Adams Mining Co. (100)."
Spruce Mining Co. (100).
Mountain Iron Co. (100).

Great Northern Mining Co. (99+).
Shaw Iron Co. (99+).

Rathburn Iron Mining Co. (100).
Greenville Iron Mining Co. (100).
Cambridge Iron Mining Co. (100).
Clarion Iron Mining Co. (100).
Crawford Iron Mining Co. (100).
Cumberland Iron Mining Co. (100).
Essex Iron Co. (100).

Roucheleau-Ray Mining Co. (100).
Tubal Iron Mining Co. (100).
Owasco Iron Co. (100).

Oneida Iron Co. (100).

Seneca Iron Co. (100).

Duluth, Missabe & N. Ry. Co. (100).

Proctor Water & Light Co. (100).

(Sharon Ore Co. (100).

Donora Mining Co. (100).

Girard Land Co. (100).

(Sharon Coke Co. (100).

Republic Connellsville Coke Co. (100).

Sharon Tin Plate Co. (100).

Matthews Woven Wire Fence Co. (100).

Owns in fee wire, wire rod, and wire nail plants.

(Champion Iron Co. (100).

St. Clair Limestone Co. (100).

Clairton Land Co. (100).

JSt. Clair Term. R. R. Co. (51).

Owns in fee furnaces and mills for crude and semi-finished products, real estate, mines, etc.

[Potter Ore Co. (50).

Ensley Land Co. (57+).

Tennessee Land Co. (100).

Birmingham So. R. R. Co. (100).

(Owns Alabama Steel & Shipbuilding Co., mines, coking plants, furnaces, mills, foundries.

You will note that far over to the left on the chart is the United States Steel Corp. itself, which is a holding company. It, in turn, held the stock, the securities, of 11 secondary companies which, in turn, in most cases, held the stock of additional companies. All told, there are on that chart 170 subsidiary companies consisting of over fourscore mining companies, twoscore manufacturing companies, over 30 transportation companies, and several gas and miscellaneous enterprises, which were brought together, almost overnight in one fell swoop into the mighty United States Steel Corp.

Mr. BRYSON. And they came through that loophole in the Clayton Act?

Mr. BLAIR. Well, that was in 1901, before there was any Clayton Act at all, but the consolidation could have been effected at the present time insofar as the Clayton Act is concerned. Whether it could have been effected under the Sherman Act, as it is now interpreted, is another matter.

Mr. DENTON. They bought stock here rather than the assets?

Mr. BLAIR. Yes, sir; but suppose they had bought the stock and then we had moved against them, then they would have probably absorbed the assets while the case was down at the Commission. That is our customary procedure, and as we

The CHAIRMAN. Not your procedure; it is their procedure.

Mr. BLAIR. Well, it is no longer our procedure. We have more or less come to the conclusion that it is a waste of the taxpayers' money to take action against acquisitions of stock, because no sooner do we do it than the company proceeded against absorbs the assets and then informs us politely but nonetheless definitely that the case is removed from our jurisdiction; and it is. The case is dropped, and the taxpayers' money spent on paying the salaries of the lawyers, and the accountants and economists and the Commissioners and whoever else may have been involved in the case, is, in effect, wasted.

We have little enough money, and so we have, in effect, notified and informed the Congress that we think trying to enforce the law about acquisitions with the loophole that now exists is a waste of the taxpayers' money, and we are not going to attempt to enforce it until the loophole is plugged.

Now, it is very interesting to note that prior to the formation of that huge aggregation of economic power, the United States Steel Corp., attempts were made to control the market in the steel industry through collusion and conspiracy, specifically through pools.

There existed pools for each of the major steel products. There was, for example, a steel rail pool. I will read to you a memorandum of agreement entered into August 2, 1887, by and between the North Chicago Rolling Mill Co., the Cambria Iron Co., the Pennsylvania Steel Co., and the other major steel companies at that time, most of which were later brought within that consolidation. This is their agreement, to which they affixed their signatures:

We, the before-named companies and corporations, manufacturers of steel rails, hereby mutually agree, one with the other, that we will restrict our sales and the product of steel rails 50 pounds to the yard and upward, applying to orders taken by us and to be delivered by us or from our respective works during the year 1888, as hereinafter allotted and limited, and we respectively bind ourselves not to sell in excess of our current allotment, without first obtaining the consent of the board of control thereto.

There was a similar agreement in the case of structural steel, dated 1897, just 4 years before this consolidation, which provided that there would be a division of the business among the steel companies making structural steel along the following lines:

Carnegie Steel Co. was to get 493% percent; Jones & Laughlin, 12%; A. & P. Roberts Co., 112 percent; Passaic Rolling Co., 6 percent.

There was a similar agreement in the case of steel plate providing 46 percent for the Carnegie Steel Co., 4 percent for Jones & Laughlin, 11 percent for the Illinois Steel Co., and so on.

Now, those pools and agreements were not effective in controlling the market; at least, they were not sufficiently effective for the purposes at hand. The major reason for their ineffectiveness was to be found in the character of a very rugged individualist, Mr. Andrew Carnegie, who, according to testimony taken later, was, and I quote, "like a bull in a china shop." He insisted on cutting prices; he would not abide by the rules of the game.

As a consequence of the ineffectiveness of the pools, the members of the industry and the financial leaders put their minds together to see if they could devise some more effective way of controlling the market, and the more effective way which they did devise was the consolidation of most all of the steel companies in the United States into a huge combine-the United States Steel Corp. This example thus illustrates the way in which pools, collusive agreements, the control of the market by collective means, when ineffective or when attacked by the antitrust agencies, are replaced by this stronger, more permanent, more formidable means of control of the market, which then has, with very few exceptions throughout our entire history, become more or less immune from effective action by the antitrust agencies.

The formation of United States Steel fell within the first of three great periods of merger activity in the United States: The first, between 1890 and 1904; the second during the middle and latter twenties; and the third beginning in 1943 and continuing to date. The latter two movements are revealed in the second of the two charts to which the chairman referred.

1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939

934 1939

1940 1941 1942 1943 1944 1945 1946 1947 1948

2000

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