SPECIAL COMMITTEE ON THE INVESTIGATION The committee this day met, Hon. Augustus O. Stanley (chairman) presiding. The CHAIRMAN. Mr. Young desires to submit certain statements for the record. Mr. YOUNG. Mr. Chairman, I wish to submit, for the purpose of having it incorporated in the record certain statistical information taken mostly from the Statistical Abstract of the United States, but a portion of it from the report of the Iron & Steel Association. The CHAIRMAN. If there is no objection, this statistical information will be inserted as an appendix to this hearing. STATEMENT OF MR. ANDREW CARNEGIE-Resumed. The CHAIRMAN. When the committee have concluded with Mr. Carnegie, I will ask him a few questions, and prefer, if it suits the convenience of the committee, that each member who cares to do so will conclude with the witness before the chairman propounds further questions. Mr. REED. Mr. Carnegie was asked yesterday for a list of his partners shortly before the Steel Corporation was formed. I have here a list of the shareholders of the Carnegie Steel Co. (Ltd.), on April 24, 1899. I think the shareholders in the limited partnership were what was meant by that inquiry. With the permission of the committee, that can be put in the record as Mr. Ĉarnegie's answer to that question. The CHAIRMAN. Yes. The list referred to is as follows: LIST OF SHAREHOLDERS, CARNEGIE STEEL Co. (LTD.), APRIL 24, 1899. Andrew Carnegie. Henry Phipps. H. C. Frick. George Lauder. C. M. Schwab. W. H. Singer. L. C. Phipps. W. E. Corey. Jos. E. Schwab. W. W. Blackburn. L. T. Brown. H. E. Tener, jr. Charles W. Baker. Mr. YOUNG. Yesterday, Mr. Carnegie, you were inquired of by Mr. McGillicuddy as to whether you could give any reason for the great increase in the profits of the Carnegie Co. from 1897 to 1899 and 1900 except the Dingley tariff? Last evening I examined the Statistical Abstract of the United States as to products of pig iron in this country, which lies at the basis of all steel manufacture, and I found that in the year 1890 our production was nine million two hundred and odd thousand tons. Later the panic came, and in 1896 the production had so far recovered that it amounted to eight million twelve hundred thousand tons. Mr. CARNEGIE. That is less. Mr. YOUNG. That is 600,000 tons less than it was six years before. But in 1899, three years later, the production was over 13,300,000, and in 1900, the year the Carnegie Ĉo. made a profit of $40,000,000, it was 13,759,000. I ask you if, in your judgment, that tremendous increase in business from 1896 to 1899 and 1900 accounts to any extent for the marvelously increased profits of the Carnegie Co.? Mr. CARNEGIE. The one is dependent upon the other, evidently. Gentlemen, this is all new to me. It is obvious, of course. Mr. YOUNG. Those figures are taken from the Statistical Abstract of the United States, and I suppose they are correct. Mr. CARNEGIE. I think no man can have any opinion upon that but one. It is the basis of the whole increase of profits. Mr. YOUNG. It would indicate, would it not, that in 1899 and 1900 the business was on the top of the wave, while in 1896 and 1897 it was in the bottom of the trough? Mr. CARNEGIE. Quite so. You remember, perhaps, what I said yesterday: When it is down and the boom comes there is nothing so slow to be affected as steel, because it takes so long to increase the product. New mines have to be opened, new blast furnaces have to be built, and new combinations made; and, of course, then we make a great deal of money. Mr. YOUNG. That is all. Mr. STERLING. On the same subject, Mr. Carnegie, have you any information as to what the imports of manufactured steel were for several years prior to the passage of the Dingley law in 1897? Mr. CARNEGIE. No, sir; I have not. Mr. STERLING. You do know that they were very small, do you not? Mr. CARNEGIE. Oh, Judge, I do not wish to trust my memory when these things are all of record. My mind has not been on the steel business for 11 years. These are all matters of record. If you could give me the figures, as my friend just did, and ask me a question, I would be able to form an opinion, perhaps. Mr. STERLING. Do you know whether or not the imports of material decreased after the passage of the Dingley law, or did the Dingley law have any effect upon the import of steel into this country? Mr. CARNEGIE. I think I answered yesterday that the question of the Dingley tariff could not influence the steel situation; not greatly. Mr. STERLING. I take it, then, that in your opinion the great increase of business and profits that followed 1897 was due to the fact that the steel business participated in the general increased prosperity of the country? Mr. CARNEGIE. Certainly. Mr. STERLING. Just as the farmers' prosperity increased, and the business of the country generally increased, on the revival of business, after the election of President McKinley? Mr. CARNEGIE. Yes, sir. And we had arrived at a time when the tariff was of no vital importance one way or the other, so far as steel was concerned. Mr. STERLING. I understand. If the Dingley tariff did affect the prosperity of the steel business, it was not directly, but indirectly, due to the increased prosperity, if any, that came from the passage of the protective tariff. Mr. CARNEGIE. I am certainly of that opinion. Mr. STERLING. That is all. The CHAIRMAN. Do you mean that you are of the opinion that the Dingley tariff law produced any prosperity to any business? Mr. CARNEGIE. I do not think so. I think tariffs, Mr. Chairman, on steel, at that time, had a very small bearing upon the value. The CHAIRMAN. Do you think that the Dingley tariff had anything to do with the prosperity of any business, to any great extent? Mr. CARNEGIE. I do not know of any; but remember, gentlemen, I do not affect to remember what the Dingley tariff did. I have no figures in my head, and I must give you a general opinion that, as far as steel was concerned, a tariff one way or the other could make very little difference. Mr. BARTLETT. One of those reasons is that we make steel so much cheaper here than they do in the foreign countries that compete? Is that true? Mr. CARNEGIE. You say to me "much cheaper"? Mr. BARTLETT. Well, "cheaper," I will put it. Mr. CARNEGIE. Yes; please. Mr. BARTLETT. I will leave out the the word "much" and just say "cheaper." Mr. CARNEGIE. I think there is a little concern in Germany that probably makes steel the cheapest of any in the world, but it has a limited deposit of ore, and it can only support two little blast furnaces. They could not afford to build more, because the ore would be exhausted. Mr. BARTLETT. Without the exception, without the small exception as to the small mill of which you have spoken, it is a fact that the manufacturers of iron and steel in this country make it cheaper than they do abroad, is it not? Mr. CARNEGIE. In my opinion they do. I have been out of the business for 11 years. I have not looked at a figure about steel in that time. I read the newspapers, and I form my opinions from what I hear and what I read. My honest opinion is that this country can make steel as cheap, and I really believe that it can make it a shade cheaper, than any foreign country. At all events, I am prepared to say that we can make it as cheap here as it can be made in any country in the world. Mr. BARTLETT. Then there would be no necessity for a tariff in order to equalize the cost of production in this country and abroad, so as to protect the manufacturers of iron and steel in this country? Mr. CARNEGIE. Not the slightest, in my opinion. Mr. BARTLETT. Of course that is your opinion. That was the testimony given by one of the gentlemen in New York-Mr. Schwab, I think. Mr. CARNEGIE. Mr. Schwab? Mr. BARTLETT. I think so. I do not know who it was. Mr. CARNEGIE. In my opinion you legislators should not bother yourselves about steel. It is no infant industry. It is a giant. America leads the world. America makes quite as much steel as the whole of the world; and when I began, gentleman, it did not make a ton. I have seen the whole thing. We were in at the beginning. Mr. BARTLETT. The United States Steel Corporation is the greatest industrial giant in the world, is it not? Mr. CARNEGIE. In steel; yes, sir. Mr. BARTLETT. I use the words "industrial organization"; it is the greatest industrial giant in the world, is it not? Mr. CARNEGIE. Industrial? Oh, yes, sir-manufacturing, you mean? Mr. BARTLETT. That is what I mean. Mr. CARNEGIE. Yes; a railway system, the Pennsylvania Railroad, for instance, is larger, probably. Mr. BARTLETT. Do you think so? Mr. BARTLETT. Mr. Carnegie, I did not have the pleasure of hearing your testimony yesterday. When did you arrive at the conclusion which you have stated, I believe, that the Government should form a commission, like the Interstate Commerce Commission, to take charge of these great business concerns and to regulate them, even to the extent of regulating prices? Mr. CARNEGIE. Judge, it was a slow process; just as the day a man is converted to Christianity is the result of a slow process. I could not fix a date. Mr. BARTLETT. I do not want the exact date, but I want to know whether your decision about that was not accelerated by the unexpected decision of the Supreme Court in the trust cases. Mr. CARNEGIE. Not the slightest. The decision in the trust cases, in my opinion, has not yet had its full effect. Mr. BARTLETT. I mean upon your opinion. Mr. CARNEGIE. I think not; no. Let me see. Mr. BARTLETT. Let me see if I can refresh your recollection. You know when Judge Gary was before this committee he rather startled |