplate and pipe), and a much greater 
participation of jobbers in their distribution. In general, the distribution of steel 
is direct from producer to user when the unit value of the product is relatively 
low, when the requirements of the buyer are large or specialized, or when the 
consuming plant is affiliated with the producer. The middleman is often im- 
portant when a product is standardized, or when its value is high in proportion to 
its weight, or when it is used over a wide geographic area in small quantities. 
Thus tonnage steel distribution except for fill-in business is handled almost 
entirely by the mill, while the jobber is a much more important factor in the die- 
tribution of further finished steel. 



10398 



CONCENTRATION OF ECONOMIC POWER 



Table VI. — Production of Hot Rolled Iron and Steel Products and Production of 
Alloy Products in Gross Tons, 1937 



Product 



Total Hot Rolled Products 

Plates 

Hot Rolled Sheets 

Hot Rolled Strip -. 

Hoops, Cotton Ties and Baling Bands 

Black Plate. 

Merchant Bars .- 

Concrete Bars , 

Heavy Shapes. 

Light Shapes 

Skelp 

Wire Rods." 

Rails... 

Sheet Piling... 

Rolled Billets for Forging... 

All Other Hot Rolled 



Total Hot 
Rolled Pro- 
duction 



766, 389 
243, 248 
839, 506 
895. 561 
165, 447 
954, 086 
186, 704 
844, 657 
546, 582 
730, 264 
279, 862 
009, 290 
445, 739 
116,418 
667, 342 
841, 783 



Percent 
Hot 
Rolled 
Produc- 
tion by 
product 



100.0 
8.8 

21.4 
7.9 
0.4 
8.0 

14.1 
2.3 
7.0 
2.0 
6.2 
8.2 
3.9 
0.3 
1.8 
7.7 



Alloy 
Produc- 
tion 



59, 486 

224, 695 

72, 343 



933, 743 



2,344 

147, 533 

47, 340 

757 



133,986 
51,551 



Alloy Pro- 
duction as 
percent of 
hot rolled 
by product 



1.83 
2.87 
2.40 



18.00 



0.32 
6.47 
1.57 
0.05 



20.08 
1.81 



Source: Annual Statistical Report of the American Iron and Steel Institute. 

Table VII. — Production of further finished iron and steel products, 1937 

[In gross tons] 



Product 


Production 


Percent 


Cold rolled sheets . 


2,408,066 
1,434,806 

775, 160 
2, 687, 128 
2, 327, 705 

986, 277 
3, 823. 736 

889, 571 


15.7 


Galvanized sheets .. . - . .... . . 


9.4 


Cold rolled strip . . . 


5.1 


Tin and Terne Plate 


17.6 


Plain Wire 


15.2 


Other wire and wire products .....-.-. 


6.4 


Pipe and tubes (black) ' .. . . . . ...... 


24.9 


Other pipe and pipe fittings ' - , - - 


6.8 








Total of above items 


15, 332, 449 


100.0 







> Includes butt-weld, lap, electric weld and seamless. 

> Includes cast iron. 

Source: Annual Statistical Report American Iron and Steel Institute. 



ALLOT AND TOOL STEEL 



Until recent years, special alloy and tool steels were produced on a relatively 
small scale, largely by semi-integrated companies. The trend, however, has 
been in the direction of larger scale output (at least of alloy as distinct from tool 
steel) by integrated producers. High value relative to bulk gives these products 
a very high degree of mobility while brands and special processes differentiate 
sources of supply. The ratio of alloy to hot rolled carbon steel production in 
1937 is shown in Table VI. Although the ratio is small, the field for alloy prod- 
ucts is increasing. 



CONCENTRATION OF ECONOMIC POWER 10399 

4. Geographical Concentration of Production Facilities 

blast furnaces 

The location of blast furnaces has been primarily determined by the location 
of the essential raw materials — iron ore, limestone, and good coking coal.^ Of 
the three, limestone is so widely distributed that it is hardly a factor. Generally 
speaking, iron ore moves to coal even though slightly more ore (1.718 tons) is 
usedthan coal (1.272 tons) per ton of pig iron. Determining considerations may 
be listed briefly. 

(i) Ore is more compact and more easily handled than coal. 

(ii) The most desitable ore fields are much further removed from consumption 
areas for iron and steel than good coking-coal fields. 

(iii) The freight rate structure is generally more favorable to the movement of 
ore than to the transportation of coal. 

(iv) Coal is relatively more important to iron and steel mills than the ratio of 
coal to ore consumption in the production of pig iron would indicate because it 
is a source of power as well as heat throughout the entire production process. 

Outstanding exceptions to the generalization that ore moves to coal are found 
in the Birmingham area, where coking coal and self-fluxing iron ore are contiguous, 
and in Southeastern Pennsylvania where the Bethlehem works obtains at least 
part of its ore requirements locally. Map I shows the locations of blast furnaces 
in the United States with relation to coal and ore deposits. The bulk of the iron 
ore used by steel producers comes from the Lake Superior fields— Northern Wis- 
consin, Minnesota and Michigan. In 1937 these three states produced 85.6% of 
the American output. Minnesota alone accounted for 67.2%. Alabama was 
the third most important source of domestic ore (8.7%) followed by Pennsylvania 
(including New York) with 3.6% of total output. Substantial quantities of ore 
are imported, primarily from Chile. In 1937, out of 2,443,000 tons imported, 
58.9% came from Chile. . Most of this ore entered this country through Sparrows 
Point, Md., which port accounted for 80.3% of total ore imports. Blast furnaces 
located at Sparrows Point and in Eastern Penn. are probably supplied primarily 
from foreign sources. (See Table VIII following.) 

Table VIII. — Production of iron ore by States, 1937 

[Gross tons] 

[Compiled by the Bureau of Mines, Department of Interior] 

Minnesota-- 48,416,985 67.2% 

Michigan.... 12,085,048 16.8 

Alabama __. 6,307,581 8.7 

Pennsylvania - 2,625,044 3.6 

Wisconsin 1,155,602 1.6 

New Jersey... 520,133 .7 

New York (') 

Other States .., 983,155 1.4 

Total 72,093,548 100.0% 

I Included in Pennsylvania. 

Source: Annual Statistical Report of the American Iron & Steel Institute. 

' Total amount of materials used per ton of pig iron produced Is remarkably stable from year to year 
Excluding charcoal, which is of minor importance and is reported in bushels rather than tons (i. e., char- 
coal pig iron is usually less than 1% of the total output), an average of 3.161 long tons of materials were con- 
sumed per long ton of pig iron produced in 1937. This was the high for the period, the low being 3.092 tons 
in 1933. 

Of the average of 3.161 tons of materials used in 1937, 1.897 tons were ore, scrap and cinder, 0.361 tons were 
limestone (flux) and 0.903 tons were coke. Since coke is bulky relative to its weight and value as well as 
friable, transportation is both costly and deleterious. Except for bee-hive coke, therefore, which has be- 
come relatively unimportant (e. g., in the 7 years ending 1938, by-product coke varied from 94% to over 
97% of total coke production while in 1935 bee-hive coke accounted for less than 3% of the steel industry's 
consumption of bituminous coal), it is the assembly of coal rather than coke which is characteristic in the 
steel industry. Using the ratio of coal to coke as shown in Diagram I for 1937, the yield of coke is about 
71%. This means that 0.903 tons of coke are equivalent roughly to 1.272 tons of coal and the total ma- 
terials used in that year are increased from 3.161 to 3.530 tons- per ton of pig. 

We may say roughly then that 3^4 tons of raw materials must be assembled for every ton of pig iron pro- 
duced. This figure understates the importance of the assembly of raw materials per ton of steel manu- 
factured because of losses through oxidization and waste in the steel furnace. Although some of this waste 
is recovered in the form of mill cinder, scale, etc., and returned to the furnace, the net loss approximates 
10%. 



124491— 40— pt. 18 13 



10400 



CONCENTRATION OF ECONOMIC POWER 












1 1 . . . J 


PENNSYLVANIA 
OHIO 
ALABAMA 
NEW YORK 
ILLINOIS 
ALL OTHER 



CONOENTRATIO>i OP ECONOMIC POWER 

Table IX. — Production of coal by States, 1937 



10401 



states 


Thou- 
sands of 
net tons 


Percent 


States 


Thou- 
sands of 
net tons 


Percent 


All . 


493, 370 

12, 400 

3,200 

7,153 

51, 240 

17, 270 

3,690 

7,044 

47, 053 

1,570 

561 

(') 

3,075 
1,795 


100.0 
2.5 
0.7 
1.5 
10.4 
3.5 
0.8 
1.4 
9.5 
0.3 
0.1 

0) 
0.6 
0.4 


North Dakota..... 


2,105 
24,500 

110, 160 

50, 915 

5,292 

879 

3,750 

18,-558- 

2,010 

118,050 

5,930 

170 


0.4 


Alabama . . 


Ohio 


5 


Arkansas 


Oklahoma 


22 3 


Colorado 


Pa. Bituminous 


Illinois ,.. 


Pa. Anthracite 


10.3 


Indiana 


Tennessee --. 


1.1 


Iowa . .. 


Texas 


0.2 




Utah 


0.8 


Kentucky 


Virginia 


' ""^.7 


Maryland 


Washineton 


4 


Michigan 


West Virginia . . .. 


23.9 


Missouri . 


Wyoming 


1.2 


Montana 


Other States, Alaska 


(») 


New Mexico 











' Included with Kansas. 

2 Included with Arkansas. 

3 Less than 0.05%. 

Source: Annual Statistical Report of the American Iron and Steel Institute, 1937. 

The high concentration of blast furnaces in the western Pennsylvania and 
eastern Ohio region with minor concentrations around the lower tip of Lake 
Michigan and around Birmingham is well illustrated in Map I. Actual produc- 
tion figures by states in 1937 give a very rough indication of this concentration. 
(See table below.) 

Table X. — Production of pig iron by States 

[Gross tons] 

Pennsylvania 11,371,238 31.5 

Ohio 7,903,944 22.0 

Indiana, Mich 4,722,316 13.1 

Alabama _ 2,580,674 7.1 

Md., Va., W. Va., Ky., Tenn 2,531,457 7.0 

Illinois 3,426,116 9.5 

Mas.s., New York 2,843,286 7.9 

Minn., Iowa, Col., Utah 750,565 2.1 

Total.... - 38,129,596 100.0- 

Source: Annual Statistical Report of the .iVmerican Iron and Steel Institute. 

STEEL WORKS 

Most of the pig iron produced i.s used in the manufacture of steel. For ex- 
ample, in 1937, 31 million out of a total of 36 million tons of 86% of all pig iron 
produced was of basic and Bessemer grade, the types used for steel production. 
Foundry, malleable and forge grades sre generally produced for sale primarily by 
small merchant furnaces. Thus in 1937, whereas only 6.8% and 7.5% of basic 
and Bessemer pig iron respectively were produced for sale, 86.9% of foundry, 
86.3% of malleable and 97.9% of forge pig iron were produced for this purpose. 
Although 82% of all pig iron was produced for makers use, of the total output of 
pig iron of steel making grade 93% was produced for the makers' own use. 

Economies in the conservation of heat indicate the desirability of using iron for 
steel making purposes in the molten state. Thus, of the total output of pig iron 
and ferro-alloys, the Census of Manufactures reports that 72% was used in the 
molten state in 1933 and 1935 and 71% in 1937. If pig iron for sale and ferro- 
alloys be subtracted from 1937 output, this would indicate that about 88% of all 
pig iron produced for makers use in 1937 was used in the molten state. 

Economies of heat conservation and the use of by-product blast furnace gas 
together with the relatively high cost of transporting pig iron compared to its 
value have resulted in a concentration of steel works in the vicinity of blast fur- 
naces even if not under the same ownership. Of 52 companies having capacity 
for the production of pig iron in 1938, 18 integrated companies owned 89% of the 
total while the remainder was divided among 34 non-integrated merchant pro- 
ducers. These same integrated companies accounted for 90% of all capacity 



10402 CONCENTRATION OF ECONOMIC POWER 

for ingots and steel for castings, 76 semi-integrated companies dividing the 
remainder among them. 

Table XI below shows the distribution of production of ingots and steel for cast- 
ings among the most important states. It will be noted that Pennsylvania and 
Ohio produced almost 53% of total output in 1937; Indiana and Illinois almost 
21%. The distribution of output is roughly comparable to that of pig iron. 

The geographical dispersion of steel works, however, is considerably greater 
than that of blast furnaces (especially blast furnaces for steel-making iron) as is 
indicated generally in Map I, p. 10400. Theavailability of steel scrap makes loca- 
tion nearer the consuming market economically practicable and desirable. Steel 
works along the West Coast and in the vicinity of St. Louis are prominent ex- 
amples. Some furnaces may be operated almost exclusively on scrap. The im- 
portance of this material is indicated by the fact that the average charge of open- 
hearth furnaces producing 91.5% of all steel made in the United States in 1937 
was approximately 54% scrap and 46% pig iron. A declining ratio of pig iron 
output to steel ingot production over a long period of years is evidence of the 
growing importance of scrap. 

Table XI. — Production of ingots and steel for castings by States, 1937 

[Gross tons] 

Mass., R. I., Conn 276,021 0.5 

New York, New Jersey 2,865,883 5.7 

Pennsylvania 1 15,615, 164 30.9 

Delaware, Md.. D. C, Va 2,324, 586 4.6 

West Virginia. Kentucky 2, 138,677 4.2 

Georgia, Ala., Texas.. 1,903,257 3.8 

Ohio 11,074,914 22.0 

Indiana 6,141,480 12.1 

niinois __ 4,429,676 8.8 

Michigan, Minn., Mo 2,457,337 4.9 

Oklahoma, Colo., "Wash 741,991 1.5 

California _ 599,715 1.2 

Total 50,568,701 " 100.0% 

Source: Annual Statistical Report of the .American Iron and Steel Institute. 

ROLLING MILLS 

As steel approaches its rolled form equipment becomes more specialized. 
Almost completely undiflFerentiated in the blast furnace stage, many rolled prod- 
ucts require distinctive rolling equipment. On the other hand the operating 
characteristics of blast furnaces and steel furnaces especially (and to some extent 
of rolling mills as well) require production approximating rated capacity during 
the period the furnace or mill is in use. Flexibility is attained by varying the 
number of units in use or the time during which they are used rather than the 
rate of use. To provide effective use of undifferentiated furnace capacity, there- 
fore, in the face of shifts in demand for finished rolled products for which more 
specialized rolling equipment is necessary, a multiplication of rolling mill facilities 
may be required to balance installed iron-making and' steel-making capacity. 
Economies in transportation and handling costs of scrap produced as well as 
those associated with common power faciUties, the use of by-product gas and tar, 
and heat conservation may dictate a location of such rolling mills contiguous to or 
in the vicinity of furnaces. Since roughly only 70% of the weight of the ingot 
on the average is finally produced in the form of hot rolled steel products, the 
first item mentioned may be substantial. Out of a total of 28,515,000 gross tons 
of scrap consumed in 1937 by the steel industry, 57.5% was produced in the 
companies' own works. These considerations weigh the more when the market 
for the rolled product is <iispersed. 

INTEGRATION 

In the production of rolled products, there is both a wider geographic dispersion 
of mills and a greater number of producers. This increase in the number of 
companies producing total finished hot rolled products as contrasted with steel 
ingots and pig iron is shown in Table XII and on Chart IV. It is characteristic 
that the integrated companies produce a wide variety of products while the 
degree of specialization increases for semi-integrated and even more for non- 
integrated companies. Many of the latter manufacture only a single product. 



CONCENTRATION OF ECONOMIC POWEIl 



10403 




10404 



CONCENTRATION OF ECONOMIC POWER 



Table XII. — Capacity in the United States, by degree of company integration, 1938 

Pia IRON 



Annual 

Capacity 

in gross 

tons 



Per Cent 



No. of 
Compa- 
nies 



Total..-. 

Integrated 

Non-integrated 



51, 401. 480 



100 



45, 953, 380 
5, 448, 100 



INGOTS AND STEEL FOR CASTINGS 



Total 

Integrated 

Semi-integrated 



Annual 

Capacity 

in gross 

tons 



73, 047, 892 



65, 951, 300 
7, 096, 592 



Per Cent 



No. of 
Compa- 
nies 



74 



TOTAL FINISHED HOT ROLLED PRODUCTS 



Annual 

Capacity 

in gross 

tons 



Per Cent 



No. of 

Compa- 
nies 



Total 

Integrated 

Semi-integrated 
Non-integrated. 



57, 818, 900 



100 



124 



49, 025, 900 
5, 508. 250 
3,284,750 



Source: Compiled from the Iron anc^ Steel Works Directory of the United States and Canada — 1938 

Because of the characteristics of production and the market, the importance 
of such semi- and non-integrated companies varies widely among products. 
Although production data on this basis are not available, the relative importance 
of each class of companies for each of a selected group of products in terms of 
relative capacity installed in 1938 is indicated in Table XIII. In the case of hot 
rolled products, integrated producers are generally more important sources for 
heavy steel products than for light while semi-integrated and non-integrated com- 
panies are more important producers of flat-rolled steel products, especially of 
light steel such as strip and black plate for tinning. More marked is the relative 
importance of this latter group of companies in the manufacture of further 
finished steels, especially cold-rolled strip in which they accounted for almost two- 
.thirds of the total capacity. 

GEOGRAPHICAL CONCENTRATION OF PRODUCTION WITH RELATION TO CONSUMPTION 

Data are not available to demonstrate adequately the relation between geo- 
graphical concentration of production and of consumption. The problem is one 
which requires analysis by products. This analysis has been undertaken by the 
Department of Justice in the present investigation and the results will be made 
available at a later date. 



CONSUMPTION BY INDUSTRY AND AREA 

The distribution of finished steel among major consuming industries in 1937, as 
estimated by the Iron Age, is shown in Chart V. The automotive industry to- 
gether with railroads, containers and the building industry, in the order named, 
accounted for approximately 47% of finished steel sold in that year. Although 
the relative order of their importance has altered, these four industries have con- 
stituted the four most important outlets for steel in each of the last six years 
(1932-38, excluding 1933 for which .data are not available). The automobile 



CONCENTRATION OF ECONOMIC POWER 



10405 



industry was first in every year (varying from 15.5% to 24.8%) but railroads were 
third in three years and fourth in two while the building industry occupied second 
rank in every year except 1937. Containers were fourth in three years and 
third in three others. Combined, these four industries accounted for from 46.2% 
of total estimated consumption in 1938 to 56.5% in 1932. 



CHART V 



CONSUMPTION OF FINISHED STEEL PRODUCTS 
BY PRINCIPAL CONSUMING INDUSTRIES 
1937 



PER CENT 

BUILDING 

RAILROAD 

AUTOMOTIVE 

OIL. GAS. ETC. 

CONTAINERS 

AGRICULTURE 

MACHINERY 

MISCELLANEOUS 

EXPORTS 

PER CENT 
SOURCE "THE IRON AGE' 




I I I 



PREPARED BY THE DEPARTMENT OF JUSTICE 



Table XIII. — Capacity for Selected Produced by Degree of Company Integration 

[Gross Tons; 000 omitted] 



Product 



Rolled Billets (or Forging. 
Shapes, Heavy Structural 

Plates 

H. R. Sheets 

H. R. Strip 

Heavy Rails 

Wire Rods 

Black Plate for Tinning. . 
Merchant Bars 



Indus 

try 
Capac-' 

ity 



1,107 
3,667 
6,505 
10,954 
4,286 
2,650 
2,358 
2,135 
9,173 



Indus- 
try 
Per- 
cent- 
age 



100 
100 
100 
100 
100 
100 
100 
100 
100 



Integrated 
MiUs 



Tons 



836 
3,617 
4,464 
9,366 
2,979 
2,650 
3,435 
1,706 
8,146 



Per- 
cent of 
Total 



75.5 
95.9 
80.9 
86.5 
69.5 
100.0 
78.8 
79.9 



Semi-Inte- 
grated Mills 



Tons 



262 

160 

1,028 

1,090 

660 



804 
96 
589 



Per- 
cent of 
Total 



23.7 
04.1 
18.7 
10.0 
15.4 



18.4 
04.6 
06.4 



Non-Inte- 
grated Mills 



Tons 



23 

498 
647 



119 
333 
438 



FURTHER FINISHED STEEL 



C. R. Sheets 

C. R. Strip 

Plain Wire 

Tin and Teme Plate 

Pipe and Tubes ' 

Wire Products -. 



5,143 
1,437 
4. 495 
3,651 
7,288 
3.674 



100 
100 
100 
100 
100 
100 



4,694 
491 
3,291 
3,078 
5.359 
2,778 



89.3 
34.2 
73 2 
84.3 
73.5 
76.6 



244 
236 
803 
115 
281 
727 



04.8 
16.4 
17.9 
03.1 
03.9 
19.8 



306 
710 
401 
468 
1,648 



Per- 
cent Of 
Total 



0.8 



0.4 
04.6 
15.1 



02.8 
15.6 
04.8 



06.9 
49.4 
08.9 
12.6 
22.6 
04.6 



1 Includes Butt-Weld, Lapweld, Electricweld and Seamless. 

Source: CompUed from the Iron and Steel Works Directory of the United States and Canada, 1938. 



10406 



OONCENTRATION OF ECONOMIC POWER 



It is apparent that, with the exception of the automotive industry, steel require- 
ments of these industries would be widely dispersed geographically. Readily 
available data for consumption of domestic finished steel by major States are 
shown in Table XIV. Over 60% of finished steel was distributed in eight con- 
tiguous states — New York, New Jersey, Pennsylvania, Ohio, Indiana, Illinois, 
Michigan and Wisconsin — in 1935. The Pacific area accounted for only 5%. 
while roughly one-third of the total consumption was distributed to the 37 remain- 
ing states in six other geographic areas. Among the states, Michigan — the home 
of the* automobile industry — was by far the largest buyer, accounting for 21% 
of total consumption. Ohio and Pennsylvania which in 1937 produced 53.5% 
of total pig iron and 52.9% of ingots and steel for castings accounted for only 
15% of total consumption. Indiana and Illinois, which in the same year pro- 
duced 20.9% of the steel, consumed only 10% of it. Although production and 
consumption here compared are for different years, the percentage of output by 
states has been fairly stable over the period. Fairly heavy concentration of 
consumption for all finished steel products in the industrial states of the Middle 
Atlantic and the East North Central areas, however, is consistent with a very 
wide dispersion for particular products, especially further finished steel, such as 
tinplate and pipe. Space and readily available data will not permit statistical 
presentation. 

Table XIV, — Consumption by Principal States of Domestic Finished Steel, 1935 



Principal Consuming States 



Middle Atlantic Area 

New York 

New Jersey 

Pennsylvania 

East North Central Area 

Ohio-- 

Indiana 

Illinois 

Michigan 

Wisconsin 

Pacific Area 

Washington , 

Oregon 

California 

All Other States 



Consumption 
in gross tons 



4,120,000 


20 


2,472,000 

412,000 

1,236,000 


12 
2 
6 


8,652,000 


42 


1,854,000' 

412,000 

1,648,000 

4,326,000 

412,000 


9 
2 
8 
21 
2 



1,030.000 
6,798,000 



Percent of 
Consump- 
tion by 
States 



Source: Derived from U. S. Tariff Commission Report No. 128, p. 375. 



CONCENTRATION OF CAPACITY BY MAJOR PRODTJCING REGIONS 

Since state boundaries fail to coincide with industrial regions and there is an 
absence of available production data by such regions, the actual degree of con- 
centration in the iron and steel industry may be approximated from capacity 
data. Using capacity by mills in 1938 as reported in the Iron and Steel Directory, 
Table XV has been prepared to show the relative capacity for the production of 
pig iron, steel ingots, finished hot rolled, and further finished steel products in the 
three most important producing regions — Pittsburgh, Chicago and Birmingham. 
Each region was defined as an area within a 100 mile air line radius of the city 
named. For some purposes this radius is too large but nevertheless these figures 
are of interest. 



CONCENTRATION OF ECONOMIC POWER 10407 

Table XV. — Concentration of capacity in major ■producing areas,^ 19S8 





Pig IroTi and Fcrro 
AUoys 


Steel Ingots & 
Castings 


Finished Hot Rolled 
Steel Products 2 


Further Finished 
Steel Products 3 


Prortucing Area 


Capacity 

in gross 

tons 


Percent 

of 

total 


Capacity 

In gross 

tons 


Percent 

of 

total 


Capacity 

in gross 

tons 


Percent 

of 

total 


Capacity 

in gross 

tons 


Percent 

of 

total • 


Total U. S. Capacity.. 

Pittsburgh 

Chicago 


51, 401, 480 
21, 356, 800 
10, 635, 800 
3, 200, 850 
35, 193, 450 


100 
41.5 
20.7 
6.2 
68.5 


73, 047, 892 
30, 282, 010 
13, 828, 000 
2. 329, 000 
46,439,010 


100 
41.5 
18.9 
3.2 
63.6 


54, 927, 800 

* 22, 970, 800 

9, 434, 500 

1, 840, 000 

34, 245, 300 


100 
41.8 
17.2 
3.3 
62.3 


26, 726, 923 
12,774,898 
3, 668, 230 
878, 200 
17,291,328 


100 
47.8 
13.7 


Birmingham 


3.3 


Total of above » 


(C4..7) 



> Producing area comprises territory within 100 mi. air line of points listed. 

» Includes the following products only: 

Heavy shapes, plates, sheet piling, heavy rails, rolled blooms and billets for forging, new billot steel rein- 
forcing bars, rerolled steel reinforcing bars, hot rolled bars other than concrete reinforcing, splice bars and 
tie plates, blanks and pierced billets for seamless tubes, skelp, hot rolled sheets, hot rolled strip, hoop, cotton 
ties and baling bands, hot rolled black plate, wire rods, strip for cold reduced black plate and tin plate. 

' Includes the following products only: 

Cold finished bars, seamless tubes, butt-weld steel pipe, lap weld steel pipe, electric weld steel pipe, cold 
rolled sheets, galvanized sheets, cold rolled strip, tin and terne plate, plain wire, wire nails and staples. 

< For some products the Carnegie-Illinois Steel Corp. report in the Directory did not show separately 
capacity located at each plant by product.' Therefore, in arriving at area capacities in which plants were 
not reported separately estimates had to be made of actual plant capacity for particular products. In this 
connection the following estimates were required. 

Bars other than concrete reinforcing: Pencoyd, Pa., estimated capacity. 39,000 O. T. 

Heavy Structural Shapes: Pencoyd, Pa., estimated capacity 70,000 G. T. 

Skelp: Youngstown and McDonald, Ohio plants, estimated capacity 265,000 0. T. 

Source: Compiled from Iron and Steel Works Directory of the United States and Canada. 

Pittsburgh, of course, is by far the most important regioo/, accounting for 
around 41% of iron, steel ingots and hot rolled steel, and almost half of the 
further finished steel. The degree of concentration in each region tends to decline 
as one passes from pig iron to steel ingots and approaches the more finished form 
of the steel product. Over two-thirds of all pig iron capacity is located in these 
three areas; over 63% of ingot capacity and over 62% of finished hot rolled 
capacity are also there. According to the sample of further finished products 
employed, 65% of further finished capacity was so concentrated. A comparison 
of these data with the sketchy consumption figures shown in Table XIV will give 
a rough idea of the relative concentration of the industry. 

5. Size of Company 

According to the Iron and Steel Works Directory of the American Iron & Steel 
Institute, there were 124 companies in 1938 which had capacity for the production 
of finished hot rolled products. Including 34 non-integrated (non-integrated with 
respect to steel making capacity only) manufacturers of pig iron and ferro-alloys, 
this makes a total of 158 companies. With operating subsidiaries included, the 
figure is raised to 164 operating companies. This number is substantially fess than 
the total number of companies in the industry since it does not include companies 
with further finishing capacity only and companies wihch have no rolling capacity 
but engage exclusively in the manufacture of products like wire and pipe. Al- 
though the total number of companies varies considerably from product to product, 
an outstanding characteristic of this industry is the concentration of capacity in 
the hands of a few sellers. Two indications of relative size may be noted. 

In Table XVI- the total invested capital of each of the first ten companies in 
the industry is contrasted with that reported for the industry as a whole in 1937. 
These ten largest companies accounted for 88% of the entire investment of more 
than four and one quarter billion dollars. The assets of United States Steel Cor- 
poration alone were 40% of the total, well over 2J^ times the figure for its nearest 
rival, Bethlehem Steel Corporation, which in turn was practically twice as large 
as its nearest competitor. Republic Steel Corporation. 55% of the total industry 
investment is accounted for by two corporations, over two-thirds by four. Even 
the second largest company in the industry had an investment substantially 
larger than the aggregate of all companies other than the first nine. 



10408 CONCENTRATION OF ECONOMIC POWER 

Table XVI. — Invested Capital of the Ten Largest Companies,^ 1937 



CompEiny 



Invested 
Capital in 
Millions of 

Dollars 



Percent 



Total Invested Capital for the Industry >... 

1. United States Steel Corporation-- 

2. Bethlehem Steel Corporation 

3. Republic Steel Corporation 

4. Jones & Laughlin Steel Corporation 

6. Youngstown Sheet and Tube Company 

6. National Steel Corporation.. 

7. Inland Steel Company 

8. American Rolling Mills Company 

9. Wheeling Steel Corporation 

10. Crucible Steel Company of America 

Totals for the Ten Companies 

All Others 



4, 281. 26 



100% 



1,717.02 
656.68 
329.50 

198. 61 

199. 34 
179. 69 
143. 36 
132. 62 
110. 37 
103. 59 



40%. 

16% 
8% 
6% 
5% 

3^ 
3% 
3% 
2% 



3. 771. ( 



509.68 



12% 



> Average of total invested capital at the beginning and at the end of the year for each individual company 
listed as reported by Poors for 1937. 

' Total invested capital as reported by the Annual Statistical report of the American Iron and Steel Insti- 
tute for 1937. 

Sources: Poors Annual; Statistical Report of American Iron and Steel Institute. 

A second measure of relative size is employed in Table XVII; the percentage of 
the total U. S. capacity in 1938 of pig iron, steel ingots, total hot rolled products 
and certain selected hot rolled and further finished products of each of the ten 
largest companies in each classification respectively. In the construction of this 
table, proportionate capacities for companies which were not among the leading 
ten for any given product are not recorded. It will be observed that the ten 
largest companies measured by investment are likewise the ten largest in total 
finished hot rolled capacity, with the exception of the Crucible Steel Company of 
America. This company is primarily a manufacturer of high-speed and tool 
steels, alloys and stainless steels, and has relatively little capacity in ordinary hot- 
rolled products. It will be observed, further, that National Steel Corporation 
with a considerably smaller total investment than Jones & Laughlin Steel Cor- 
poration, has much larger finishing capacity than the latter although smaller pig 
iron and ingot capacity. Similarly, Youngstown Sheet & Tube Company, with 
a much greater investment than Inland Steel Company, has approximately the 
same hot rolled finishing capacity but a much larger pig iron and ingot capacity. 

It will be noted that there is a wide disparity in the relative importance of 
particular companies for particular products. 

Even the giant United States Steel Corporation, although first in all the 
products shown except cold rolled sheets, in which it is third to National Steel 
Corporation, is practically matched by other much smaller companies in par- 
ticular products. In general, its dominance is more pronounced in hot-rolled 
products, especially the heavier hot-rolled products, than in further finished 
products Exceptions are wire and hot reduced tin and terne plate. In cold 
rolled sheets, strip and tin and terne plate, its lead is small or non-existent. 
Finally, to list the ten largest producers in some product's, it is necessary to include 
some semi- and non-int«grated producers. 



CONCENTRATION OF ECONOMIC POWER 



10409 









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10410 



COxNTCENTKATION OF ECONOMIC POWKK 



Ten companies or less accounted for the entire capacity in the United States 
in three of the products listed, heavy shapes, heavy rails, and cold reduced tin 
and terne plate. In some other products, not listed, the concentration is even 
greater. For example, only three companies produce sheet piling. Although 
the concentration of capacity for particular products varied from 66.2% to 100% 
for the ten largest companies, it is noteworthy that with the exception of cold- 
rolled strip, the range is not much wider if only the first five companies be aggre- 
gated (i. e., 58% to 100%). Since this table includes all of the most important 
rolled and further finished steel products (measured in tonnage produced) with 
the exception of black plate for tinning, and pipe and tubes, it may be considered 
typical of the concentration of capacity in the industry and of the leading posi- 
tion of one or a few sellers. Strictly, of course, these data understate the impor- 
tance of size, since size is a relative term and must be measured with respect to 
the market for the product in question. 

Perspective may be restored by one striking comparison. The manufacturing 
capacity of United States Steel Corporation alone is approximately that of all 
German producers combined. It is almost twice that of the entire British steel 
industry and more than twice that of all French mills combined. 

COST STRUCTURE OF THE INDUSTRY 

Data are not available which permit anything like an adequate picture of the 
cost structure in the iron and steel industry. Nevertheless, it is important to 
bear in mind the bulk of overhead costs in tiie production of steel. Although we 
have seen that the iron and steel industry occupied no better than third place in 
total capital investment, it will be observed in Table XVIII that it has the slowest 
capital turnover (i. e., the ratio of capital investment to estimated values of sales) 
of the leading manufacturing industries. Thus steel capital investment was 
equalled by gross income at the rate of once every 1.6 years in 1936 as compared 
with 1.4 years in the petroleum industry and about every five months in food 
manufacturing. As shown in the same table, the average capital turnover in the 
steel industry from 1909 through 1938 was 2.1 years, ranging from 1.3 years in 
1918 to 5.5 years in 1932. In other words, at its worst the ratio of investment to 
gross income in steel approximates that in the public utilities, the traditional 
examples of heavy capital use. 



Table XVIII. — Capital turnover in the steel industry ' and in six other leading 
manufacturing industries - in 1936 



Year 


Industry- 


Stock. 
Bonded Debt 
and Surplus 
(000 Omitted) 


Estimated 
Value of 
Sales (000 
Omitted) 


Rate 


1909-1938 A verage 


Iron and Steel . . 


4, 453, 248 
4,887,112 
4, 962, 261 
4, 125, 654 
5, 554, 722 
4, 535, 678 
3, 424, 186 
2, 903, 287 
2, 461, 969 


2,120,095 

3,811,431 

895, 781 

2, 572, 933 
4, 044, 089 
9, 945, 168 

3, 614, 106 

4, 290, 749 
4.640.931 


Yeart 

2.1 


1918 


Iron and Steel 


1.3 


1932 . .. . 


Iron and Steel . 


5.5 


1936 


Iron and Steel 


1.6 




Petroleum . . . .. 


1.4 




Food (Manufacturing;) _ 


0.4 




Chem. <5r Allied Products 


0.9 




Textiles 


0.7 




Motor Vehicles - 


0.5 




Tobaoco 


897, 458 1. 188. 954 


0.7 













• Source: American Iron and Steel Institute. 

» Bureau of Internal Revenue Report, Statistics of Income (Vol. II) for 1936. 

Much capital investment is tied up in ore and coal reserves by integrated com- 
panies, one of the reasons for the disproportionate investment of these companies 
as contrasted with semi- and nonintegrated firms. But the major cause is un- 
doubtedly discovered in the enormous cost and capacity of efficient units of capital 
equipment required in the large-scale manufacture of iron and steel products. 
Thus, the cost of a modern blast furnace approximates five million dollars, open 
hearth furnaces may require an investment of upwards of six hundred thousand 
dollars, while a continuous strip or sheet mill will aggregate upwards of ten 
million dollars to almost double that sum. In part because of reduced operating 
cost for output equivalent to their normal capacity and in part becau.se of the 



CONCENTIIATION OF ECONOMIC POWEH 



10411 



quality of the product which was required b}'^ the automobile industry, the out- 
standing change in iron and steel equipment during the last decade has been the 
installation of continuous mills for finished hot rolled products. The record of 
such installations to Jai.uary 1938 is shown in Table XIX. The large annual 
capacity and the great width of most of the latter mills is especially notable. To 
continuous hot mills in recent years have been added continuous cold reduction 
mills, especially for strip and black plate. 

Overhead costs in the steel industry, then, may be considered in two categories. 
First, there are the usual financial overheads which are associated with the total 
investment of the entire corporation. Second, and perhaps more significant, are 
the technical overheads associated with the operation of individual furnaces or 
mills. Since the production process is continuous and the size of individual units 
is very large, a considerable amount of overhead is invested in the process once 
it is started and interruptions to that process become excessively costly.. The 
exorbitant cost of roll change, for example, on a continuous mill, may render it 
profitable to serve a relatively wide and variable distribution area, even at 
increased freight absorption, if by so doing it is possible to accumulate a more 
economical tonnage of a given specification. 

These considerations weigh larger with the integrated than with the non- 
integrated producers, not merely because of the larger investment of the former 
but also because the size of the latter's units of equipment is a mere fraction of 
that of the integrated firm. The average nonintegrated firm must put up with a 
hand rolling mill or some other compromise with the continuous unit. Its costs, 
therefore, are more flexible although they are likely to be larger at any rate of oper- 
ations favorable to the continuous unit. The dominating influence of the rate of 
operations on net profits in the industry even in the absence of price change is too 
obvious to be stressed. It is evidence of the weight of overhead costs. 

Table XIX. — Continuous Sheet and Wide Strip Mills Installed or Under 
Construction in the United States With ApTproximate Capacities, January 19S8 



Name of Company and Location of Mill 



Year 
Started 



Size, In. 



Annual 
Capacity 
Gross Tons 



American Rolling Mill Co., Ashland, Ky._ - 

American RoUina- Mill Co., Butler Pa.. 

Republic Steel Corp., Warren, Ohio 

Weirton Steel Co., Weirton, W. Va..... 

Carnegie-Illinois Steel Corp., Gary, Ind 

American Rolling Mill Co., Middletown, Ohio.. 

Wheeling Steel Corp., Steubenvilie, Ohio _. 

Carnegie-niinois Steel Corp.,' South Chicago, 111 

Great Lakes Steel Corp., Ecorse, Mich 

Otis Steel Co., Cleveland 

Inland Steel Co., Indiana Harbor, Ind.._ 

Allef;heny Steel Co., Brackenridge, Pa 

Youngsto^-n Sheet & Tub? Co.,' Indiana Harbor, Ind. 

Youngstown Sheet & Tube Co., Campbell, Ohio 

Carnegie-Dlinois Steel Co., Gary, Ind 

Ford Moto- Co., Detroit 

Carnegie-niinois Steel Corp., MacDonald, Ohio 

Bethlehem Steel Co., Lackawanna, N. Y 

Carnegie-niinois Steel Corp., Gary, Ind... 

Great Lakes Steel Corp., Ecorse, Mich _ 

Granite City Steel Co., Granite City, 111 

Carnegie-Illinois Steel Corp.,' Ilomestcnd, Pa 

Jones & Laughlin Steel Corp., Pittsburgh 

Bethlehem Steel Corp., Sparrows Poii.*. Md 

Tennessee Coal, Iron & Railroad Co., Biimingham 

Republic Steel Corp., Cleveland -. 

Carnegie-Illinois Steel Corp., Pittsburgh, Irvin Wks... 



1926 
1926 
1927 
1927 
1928 
1929 
1929 
1931 
1930 
1932 
1932 
1932 
1934 
1935 
1935 
1935 
1935 
1936 
1936 
1936 
1936 
1936 
1936 
1937 
1937 
1937 
1937 



58 
48 
36 
54 
42 
80 
60 
96 
38 
72 
79 
38 
72 
79 
38 
56 
43 
79 
80 
96 
90 
100 
96 
56 
48 
98 
80 



432, 000 
315, 000 
302, 000 
420, 000 
400, 000 
372,-OOiO 
540, 000 
720, 000 
400, 000 
375, 000 
600, 000 
275, 000 
214, 000 
600, 000 
270, 000 
500, 000 
300. 000 
600, 000 
720, 000 
720, 000 
375. 000 
729, 000 
720, 000 
600, 000 
300, 000 
720, 000 
600, 000 



13,119,000 



1 These mills are continuous and semi-continuous plate mills, but are capable of rolling heavier gage sheets. 
Source: The Iron Age, January 6, 1938, p. 388. 

6. Pricing op Iron and Steel 
The Basing Point System of Pricing.— Characteristically, iron and steel prod- 
ucts today are priced on a multiple basing-point system.'' It is beyond the scope 
of this pamphlet to explain the origin, describe the development, analyze the effects 

< There are exceptions, the most important being rails and other steel products sold to railroads for their 
own use. These are oriced f. o. b. the mill or the nearest freight station on the Ime of the purchaser. * or 
some products in some areas, arbitrary dehvered prices are established. Detroit is an outstanding example. 



10412 CONCENTRATION OF ECONOMIC POWER 

of or state the problems associated with the basing-point method of pricing. As 
a method, it is not unique to the steel industry. Suffice it here to describe suc- 
cinctly its operation and the recent changes which have been made in it. 

Essentially a basing-point system of pricing is a simplified method of quoting 
a delivered price at any potential destination. That is, the destination price is 
the aggregate of the basing-point price and the freight from basing-point irre- 
spective of source of supply. So long as the same basing-point, the same basing- 
point price, and the same freight rates from basing point to destination are em- 
ployed, ignoring "extras" ^ and terms of sale, the price at any given destination 
will be identical irrespective of the location of the mill or the actual transportation 
cost. If, then, there are a limited number of basing points for any given product, 
known prices at those points, and a book of freight rates from such points to 
various destinations available, the computation of the deliered price at any given 
point is within the powers erf any office boy. Whether such a simplification of 
pricing procedure, together with the publication by a central body of a freight- 
rate book for the use of the industry significantly affects "competition" is not a 
matter to be considered in. this descriptive statement. 

From the point of view of the ease in price quoting and from that of the effects 
of the system, the number of basing points is extremely important. For example, 
if a mill" is not located at a basing point, it is apparent that the freight from basing 
point to customer location (the amount of the addition to base price which deter- 
mines the delivered price) will generally differ from the freight from mill to cus- 
tomer location (the actual freight which is either prepaid or allowed to the cus- 
tomer). Therefore, the net receipts at the mill (the "mill-net") will vary on each 
sale in accordance with the location of the destination relative to that of the mill 
and the basing point. These nets will be at a maximum for destinations in the 
immediate vicinity of the mill and freight-wise away from both the mill and the 
basing point (with qualifications for cheap alternative methods of transport and 
the vagaries of the freight-rate structure). As the number of basing points in- 
creases, however, especially when identical prices are quoted at all bases, the area 
within which maximum mill-nets ace enjoyed is reduced. On the other hand, that 
within which there is a reduction in the mill-net, by reason of an excess of actual 
freight charges from mill to destination over the freight from the governing base,*" 
is increased. 

Number of Basing Points. — The trend in the industry has been toward an in- 
crease in the number of basing points. This may be attributed to the growth 
of new centers of production, to the bargaining power of important consumers 
and consuming industries, or to pressure of opinion emanating from the decision 
of the Federal Trade Commission in 1924 condemning the old "Pittsburgh Plus" — 
single basing-point-system. In view of the multiplicity of products in the industry 
and the fact that a given basing point may be a base for only one product (and 
even for only one grade of a product) while another is a base for twenty or thirty, 
there is little significance in the total number of basing points at any given time. 
In other words, one is concerned in the steel industry not with one basing-point 
Bystem but with a series of systems, the adequacy and the significance of any one 
of which must be analyzed with relation to the characteristics of production and 
of the market for tn^t product. For example, it would be fallacious to judge the 
adequacy of the number of basing points for pig iron without first distinguishing 
between capacity for sale (primarily the merchant furnace) and capacity for mak- 
er's own use; and clearly, this problem has little to do with the effect of basing 
points for steel pipe. 

Until June 1938 the basing-point system in the steel industry retained substan- 
tially all the characteristics with which it had emerged from the period under the 
Code. A few changes had been made — the most important being the recognition 
of Granite City, Illinois as a base for hot and cold rolled sheets, black plate and 
tin plate when the Granite City Steel Company initiated quotations for such prod- 
ucts based on this point during the second quarter of 1937. But the arbitrary 
differentials, applicable to areas such as Detroit for certain products, were retained 
along with the traditional scheme of price differentials over Pittsburgh at other 
basing points. On June 24, 1938, following exceptional weakness in the prices of 
many steel products, the United States Steel Corporation initiated a fundamental 

• The "extras" comprise additions to or subtractions from the base price for specification (gauge, width, 
length, chefhical composition, etc.) or quantities other than those for which the base price is quoted. 
Schedules are issued by the steel companies from time to time. Although the published extras tend tp be 
uniform for all companies, they are a fertile source of price conce'"5ions. 

6 The "governing base" is that from which the aggregate a' ase price plus freight to destination is 
lowest. 



CONCENTRATION OP ECONOMIC POWER 



10413 



change by announcing not only a substantial price reduction at Pittsburgh, but 
also identical prices at Chicago and Birmingham, In the price confusion which 
followed this elimination of the customary inter-basing point price differentials, 
many companies began the quotation of base prices, especially for flat-rolled prod- 
ucts like sheet, strip and plates, at their own mills. Th|e net result was a sub- 
stantial increase in the number of basing points and of base prices which are 
identical with those quoted at Pittsburgh. 

The net change since the Code period in the number of basing points for the 
more important commbdities is shown in Table XX. With the changes as indi- 
cated in the Iron Age, existing basing points as listed by an important steel com- 
pany are also compared. Discrepancies between the Iron Age and the steel com- 
pany report, while it may reflect no more than partial coverage by one or the other 
source, suggests that what is and what is not a basing point is largely a matter 
of managerial sales policy. While the number of. basing points, where changed 
at all, has usually been increased, this is not always the case. In the case of plain 
wire, for example, there has been from time to time a substantial reduction in the 
number of bases. 

Since new basing points were established at the same time that price differentials 
were abandoned in June 1938, the amount of the price reductions for the third 
quart.er of that year differed substantially in various sections of the country. 
This resulted from the pre-existing differentials in the case of old basing points, 
the location of the newly established bases relative to pre-existing basing points 
for particular products and the amount of the differential over Pittsburgh prices 
actually retained. This change in price relationships is indicated in Table XXI 
for an extended list of products. In general, the net reduction of price was lowest 
at Pittsburgh although it was equalled at those basing points which retained the 
pre-existing relation with Pittsburgh. Exceptions to this generalization were 
found in plates, sheet piling and soft steel bars; in these instances a smaller net 
change occurred at Pacific Coast Ports, thereby augmenting the traditional differ- 
ential over Pittsburgh. In those products for which they were basing points, 
differentials were retained at Pacific Ports, Gulf Ports, Granite City, Worcester, 
and Duluth. In addition, Chicago continued a differential on cold rolled strip. 
Differentials were unaffected for basic pig iron, the price reduction being equal 
at all bases. 

Table XX. — Number of Basing Points for Selected Steel Products, 1935 and 1939 



Product 



Sheet and tin-plate bars 

Plates . 

Heavy structural shapes 

Hot rolled sheets 

Hot rolled strip _ _ _ 

Cold rolled sheets 

Cold rolled strip 

Wire rods 

Plain wire 

Tin-plate 

Tin mill black plate 

Merchant bars 

Skelp 

Pipe-std., line, and oil country 
Pig iron 



May 1939 





No. of bas- 


No. of bas- 


ing points 


ing points 


listed by 


listed by 


a major 


"Iron Age" 


steel 




producer 


7 


7 


10 


10 


7 


7 


10 


10 


16 


7 


8 


8 


5 


h 


'6 


9 


34 


7 


13 


4 


4 


4 


8 


»8 


«5 


6 


3 


3 


'18 


21 



During 
N. R. A., 
No. of bas- 
ing points 



1 Pacific Ports not included in "Iron Age." 

' Duluth, Galveston and Youngstown not included in "Iron Age." 

3 Duluth, Pacific Ports and Worcester not included in "Iron Age." , » , ^. , t j 

< Includes 6 separate Oulf Ports. Four bases (Anderson, Ind., Mobile, Ala., Lake Charles, La., and 
Corpus Christi, Texas) are for merchant wire only. 
' Listed by this company as bars and small shapes. 
' Buffalo not included in "Iron Age." 
' Hamilton, O., Jackson, O., and Sharpsville, Pa., not included in "Iron Age. 

Note.— Chicago and Gary, though sometimes listed separately are here counted as 1 b^ing point. 
Gulf and Pacific Ports are counted as 1 basing point each except for plain wire durmg N. K. A. (bee 
note 4 above.) 



10414 



CONCENTRATION OF ECONOMIC POWER 



Table XXI. — Base Prices of Selected Steel Products 
[ Dollars per 100 lbs.) 



Item 



Price 

May, 
1938 



Plates: 

Pittsburgh 

Chicago -- 

Gary 

Birmingham 

Sparrows Point 

Coatesville 

Youngstown. 

Cleveland 

Claymont '. . 

Gulf ports. _.. 

Pacific ports _. 

Hot Rolled Sheets: 

Pittsburgh.. 

Gary 

Birmingham 

Pacific ports 

Buffalo 

Sparrows Point 

Cleveland 

Youngstown . 

Middle! own 

Granite City 

Cold Rolled Sheets, 20 ga.: 

Pittsburgh 

Chicago-Gary 

Birmingham .". . . 

Buffalo 

Youngstown 

Cleveland 

Middleto wn 

Granite Cjty... 

Pacific ports 

Galvanized Sheets: 

Pittsburgh. 

Chicaeo-Gary 

Sparrows Point 

Buffalo 

Middletown 

Youngstown 

Birmingham 

Granite City 

Pacific ports _ 

Sheet Piling: 

Pittsburgh.. 

Cbicaeo 

Buitalo 

Gulf ports. 

Pacific ports... 

Hot Rolled Strip: 

Pittsburgh. 

Chicago 

Cleveland 

Middletown 

Youngstown 

Birmingham 

Granite City 

Cold Rolled Strip: 

Pittsburgh 

Youngstown 

Cleveland 

Worcester 

Chicago.. 

Special Coated Mfg. Terne: 

Pittsburgh 

Gary 

Granite City 

Wire Rods: 

Pittsburgh... 

Chicago 

Youngstown.^ 

Cleveland 

Birmingham... 

Worcester.. 

San Francisco 

Anderson.^ 

" Calculated delivered price. 



2.25 

2.30 

2.30 

2.40 

2.35 

2.35 
1 2. 3725 
' 2.45 
1 2. 50 

2.65 

2.80 

2.40 

2.50 

2.55 

2.95 
12.66 
' 2,70 
12.60 
1 2. 5223 
12.68 

2.60 

3.45 

3.55 

3.60 
1 3.71 
1 3. 5725 
13.65 
13.73 

3.65 

4.00 

3.80 

3.90 
14.10 
1 4.06 
1 4. (18 

3. 9225 

3.95 

4.00 

4.40 

3.60 
2.70 
2.70 
3. 05 
3.05 

2.40 

2.50 
' 2. 60 
> 2.68 
1 2. 5225 

2.55 

2.60 

3.20 
1 3. 3225 
3.20 
3.40 
3.49 

4.65 
4.75 
4.85 

2.10 
2.14 
2.14 
2.10 
2.23 
2.19 
2.50 
2.14 



Price 
July, 
1938 


Differ- 
ence 


2.10 


.15 


2.10 


.20 


2.10 


.20 


2.10 


.30 


2.10 


.25 


2.10 


.25 


2.10 


.2725 


2.10 


.35 


2.10 


.40 


2.45 


.20 


2.70 


.10 


2.15 


.25 


2.15 


.35 


2.15 


.40 


2.75 


.20 


2.15 


.51 


2.15 


.55 


2.15 


.45 


•2. 15 


.S725 


2.15 


.53 


2.25 


.35 


3.20 


.25 


3.20 


.35 


3.20 


.40 


3.20 


.51 


3.20 


.3725 


3.20 


.45 


3.20 


.53 


3.30 


.35 ■ 


3.80 


.20 


3.50 


.30 


3.50 


.40 


.3.50 


.60 


3.50 


.56 


3.50 


.58 


3.50 


.4225 


3.50 


.45 


3.60 


.40 


4.10 


.30 


2.40 


.20 


2.40 


.30 


2.40 


.30 


2.85 


.20 


2.90 


.15 


2.15 


.25 


2.16 


.35 


2.15 


.45 


2.15 


.53 


2.15 


.3725 


2.15 


. «0 


2.25 


.35 


2.95 


.25 


2.95 


.3725 


2.95 


.25 


3.15 


. 25 


3.05 


.44 


4.65 


.00 


4.65 


.10 


4.85 


.00 


1.92 


.18 


1.92 


.22 


1.92 


.22 


1.92 


.18 


1.92 


.31 


2.01 


.18 


2.32 


.18 


12.14 


.00 



Difl. asa 

Percent 

of May 

price 



-6.66% 
-8.70 
-8.70 
-12.50 
-10.64 
-10.64 
-11.49 
-14.29 
-16.00 
-7.54 
-3.57 

-10.42 
-14.00 
-15.69 
-6.78 
-19. 17 
-20.37 
-17.31 
-14.77 
-19.78 
-13.46 

-7.25 

-9. 86 

-11.11 

-13.75 

-10.43 

-12.33 

-14.21 

-9. 59 

-6.00 

-7.89 
-10.20 
-14.63 
-13.79 
-14.22 
-10.77 
-11.39 
-10.00 

-6.82 

-7.69 
-11.11 
-11.11 

-6. 56 
-4.92 

-10.42 
-14.00 
-17.31 
-19. 78 
-14.77 
-15.69 
-13.46 

-7.81 

-11.21 

-7.81 

-7.35 

-12.61 

.00 
-2.064 
0.0 

-8.57 
-10. 28 
-10. 28 

-8.57 
-13.90 

-8.22 

-7.20 
.00 



CONCENTRATION OF ECONOMIC POWER 



10415 



Table XXI. — Base Prices of Selected Steel Products — Continued 
[Dollars per 100 lbs.] 



Ttpm 



Billets, Blooms & Slabs: 

Pittsburgh. _ 

Chicago-Gary. 

Cleveland. 

Youngstown 

Buffalo 

Birmingham 

Sparrows Point 

Skelp: 

Pittsburgh 

C hi cago 

Youngstown 

Buffalo 

Coatesville 

Sparrows Point 

Soft Steel Bars: 

Pittsburgh 

Chicago-Gary 

Youngstown 

Cleveland 

Duluth 

Buffalo 

Birmingham 

Gulf ports 

Pacific ports .' 

Sheet Bars: 

Pittsburgh 

Chicago.. 

Cleveland _ . . 

Youngstown 

Buffalo ... 

Canton 

Sparrows Point 

Rail Steel Re-enforcing Bars: 

Pittsburgh . 

Chicago-G ary 

Buffalo 

Sparrows Point _ 

Cleveland ._ 

Youngstown 

Birmingham 

Gulf ports 

Pacific ports 

Billet Steel Reinforcing Bars: 

Pittsburgh 

Chicago-Gary 

Birmingham. 

Buffalo .. 

Youngstown .■ 

Cleveland 

Sparrows Point. 

Gulf ports •. 

Pacific ports.. 

Structural Shapes: 

Pittsburgh 

Chicago.. 

Buffalo 

Bethlehem _-. . . 

Birmingham 

Gulf ports. 

Pacific ports 

Bright Wire to Mfg. Trade: 

Pittsburgh 

Chicago.. 

Cleveland 

Birmingham 

Mobile 

New Orleans 

Lake Charles 

Barbed Wire, Galvanized to Trade: 

Pittsburgh. 

Chicago. 

Cleveland ... 

Birmingham 

Mobile 

New Orleans 

Lake Charles 



Price 
May, 
1938 


Price 

July. 
1938 


Differ- 
ence 


Dlff.asa 
Percent 

of May 
price 


1.65 


1.52 


.13 


-7.88% 


1.65 


1.52 


.13 


-7.88 


1.65 


1.52 


.13 


-7.88 


1.65 


1.52 


.13 


-7.88 


1.65 


1.52 


.13 


-7.88 


1.65 


1.52 


.13 


-7.88 


1.95 


1.52 


.43 


-22.05 


2.10 


1.90 


.20 


-9. 52 


2.10 


1.90 


.20 


-9.52 


2.10 


1.90 


.20 


-9. 52 


2.10 


1.90 


.20 


-9. 52 


2.10 


1.90 


.20 


-9. 52 


2.10 


1.90 


.20 


-9.52 


2.45 


2.25 


.20 


■ -8.16 


2.50 


2.25 


.25 


-10.00 


2.50 


2.25 


.25 


-10.00 


2.50 


2:25 


.25 


-10.00 


2.60 


2.35 


.25 


-9.62 


2.55 


2.25 


.30 


-11.76 


2.60 


2.25 


.35 


-13 46 


2.85 


2.60 


.25 


-8.77 


3.00 


2.85 


.15 


-5.00 


1.65 


1.52 


.13 


-7.88 


1.65 


1.52 


.13 


-7.88 


1.65 


1.52 


.13 


-7.88 


1.65 


1.52 


.13 


. -7. 88 


1.65 


1.52 


.13 


-7.88. 


1.65 


1.52 


.13 


-7.88 


1.65 


1.52 


.13 


-7.88 


2.30 


1.90 


.40 


-17.39 


2.35 


1.90 


.45 


-19.15 


2.35. 


1.90 


.45 


-19.15 


12.60 


1.90 


.70 


-26. 92 


2.35 


1.90 


.45 


-19.15 


2.35 


1.90 


.45 


-19.15 


■ 2.35 


1.90 


.45 


-19. 15 


2,70 


2.25 


.45 


-16.67 


2.80 


2.35 


.45 


-16.07 


2.45 


2.05 


.40 


-16.33 


2.50 


2.05 


.45 


-18.00 


2.50 


2.05 


.45 


-18.00 


2.50 


2.05 


.45 


-18.00 


2.50 


2.05 


.45 


-18.00 


2.50 


2.05 


.45 


-18.00 


1 2.75 


2.05 


.70 


-25. 45 


2.85 


2.40 


.45 


-15.79 


2.95 


2.50 


.45 


-15.25 


2.25 


2.10 


.15 


-6.66 


2.30 


2.10 


.20 


-8.69 


2.35 


2.10 


.25 


-10.64 


2.35 


2.10 


.25 


-10.64 


2.40 


2.10 


.30 


-12.5 


2.65 


2.45 


.20 


-7. 55 


2.80 


2.70 


.10 


-3.57 


2.90 


2.60 


.30 


-10.31 


2.95 


2.60 


.35 


-11.86 


2.90 


2.60 


.30 


-10.34 


3.05 


2.60 


.45 


-14.75 


"3.36 


2.80 


.56 


-16. 67 


13.42 


2.85 


.57 


-16.67 


s 3.50 


2.90 


.60 


-17. 14 


3.40 


3.20 


.20 


-5.88 


3.45 


3.20 


.25 


-7.23 


3.40 


3.20 


.20 


-5.88 


3.55 


3.20 


.35 


-9. 86 


3.70 


3.40 


.30 


-8.11 


3.70 


3.45 


.25 


-6. 76 


3.70 


3.50 


.20 


—V 41 



1 Calculated delivered Price. 
« Rail- Water via Pittsbureh.'f 

124491 — 40 — pt. 18- 



10416 



CONCENTRATION OF ECONOMIC POWER 



Table XXI. — Base Prices of Selected Steel Products — Continued 
[Dollars per 100 lbs.] 



Item 



Price 

May, 
1938 



Price 
July, 
1938 



Differ- 
enc 



Diff. as a 

Percent 

of May 

price 



Galvanized Fence Wire to Trade 

Pittsburgh- 

Chicago 

Cleveland 

Birmingham 

Mobile 

New Orleans 

Lake Charles.. 

Standard Wire Nails to Trade: 

Pittsburgh. 

Chicago. 

Cleveland... 

Birmingham.. 

Mobile 

New Orleans.. 

Lake Charles 

Galvanized Wire to Mfg. Trade: 

Pittsburgh 

Chicago 

Cleveland 

Birmingham 

Mobile , 

New Orleans 

Lake Charles 

Single Loop Bale Ties: 

PittsbufgbcT^ 

Chicago.-,. 

Cleveland- 

Birmingham 

Mobile 

New prleans 

Lake Charles 

Basic Pig Iron: 

Bethlehem 

Birdsboro- 

Swedeland 

Steelton 

Sparrows Point 

Everett 

Buffalo 

Neville Island _.. 

Erie-- 

To'edo 

Chicago 

Youngstown 

Birmingham 



3.55 

3.60 

3.55 

3.70 

14.01 

14.07 

»4. 15 

2.75 
2.80 
2.75 
2.90 
3.05 
3.05 
3.05 

2.95 

3.00 

2.95 

3.10 

'3.41 

'3.47 

H3.55 

.63 

.68 

.63 

.78 

«.87 

1.93 

1 » 1.16 

1.049 
1.049 
1.049 
1.049 
1.049 
1.127 
1.027 
1.049 
1.049 
1.049 
1.049 
1.049 
0.848 



3.35 
3.35 
3.35 
3.35 
3.60 
3.65 
3.70 

2.45 
2.45 
2.45 
2.45 
2.65 
2.70 
2.75 

3.15 
3.15 
3.15 
3.15 
3.35 
3.40 
3.45 

.56 
.56 
.56 
.56 
.76 
.81 



0.915 
0.915 
0.915 
0.915 
0.915 
0.949 
0.848 
0.871 
0.871 
0.871 
0.871 
0.871 
0.670 



.2»- 
.25 
.20 
.35 
.41 
.42 
.45 

.30 
.35 
.30 
.45 
.40 
.35 
.30 

.20 
.15 
.20 
.05 
.06 
.07 
.10 

.07 
.12 
.07 
.22 
.11 
.12 
.30 

.13 
.13 
.13 
.13 
.13 
.18 
.18 
.18 
.18 
.18 
.18 
.18 
.18 



-5.63% 
-6.94 
-5.63 
-9.46 
-10.22 
-10.32 
-10.84 

-10.91 
-12.5 
-10.91 
-15.52 
-13.11 
-11.48 
-9.84 

6.77 

5.00 

6.78 

1.61 

-1.76 

-2.02 

-2.82 

-11.11 
-17.65 
-11.11 
-28.21 
-12.64 
-12.90 
-25. 86 

-12.39 
-12.39 
-12.39 
-12.39 
-12.39 
-15.97 
-17. 53 
-17. 16 
-17.16 
-17.16 
-17.16 
--17.16 
-21.22 



' Calculated delivered price. 
2 Rail- Water via Pittsburh. 

Source: The Iron Age. 



Although the basic method of pricing remained unchanged after June 1938, it is 
apparent that the relative mill-net prices received by steel companies as well as 
the relative competitive position of consuming industries was profoundly altered. 
An examination of these effects is beyond the scope of this pamphlet. 

7. Performance Record 

That the productive activity of the steel industry is subject to considerably 
larger cyclical fluctuation than is business as a whole is demonstrated by Chart 
VI. The fact that much of the iron and steel produced finds its way into the 
heavy capital goods industries accentuates this tendency. During periods of 
depression when little new capital is invested there is small demand for the heavy 
tonnage steels. On the other hand, some few steel products, such as tin plate, 
which are used in consumption goods industries of a more stable nature are not 
affected as severely. The rate of utilization of steel-making capacity since 1929, 
shown in the table below, indicates this wide variation. 



CONCENTRATION OF ECONOMIC POWER 



10417 



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10418 



CONCENTKATJON OF KCOxNOMIG POWER 



Along with the wide fluctuations in production it is not surprising to find laree 
variations in the number of workers employed. The latter, however, are not as 
great as the former. This is to be expected. Continuous rolling mills and other 
automatic rolling equipment now indispensable to the large producer of steel 
require little additional labor to operate at increasing rates of production The 
older type of hand-operated machinery, involving a much smaller investment, on 
the other hand, makes necessary a considerably more flexible labor supply The 
average number of employees in blast furnaces, steel works and rolling mills in 
the United States for tne last ten years, as reported by the Bureau of Labor 
statistics, is shovrn below: 

Table XXII.— Steel Ingot Production as a Percent of Capacity, 1929-19S8 



Year " 



1929 
1930 
1931 
1932. 
1933- 



Steel Ingot 
Production 
as a Percent 
of Capacity 



Percent 
88.5 
62.5 
37.6 
19.5 
33.1 



Year 



1934 
1935 
1936 
1937 
19.38 



Steel Ingot 
Production 
as a Perqent 
of Capacity 



Percent 
37.4 
48.7 
68.4 
72.5 
39.6 



Source: Statistical Report of the American Iron and Steel Institute. 



Table XXIII.- 



' Average Number cf Employees in Blast Furnaces, Steel Works and 
Rolling Mills, 1928-1938 



Year 


Average 

Number of 

employees 

(Average 

Mid-Month 

Count) 


Year 


Average 

Number of 

employees 

CAverape 

Mid-Month 

Count) 


1929 . 

19;i0._ 

19.S1.... 


419,360 
3G7, 098 
278, 079 
234. 899 
288, 510 


1934.... 

1935 .. "■ 

1936 


350, 114 
374, 125 
428,481 
487, 714 
356,311 


1933 "-------.m^^^ii^i^^ii;^ 


1937 

1938... 



Source: Bureauof Labor Statistics. 

Chart VII shows the indexes of production, employment and payroll by months 
rom January, 1923 to date. It will be noted that the production and payroll 
indexes correspond somewhat more closely than do those of production and 
f,!?^ I^^^'JLo or^.^°^ P°^"* ^^ i"Sot production for the period was in July 1932 
cf. !^ ^^}?^^~^^ '''^^'' reached 23. In March of 1937 this production index 
Til noo J , employment index using the same base was 54 at its lowest in 
July iyci2 and reached the highest point thereafter in May of 1937 at 127. Whereas 
tne number of persons employed fluctuates over a smaller range than changes in 
production, employees' earnings correspond much more closely in magnitude df 
nuctuation. W hen business conditions are depressed money wage reduction may 
De accompanied by shortened hours and staggered work schedules. Average 
w-eekly earnings, average hours worked per week and average hourly earnings are 
Shown below by years from 1932 to date in blast furnaces, steel works and rolling 



OONCENTltATION OF ECONOMIC POWEFl 



10419 



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10420 



CONCENTRATION OF ECONOMIC POWER 



Table XXIV. — Average weekly earnings, average hours worked per week, and average 
hourly earnings in blast furnaces, steel works, and rolling mills, 1932-1938 



Year 


Average 
Weekly 
Earnings 


Average 

hours 

worked 

per week 


Average 
hourly 
earnings 


1932 


13.91 
17.27 
19.25 
23.12 
27.37 
31.46 
23.78 


26.1 
32.5 
30.5 
34.9 
40.9 
38.7 
28.7 


52 7 


1933 


53 1 


1934 


63 2 


1935... 


66 4 


1936 


67 1 


1937 


81 8 


1938 


83 5 







Source: U. S. Bureau of Labor Statistics. 



CHART VIII 



FINISHED STEEL COMPOSITE PRICE INDEX 

BY MONTHS. 1926-1939 INCLUSIVE 



IIU 
























1 




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' 


\ 








































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70 




1926 


1927 


1928 


1929 


1930 


1931 


1932 


1933 


1934 


1935 


1936 


1937 


1938 


1939 




SOURCE. • 


THE IRON 


AGE" 














PR 


EPAREO 61 


THE OEP 


ARTMENT C 


F JUSTICE 





PRICES 

In contrast to production, employment and payrolls, the prices of steel products 
are relatively rigid. They exhibit only small declines in periods of depression. 
The composite pi ice index of finished steel products (1926—100) shown in Chart 
VIII indicates that the level of prices was only some 15% lower in 1932 than it 
was in 1929. In the table below yearly average wholesale price indexes of "all 
commodities," "semi-finished manufactured articles," and "finished products" as 
classified by the Bureau of Labor Statistics are compared with the "finished steel 
composite" as defined by the Iron Age.^ Unlike the other indexes, the steel com- 
posite is an unweighted average of published prices at Pittsburgh. It is therefore 
less satisfactory as an indication of actual price changes. Changes in the relative 
importance of the constituent items are not reflected in the index; actual price 
concessions from nominal base prices are not revealed; and fundamental changes 
in the cost of steel such as the elimination of inter-basing point price difi"erentials 
and the increase in the number of basing points in the summer of 1938 are not 
shown. 



' Of the items in the "finished steel composite," bars, plates, black sheets, and hot rolled strip are classified 
by the Bureau of Labor Statistics as "semi-flnisbed manufactured articles" because, although they are a 
finished product of steel rollinc mills, they are further fabricated by other industries. Shapes, plain wire, 
black plate, and open hearth rails, being used in that state, are classified as "finished" by the Bureau of Labor 
Statistics. 



CONCENTRATION OF ECONOMIC POWER 
Table XXV. — Yearly average price indices 



10421 



Price Index 1926=100 


All Com- 
modities > 


Semi- 
Finished 

Mfg. 
Articles ' 


Finished 
Products ' 


Finished 

Steel 

Composite * 


1926 


100.0 
96.3 
64.8 
66.9 
80.8 
86.3 
78.6 


100.0 
93.9 
59.3 
65.4 
75.9 
85.3 
75.4 


100.0 
94.5 
70.3 
70.6 
82.0 
87.2 
82.2 


100 


1929 


95 4 


1932.... 


82 1 


1933 


81 2 


1938 1 


89 7 


1937 .• 


106 4 


1938 


103 4 







' Source: Bureau of Labor Statistics. 
• Source: Compiled from "Iron Age." 



EARNINGS • 



An industry such as the steel industry, with huge sums invested in capital equip- 
ment, must depend upon mass output to operate profitably. 'Consequently one 
would expect to find a rather high correlation between earnings and rate of output. 
The highest yearly rate of utilization of ingot capacity in the steel industry in the 
period since 1910 was 93.4% of capacity in 1916. Net income before dividends 
and earnings as a per cent of total capital were also highest during this year at 
16.5% This, of course, reflected war time demand and prices. Similarly, in 1932, 
when the rate of utilization was at its lowest ebb, losses in the industry were 
greatest. 

Table XXVI compares rate of earnings and rate of utilization of ingot capacity 
from 1909 to 1938. Obviously many other factors than the utilization rate play 
an important part in determining the profitability of steel operations. At no time 
in the past thirty years, however, has the earning rate for the industry as a whole 
been as high as 4 per cent when the rate of utilization has been below 60% and 
the only years during which the rate of earnings has exceeded 10 per cent have 
been those when the rate of utilization was over 90 percent. The average rate 
of earnings of the industry by years since 1909 is pictured in Chart IX. 

In interpreting the data presented in Table XXVI and Chart IX, three im- 
portant qualifications should be borne in mind. First, the basic figures used are 
aggregates reported by the American Iron and Steel Institute. Second, net earn- 
ings may be grossly understated because, as reported, they are net after all taxes, 
including federal income taxes, and taxes were not reported separately. Third, 
capital investment, as presented herein, is less than total investment as reported 
by the Institute because the latter included reserves in total investment. It is 
possible, of course, that reserves might be in the nature of "surplus reserves" and 
properly a part of investment. But as accrued liabilities not yet paid they are 
no part of capital investment. Since the latter is the more probable character of 
reserves, they have been excluded. 

» Earnings rate which is discussed here is the ratio of net Income before interest and dividends to capital 
stock, bonded debt and surplus. 



10422 



CONCENTKATION OF ECONOMIC POWER 



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CONCENTRATION OF ECONOMIC POWER 



1042: 



Table XXVI. — Rate of Earnings Compared to Utilization of Steel Ingot Capacity 

by Years, 1909-1938 



Year 


Net income 
before interest 
and dividends 
as a per cent of 
capital stock, 
bonded debt 
and surplus 


Ingot produc- 
tion as a per 
cent of 
capacity 


Year 


Net income, 
before interesl 
and dividends 
as a per cent of 
capital stock, 
bonded debt 

and surplus 


Ingot produc- 
tion as a per 
cent of 
capacity 


1909 


6.0 
6.7 
S.0 
6.1 
6.9 
3.3 
6.9 
16.5 
13.9 
9.0 
5.7 
7.2 
1.6 
3.0 
6.5 


70.6 
74.1 
65.8 
82.2 
80.3 
59.2 
77.9 
93.4 
90.8 
84.6 
63.6 
75.7 
34.5 
60.9 
76.6 


1924 


5.0 
5.6 
6.8 
5.3 
6.4 
9.4 
4.5 
0.3 
-2.9 
-0.5 
0.5 
2.3 
4.6 
6.3 
0.5 


63.8 


1910 


1926 


74.2 


1911 


1926 


83.5 


1912 


1927 


74^9 


1913 


1928 


83.9 


1914 . 


1929 


88.5 


1915 


1930 


62.6 


1916 


1931 


37.6 


1917 


1932 - 


19.5 


1918 


1933 


33. 1 


1919 . 


1934 


37.4 


1920 


1935 


48,7 


1921 


1936. 


68.4 


1922 


1937 


72.5 


1923 


1938 . 


39.6 









Source— Compiled from Iron and Steel Institute Data. 



The only check on the accuracy of the data as presented here is provided by the 
study of the Federal Trade Commission, War-Time Profits and Cost of the Steel 
Industry, for the years 1915 through 1918. A comparison of the Commission's 
findings with the information supplied by the Institute in those years is shown in 
Table XXVII. It will be observed that in every year investment as compiled 
from Institute figures exceeded that reported by the Federal Trade Commission 
by substantial sums varying from 1,096 million dollars in 1916 to 797 millions in 
1918. True the latter reported on only 112 companies in 1915, 124 in 1916 and 
131 in each of the other two years but the explanation that the difference is 
accounted for by variations in coverage is qualified by the fact that earnings, even 
adjusted to eliminate federal income and excess profits taxes, as reported by the 
Commission, exceed those reported by the Institute by amounts varying from 
3.361 millions of dollars in 1917 to 57.698 millions in 1916. It is apparent that the 
Institute figures cannot be assumed to be accurate in any given year and must 
be regarded as indicative rather of the trend of earnings than of their magnitude. 

Federal income and excess profits taxes were especially heavy during the 
highly profitable period of the war. A comparison of the rate of earnings reported 
by the Federal Trade Commission for these years with that on the adjusted 
basis indicates the relative importance of this item which is excluded from the 
Institute figures. With the qualification, then, that the data probably under- 
states the rate of earnings, information available indicate that the Iron and Steel 
Industry earned an average return of 5.20% on capital investment during the 
entire period 1909 through 1938 or an average of only 5.47% in the pre-war years 
through 1914, 11.69% during the war boom, 5.73% in the post war period 1919 
through 1929, and only 1.65% during the years since the 1929 slump.' This 
exceptionally small return was earned despite an almost continuous reduction in 
total capital investment from a peak for. the entire 30 year period of approximately 
5.322 billion dollars in 1929 to 4.024 billions in 1938. 



• If reserves were included in capital investment, these ratios vrould be slightly lowered by amounts less 
than 3-10th,of 1%. That is, the respective ratios in the order given above would become 5.02, 5.40, 11.35, 
5.47 and 1.60 per cent. 



10424 



CONCENTRATION OF ECONOMIC POWER 



Table XXVII. — Annual Capital Investment, Net Earnings, and Ratio of Earnings 
to Capital Investment in the Iron and Steel Industry, 1915-1918 Inclusive 

[Investment and Earnings in thousands of dollars] 





Capital investment > 


Earnings 


Rate of Earnings 


Year 


Amer. Iron 

and Steel 

Inst. 


Fed. Tr. 
Commis. 


Amer. 
Iron » and 
Steel Inst. 


Fed. Tr. 
Commis. 
(Adjust- 
ed) a 


Fed. Tr. 
Commis. 
(Report- 
ed)' 


Amer. Iron 

and Steel 

Inst. 


Fed. Tr. 
Commis. 
(Adjust- 
ed)* 


Fed. Tr. 
Commis. 
(Report- 
ed) « 


1916... 
1916... 
IMtr:-.. 
1918... 


3,668,012 
4,076,762 
4,635,271 
4,887,112 


2,760,008 
2, 979, 661 
3, 610, 208 
4,089,884 


246,329 
673, 856 
646,273 
ill, 302 


200,344 
616, 158 
642, 912 
406,821 


203, 154 

634, 403 

1,034,892 

819, 635 


6.9 
16.5 
13.9 

9.0 


7.3 
20.7 
17.8 

9.9 


7.4 
21.3 
28.7 
20.0 



> Includes Common and Preferred Stock, Bonded Debt and Surplus. 

' Ket earnings before bond interest and dividends. 

» Net earnings before bond interest and dividends and Federal Income and excess profits Taxes. 

< Rate calculated on the basis of earnings as described in note No. 2 above. 

• Rate calculated on the basis of earnings as described in note No, 3 above. 

Sources: CompQed from American Iron and Steel Institute data. War Time Profits and Cost in the Steel 
Industry, Federal Trade Commission. 



CONCENTRATION OF ECONOMIC POWER 



10425 



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1 0426 cOmcentration of economic power 

Exhibit No. 1352 
Relative industry position major iron ore companies, 19S7 



Company 



Shipments in 


Industry 


Gross Tons 


Percentage 


63,110,000 


100.0 


26, 648, 159 


42.2 


•13,816,332 


21.9 


5, 733, 879 


9.1 


2, 239. 442 


3.5 


1,817,779 


2.9 


1, 636, 677 


2.6 


1,816,291 


2.9 


8,401,641 


14.0 



Total industry. 

Oliver Iron Mining Company 

Piekands Mather & Company > 

Tho Cleveland-Clifis Iron Company » 

The M. A. Hanna Company 

Butler Brothers - 

Oglebay, Norton & Company 

Other ore companies (7) 

Steel Companies * 



> Tonnages shipped from properties managed by Piekands Mather * Company. 
» Includes 181,998 tons sold and shipped from non-managed mines. 

' Tonnages shipped from properties operated, managed or leased to others by the Cleveland-C lifts Iron 
Company. 
* Tonnages shipped from mines owned and operated by steol companies other than U. S. Steel Corporation. 

Source: Lake Superior Iron Ore Association. Data submitted to the Department of Justice by tho above 
companies in answer to the Department's questionnaire. 



CONCENTRATION OF ECONOMIC POWER 



10427 



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10428 CONCENTRATION OF ECONOMIC POWER 

"Exhibit No. 1354," introduced on p. 10235, supra, is included in Hearings, 
Part 16, appendix, p. 9929. 



Exhibit No. 1355 

Fkbruary 17, 1930. 
Mr. E, B. Greene, 

Mill Pond Plantation, 

Thomasville, Georgia. 

Dear Mr. Greene: To bring you down to date on negotiations with The 
Cleveland Cliffs Iron Company, beg to advise that Mr. Livingstone Mather has 
sent a letter here requesting copies of all our contracts, in order that they may 
be studied by him before the return of Mr. W. G. Mather, who is expected about 
February 24th. In this same letter Mr. Livingstone Mather suggests that all of 
the details of the proposed transaction be ironed out, and in pursuance of this, 
Messrs. Wm. Wisner White and W. B. Belden have had several conferences during 
the past week and have developed for approval of the principals a general outline 
of the various steps.which they advise in the way of consummating the transaction 
with maximum advantage to both parties. 

We have not yet submitted any contracts, as requested by Mr. Mather, think- 
ing it advisable to determine, with respect to the contracts to be renewed, just 
what the terms are to be in order to avoid any misunderstandings. To that ena 
we have made a thorough study of the Montreal contract, and this afternoon we 
have had a long conference with Mr. G. '^. Wade, taking up all the points serially 
and coming to an agreement with him co.iCerning them^ Mr. Wade suggested 
that we write you a memorandum of this conference and send with it a copy of the 
present contract, which we all think should be renewed for a period of five years 
without any chan^, as will appear below: 

(a) The first point discussed this afternoon referred to possible diti'^rimination 
against the sale of Montreal ore. This, as you know, is a rather delic He question 
and one which we all agree cannot be handled in a contract. As a practical 
matter, the Cleveland Cliffs Iron Comp ny could not discriminate against the 
sale of Montreal ore even should they have ^hat desire, because the contract with 
Ogleba>, Norton & Company reserves speo^xcally to The Montreal Mining Com- 
pany full control of the policy and complete direction with respect to sales, 
including tonnages and prices. Under that contract, The Cleveland Cliffs Iron 
Company or Oglebay, Norton & Company can in no sense dictate terms to The 
Montreal Mining Company. On the other hand, the agent is specifically required 
to execute the directions of the principal. There wiU, of course, be no change in 
the directors of The Montreal Mining Company, except such as are desired by 
the stockholders, and it is assumed that those now representing stockholders on 
the Board wiU continue to govern the affairs of the Company and, as such stock- 
holders and representatives of stockholders, wiU continue to have the same interest 
in the affairs of the Company that they now have and will function in the future 
precisely as they have in the past. 

Moreover, The Cleveland Cliffs Iron Company will itself have a lively interest 
in the disposal of Montreal ores at fair prices, because they will need to protect 
their own values, and any Montreal ore not covered by term contracts, and 
available for sale from year to year, will have their active interest as well as 
our own, to the end that such ores be moved at the highest practical price. 

Finally, of the ores produced by the Montreal mine, about one-third is and 
will continue to be manganiferous, a grade which Cleveland Cliffs does not 
produce or sell. Our association with Cleveland Cliffs will presumably strengthen 
our market position with respect to the manganiferous grades, known as Ontario 
and Quebec, because it will give us a favorable standing with steel companies 
associated with Cleveland Cliffs operations. As to the other grades, namely, 
Bessemer and Basic, it so happens that we have none on the market at the present 
time. We assunae, of course, that our contract with Wheeling will be renewed, 
which we think is a foregone conclusion. We have made a ten-year contract 
with American Rolling Mills Company, and have a contract with Jones &: 
Laughlin, which runs through 1932 for Bessemer and 1933 for Basic, total 500,000 
tons, as well as a contract with Weirton Steel Company having six years to rur. 
Wtj jvill, of course, want to renew the Jones k Laughlin contract upon more 
favorable terms, and we think that the proposed association with Cleveland 
Cliffs will aid us materially in getting better terms, for one reason, among others, 



CONCENTRATION OF ECONOMIC POWER 10429 

because Cleveland Clififs is now selling Jones & Laughlin as much ore as we think 
Cleveland Cliflfs desires to sell them. So far as our Basic and Bessemer ores are 
concerned, we would not need new association in order to dispose of our tonnage, 
but in the renewal of present contracts with these same associates, our chances 
for better values will be much increased by the proposed alliance. 

We all agree, then, in thinking that The Cleveland Cliflfs Iron Company, 
under our contract, copy enclosed, not only has no power to discriminating against 
Montreal ores, but has a very practical incentive to see that these ores are mar- 
keted at highest practical value. 

(b) We discussed the matter of overhead charges. Here again The Montreal 
Mining Company is protected in its contract, for these charges can be made only 
with its approval. If The Clevelanrj Cliffs Iron Company should attempt to 
increase overhead charges to The Montreal Mining Company, the directors of 
this company could inquire into the proposed increase, and unless it were deemed 
fair and the JJtoposed charges were representative of increased services rendered 
of the kind desired by The Montreal Mining Company, the increases could not 
be charged against the company. Furthermore, it is our present understanding 
that should the proposed trant .ction be consummated, Oglebay, Norton & 
Company will continue, as at present constituted, until such time as a major 
adjustment of some kind is made involving a consolidation of the two offices. 
When that occurs, if at all. The Montreal Mining Company can rest secure in 
its contract with Oglebay, Norton & Company, and successfully challenge any 
increase in overhead charges which may be proposed if such increase is regarded 
by the Montreal directors as excessive. In this connection, it should not be 
overlooked^that an amalgftmation of the offices may, and as we see it should, 
work toward lower overhead charges for all of the mines, both Cleveland Cliffs 
and our own. 

(c) Mr. Wade advanced for consideration in the conference whether it would 
not be fair and proper, in case of a sale of the mine during the life of the proposed 
contract, that is, five years, to limit the commission with respect to ore then 
sold but undelivered, to say 5^ per ton. This idea is based on the thought that 
the actual cost of selling and delivering is say 6^ per ton. It was concluded 
that this idea should not be brought into the contract for the following reasons: 

The right to the full commission for ore sold but undelivered is looked upon 
as part of the assets of Oglebay, Norton & Company. It has been customary 
for many years past in our office, and also in the trade in general, to pay the 
full commissions in circumstances such as these, and it was thought that no 
exception should now be made in the case of The Montreal Mining Company, 
particularly because, among other reasons, it would be challenged in all prob- 
ability by The Cleveland Cliffs Iron Company, which would expect the Montreal 
Company to deal with it on the same basis, that it has heretofore dealt with 
Oglebay, Norton & Company, and which, as said above, is the common practice 
of the trade in other offices such as ours. In this Connection, Mr. Wade also 
generously recognized the long association of Oglebay, Norton & Company 
with The Montreal Mining Company and the part which our older management 
had in making advantageous purchases and leases of the properties, creating the 
basis of the asset which the Montreal mine now represents; and Mr. Wade also 
recognized the services of our younger management, which, inheriting the fruits 
of the activities of the older management, developed the property from a rela- 
tively small producer to one of the greatest mines in the Lake Superior regions. 

As a practical matter, the difference between 10^ and 6^ on ore sold but un- 
delivered at any time is not a large amount of money. On the average it probably 
would not at any time exceed $125,000.00, because it is h:-d to conceive that 
ore sold but remaining undelivered at any time would be in excess of 2,500,000 
tons, or 2)4 years' production, which is one-half the production covered by the 
proposed contract. In this connection, it may be remarked too that the agent, 
in this case Oglebay, Norton & Company, would be of material assistance to 
The Montreal Mining Company in effecting a favorable sale of the mine. If 
the property were sold, it would doubtless command as much as $10,000,000.00 
or more. 

(d) Mr. Wade brought forward for discussion a possible new forrn of contract 
under which the agent would be paid say 5<i per ton, and, in addition, a per- 
centage of the annual net profits of the company. We believe that such a contract 
is not in the interest of The Montreal Mining Company. So far as increasing 
the value of the ore itself is concerned, we may say that although the agent 
plays a^art, the course of values is not under i+.8 control. The value of ore is 
determined by so many factors not under the control of the agent, or even 



10430 CONCENTRATION OF ECONOMIC POWER 

susceptible of influence by him, that he is not fairly entitled to an increased 
commission on rising ore values. The proposed transaction is in itself in the 
direction of bringing about better values. The Montreal Mining Company has 
now some contracts at rather low values which will undoubtedly be renewed at 
better values, and any commission based on percentage of present profits of The 
Montreal Mining Company would become unduly lairge, as the profits of the 
company are increased by better ore values. 

As to mine costs, we would call your attention to the fact that the contract 
expressly provides that the agent in managing the mine is at all times subject to 
the direction and control of the Montreal Board of Directors. While in the past, 
by reason of close relationships, considerable latitude has been permitted to Ogle- 
bay, Norton & Company as such agent, nevertheless under the terms of the con- 
tract that management is at all times subject to such control and direction. 
Undoubtedly the Board will continue to be composed of the same individuals as at 
present for years to come, so that the same knowledge of proper mine operation 
will be at all times at the Board table. It is our view that if the officers and 
Board of Directors haw the same interest and give the same attention to the 
property in the future as in the past, the management of the mine will continue 
to be as efficient as it has ever been, for that management must at all times follow 
the directions of the Board. Moreover, it must not be overlooked that it is a part 
of the plan that Oglebay, Norton & Company, with its present personnel, shall 
continue to function as a separate organization for some time to come, and as such 
separate organization wiU function just as it has heretofore, and it is only if and 
when some major change occurs that we need to consider this question of mine 
costs, from which time the control lodged in the Board of Directors will in our 
judgment take care of this matter. 

Since this proposed transaction several months ago became a possibility, the 
undersigned and others associated with him have been giving it very careful 
study, having in mind the interest of all the properties which we represent. We 
have all come to the conclusion that the consummation of the proposal will bring 
these' properties into contact with new and strong associations, will undoubtedly 
increase the value of the ores to be mined and marketed in future years, and will 
introduce us and the owners of the properties to a much closer contact with and 
knowledge of developments broadly in the steel business, which, of itself, wiU work 
to the ultimate advantage of the properties. 

We are authorized to say that Mr. Wade has read this letter and approves of the 
recommendations herein made, which are all embodied in the proposal to renew 
the Montreal contract for a period of five years without change. We may add that 
Mr. Russel also approves, and that the Bristol Mming Company is agreeable to 
making a similar contract. 

If you approve of our conclusions, will you not kindly notify us by wire or 
telephone? We would like your early attention to this matter for the reason that 
Mr. Livingstone Mather wants to have everything in shape to present to Mr. 
William G. Mather on his return here February 24th. If you do not approve, and 
desire further discussion, I will be very glad to get on the train and go down to 
Thomasville to talk with you. We here feel, as does Livingstone Mather, that this 
transaction should be consummated, if at all, before Mr. William G. Mather's 
departure for Europe, about March 15th. If the deal is made b}' that time, we 
will, of course, approach this year's business from that point of view, and we 
think it 'will be very advantageous to have the cooperation of the two groups 
established for the benefit of this year's sales. 

With kindest regards, J am 
Sincerely yours, 

Oglebay, •Norton & Company, 
By , Presi ent. 



Exhibit No. 1356 
Oglebay, Norton Arrangement. 

May S9, 1930. 
Mr. S. R. Elliott, 

Manager, Ishpeming, Mich. 
Dear Sir: You will have seen by the papers that The Cleveland-ClifFs Iron 
Company has made an aflSliation with the Oglebay, Norton Co. The statements 
that have appeared in the Cleveland papers are worded unfortunately, in that 
they have connected the deal with Mr. Eaton's activities. This is not true, 
because Mr. Eaton had no connection with the negotiations, but simply voted 
for it as a Director of The Cleveland-Cliffs Iron Co. 



CONCENTRATION OF ECONOMIC POWER 10431 

The Daily Metal Trade of May 29th has a statement of the transaction which 
was practically prepared by this office, although it is somewhat shortened from 
the statement that I approved. 

The Oglebay, Norton people will continue to run their business as heretofore. 
The advantages that will accrue to us are that we share in their net profits to an 
appreciable extent, and that we are placed in a position of greatly minimizing, if 
not entirely preventing, tendencies which have prevented iron ore producers from 
getting a reasonable price for their product. We are on friendly and social terms 
with the Oglebay, Norton people, and the principal mines for which they act as 
agents are controlled by the Wade Estate, representatives of which, Mr. Garretson 
Wade and Mr. E. B. Greene, are Directors of The Cleveland-Cliffs Iron Co. 

I think it is an excellent move and will have a stabilizing effect on the conduct 
of the iron ore industry, but you can see that it is a relationship which we do not 
want to talk about, as such publicity might result in opposition on the part of 
the public or the consumers to a move which they may construe as tending towards 
an undue control of prices. 

Since my return I have been giving some attention to the affairs of Corrigan, 
McKinney & Co., of which we now own 62)^ per cent., but owing to pressure of 
other affairs my study of the situation has not been as yet very thorough. I shall 
want you to arrange, as soon as you can conveniently, to have the mines of Corri- 
gan, McKinney & Co. examined from the standpoint of geology and operation 
and plant, so that I can get the opinion of your organization upon their value 
without undue delay. The manufacturing plants of the company are now being 
reported upon by Mr. Brassert, the eminent engineer, but the iron mines I shaU 
want reported upon by your department. 

As may be convenient and desirable by you, you can arrange, of course, now 
that we have this affiliation with Oglebay, Norton & Co., to look into the opera- 
tions of the mines which they manage, and whose ores they sell at any time that 
you may wish, and I am in hopes that this exchange of opinion between your 
operations and Corrigan's operations and our own operations, may be productive 
of exchanges of experience which may be helpful to all three of us. 

I wish to add a word of caution to the way in which you and your lieutenants 
may comment upon these important moves of our company. The Oglebay, 
Norton Company occupies a very sound and honorable position in the trade, and 
I would not like to have any opinions come from any of our officers, either here 
or up above, which would indicate that we intended to exercise any control over 
their operating men. They have had an independent position as operators and 
feel that they have been doing excellent work and would, I imagine, dislike to 
have the idea spread that we, the older and stronger company, were going to 
take any position of criticism or control over their mining operations. 

With respect to the operations of Corrigan, McKinney & Co. they also, for the 
time being at least, will be run as heretofore. In time, however, after we have 
thoroughly familiarized ourselves with the situation, we may take a different 
position to the extent of exercising supervision. 
Yours truly, 

, President. 

WGM:F. 

(In ink:) Certified true copy 

E. H. Jaynes, 
Secretary The C. C. I. Co. 

Exhibit No. 1357 

The Cleveland-Cliffs Iron Co. 
Offices 14th Floor Union Trust Building 

Wm. G. Mather, President 
S. L. Mather, Vice President 
C. G. Heer, Treasurer 
V. P. Geffine, Secretary 
E. H. Jaynes, Ass't Sec'y 

Cleveland, Ohio, January 27, 19S0. 
Mr. Crispin Oglebay, 
clo P. W. Harvey, 

Pebble Hill Plantation, Thomasville, Ga. 
My Dear Chris: Livingston and I had a talk today with Messrs. Allen and 
Norton, and I felt obliged to say that I could not give sissurancos tliat the deal 
between us could be carried out at the present time. 

124491— 40— pt. IS 1.5 



10432 CONCENTRATION OF ECONOMIC POWER 

I feel that the amount which has been mentioned up to this time for us to pay is 
very large, considering that the cash returns upon it which are dependent upon the 
continuance of the profitable contracts which j^ou now enjoy, are not assured for 
an-a definite length of time. There are, to be sure, advantages which will accrue 
to the owners of the fees and to those interests which are more or less associated 
with us, who have in mind the desirability of enlarging the mergers of steel com- 
panies which ^e now in progress. For that reason, I am sympathetic with the 
idea in principle, but, as said above, the amount we have discussed, and the im- 
portance of the deal so great, that I cannot commit myself to an approval of 
it until I have had a consultation with practically all of our directors. It will not 
be possible to have such a meeting and consultation before my return from the 
West Indies trip, which will be the latter part of February. I hope that this will 
not break oflF the negotiations which have been carried on and that they can be 
resumed on my return, and in the meanwhile our people can be considering care- 
fully the details which we consider important for the success, looking at it from 
both sides of the proposed deal. 
Yours truly, 

(Signed) Wm. G. Mather, 

President. 

Copy to Mr. E. B. Greene. 

(In ink: W G M expects to return 2/23. leaves again 3/15. 



Exhibit No. 1358 

[Copy of telegram] 

TnOMASViLliE, Ga., January 36, 10:17 P. M. 
W. W. White, 

Union Trust Building., Cleveland, Ohio. 

I have talked with Wade and Green and they approve of general plan and ask 
the following telegram be sent as representing their thoughts. I think their 
recommendation for specific considerations are entirely proper and have advised 
them in my opinion they would be so recognized stop As individuals we are 
heartily in favor of Cleveland-Clififs company acquiring Oglebay, Norton & Com- 
pany under the proposed plan believing that this merger tends to stablize the 
market value of ore. As directors of the Montreal Mining Company we would 
not favor entering into a contract longer than five years or even for that period 
unless such contract insured first the same high standard of management and 
individual attention to the affairs of the Montreal Mining Company which it has 
enjoyed in the past second that a plan be devised so that the Montreal Mining 
Company can be assured that its ore will be sold in such manner that there shall 
be no discrimination against its ore in favor of ore from mines owned by The 
Cleveland-Cliffs Company, third that the amount of overhead expenses charged 
in the future against the Montreal Mining Company shall not exceed the amount 
of such overhead expenses charged to the Montreal Minirig Company in the year 
1929 computed on the same basis and should the Directors of the Montreal Min- 
ing Company desire to do so that compensation involving a smaller fee per ton 
plus a percentage of net earnings might be substituted for the present compensa- 
tion in some manner so that the net earnings of the Montreal Mining Company 
would directly effect the total compensation received by the Cleveland-Cliflfs 
Company. Fourth, that the same relations between The Oglebay, Norton and 
Company as Agents and the Montreal Mining Company as mine owners be con- 
tinued the Board of Directors of the Montreal Mining Company continuing to 
pass on all matters of General Policy such as annual production, sales contracts, 
etc. 

Crispin Oglebay. 

(In ink :) Certified true copy. 

E. H. Jaynes, 
Secretary, The C. C. I. Co. 



"Exhibit No. 1359", introduced on^p. 10259, is on file with the Commit+"e- 



CONCENTRATION OF ECONOMIC POWER 10433 

Exhibit No. 1860 

8-2-34 

STATEMENT OF WM. G. MATHER TO THE BOARD OF DIRECTORS OF OTIS 

STEEL COMPANY 

Mr. President and Members of the Board: 

I desire, in behalf of myself and the other Board members who are also Direc- 
tors of The Cleveland-Cliffs Iron Company, or officials of that Company, to state 
our position with reference to the proposed negotiations with Republic Steel 
Corporation and The Corrigan, McKinney Steel Company. We feel, and are 
advised by counsel, that in view of the large ownership of The Cleveland-Cliffs 
Iron Company in the stock of Corrigan, McKinney and its substantial ownership 
of Republic stock, as well as its ownership of shares in Otis Steel Company, it 
would not be proper for us to vote upon or participate in any corporate action 
involving the sale of the assets and business of Otis Steel Company to, or its 
consolidation with, Republic, and in case the time arrives when such questions 
are presented to this Board for determination, we will withdraw, leaving the 
other members of the Board free to act in such manner as they shall deem for the 
best interests of the Company. 

We are, however, advised by counsel that it is not only our privilege, but it is our 
duty, to express to the other members of the Board our general views as to the 
desirability of giving consideration to this subject so that you may have the 
benefit of such general information regarding the industry as we possess and be 
advised as to how the large stock interest which we more particularly represent 
regards it. 

While no one appreciates more than we the excellent record made by the manage- 
ment of Otis Steel Company, especially during the first half of 1934, we think, 
nevertheless, that it would be for the best interests of the Company to bring 
about the consolidation on some fair and proper basis of Otis Steel Company 
with Republic and Corrigan. 

We are not assuming to suggest to this Board the basis on which it would be 
advisable to enter into such a merger. We do, however, feel that in view of the 
present condition of the steel industry it would be for the best interests of this 
Company to have the question of such a consolidation carefully investigated and 
considered by a strong committee of disinterested members of this Board of which 
conamittee, we request, Mr. President, that you should be a member. I hope 
3"ou will receive this suggestion in the open minded spirit in which it is presented 
and that the Botird may have the benefit of such an investigation and report as 
I have indicated. 

I am a'iv^ised by counsel that my associates and I may properly vote for the 
appointment of such a committee but we would not, of course, expect to vote upon 
anv recommendations it may make. 

(In ink:) Certified true copy. 

E. H. Jaynes, 
Secretary, The C. C. I. Co. 



Exhibit No. 1301 
Inter-oflBce letter ' 

The Cleveland-Cliffs Iron Co.. 

Cleveland, Ohio, April U, 1936. 
Subject: Republic Steel. 
Reference: 
Memorandum: 

In connection with our business with Republic Steel Corporation covering iron 
ore floatage by boat and railroad freight, also coal floatage, and mine leases, the 
writer, during his illness, has had the following contacts directly with Republic. 
In February when we held our directois meeting in New York the writer had an 
hour's conference with Mr. Girdler in his office at which Mr. Girdler himself 
agreed that he desired to work in closest harmony with^ Cleveland Cliffs Iron 
Company, and he felt the best way to bring about those results was to have 
Messrs. Brov/n and Raymond and possibly one or two others meet with Messrs. 
Wysor, Ilgenfritz, and Gosewisch, and if they could come to terms then it would 
be unnecessary for either Mr. Girdler or +v^ -^^--cirrr^oH fo erive the matter any 



10434 CONCENTRATION OF ECONOMIC POWER 

time, but if they could not agree then the matter was to be referred to Mr, Girdler 
and the undersigned, and Mr. Girdler promised at that time that he would bear 
in mind his assurances as to friendly relations just recited. Mr. Girdler went on 
to say that he expected his associates to represent Republic to the best of their 
abiUty and that he knew Cleveland Cliffs did not want anything that was not fair, 
but it was his desire to have RepubUc do as much business as possible in justice 
to Republic's own welfare with Cleveland CliflFs. The writer expressed his entire 
approval of Mr. Girdler's assurances and we then went on to discuss the question 
of a common general counsel, this matter having come up because of the death of 
Mr. Belden. At the close of the interview, in order that there should be no 
misunderstanding^ the writer recapitulated the agreement using Mr. Girdler's 
own words as nearly as possible. Mr. Girdler agreeing to this recapitulation. 

Following Mr. Brown's and Mr. Geffine's visit to Thomasville at which we 
discussed, among other things, the Republic matter, at the suggestion of Mr. 
Brown the writer wrote to Mr. Girdler reminding him of this matter, telling him 
when I would be back in Cleveland, and assuming that his ideas had not changed. 
Following long distance conversations from the o Tice about the middle of March 
the writer wrote Mr. Girdler again telling him that his return had been somewhat 
delayed owing to iUness and asking Mr. Girdler's forebearance in waiting for his 
return to Cleveland. Upon the writer's return to Cleveland March 30th he 
went immediately to the hospital. Meanwhile the negotiations were coming to 
a crisis. Accordingly I wrote Girdler on April 7th suggesting an appointment at 
soon as the writer was well enough. He suggested an appointment Friday the 
10th which had to be postponed on account of the writer's health. On the 13th 
I wrote him again suggesting the possibility of an appointment with him in 
New York on the 16th. Upon receiving somewhat pessimistic views regarding 
the progress of the negotiations, and even more Mr. Girdler's remarks that he 
might question Mr. Brown's assurances that the writer was still sick, the writer 
disobeyed the doctor's instructions both to leave the city and to take no part in 
business negotiations and called at Mr. Girdler's office today, having nearly an 
hour's conference with him. 

The writer explained to Mr. Girdler that he was leaving town to avoid being 
drawn into business matters, but that he could fully understand that Mr. Girdler 
might be puzzled that I could see him in New York and not in Cleveland and 
might think that I was purposely delaying the matter. I explained my physical 
condition and Mr. Girdler said he thoroughly understood the matter and hoped 
that the writer had not misunderstood him. 

The writer then said that he wanted to discuss with Mr. Girdler three things: 
first, the big general policy which looked into the future of both companies, then 
going back into the original plan of a midwest steel company and Cleveland 
Cliffs' relation to it, and calling attention to the very large holding in CliflFs Cor- 
poration and the possibility that matters of investment in steel companies might 
be arranged to further the growth and prosperity of Republic as well as Cleveland 
Cliffs. Second, the writer wanted to discuss with him the negotiations now being 
carried on which possibly Mr. Girdler felt were not proceeding as fast as possible. 
Mr. Girdler interrupted to state that he had kept out until recently but was now 
in quite deeply and Mr. Wysor said that he was now as fiilly acquainted with the 
details as he Wysor was. 

Outside of very minor matters his criticisms were that Cleveland Cliffs stated 
that opening up the Jackson Mine on 50^ royalty was of no advantage, and 
second, that we were not giving them allowance enough for other advantages such 
as profit on float, etc. He stated that opening up the Jackson Mine on a 50(i 
royalty basis, and taking into consideration other matters, was certainly of great 
advantage to us and he did not like us to deny it. Also he felt that we were not 
crediting them sufficiently with the advantage we receive from floatage and 
freight, and said that these should be as fully considered as the price of ore. He 
then went on to tell me that he had several offers to transport ore at not quite 15<i 
but nearly that figure less than the market. He then went on to recite how one 
man had tried to threaten him through his railroad interest unless he got a big 
chunk of floatage and how he had straightened the matter out by telling"him they 
were not receiving enough steel business to cover the present freight the railroads 
were receiving. He advised the man to go back and find out where he stood in 
the railroad end, and later he was advised by the railroad man tliat he had gotten 
oflF on the wrong foot. He said he wanted to give Cleveland Clift's the floatage for 
ten years and then be able to tell the otheis he was out of it, and that he was 
sincere in wanting to do business with Cleveland Cliffs but that it must be on a 
basis fair to Republic. 

The writer kept the conversation on generalities and it never was a matter of 
getting down to detail. The writer concluded the conversation by sayine that 



CONCENTRATION OF ECONOMIC POWER 10435 

whatever gap there was he felt might be entirely closed by the meeting set for 
tomorrow morning at nine o'clock and he hoped that such was the case, but that 
he had remained over not only to see Mr. Girdler today but with the hopes of 
seeing him again tomorrow should the meeting not conclude the negotiations. 
The matter closed in the friendliest way, Mr. Girdler saying he would follow the 
program closely and would call at the writer's house if it was more convenient and 
would save my coming downtown. 

After this matter was disposed of Mr. Girdler then discussed the question of 
directors, but concluded by stating that that whole subject could be discussed 
upon my return and that it could well wait without disadvantage. He said 
he would be pleased to have me on the board, giving his reasons, and also that he 
would be pleased to have Mr. Mather on the board, also giving his reasons, but 
that he had advised Mr. Brown that he could not put either of us on the board 
until the New York Central and Otis Steel situations were changed. The writer 
agreed with him that this matter could well rest until his return, and we concluded 
with a discussion of purely personal matters. 

EBG JS E. B. Greene, President. 



(In ink:) Certified true copy. 



E. H. Jatnes, 
Secretary, The C.C.I. Co. 



Exhibit No. 1362 

[Inter-Department Correspondence] 

Butler Brothers 

AND 

Manganiperous Iron Company 
Unioi>>Trust Building, Cleveland, O. 

September 4, 1928. 

Dear Dad: I talked with,Hoyt this afternoon relative to our counter pro- 
posal. 

The minimums and maximums as you suggested are agreeable to him. How- 
ever, he wants first call on any additional tonnage our present properties might 
show up. This is to keep us out of the market as' much as possible. This first 
call means that should we feel we ought to produce more, or that we are in a 
position to take on additional contracts, that we should offer the ore to them 
before we do so to anyone else. 

He said our proposal worked out better for us than our present contracts, not- 
withstanding the fact that P. M., were putting up two million dollars. 

The first million tons in his estimation should be priced at $3.50 per ton, with 
full Non- Bessemer premiums for iron only. Hoyt wanted to know whether we 
would share in a decrease if the market price of ore went down. This i6 in 
answer to your sentence stating "that in case of increase in market, Butler 
Brothers are to receive 50% of such increase." 

He suggested as a price after the first million tons have been" delivered of 
$3.80 minimum for 53.00% natural iron and .035 phosphorus, plus 50% of the 
difference between $3.80 and the full market price. This makes his price on 
this year's market of $4,216 as against your proposal of $4,379. For variations 
from the above analysis full unit values are to be taken. ■ 

He wants to float all the tonnage saying that Bethlehem would insist on it. 

He has agreed to split 75-25 if the purchase price of stock is less than two 
million doUars. 

I will telephone you this evening. Hoyt wants to go east Sunday night so I 
should have your ideas on or before Saturday. He says that he needs only our 
assurance that we can get together on about this lineup to go ahead with Bethle- 
hem, and that we need not commit ourselves definitely. 
Yours, 

(Signed) Pat. 

PB:K. 

(Stamped:) Certified true copy from files. 

Butler Brothers, 
By (Signed) F. J. McArthur, 

Treasttre . 



10436 CONCENTRATION OF ECONOMIC POWER 

Exhibit No. 1363 

September 19, 1934. 
Mr. G. M. Humphrey, 

1300 Leader Bldg., Cleveland, Ohio. 
Dear George: Many thanks for your note regarding Alec. I am very much 
pleased to find that such men as yourself, Leonard, Elton, and others have been 
pleased by the appointment and so sincerely welcome Alec into our "union". 

I am glad that the iron ore business is so largely in the hands of a small group 
of men who aU work on a close and friendly basis. 
Sincerely yours, 

, President. 

EBG JS. 

(In ink :) Certified true copy. 

E. H. Jaynes, 
Secretary, The C. C. I. Co. 



"Exhibit No. 1364," introduced on p. 10296, is on file with the Committee. 



Exhibit No. 1364-A 
Personal. 

October 17, 1936. 
Mr. S. R. Elliott, 

Mgr., Ishpeming, Mich. 

Dear Sir: This will confirm our conversation over the long distance phone 
last evening. Yesterday morning Mr. Elton Hoyt called the writer asking for 
an appointment with him and Mr. Brown, saying he had an important matter 
to discuss with us. 

At the ensuing conference he stated that he had been north for a couple of 
weeks and had had a long conversation with you in which you mentioned a change 
in working hours. He was somewhat disturbed by this as there has been an under- 
standing for several years, originating, I imagine, at the time of the first discussions 
over the N. R. A., -that any changes in pay, hours, working conditions, etc. would 
be discussed among the big employers before action was taken so that the industry 
might present a united front. He further stated that in view of the numerous con- 
nections our two companies had, that he was surprised that we should have made 
this change without explaining the matter to him. Both Mr. Brown and the 
writer told him frankly of the conference which you had had with Mr. Brown 
when you were in Cleveland on September 22nd, and with the writer on our boat 
going north, and that at both these conferences we had inquired particularly as 
to whether the new regulation was the same as that in force at the mines of our 
competitors. Both of us assured him that our new arrangement was complying 
with their condition, and that we had been the only one of the big ore companies 
who brought our men to the surface for lunch, and we saw no reason to advise the 
others when we were simply getting in line with them. 

Mr. Hoyt then went on to say that we had not gotten in Une with them but in 
his opinion, and in the opinion of Mr. Salsich, we had given the equivalent of a 
raise in pay inasmuch as we were paying for eight hours and not receiving that 
amount of labor. Mr. Brown then went into it in some detail with Mr. Hoyt 
but Mr. Hoyt insisted that either we were misinformed or that the situation in 
our own mines was not as we stated. 

He left our oflBce, not satisfied that we were correct, but greatly pleased to find 
out that we had not knowingly changed working conditions without notification 
to them. Mr. Hoyt called the writer later in the afternoon saying that he had 
investigated the matter carefuUy by telephone, and I think he had talked with 
both his own men and the Oliver Mining men, and stated that the facts of the 
matter were these: that their men reached their working places at 8:00 and left 
the working places at 4:30, and that they were allowed 30 minutes for lunch; that 
our men arrived at the working places at 8:00, left them at 4j00 and therefore 
ate their lunch out of the 8 hours time, our men reaching the surface half an 
hour earlier than either the Pickands Mather or Oliver Mining men. He then 
asked us if we were willing to have you meet with either Mr. Chisholm or Mr. 



CONCENTRATION OP ECONOMIC POWER 10437 

Chinn, and Mr. Salsich or whoever he nominated, and discuss this matter. He 
said it might not be possible to change our position, but he felt that at least we 
ought to be willing to talk it over. The writer agreed that his request was 
reasonable, and put in a call for you. As you were down in one of the mines we 
could not reach you until after I had reached my home. 

It seems obvious to the writer that in our own case the men are eating their 
lunch on the company's time, while in the case of Pickands Mather and the 
others to whom Mr. Hoyt refers, (assuming they take no more than 30 minutes) 
they are eating on their own time and giving the company the full 8 hours of 
service. It is fair to assume that the eating time of the miners is approximately 
the same whether employed by us or by the other companies. The writer concurs 
in your views that there are certain employees whose work is intermittent and 
who could undoubtedly eat their lunch in between times in such a way that the 
company would not be the loser by their eating their lunch on the company's 
time. It is also true that to the extent that our mines are now or will work on a 
three-shift basis, that it is necessary for the men to follow the system which we 
have installed. Therefore Mr. Hoyt's objection apphes only to the mines which 
are not working on a three-shift basis, and further, that the company is not a 
loser by having men whose work is intermittent take their lunch on the company's 
time. Unquestionably however, our system differs from theirs, and in accord- 
ance with the understanding, it would have been better had we either consulted 
Mr. Hoyt or at least advised him of our change. 

You may possibly think that Mr. Brown, and especially the writer, are giving 
more consideration to a partner of one of our competitors than is justified, and I 
would be sorry if you have this impression. I would hke to remind you that it 
was largely through Mr. Hoyt's hearty cooperation that we were able to get the 
Bethlehem Steel Company to operate the Negaunee Mine as we desired for the 
past several years. Mr. Hoyt's cooperation with this company, both in matters 
pertaining to partners' attitude as weU as during our financing was helpful in an 
outstanding way, and I am explaining this only because I think you feel that we 
are magnifying the importance of cooperating with him. I am sorry to have you 
go to the trouble of meeting with these men as it takes you away from your work 
at this busy time, and also because I think you prefer not to do it, but it seems 
to us that it is in our best interests to comply with Mr. Hoyt's request. I am 
sorry that in your discussions with Mr. Brown and also with me that we did not 
fully understand that future working conditions would be different from those of 
our competitors. Undoubtedly we would have felt a perfect right to do as we 
have done, but also undoubtedly we would have avoided their criticism by 
advising them of our intention. 
Very truly yours, 

, President. 

EBG JS. 

(In ink:) Certified true copy. 

E. H. Jatnes, 
Secretary, The C. C. I. Co. 



Exhibit No. 1365 

[Copy of Western Union telegram] 

(52) 
Received at The Waldorf Astoria New York, N. Y. 19S7 May 8 PM S 52 

NS 127 127 DL Cleveland Ohio 8 322P 
E. B. Greene, 

Waldorf Astoria Hotel: 
Very important meeting Tuesday morning Pickands Mathers office Same 
personnel previous meeting and in addition Butler representatives will be present 
Elliott cannot attend account of meeting on Mesaba but will send Jackson Be- 
lieve important you should be here Stop After discussing with Veach I tele- 
phoned Elliott compromise suggestion I made you by telephone today which he 
says helps situation but still is not convinced though entirely willing to do his very 
best Stop Schneider advises he wired you Waldorf yesterday regarding White 
He tells me thinks he is all right but not had whole lot of experience and is pretty 



10438 CONCENTRATION OF ECONOMIC POWER 

green White wishes to discuss with Bob and Chris and will advise Schneider 
Monday Schneider told him any definite arrangement would have to be consid- 
ered after your return. 

A. C. Brown 
(In ink :) Certified true copy. 

E. H. Jaynes, 
Secretary, The C. C. I. Co. 

Exhibit No. 1366 

May 24, 1938. 
Curtailment. 

Personal. 

Mr. S. R. Elliott, Mgr., 

Ishpeming, Mich. 

Dear Sir: I have read with interest your letter of the 19th inst. to Mr. Brown, 
to which was attached the minutes of the Superintendents meeting held May 17th. 
It would seem that this work is progressing satisfactorily. 

As time goes on I see nothing in the future that would make us feel that these 
reductions are unnecessary. In fact, each week brings additional reductions in 
the schedules of the steel companies. I am afraid when the automobile industry 
shuts down this summer for inventory and preparations for the new models that 
the situation is going to be even worse. I doubt if the situation in 1932 or 1933 
was any worse than at present, the only difference being that people are used to it 
and are taking it more philosophically. 

In connection with the curtailment of personnel I want to confirm my talk with 
you in Cleveland. Namely, that Fayette Brown Jr. was taken on as a matter of 
policy and due to the insistent request of Mr. Elton Hoyt. As you know, Mr. 
Dalton's health is far from good and the responsibility for handling the affairs of 
that firm rests, in very large measure, on Mr. Hoyt's shoulders. Even though it 
may cause you some embarrassment I think there is no way out of it but to con- 
tinue his employment, and I think it wise that he should have more experience at 
the mines before bringing him to Cleveland. If it would in any way help your 
situation, you might transfer him to the Athens Mine in which Pickands Mather 
are practically half owners, and you could explain his continued employment on 
the basis that he was representing Pickands Mather's ownership. 

Ag Mr. Mather has placed his step-son, the writer a nephew, and Mr. Brown 
and Mr. Geffine each a son in other lines of business, I think you may accept at 
face value the statement that Fayette Brown Jr. was not employed on account 
of his relationship to any ofl^cer of this company, but was employed because we 
value very highly the co-operation which we are getting from Pickands Mather. 
I want you to know that in our dealings with the Bethlehem Steel Company re- 
garding Negaunee Mine afiFairs, Mr. Hoyt personally has been of tremendous help. 
Our relationship now is on a basis which possibly does not make his intervention 
at all necessary, but our relationship with Bethlehem would not be what it is if it 
had not been founded on his efforts in our behalf. During the troublesome times 
which started with, say, the N. R. A., right up to the present time, the interests 
of Pickands Mather and ourselves have been working in the closest harmony, and 
the combined efforts of these two interests have brought about a united front in 
the ore industry. I am speaking from absolute personal knowledge of these 
matters. 

I am going to all this trouble because I want you to understand why I am so in- 
sistent about this matter. I feel certain that if Fayette Brown Jr. were dropped, 
Mr. Hoyt would interpret it as a personal reflection on him, which, of course, 
would not be in your mind or mine, but in view of this peculiarity I have no alter- 
native but to request you to continue him up north in whatever line you find 
suitable. 

Very truly yours, 

, President. 

EBG JS 

(In ink:) Certified true copy. 

E. H. Jaynes, 
Secretary, The C. C. I. Co. 



CONCENTRATION OF KCONr.MIC P0V7E11 



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CONCENTRATION OF ECONOMIC POWER 10441 

Exhibit No. 1369 

Butler Brothers, 
Cleveland, Ohio, April 10, 1934. 
To Mr. Emmett Butler 
Subject: 

Dear Dad: I saw Hoyt yesterday at which time he told me the ore magnates 
had decided to retain last year's market price. This price will be held regardless 
of what Ford does. We mailed our bid to Ford yesterday as did the others. 

Hoyt says Pickands- Mather hope to take their minimum from us of 200,000 
tons plus all the stockpile which we figure to be 117,000 tons. 

Archibald is to be in Detroit the last part of this week and I am holding myself 
in readiness to meet him there. 
Yours very truly, 

(Signed) Pat. 
CC: Mr. R. O. Hocking. 

Mr. Hazen E. Butler. 
(In ink:) E. B. 4/12. 
(Stamped:) Certified true copy from files. 

Butler Brothers, 
(Signed) F. J. McArthur, 

Treasurer. 



Exhibit No. 1370 

Inter-Department Correspondence 
Butler Brothers 

AND 

Manganiferous Iron Company 

Union .Trust Building, Cleveland, O. 

March 28, 1929, 
Mr. Emmett Butler, 
c/o Butler Brothers, 

Hamm Building, St. Paul, Minnesota. 
Dear Dad: I had a talk with Elton Hoyt yesterday afternoon and he talked 
me out of quoting Ford on any of our grades at less than the full market price. 
He said the market for standard ores is still a little shaky and that it would be 
dangerous to quote Ford anything under the full price. 

On the Hume quotation, there would be too much danger of the Corporation 
learning that we were using any other basis for figuring other than that we submit 
to them. And I'm afraid that our goose would be cooked if Shiras ever heard of it. 
In light of the above I am submitting today quotations on Hume, Knicker- 
bocker, Louise, Kevin and Butler silicious at the full season's prices. 
Yours affectionately. 



PB: A. 

Copy to H. E. Butler. 

(Stamped:) Certified true copy from files. 



(Signed) Pat. 



Butler Brothers, 
(signed) F. J. McArthur, 

Treasurer. 



Exhibit No. 1371 

BuTLEE Brothers, 
Cleveland, Ohio, August 4, 1931. 
To Mr. Emmett Butler. 
Subject: 

I have your letter relative to 1 . "^ Stack's letter to mo. 

I stopped in Detroit j'^esterday and called on Ahrens and Newkirk. They did 
not mention long term sales nor did I. They are interested in a basic ore similar 
to the one they are now getting from Pickands- Mather, also, a low phos., ore-, 
specifications of which they have not as yet decided. 



10442 CONCENTRATION OF ECONOMIC POWER 

I believe it would be a dangerous thing to quote below this years market 
whether it be for this year only or a term of years. For one reason I believe that, 
any price, no matter on what basis, quoted for this year would establish next 
year's market price. The Ford business is the only open market business left and 
if this is not maintained I do not know what would become of our long term 
contracts that are based on a market price. Then also, if we took away the busi- 
ness from Pickands-Mather on a price concession we would incur the wrath of 
Jim and also giv^e the old line companies an excuse to do likewise. Now that 
Quinn is practically out of business I believe the ore market can be more closely 
controlled. 

We are the only people that can furnish them a tonnage of low phos., ore and 
I am of the opinion that we can use this as a club to move our other grades in the 
same way that Cleveland-Cliffs uses their monopoly on open hearth ore. 

I appreciate your anxiety to land this business but I believe it would be a 
dangerous thing to cut the price in any way whatsoever. We will, however, 
consult with the Big Four beforehand to assure ourselves that they will not try 
any such tricks. 

Yours very truly, 

(Signed) Pat. 
(Stamped:) Certified true copy from files. 

Butler Brothers, 
(Signed) F. J. McArthur, 

Treasurer. 



Exhibit No. 1372 

Butler Brothers, 
Cleveland, Ohio, March 26, 1931. 
To: Mr. Emm.ett Butler. 
Subject: 

As I wired you this morning the 1930 prices will be submitted to Ford by the 
Big Four and ourselves. Oglebay-Norton have been unable to keep Nelson & 
Associates from making a cut on their product. This cut is supposed to be about 

quote 
fifteen cents a ton. Oglebay-Norton will not e«* on this grade and will refuse to 
take a commission on the sale of it. It is the consensus of opinion that too much 
is at stake to meet this competition and as usual I have agreed to stay in line. 

It is our opinion that Ford will not buy from any property that has not shipped 
before, even at a reduction in price. 

We expect action on Ford's bids the first part of the coming week. Copies of 
our quotations will be sent as soon as I can get them back from Wyman, who is 
in Detroit at present. 

Yours very truly, 

(Signed) Pat B. 

PB:A 

CC: H. E. B., R. O. H. 

(Stamped:) Certified true copy from files. 

Butler Brothers, 
By (Signed) F. J. McArthur, 

Treasurer. 



1 



Exhibit No. 1373 

Inter-Department Correspondence 
Butler Brothers 

AND 

Manganiferous Iron Company 

Union Trust Building, Cleveland, O. 

March 27th, 1929. 
Mr. Emmett Butler, 
Butler Brothers, 

639 Hamm Building, St. Paul, Minn. 
Dear Dad: I ofl^ered Wheeling 100,000 to 150,000 tons of Kevin grade ore at 
10)4 off the market. I also told them I would dispose of 60,000 tons of their 



I 



CONCENTRATION OF ECONOMIC POWER 10443 

Wacootah, taking that in at the market price. WheeHng has already traded 
200,000 tons of their ore for 200,000 tons of Cleveland- Cliffs ore — so they are not 
as interested as they might be. There ie a hope that if Wheeling does not want to 
trade, that the only place Donner can get high alumina is from us on the Cuyuna. 
That being the case, I am not pressing Wheeling as hard as I might but have to 
go through motions for Donner's benifit. 

Wheeling will be taking offers for long term sales on basic ore sometime before 
summer. Let me know if you thin), we want to quote them, what tonnage, what 
years and what grade. 

I think we have lost out at the Rolling Mill. They do not like the high silica. 

I am seeing Hoyt this afternoon to find out what we shall quote on mangani- 
ferous ore and possibly to get his approval of our offering Hume as a straight iron 
ore. Also, if we can't quote Kevin 100 to 15j5 off without stepping on Bennett's 
or his corns. 

Wired you this afternoon about the manganese in Kevin, having in mind that 
possibly the Margaret shipments might bring up the manganese in Kevin. The 
more free manganese the more attractive this ore will be to Ford. I intend going 
to Detroit on Friday and I think we should hear on the letting by the middle of 
next week. 

Harry Shick will be in the office Tuesday and at that time we should find out 
about Merritt. 

Henry Raymond insists that the silicious market remain the same this year as 
it did last. That is— $2.25 for 38.50% natural iron. 
Yours, 



PB:K 

Copy to H. E. Butler. 

(Stamped:) Certified true copy from files. 



(Signed) Pat. 



Butler Brothers, 
By (Signed) F. J. McArthur, 

Treasurer. 



Exhibit No. 1374 

Butler Brothers, 
Cleveland, Ohio, April 16, 1935. 
To Mr. Emmett Butler, 
Subject: Ford Motor Company. 

Dear Emmett: The Ford Motor Company Inquiries came in today calling for 
120,000 tons of basic with phosphorous under .10, and 60,000 tons of high phos- 
phorous ore. 

I checked up with Hanna's and Pickands- Mather today and firid that there has 
decision 
been no diocuoQion as to what this year's price will be, except that there seems to 
be some difference of opinion as to whether or not the surcharge on freight rates 
will be absorbed and the same market price named as existed over the past several 
years. • 

As discussed with you yesterday, we are getting together a form of contract to 
submit to the Ford Company covering a period of years on an ore similar to tb,© 
Hocking Grade, in which we will be protected with regard to variations in labor, 
supplies and fuel. It is my understanding from our conversation that we can 
afford to put in a base price of $2.25 on a 50% natural iron in the event that we can 
arrange a term contract of five years or more. We will proceed with the working 
up of the general outline of such a proposal and try to get it before Sorenson. 
Very truly yours, 

(Signed) C. L. Wtman. 
CC R. O. Hocking. 

Hazen E. Butler. 
(In ink:) 

E. B. 4/19. 
G. J. H. 4/18/35. 
(Stamped:) Certified true copy from files. 

Butler Brothers, 
(Signed) F. J. McArthur, 

Treasurer. 



10444 CONCENTRATION OF ECONOMIC POWER 

Exhibit No. 1375 

Aprii, 23, 1935. 
Ore pricfes. 
(In ink:) Prices 1935. 

Mr. E. B. Greene, President, 

Office. 

Dear Sir: Mr. Hoyt called up to-day and after asking if Alex was in town, 
asked if I would come up to speak with him a minute. He told me of his talk with 
you last night and the agreement that he would see Mr. Girdler this morning. 
He said he had just been talking with him for an hour and a half, asking Mr. 
Girdler if he did not think it would be a good thing for the whole Industry if the 
emergency freight charge be borne by the buyers of ore. He said that Mr. 
Girdler told him that if he would get Mr. Block and Mr. Weir to agree that adding 
the emergency freight to the ore price this year would be of psychological help in 
getting a better price for steel in the third quarter, that he would be in favor of it. 
He said that of course Mr. Girdler and he both realized (regardless of the fact that 
Mr. Wysor is in Bermuda) that he, Hoyt, could not get any such assurance. Mr. 
Girdler felt that if this were not the case, the increase in freight rate should not be 
added to the price of ore. Mr. Hoyt then said he would go back and think it over 
and on parting said to Mr. Girdler: "Well, then, if I announce in the papers that the 
price of ore is the same as last year, with the ore companies absorbing the increase 
in freight rate, I can consider that we have sold you a tonnage of ore at last year's 
price." Mr. Girdler's reply was: "Yes, we have made a deal." 

Therefore, Mr. Hoyt said he wanted to announce in the papers this afternoon 
that the ore price has been set at $4.50 for this season, and asked if that would be 
alright for our company. I told him that I would have to call you on the tele- 
phone, and that it might be that you would prefer to have another talk with Mr. 
Girdler along the lines of if we are going to absorb this freight they ought to give us 
an increase in tonnage. Mr. Hoyt felt strongly that this matter must be com- 
pleted to-day and that you would be in just as good a position to make such a 
plea after the prices are fixed, with the argument that the ore industry has ab- 
sorbed $2,500,000 of increased freight rate and ought to get some help. I told 
him, of course, that is not correct, that nearly 90% of the ore is ownership ore, 
which naturally has to bear the increase, but he said it is the ore mining end of 
the industry that is standing it and he thought that was a fair statement. I told 
him that I felt that you would like to talk with Mr. Girdler before having the 
price set but he said he thought it was important to get it done immediately. He 
then went on to further say that if a lower price would bring more business he 
would be 'in favor of making some lower price, but he thought we would have to 
wait until there was a real prospect of getting the larger tonnage and he thought 
thai very likely ore prices will be I^ower, but that as this is a year when we are 
mining merely to give employment, and with so little to gain, that it was a bad 
time to make any change. He suggested that if he did not hear from me by 
4 o'clock they would go ahead and announce the price arid asked what I thought 
you would think of that. I said that I felt that would not be the right thing- 
that you surely should be advised and reiterated that I did not think the delay of 
a day would make any difference. 
HAR:ADP H. A. Raymond. 



Exhibit No. 1376 

National Steel Corporation, 
Grant Building, Pittsburgh,, Pa., January 18, 19S0. 
Mr. George M. Humphrey, 
The M. A. Hanna Company, 

1300 Leader Building, Cleveland, Ohio. 
My Dear George: I return herewith the letters from Earl Hunner, and which 
are interesting. 

Don't you think in view of the very keen interest in the ore situation, and the 
fact that everybody is after even the smallest properties, that it ought to be a 
«ood time to get the price of ore up 25 cents a ton. Even if pig iron and other 
conditions are not just as good, it seems to me the move should be made, indi- 



CONCENTRATION OF ECONOMIC POWER 10445 

eating that ore is in a strong position and able to start out on a basis of higher 
prices. 

Very truly yours, 

(Signed) Ebnbst. 
(Pencilled note:) 
Letter from E. E. Hunner — January 15, 1930 

See "Ore Lands" Mesabi Iron Co. 
Letter from E. E. Hunner — January 15, 1930 
See Virginia O. M. Co. 



Exhibit No. 1377 

[Copy] 

Gasparilla Inn, 
Boca Grande, Fla., Feb. 28, 19S7. 
Dear Ed: There are three things that are somewhat on my mind which I hope 
you can go over with Henry and the others while I am away for they all require 
your decision as to policy before we could do very much about them in following 
them up after yoa go away. 

1. The proposed new Wheeling Steel ore contract about which I have already 
talked with you. 

2. The Otis Steel ore contract. I feel that unless this is worked out before we 
agree with Wheeling we will be at a disadvantage with Otis. Our present situa- 
tion is that we have sold no ore in 1937 below market price. Our Republic con- 
tract reads as a sale of ore completed in 1936 for the whole ten year period with 
deliveries to be made during that period on this 1936 sale. This is the same in- 
terpretation that has always bepn given to our J & L sale of ore. 

If we negotiate with Otis before completing Wheeling, the concession we make 
will be from the 1937 market price, whereas if Wheeling is completed first we 
will be obligated under our present Otis contract to give Otis the amount of the 
Wheeling concession for Otis' 1937 ore at least, and lose this amount of bargaining 
advantage. 

3. The question of 1937 market price of ore will surely come to a head shortly. 
This should be settled before there is any chance of Ford buying ore because it is 
becoming more and more likely that the large order placed by Ford each year at 
cut prices may become the accepted market price. Our interest in the market 
price is, of course, very much less than it used to be but this year it is of particular 
importance because of our Wheeling and Otis negotiations. 

An increase in the market price is certainly expected. It is true that a higher 
market price will increase taxes particularly on the Mesaba range. On the other 
hand, if the market price is not raised I think that, in Minnesota at least, taxes 
will be raised anyway and possibly will be related to pig iron prices, instead of ore 
prices, to our disadvantage. I think a study of this tax feature as it relates to 
market price should be made. 

An increase in the market price would make Republic aU the better satisfied 
with our present contract, in spite of the increases that have to be made for labor 
costs etc. ; also our increase would make our proposed Wheeling and Otis contracts 
easier to accoinplish. 

My idea at present is that the increase should probably not be naore than 40^ 
nor less than 25^. In this connection the tax feature is, of course, important. 

25^ is a little less than a 10% increase on the f. o. b. mine market price for 
Mesaba non-bessemer and 40(4 is a little less than 15% increase, I believe. 

I think on the present basis of wages and freight and providng there are no 
further wage or freight increases, our addition to the Republic base price for 1937 
will be about 6^ to 170. If social security increases are included for Wheeling 
and Otis, this addition to last years market price would be greater. 

I believe it would be wise to have the increase in market price for 1937 substan- 
tially more than we figure the probable increase in the base price to both Republic 
and J. & L. due to labor and freight changes after allowing for another expected 
increase in wages this year. 

I am sorry this letter is so long but wanted you to know my ideas m the hope 
they may be helpful to you. 



10446 CONCENTRATION OF ECONOMIC POWER 

Everything is delightful here. We made no mistake in our choice. As you 
know, unless needed sooner, I expect to be back at the office Tuesday March 16th. 
Sincerely yours, 

Alex. C. Brown. 
(In ink:) Certified True Copy. 

E. H. Jaynes, 
Secretary, The C. C. I. Co. 

Exhibit No. 1378 

March 28th, 1934. 
Mr. Patrick Butler, 

308 Euclid Avenue, Cleveland, Ohio. 

Dear Pat: I have before me Cliff Wyman's letter of the 26th which states, 
among other things, that Ford's inquiry for 50,000 tons of ore is out. Now the 
question arises whether to wait for the other big ore merchants to quote Ford 
before making our quotation or to attempt to arrange some trade with Ralph 
Archibald and get the business without the formality of quoting a price. I do not 
know, of course, whether or not this can be done. 

My feeling about the matter is that these 30,000 tons of ore will only add to our 
expense this year about $40,000. It sometimes occurs to me that it would be 
better for Butler Brothers to start fixing the market price of ore instead of having 
our prices fixed so far as we are concerned and then another price fixed so far 
as they are concerned, as they did in 1933. This whole matter, I think, deserves 
a great deal of consideration. 

Cliff seems to think that Ford would be pleased to get the highest natural com- 
bined iron and manganese content that he can. I do not think that we can 
arrive at the figure of 52.81% that Chfif has set up for the reason that 17% of 
Hillcrest ore would probably be lost in the mix and the manganese would not 
show up in the proper proportions in the analysis. I do think we could make a 
51%, and possibly a 51.50% natural combined. 

Our competition on this business will be Perry Harrison and h s Cuyuna 
Range ore and ore that may be purchased from most any of our Mesuba Range 
frienos to mix with it. For that rep son I believe that if any trade arrangement 
can be worked out so as to cinch this btislness it would be well to do it. 

I think, possibly, this would be a good time to say to our customers, particularly 
M. M. and Hanna Co., "What are you going to do with this year's business, and 
what price are you going to put on ore?" They will, no doubt, answer to that that 
they do not know because they have not had their ore meeting, and stall beyond 
the date that Ford has fixed to close the bidding, and probably slip in a bid in the 
meantime. Why not tell them that we want to move tonnage and that we are 
either going after the Ford business in our own way or they are going to guarantee 
us an additional tonnage over their minimum equal to that of Ford's inquiries? 

You will notice by a statement of our costs that our fixed charges, if we include 
royalty which we must to a certain extent because of our minimum, is about one 
half of the total cost of ore to us, that is about 92j5 a ton for production cost, 
overhead, depreciation and taxes and about the same amount for labor and supply 
costs. 

I am enclosing herewith a forecast of our operations for this year based on the 
minimum tonnage. 

Affectionately, 
EB . 

SUPPLEMENTAL PATA 



The following is the narration delivered by Mr. Edwin C. Hill 
during the showing of the sound, Technicolor moving picture, "Steel, 
The Servant of Man", before the Temporary National Economic 
Committee on November 1, 1939. 



CONCENTRATION OF ECONOMIC POWER 10447 

Narration Accompanying United States Steel Corporation's Four-Reel 
Technicolor Film "Steel — The Servant of Man" 



(1) From the good red earth comes iron ore — the basic element of steel. Can 
you imagine what would happen if a great magnet — suddenly wrenched all steel 
from our daily life? What would happen to our skyscrapers? What would 
happen to our homes? What would become of our great bridges? How could 
we travel? How could we farm? How could we even communicate with one 
another? What would become of all industry? What, indeed, would become of 
all of us? 

(2) Only in a nightmare could such a calamity occur — and so we begin the 
story of steel, with huge shovels ripping the raw, red iron ore from its ancient 
beds. 

(3) 17 tons at a gulp is the capacity of this hungry giant eatii'.g into the bank 
of ore — a 34,000 pound load made possible by the strength and boundless ca- 
pacity of steel. This is called the age of electricity. Is it not also the Age of 
Steel? It's an age of remendous locomotive strength made possible and pressed 
into usefulness bj' steel — light weight, stronger railroad cars rolling over ribbons 
of' steel. 

(4) Open pit mining is restricted to months when frost is out of the ground. 
But the year round we find the men of the underground mines, like gnomes 
wresting from nature, ore lying far beneath the earth's surface — ^contributing to 
the steady* stream of loaded ore cars flowing between the iron ranges of the 
Northwest and the northern harbors of the Great Lakes. 

(5) Puffing impatiently, the ore boats of the Great Lakes' fleet await their 
loads under ore bins at the docks. 

(6) They must go!. We must get this good red ore to the mills. So down come 
the loading chutes, like the mouths of a huge prehistoric monster, to pour the ore 
into the bellj^ of the waiting ore boat. 

(7) Up goes the gate and out pours the brown-red stream cf the earth which 
makes steel. Few things have less valcie than this raw iron ore as we see it now. 
Yet there are few things of greater value and benefit to our modern civilization 
when the labor and intelligence of man is applied. 

(8) These carriers must work fast during late soring, summer and early fall. - 
While the ice is out, scores of ships in this large lake fjcet are constantly on the go. 
The loading completed, they start in an endless stream for the southern lake 
ports to feed the hungrj'^ blast furnaces of the steel mills to the south. 

(9) Three days later, it's the end of the line, and all hands on deck — there's no 
rest for an ore transport. Two or three hours in port and that's all — as men 
drive huge grab buckets like iron dragons which snatch great bites of the ore 
stored in mountains of red earth ready of the blast furnaces. 

(10) Riding the cab of a clam-shell bucket along an ore bridge as high as a 6 
story building we see the ore picked up from a trough behind the unloaders by 
another clam-shell and carried across the storage yards, traveling along a giant 
ore bridge just like the one we're on. Thousands upon thousands of tons of 
catalogued, registered and practically pedigreed ore pass beneath us. The ant 
has nothing on the steel business for enough ore must be stored in summer to last 
through the winter when lake carriers are icebcand. Steel's skyline looms before 
us — a skyline made up of blast furnaces — tall sentinels of the steel plant — which 
change the ore into molten iron. 

(11) And here the cycle of steelmaking re.ally begins — with the first step in the 
making of iron^an 8-ton skip-hoist dumps into the blast furnace a rich mineral 
stew of ore, limestone and coke. 

*^12) We're getting up speed now — Down below on the casting-floor the stage 
is set. At intervals of six hours the charge smelted down under intense heat is 
withdrawn and here comes the signal to tap. 

(13) Ready for their end of the job — these fellows stab an oxygen torch through 
the hole, piercing a plug of clay — and here it comes — a writhing stream of molten 
iron — 2600 degrees hot. 

(14) Between 1.50 and 250 tons are tapped in a cast — a hundred tons or so 
stream down runways of sand and graphite into the first of two huge ladles. 
Then — the gate is raised and the molten stream flows to a second ladle. 

(15) Outside lies the ladle, a Thermos bottle as big as a tank car, lined with 
brick ;;apable of holding molten iron at the highest possible temperature. 



124491 — 40— pt. 155 ^16 



10448 CONCENTRATION OF ECONOMIC POWER 

(16) A lot goes on in the twenty minutes that it takes to make a cast — not so 
much in the six hours between casts. Then there's time to relax. But now 
antrther sample must be taken from the golden stream — a test specimen which 
will tell the steelmaker the quality of his work. It takes skilled men to nurse 
these monsters — men who know the whims of iron — men who have been feeling 
the pulse and taking the temperature of liquid metal for a good many years. 
It's positively uncanny the way these fellows with a single glance at their samples 
recognize the calibre of the whole batch. And they seem pretty happy with 
this one. 

(17) Now we have molten iron, the first step in the production of steel. This 
liquid iron goes for a while into huge storage tanks called mixers. We'll come 
back to this iron soup a little later. But first, the open hearth furnaces of steel. 

(18) By far the greatest amount of steel produced in the United States is made 
in open hearth furnaces such as these. 

(19) The ravenous open hearth is never on a diet. It devours good scrap 
metal — odds and ends of antique flivvers — chunks of old rails — axles that may 
yet roll again — even chicken wire. 

(20) And up on the charging machine, you see the operator handle the huge 
piece of machinery, so agile that it picks up an eight thousand-pound charging 
box of scrap, thrusts it into the furnace, twists and turns and rams and charges 
at the touch of a hand upon a switch. 

(21) And now back to that iron soup we left in the storage mixer a moment 
ago. As the work goes on this molten metal is combined with the melted scrap. 

(22) Perched high above, the craneman watches the ladle fill, then guides 
giant hooks in to carry the ladle down the line to the furnace. 

(23) Meanwhile, an old hand at the game waits by the open hearth for the 
hot metal coming up from the mixer — ready to direct the craneman's pouring of 
the fiery charge into the blazing furnace. About 50 tons of liquid iron are now 
added to the melted scrap. And the sheer beauty of this scene never fails to grip 
the thousands who visit these plants. 

(24) Years ago the making of steel was the experienced guesswork of smart 
old-timers. But today their experience is backed up by the most accurate of 
scientific instruments. 

(25) This is steel in the making. 

(26) Throughout every stage of steel's vivid evolution repeated tests are 
taken. The helper dips his test spoon — spoon, mind you — into the soup — and 
to the steelmaker it is just that— soup. And this sample, poured into a test 
mould goes to the laboratory for analysis. 



(27) These are the craftsmen of steel — these and hundreds of thousands like 
them — men born and raised to the companionship of hot metal — young men learning 
their trade — old men grown gray in the university of steel itself — men who know 
all the moods and fancies and quips and quirks of molten metal — who know how 
to tame and temper this flaming monster to the service of mankind. 

By their watches and their blue filter glasses shall ye know them. A golden 
glow on their faces, they peer into the open hearth to read the future of this steel 
as a gypsy reads your future in the tea leaves. 

(28) Even as a great chef expertly adds just the right seasoning to his famous 
dishes, so these expert chefs of the open hearth add the condiments that season 
steel — in this case, a helping of ferro-manganese. These boys certainly can handle 
their shovels — they swing and follow through with all the power and grace of a 
cliampion golfer. They must hit a certain spot inside that furnace and that, 
believe me, is quite an art. 

(29) On the ranch or in a lumber camp, this means "come and get it or we'll 
throw it away". — It means Grub! — But in these mills it means: "Pour Steel!" 
Here are the cindersnappers, jacks of all trades. With rammingrod ready, they 
wait, while men on the other side prepare the furnace for tapping. -Another pinch 
of this and that from the bins and boxes according to the sure recipes of steel's 
cookbook. Meanwhile the helper with an oxygen torch bums through the clay 
which plugs the tapping hole. They're raring to go, these cindersnapper lads, 
but it takes time to uncork this flask. Just a moment now — only a few more 
ashes to get out of the way and then the "Go ahead!" will come. It's a welcome 
signal because the smash of ramming through a heat- of steel is always a high light 
in their da,y's work. Altogetlicr- there she goes! It's steel— backbone of the 



CONCENTRATION OF ECONOMIC POWER 10449 

worlci — steel for axles, springs, girders; steel for bridges, wire, slilps, automobiles 
magic and marvels from the earth -from the labor and brains of men who serve 
their fellowmen. 

(30) It takes about 15 minutes to fill this ladle. Slag, tJie scum or flux of 
limestone, floats on top of the steel, finally overflowing into the slag pot. 

(31) Bathed in a red glare, the craneman handles with ease his heavy load of 
glowing metal — this gigantic ladle, like a huge soup bowl — 150 tons of liquid steel. 
Flames lick through the scum of its surface, a blood-red touch from the seething 
cauldron. 

(32) Stately as a ship, the ladle moves to its position at the pouring platform, 
ready at the mere touch of the hand to discharge into the waiting ingot moulds. 

(33) Skillfully the craneman maneuvers the heavy load to rest, centering tlie 
nozzle above the first of the moulds. The stopper is released and out gushes the 
steel to fill them one by one. 

(34) Every little movement has a meaning of its own in steel. Tests for quality 
such as these are very important. They go to make steel one of the most scientifi- 
cally-controUed operations in all industry. 

Meanwhile, the fascinating work of pouring goes on. Here's a young apprentice 
in steelmaking, taking a lesson from the older heads of the pouring platform as 
with an optical pyrometer he measures the temperature of the molten steel — and 
we are seeing just what he sees through the pyrometer — steel at 2800 degrees hot. 
Slowly cooling — beautiful to look upon — the ingots sparkle and eflfervesce in their 
moulds. When cooled enough, they will be stripped of their most unfashionable 
jackets. 

(35) Another day without an accident. It is now common for months to go by 
without a single man being injured, so highly developed is modern safety practice. 

(36) One of the most thrilling operations in the whole dramatic story of steel- 
making is the production of alloy steel in the electric furnace. Inside this hottest 
of all furnaces, huge electrodes, suspended over the mass of selected scrap slowly 
creep downward. An electric arc leaps from electrodes to scrap and produces one 
of the most spectacular sights ever filmed. — Here is inferno. 

(37) After three hours under this man-made lightning, the scrap is melted and 
the electrodes purr over the molten steel now ready for the addition of alloys. 

(38) Finally the precious soup is cooked, and out of the cauldron pours another 
heat of stainless steel. Steel for kitchens, for architectural trim, for fine instru- 
ments and for laboratories and hospitals, for use wherever a glossy acid and rust- 
resisting surface contributes to modern industry and to modern living. 

(39) Rising before you like a harvest moon is the hungry maw of a Bessemer 
converter — chief actor in one of the great shows in steel. Closely watching this 
rising monster are the men who run the show — looking at life and steel from behind 
shatter-proof glass, thirty feet away from the trio of Bessemer converters mounted 
on a high platform. 

(40) The operator's whistle was the signal which brought the hot iron from the 
mixer apd started it pouring into the mouth of the Bessemer converter. This 
iron whale, if really hungry, could swallow a score of Jonahs at a gulp, or could 
find room in its red-hot gullet for a good-sized motor boat. Every night is Fourth 
of July when the Bessemers go into action — and here's your action, Roman 
candles lancing the blackness of the night. 

(41) The girders of a railroad bridge march past, silhouetted by the licking 
flames of these beacons of steel. As many of you have often seen, these huge 
torches flare up in the dark as symbols of steel working for man. 

(42) You are seeing it as the steelmaker sees it in gauging the carbon content 
by the color of the flame. When the flame displays the telltale characteristics, the 
conversion is complete and the Bessemers are ready to pour the magic metal 
w*^ ch first we saw as plain ore, then soft as molten iron, and now transformed to 
£ 1 for aU the needs of man. 

(43) Here in the stripping yard is the row of jacketed ingots we left sparkling a 
moment ago and now cool enough to shed their moulds. Reaching down, the 
human-like fingers of this martian giant grasp and pry the moulds from ingots 
weighing between twenty and forty thousand pounds — an impressive sight as 
the rich, crimson velvety glow emerges from beneath the rising moulds. Steel 
has no competitor in modern life — no possible substitute. Wherever you look, 
you encounter examples of its service to man. 

(44) The nation's parade of glowing ingots is a barometer of economic con- 
ditions and is watched by many who seek to gauge business actiyity. For, as the 
ingots go, so goes industrial America. 



10450 CONCENTRATION OF ECONOMIC POWER 

REEL III 

(45) The golden pillars of fire go next to soaking pits for reheating, where they 
literally soak in a bath of flame which evenly restores their temperature. 

(46) That was the signal to send one of these glowing ingots from the soaking 
pit. It is 2200 degrees hot as you see it now. And we begin to get an idea of the 
innumerable processes required to make fine steel, and how amazingly economical 
the finished product is after all this labor and effort. For, after all, this is a hair- 
pin, a thumbtack, a monkey wrench, a rail or a beam in infancy. 

(47) Through a mirror directly in front of him, the operator sees the ingot 
bumping along the conveyor rollers, like a car on a corduroy road — unaware of 
the punishment to come, as it will be squeezed, pounded and pressed into or_e of the 
thousand shapes which meet the demands of industry, ine big idea here is to 
crack off the scale which has formed and to prepare the ingot for the real rough 
stuff to come. 

The ingot is manipulated from a pulpit protected by heavy screening and 
shatterproof glass, supported by the post partially hiding the ingot. 

(48) The roller-man glances at the dials and brings the rolls down — it's a 
squeez^T-play an inch or more at a time until the huge ingot is flattened to a slab 
about 5 inches thick, ready to be cut like cheese into shorter lengths for further 
rolling. 

(49) In the continuous rolling mill, skilled workers, in pulpits set high up across 
the floor from each set of roUs, chart the course the slab must follow as they phone 
dimensions and adjustments from stand to stand. These continuous mills cover 
so much ground that the traffic lights of a mill are as important as the red and 
green stop and go lights of a small town. 

(50) All clear. The rolls are set and ready. And here it comes. A white hot 
slab of steel, sliding swiftly and smoothly toward the all-poAverful rolls. 

(51) The first pass takes off the scale. Then a quarter turn on the turntable 
sends the slab sideways into the spreader to increase its width. An extra push 
is needed here to force it through the rolls. 

(52) That's only the first step. Farther down the long line the width is checked 
and then the rapidly transforming slab of steel races on beneath showers of water 
and steam, to enter the reversing mill, and back' and forth and back and forth 
again it must pass. And this reducing process we don't recommend to the ladies. 

(53) It's hard going forthe slab. But it's just another dial-setting and a turning 
of a switch to the man at the levers. He sits at a control board like the keyboard 
of an organ, and casually watches the huge rolls do their work. Getting longer 
and longer, the plate races on to run the gauntlet of the finishing stands, four 
giant stands in tandem, each one squeezing the plate thinner and thinner. 

(54) From the beginning of this pictorial drama of steel, we have seen how 
machines have been called to the aid of the men who make steel. 

(55) These machines of the steel mills are genii more powerful, more incredible 
than Aladdin ever summoned by rubbing his wonderful lamp. Watch this 
servant work for Man, his master, machines obedient to the merest touch; some 
as delicate as the flutter of a butterfly's wing — some as powerful as an avalanche. 
These same machiijes, while producing amazingly low-cost steel, have created 
many new commodities, many new markets — thus providing for countless workers 
occupations which never existed before. 

(56) One of the most interesting of recent inventions, the rocking shear, was 
suggested by an ordinary rocking chair, perfected in a wooden model which 
sheared chewing gum instead of steel. 

(57) And now watch the result — rocking power — high pressure shear, cutting 
cold steel plate with incredible ease and accuracy. 

(58) Such is the story of steel today — steel plate for use in railroad cars, Steam- 
ships, bridges, and buildings. 

(59) Well, boys, you're doing a swell job and we're getting a real thrill watching 
you. Before going on let's have a bottle of pop together — Drink hearty! 

(60) Moving on in the production of steel we come to the manufacture of sheet 
steel. Hot-rolled like steel plate, sheet steel is merely rolled thinner and thinner. 
Then cleaned with acids, it is cold-rolled in coils to even lesser gauges, emerging 
on the other side of this machine as'cold-roUed sheet, for use in automobile fenders, 
bodies, stoves, refrigerators and the many products of pressed steel. 

Further reduced and tin coated, cold-rolled steel has thousands of uses as tin 
plate. 

(61) Here's where the girls come in — as inspectors of the finislied plate. These 
shining surfaces must tempt the vanity of any daughter of Eve. But surely iiot 



CUNCENTllATION OF ECONOMIC TOWER 10451 

this girl's. Oh-Oh! Well, to err is human. It must have been the oversized 
mirror that did it. 

(62) With that little touch of feminine vanity satisfied, she goes back to her 
work — an artist at her job. 

(63) These girls are mighty useful employees in a tin plate mill and their sched- 
ule is arranged accordingly — an hour on and 15 minutes off for colTcc, tea and rest. 

(64) Here we are back again with hot steel, and there's a red-hot rail coming 
through the first pass taking on its first big impression. Like everything else in 
steel, this rail was rolled down from an ingot. The rail bar takes more definite 
shape with each new pass through the rolls. After the first pass, it moves down 
to the end of the line — across the conveyor table and up on the high line in the 
middle to an intermediate pass and then across another conveyor table, and down 
the line at the right to the finishing rolls for its final impression. The finished 
rail over which the wheels of your train may some day click. 

(65) Steel cuts steel — the cold biting tlirough the hot, sawing a rail bar of more 
than a hundred feet long into standard lengths. 

(66) Then these rail-lengths are heat-treated, or Brunorized, as they call it in 
the steel business, strengthening the rails to withstand drastic changes in tempera- 
ture, and the pounding of heavy trains. In heating, these rails bend, but in cooling 
they will straighten out. 

(67) We go along now to still another most interesting episode in the fascinat- 
ing drama of steel production — to still another pictorial chapter in the saga of 
steel — rolling giant beams. How many people would ever guess that from this 
6-foot ingot, a 36-inch I-beam, almost as long as a City block, could be rolled! 
Hot rolls steam and sizzle, but an operator skillfully trips the switches controlling 
a pressure of many thousands of pounds. Back and forth under the dripping rolls 
the ingot passes until it takes on a faint shape — the semblance of an I-beam — 
suggestion of a girder that may support a bridge or a skyscraper. It's all as 
easy as falling off a log. Or so it seems as this young man of steel handles the 
controls, passing the huge form backward and forward, reducing the gauge, shap- 
ing the rough beam into an almost finished product, and sending it along down the 
line on its way to the finishing stands. 

(68) There comes the I-beam out of the finishing stand — and we have actually 
seen how one hundred and fifty feet of strong, sturdy steel can be rolled from a 
six-foot ingot. The columns and girders with which America builds its future! 

(69) The beam slides down the rollers coming to a stop at the saw to be trimmed 
and cut to length. 

(70) They're mighty particular to get things right, these steel men Here 
they are taking a sample from the hot beam — a test piece — which will go on to the 
laboratory. But right now they have another use for it — the hot beam sample 
performs a dual role, serving also as a fireless cooker de luxe for Mike's private 
coffee pot. 

(71) It's too good a thing to keep to himself. So big-hearted Mike calls 
Powerful Pat to have a sip of the old Java with him. "I accept with thanks," 
says he — "but don't ever let the wife know you're this good, or she'll be after 
pinning an apron on you." 

REEL IV 

(72) Now let's stroll over to the axle forge where immense hammers are pound- 
ing like pile-drivers. This machine does the heavy work but man's hand shapes 
the railroad axle. Packing an awful wallop, this hammer slams down on the help- 
less round, beating it into shape. 

(73) Two crews alternate at the hammer, as each axle is turned. Now the 
axle is forged from the other end as the giant hammer shapes the collar. See 
between the hammer blows, the alert intense faces of these men. While the axle 
is getting its finishing touches, railroad wheels are being turned out in another 
impressive operation of the modern steel plant. The first thing which will catch 
your eye will be a red-hot wheel block, as the steel men call it, about to take its 
place between the two halves of a wheel mould. And then as men and machinery 
take advantage of the precise moment, the glowing hot block is formed under 
20,000,000 pounds of pressure — slowly — very slowly — pressed and flattened 
and shaped into a blank— something close to a railroad wheel, but not yet the real 
article, and then with scarce an instant's pause the blank is lifted from mould No. 
1, while Mould No. 2 slides slowly and easily to the left and relentlessly grips the 
victim between its powerful jaws. And then comes the final shaping in the finish- 
ing mould, under further terrific pressure. If you thought the first one was a 
squeezer, watch No. 2. 



10452 gONOENTRATION OP ECONOMIC POWER 

(74) The throttle of Casey Jones never controlled as much power as these 
levers which now release the rough wheel and send it on to the caliper man. Only 
perfection gets by this chap. Then upon emerging, the wheel is ready for finish- 
ing — perhaps to convey you, some day, possibly soon, on a journey of your heart's 
desire. 

(75) Here's another chapter in the tale of steel. Coming out of a reheating 
furnace is a pair of billets — 30 ft. lengths of steel about 2 inches square. They, 
too, were rolled down from an ingot — rolled in a billet mill much like a rail mill. 
The billets run the gamut of 16 sets of reducing rolls. Each roll reduces the diam- 
eter and hastens the rod with ever-increasing speed toward its final reduction. 
In a moment you'll see it begin to step out, the snail turning into a scared rabbit. 
Its rate of speed through the rolls is from four to 45 miles an hour, better than a 
race horse, as its length increases from 30 ft. to almost three quarters of a mile. 

(76) These close shots show exactly what takes place, slow at the start — then 
faster in this intermediate pass — and still its speed increases. If you watch 
closely, you can see it dart through these rolls. 

(77) And at last there it comes — whistling into the coiler — to be tamed into a 
shapely coil of finished rod. 

(78) These marvelous machines of steel pull their own taffy — heavy wire from 
rod as we see here in these big dies. 

(79) But we're not through yet with this metallic candy-pulling. Now the 
rapidly thinning wire goes to a huge drum which is a real taffy-puller — and our 
wire gets tenuous and more tenuous. 

(80) The operator most accurately measures the gauge, for a thousandth of an 
inch counts in the kind of accuracy that is standard in wire drawing. 

(81) The rest of the story of wire making is one reduction after another, a 
hundredth or a thousandth of an '■'-oh «t 3 time-. -Finer and finer the tough steel 
wire is drawn. 

(82) On the wire goes darting, twisting, weaving to and fro, through as many 
as 11 dies, until finally it comes out, all bright and silvery, almost as fine as silken 
thread. 

(83) And so wire is made for countless demands, for bed springs, nails, fence, 
telephone and telegraph lines, more than 90,000 uses represented in our modern 
civilization. 

(84) Production of pipe and tubes is another important phase of steel produc- 
tion. The finest kind of tube is seamless. Starting as a hot round, a reheated 
cj^linder of solid steel is hustled along and rammed into the seamless piercing mill. 
By means of great pressure, created by whirling cone-shaped rolls forcing the 
malleable steel forward over a piercL-g point, the round emerges on the other side 
as a seamless tube — a hollow pipe of hot-rolled steel. 

(85) It's remarkable how perfectly this round of golden hot steel is pierced, 
expanded and finished to meet specifications — one of the most interesting opera- 
tions to be found in any of these great steel mills. 

(86) And so, mile after mile of seamless tube finds its place in the pipe lines 
which serve us for heat, fviel, water and the other necessaries of modern life. 

(87) Let's turn from the colorful, dramatic sight of the mill to the quiet of the 
laboratories, and to the scientist. Much of what you have seen would not have 
been possible without the research man, constantly working into the future of 
Steel and devising new ways for it to serve its master, man. Here we see Steel's 
anatomy photographed and studied. 

(88) Here's a piece of Cor-ten sted getting the tensile test. That dark colored 
piece the metallurgist has just placed in the machine is being subjected to the 
severest possible tension. See how remarkably a piece of steel can be stretched — 
almost like rubber. Fifty, sixty, seventy thousand pounds of pull per square inch 
and more to find the breaking point. It's amazing that steel can stand such 
punishment. Finally, it does break under much greater strain than ever will be 
exacted in its actual use. 

(89) With little furnaces such as these, the scientist worked with patient study 
and experiment to aevelop stainless steel — whose shining surface reflects the re- 
search and the effort devoted to its production. 

(90) This is the fascinating world of steel. Many are those who walk its paths. 
The miner, the engineer, the craneman, the melter, the roller, tne scientist — 
hundreds of thousands among the men of steel. More than 500,000 men are 
engaged in making steel, over half of them in the companies of United States 
Steel alone. Men who are confident and competent in their work, men who can 
return to their homes and firesides proud and happy in the knowledge of their 
contribution to society. 



CONCENTRATION OF ECONOMIC POWER 10453 

(91) Beyond the door of a furnace we see nothing but hot gases and bubbling 
metal. But the man who makes steel sees there streamlined trains streaking 
smoothly across the continent, great ships carrying the products of the farm and 
factory to the four corners of the earth — saiUng the seven seas with the promise of 
world peace through world trade, with commerce and profit to all. 

(92) He sees concrete roads made from the slag of blast furnaces, busy with cars 
and trucks of steel. 

(93) He sees beyond that bubbhng steel, the wire lines of modern telephone 
and telegraphic communication, and the high towers carrying electric power to 
home and industry. 

(94) He sees modern farming made possible by steel machinery and fencing. 

(95) Countless oil derricks stretching their structures to the heavens — gaunt 
frameworks of steel — landmarks of another of America's great industries. Big 
and little things, he sees — the big little conveniences of modern cookery, stainless 
steel utensils and kitchen sinks. 

(96) Hammers and little nails that play a big .part — or the melodious vibration 
of a finely drawn steel piano string — he sees acid resisting cans for food preserva- 
tion of a fine steel watch spring set in a steel chassis. 

(97) And he sees tall buildings of steel rearing their proud heads almost above 
the clouds. 

(98) Great bridges spanning rivers and harbors, bringing commerce and its 
people closer and closer together. 

(99) All these and more the man of steel sees — New eras — New standards of 
living — as the world moves forward with the men who make steel. 



The following letter is included at this point in connection with 
testimony on p. 10382 et seq., supra. 

PiCKANDS Mather & Company, 

November 9, 19S9. 
Hon. Jos. C. O'Mahonet, 

Chairman, Temporary National Economic Committee, 

Congress of the United States, Washington, D. C. 

Dear Senator: At the close of the hearing on Friday last, November 3rd, you 
made the suggestion that I might be able to recommend to the Committee what 
business men ought to be free to do without fear of violating the anti-trust laws 
for the purpose, as you stated at the hearing, of perhaps aiding the Committee in 
its desire to promote a greater degree of prosperity for business as weU as for the 
rank and file of the people of the United States. 

Frankly, my experience gained for the most part in the iron ore business does not 
qualify me to answer these broad economic questions, particularly as far as the 
many industries outside of our own are concerned. However, I hope you will 
believe that I have given very careful consideration to your request as it affects 
the iron ore industry in the hope that I might be able to answer your question 
with some practical business suggestions. Several of the investigators of the 
Department of Justice have spent many weeks in the various offices concerned and 
have had at their disposal for study all of the contracts and agreements under 
which these businesses have been conducted, and in addition, a group of the 
industry has spent three days on the witness stand in an efi'ort to convey to your 
Committee a practical and general understanding of the iron ore business and 
how it functions. The trade practices of the iron ore industry are the results of 
many factors and considerations which have grown up over many years and which 
the producers and consumers of iron ore have taken for granted in the running 
of their respective businesses. I, personally, have no fault to find with the 
results accomplished, believing as I do absolutely, that there has existed for many 
years and now exists the free and keen competition which I believe to be necessary 
in the long run for promoting the prosperity which your Committee is endeavoring 
to secure. Therefore, I have come to the conclusion from my knowledge of the 
iron ore industry that I am unable to suggest, in answer to your direct question, 
a more specific definition of what "business men ought to be free to do — " 
than is now contemplated in the basic purposes of the so-called anti-trust laws. 
Respectfully yours, 

(Signed) Elton Hott 2nd. 



INDEX 

Page 

Acme Steel Co 10469 

Allegheny Ludlum Steel Co 10409 

Allegheny Steel Co 10411 

American Iron and Steel Institute 10410, 10418, 10421-10422, 10424 

Annual statistical report of 10395, 10397-10399, 10401-10402, 10408 

American RoUing Mill Co 10240, 10242, 10348, 10408-10410, 10428 

Archibald, Ralph 10446 

Arnold, Thurman 10329, 10357 

Athens mine 10296-10297, 10304-10305, 10438 

Barnum, WUUam H 10236 

Base prices 10305- 1 0350 

Determination of 10305-10337, 10367-10372 

Uniformity of 10311-10328 

Variations from 10337-10348 

Belden, W. B 10428, 10454 

Bennett Mining Co 10228, 10233-10234, 10352, 10443 

Bessemer range -- 10306 

Bethlehem Steel Corp 10219, 10226, 10229, 

10231-10234, 10256, 10274, 10296-10297, 10304, 1031 L 1032), 
10393, Facing 10393, 10399, 10407-10409, 10411, 10437-10438 

Block, L. E 10354, 10381. 10444 

Block, P. D 10354 

Bool, Samuel 10227 

Bourne-Fuller Co., Ino 10257 

Brayton, Henry F --. 10236 

Bristol Mining Co 10430 

Brown, Alex. C 10295,10297-10.300 

10302-10303, 10354, 10370, 10433, 10436, 10438, 10444, 10446 

Brown, Fayette, Jr 10438 

Butler Bros 10224-10225, 10286-10288, 10290, 10301, 10311, 10329, 

10334, 10342, 10371, 10425-10426, 10435, 10441-10443, 10446 

Ore contracts 10291-10294 

Butler, Emmett 10290, 10294, 10.329, 10441-10443 

Butler, Hazen E 10443 

Butler, Patrick 10291, 10294, 10329, 10435, 10441-10443, 10446 

Carnegie-Illinois Steel Corp 10226, 10407, 10411 

Carnegie Steel Co 10342 

Census of Manufactures 10393, 10395, 10400-10401 

Chamberlain, Selah 10236 

Chicago & Northwestern Railway Co 10220 

Clark, E. M -- 10236 

Clayton Act 10253-10254 

Cleveland'Cliflfs Iron Co 10220, 

10224, 10235, 10237-10239, 10241, 10244-10245, 10247-102.58, 
10260-10265, 10267-10271, 10273-10274, 10276, 10278, 10280, 
10294, 10297, 10329, 10343, 10351, 10356, 10425-10438, 10442- 
10443, 10446. 

Acquisition by of stock in Oglebav, Norton & Co 10237-10256 

Reasons for -' - 10238-10255 

History and corporate structure of - 10235-1023G, 10255 

Ore contracts of 1027.8-10279 

Cleveland Iron Mining Co 10220, 1023.5-102.36 

Cleveland Trust Co -- 10427 



II INDEX 

Page 

Cliffs Corp -- 10235,10255-10257,10276 

Formation of. '* 10255-10257 

Cold Metal Process Co 10409 

Colorado Fuel & Iron Co 10219, 10409 

Competition: 

Maintenance of advocated 10280-10281 

Question of degree of in the industry 10272, 10276-10277, 10280-10281 

Competitive advantage enjoyed by integrated steel producers 10360-10364 

Congress of the United States 10215 

Continental Can Co 10409 

Continental Steel Corp 10409 

Contract sales, iron ore 10307-10320, 10331-10332, 10359 

Contracts, iron ore: 

Butler Bros 10291-10294 

Cleveland-Cliffs Iron Co 10278-10279 

Pickands, Mather & Co 10291-10294 

Corrigan. McKinney Steel Co... 10259-10262, 10265, 10273, 10276, 10431, 10433 

Coulby Mine 10220, 10227 

Croxton, D. T 10260 

Crucible Steel Co. of America 10408-10409 

Cuvuna Range : 10221, 10287, 10354 

Daily Metal Trade . 10431 

Dalton, Henry G 10229-10231, 10296, 10438 

Dalton Ore Co 10227, 10230-10234, 10311 

Detroit Steel Co 10409 

Dies, Representative Martin 10348 

Donner Steel Co., Tnc 10257, 10443 

Duluth & Iron Range Railroad Co 10220 

Duluth. Missabi & Northern Railway Co 10221-10222 

Eaton, Cyrus S 10256, 10259, 10263, 10267, 10272, 10275, 10430 

Project for midwestern steel merger ' 10256-10279 

Reasons for 10267-10278 

Elliott, S. R 10238, 10243, 10255, 

10295, 10297, 10300, 10302-10303, 10430, 10436, 10438 

Federal Reserve Board 10417 

Federal Trade Commission 10387, 10412, 10423-10424 

Fink, George.. _^ 10284-10285 

Follansbee Bros.'C6 10409 

Ford Motor Co 10321, 10331, 

10333-10334-10336, 10341-10344, 10346, 10348, 10352,10370- 
10371, 10385, 10409, 10411, 10441-10442-10443, 10445-10446 

Foreign and Domestic Commerce, U. S. Bureau of Facing p. 10424 

Freight rates. Lake Erie 10372-10381 

Geffine, V. P 10431, 10434, 10438 

Girdler, Thomas 10257-10259, 

10263, 10273, 10354-10356, 10379-10381, 10433-10435, 10444 

Gogebic Range 10220, 10227, 10238 

Granite Citv Steel Co . 10409, 10412 

Great Lnkes di.strict Ll 10219. 10221 

Great Lakes Steel Corp. 10285, 10411 

Greene, E. B . 10235, 10241, 10250, 10259, 10267, 10294- 

1029.5, 10329, 10369, 10428, 10431-10432, 104r^7, 10444-10445 

Greenwav property . 10348-10351 

Hanna, Leonard 10295, 10352-10353, 10436 

Hanna, M. A., Co 10224, 10283-10285, 10294, 10329, 10343, 10353, 10358, 

10362-10363. 10371, 10425-10427, 10443-10444, 10446 

Stockliolding of, in National Steel Corp 10284 

Harrison, Perrv- _ . 10446 

Heer, C. G_-.' 10431 

Hewitt, Isaac L . . 10236 

Hewitt, Morgan J; . .. . 10236 

Hill, Edw-n C 10217, 10446 

Hilton, H. G . 10330, 10331 

Hocking, R. O 10441, 10443 



INDEX HI 

Page 

Hoyt, Elton, II 10218- 

10220, 10223, 10282, 10292, 10294-10300, 10305, 10308, 10316, 
10329, 10331, 10334, 10342, 10352, 10354, 10371, 10435-10438, 
10441, 10443-10444, 10453, 

Humphrey, George M 10283, 

10293-1295, 10329, 10334, 10351, 10371, 10436, 10444 

Hunner, Earl 10444-10445 

Hutchinson fleet 10236 

Inland Steel Co 10225-10226, 10256, 

10264-10265, 10275, 10279-10280, 10408-10409, 10411, 10427 

Integration, question of added efficiency through 10272-10278 

Interlake Iron Corp 10229, 10230-10231, 10409 

Interlake Steamship Co 10218, 10229, 10231-10232, 10236, 10373, 10377 

Internal Revenue, Bureau of, Report on Statistics of Income 10395, 10410 

International Harvester Co 10226, 10409 

Iron Age._ 10396, 10404-10405, 10411, 10413, 10416, 10420-10421 

Iron and Steel Works Directorv of the American Iron & Steel Institute 10407 

Iron and Steel Works Directory of the United States and Canada 10403, 

10407, 10409 

Iron CliflFs Mining Co, 10235-10236 

Iron Mountain 102 19 

Iron ore: 

Base prices of: 

See Base prices. 
Contracts: 

See Contracts, iron ore. 

Contract sales . 10307-10320, 10331-10332, 10359 

Industry: 

History of 10220-10224 

Taxes in 10364 

"United front" policy in 10295-10305 

Prices : 

See Prices, iron ore. 

Pricing, method used by U. S. Steel Corp. subsidiaries 10329-10330, 

10357-10358 

Producers, major - 10224-10225 

Financial connections between, and steel companies.. 10225-10234 

Reserves 10387-10389 

Sources 10219 

Spot sales of 10310-10315, 10339, 10359 

Jackson Mine 10434 

Jaynes, E. H 10431-10433, 10435-10436, 10438, 10446 

Jones, Casey 1 0452 

Jones & Laughlin Steel Corp . 10270, 

10408-10409,10411,10428-10429,10432, 10445 

Justice, U. S. Department of 10310, 10314, 10425-10427, 10439-10440, 10453 

Kevin grade ore 10342,10352,10441,10443 

Keystone Steel & Wire Co 104U9 

Kulas, E. J --- 10262 

Labor Statistics, U. S. Bureau of 10418-10421 

Lackawanna Steel Co 10229 

Lake Erie base price, determination of 10305-10310 

Lake Superior Consolidated Iron Mines 10222 

Lake Superior district 10219-10220, 10222-10224, 10227, 10387-10388 

Lake Superior Iron Ore Association 10310, 

10387, Facing 10424, .0425-10426, 10439-10440 

Lake Superior & Ishpeming Railroad Co 10237 

Lake Superior region 1 0269 

Lukens Steel Co . 10409 

MacKilliken, James A 10343-10345, 10442 

Manganiferous Iron Co 10435, 10441-10442 

Marquette Iron Co 10220 

Marquette Range - .. 10220,10237,10280,10297 

Mather Iron Co . . . ....10218,10227-10228,10231,10233,10235 

Mather, Livingstone 10428, 10430 

Mather, Samuel 10226-10227,10236,10431 



IV INDEX 

Page 

Mather, William G 10236, 10238. 

10243-10245, 10247, 10251, 10253-10255, 10257^10260, 10267, 
10273, 10278, 10428, 10430, 10433, 10435', 10438. 

McArthur, F. J .. 10435, 10441-10443 

McGraw-Hill Book Co., Inc 10394 

McKeesport Tin Plate Corp 10409 

Menominee Range 10220, 10280, 10308 

Merger, steel, Cyrus S. Eaton project for 10256-10279 

Reasons for 10267-10278 

Merritt, Alfred 10222, 10443 

Merritt, Leonidas .,. 10308 

Mesaba Bessemer . 10308 

Mesaba non-Bessemer 10306, 10358 

Mesabi Range 10220-10222, 10280, 10300, 10306, 10358, 10445 

"Metallurgy of Iron and Steel, The" 10394 

Midwestern Steel Co 10256, 10258 

Mines, U. S. Bureau of 10399, Facing 10424 

Mining Directory of Minnesota 10357, 10387 

Minnesota Iron Co 10220-10221 

Modification of existing laws, question of 10382-10386 

Montreal Mining Co ■. 10241-10243, 

10249, 10251, 10348, 10428-10429, 10432, 10446 

Morse, James C - 10226 

Movmtain Iron Biwabik mines 10221 

National City Bank of Cleveland 10231, 10427 

National Resources Board . 10391 

National Resources Committee 10400 

National Steel Corp 10225, 10283-10284, 

10289, 10354, 10361-10363, 10381, 10408-10409, 10427, 10444 

Formation of _• 10284r-10285 

Stock in, held by M. A. Hanna Co 10284 

Negaunee mine 1029&-10297, 10304, 10437-10438 

Nelson & Associates 10346, 10349 

New York Central R. R. Co 10435 

Non-Bessemer range 10306 

Norton, Laurence Harper 10431 

Northwestern Steel & Wire Co 10409 

N. R. A 10297-10299, 10301-10302, 10304, 10413, 10436, 10438 

Ogden, WiUiain B 10236 

Oglebay, Crispin 10237, 10239, 10244, 10294, 10329, 10431-10432 

Oglebay, Norton & Co 10224, 10237- 

10240, 10244-10245, 10247-10248, 10250-10255, 10257, 10272, 
10278, 10294, 10329, 10343, 10348, 10425, 10428-10432, 10442. 

Acquisition of stock of by Cleveland-Cliffs Iron Co 10237-10256 

Reasons for 10238-10255 

Olds, Irving S 10224, 10329, 10330, 10357, 10377 

Oliver Iron Mining Co 10221-10224, 10249, 10284, 10298, 

10329-10330, 10357-10358, 10377, 10425-10426, 10436 

O'Mahoney, Senator Joseph C 10453 

Ore contracts: 

See Contracts, iron ore. 

Ore prices, iron 10305-103.50 

Otis Steel Co 10225, 10260-10262, 10264-10265, 10273, 

10275, 10279, 10370, 10409, 10411, 10427, 10433, 10435, 10445 

Outhwaite, John 1 10236 

Petroleum Retailers Association 10302 

Phoenix Iron Co 10409 

Piekands, Col. James 10226-10227 

Pickands, Mather & Co 10218, 

10224, 10228, 10230-10234, 10236, 10249, 10291-10294, 10296- 
10298, 10300, 10304-10305, 10308, 10314, 10321, 10329, 10344, 
10352-10353, 10371, 10425-10426-10427, 10436-10438, 10441- 
10443, 10452-10453. 

Ore contracts 10291-10294 

Pittsburgh Steamship Co 10236, 10376 

Pittsburgh Steel Co 10226,10376,10409 



liNDEX V 

Pace 

Plymouth mities 10228 

Poor's Annual 10408 

President of the United States 10215, 10301 

Prices, iron ore 10315-16350, 10367-10372 

Determination of 10305-10337, 10367-10372 

Discussions about 10352-10357 

Efifect of cutting 10343-10350 

Rigidity of 10311-10328 

Pricing, iron ore, method used by U. S. Steel Corp. subsidiaries... 10329-10330, 

10357-10358 

Producers, major iron ore, connections with steel companies 10225-10234 

Quinn, Clement K 10343, 10345, 10442 

Raymond, H. A 10260, 10354-10356, 

10365, 10369-10370, 10379, 10383, 10388, 10433, 10443-10444 

Republic Steel Corp 10225-10226, 

10232, 10235, 10246, 10256-10258, 10260-10265, 10267, 10273, 
10275-10276, 1027&-10280, 10354^10355, 10369-10370, 10407- 
10409, 10411, 10427, 10433-10434, 10445. 

Reserves, iron ore 10387-10389 

Rockefeller, John D 10222 

Roebbling's, J. A., Sons 10409 

Rowe mine 10286-10290, 10293 

Description of 10286, lf)288-10290 

Development of, question of ... 10286-10290 

Season, iron ore shipping 10327"-! 0328 

Securities & Exchange Commission Facing 10393 

Sharon Steel Corp 10409 

Sharon Steel Hoop Co 10226 

Shick, Harry 10443 

Shiras, 10342, 10441 

Spot sales, iron ore 10310-10315, 10339, 10359 

Stabilization 10271-10278 

Stacks, Pat 10441 

Stambaugh, A. A 10235 

Stanley committee report (H. R. No. 1127) Sixty-second Congress 10222 

Stanley Works, The 10409 

Steel Co. of Canada, Ltd 10226, 10230-10232, 10330, 10331, 10348 

"Steel, The Servant of Man" 10217, 10446-10447 

Showing of moving picture before T. N. E. C 10217 

Superior Steel Corp 10409 

Supreme Court, U. S 10302 

Tariff Commission, U. S 10394 

Report No. 128 1040G 

Taxes in iron ore industry 103G4 

Temporary National Economic Committee 10391, 10453 

Tennessee Coal, Iron & Railroad Co 1041 1 

Tilden, SamuelJ 10236 

Timken Roller Bearing Co. 10409 

Tonawanda Iron Corp 1022(; 

"Topsy"..; - 10228 

Trumbull-Cliflfs Furnace Co 10265, 10270 

Trumbull Steel Co 10246, 10256, 10277 

Uniformity, price 1031 [-10328 

"United front" policy in iron ore industry 10295 10305 

United States Steel Corp 10217, 10222-10224, 10236, 10274, 

10284, 10300, 10329-10330, 10342, 10357, 10358, 10381, 10393. 
Facing 10393, 10407-10410, 10412, 10425-10426, 10447, 10452. 

Vermillion Range 10220-10221 

Virginia Ore Mining Co 10445 

Wade Estate _ _ _ _ - - - - - 10431 

Wade, G. G. 10235,10241,' 10245,' 10250, 10251, 10428-10430, 10432 

Wade, Garretson '0431 

Waldorf-Astoria Hotel 10299-10300. 10302,10437 

Washington Tin Plate Co , - 10409 



VI INDEX 

Page 

Weir, Ernest T 10285-10289, 10354, 10361-10362, 10369, 10381, 10444-10445 

Weirton Steel Co 10285, 10411, 10428 

Wheeling Steel Corp 10225, 

10240, 10242, 10256, 10264-10265, 10275, 10279-10280, 10348, 
10349, 10370, 10408-10409, 10411, 10427, 10442-10443, 10445. 

White, W. W 10241, 10250, 10300, 10303, 10428, 10432, 10437-10438 

Wickwire-Spencer Steel Co 10409 

World War I 10245, 10247 

Worth Steel Co 10409 

Wyman, C. L 10346, 10353, 10442-10443, 10446 

Wysor, R. J 10354, 10369-10370, 10433-10434, 10444 

Youngstown Sheet & Tube Co 10225, 

10228-10229, 10231-10232, 10234, 10256, 10264-10265, 10275, 
10279-10280, 10335, 10408-10409, 10411, 10427. 

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