Mr. GARDNER. Let me ask you this question, to elucidate these two directions:

In the first place, if dissolution takes place by the order of the courts, either under the imperfect law which we have at present or under the law made much more severe, in your opinion will that lessen the cost of steel products to the people, other things being equal?

Mr. CARNEGIE. No, sir. My court, that I stand for, would take care of the rights of the people; and, Judge-I always think of you as a judge or a lawyer

Mr. GARDNER. I was a bookkeeper. [Laughter.]

Mr. CARNEGIE. I am delighted to hear such an exposition. Your mind has traveled exactly over the same ground that mine has in studying this question.

Wherein we differ is this: You are not sure that it is necessary to dissolve these large companies. You are not sure.

Mr. Gardner, you are sure about one thing, that they must not be permitted to charge monopolistic prices, as they have been doing, by agreements among themselves. You are sure about that? Mr. GARDNER. Wait a moment, Mr. Carnegie. I have my own opinion as to the question of the agreements amongst themselves, that I am not willing, without further evidence, to express, but I will say this: I ought not to answer your question as to whether I think that they are charging excessive prices or not now. I do not think I would have the right to give anything more than general conclusions, so I shall not contradict you.

Mr. CARNEGIE. But wait. Suppose you assume, for the moment, that they are doing so.

Mr. GARDNER. Yes.

Mr. CARNEGIE. What would your position be?

moment, they are doing so.

Mr. GARDNER. Yes.

Mr. CARNEGIE. What would your position be?

Suppose, for the

Mr. GARDNER. My position would be that we must travel in one of those two directions; preferably, that we ought to travel in the direction which produces the lowest prices ultimately, even though it appears to be a step in the direction of socialism.

Mr. CARNEGIE. Then do not let us discuss that. My view is that the agent of the Republic on that proposed commission will take good care about prices.

Mr. GARDNER. I quite agree with you.

Mr. CARNEGIE. Then, if you agree upon that, there can be no doubt that you and I shake hands, and if I were a Congressman to-day with you, you and I would vote together for the establishment of that commission.

Mr. GARDNER. That may not be at all the question which presents itself.

Mr. CARNEGIE. I am assuming that it did. Then we would be together.

Mr. GARDNER. I think you have a little bit gotten away from what I want to get at. I want to get at two great difficulties which seem to confront me in whichever direction we go.

17042-No. 36-12- -2

Assuming that the United States Congress, believing that the will of the people demands the policy of dissolution to be carried out, and assuming that it is carried out, in your opinion would that have an effect in the direction of lowering the prices of steel products to the consumer?

Mr. CARNEGIE. Certainly it would, but

Mr. GARDNER. It would or it would not.
Mr. CARNEGIE. It would lower the price.

Mr. GARDNER. That is, dissolution would lower the price?

Mr. CARNEGIE. Dissolution? No. I thought you said "the commission" instead of "dissolution." I thought you said the commission.

Mr. GARDNER. No. I say, suppose that we take the course toward dissolution.

Mr. CARNEGIE. Oh! I thought you said toward a commission.

Mr. GARDNER. Would dissolution by the order of the courts of these large industrial units, in your opinion, result in lower prices to the consumer?

Mr. CARNEGIE. It would depend upon what the court fixed.
Mr. REED. You do not hear his question, Mr. Carnegie.

Mr. CARNEGIE. I assume there would be

Mr. GARDNER. Just follow me a moment, Mr. Carnegie. I think it is very important to get your opinion on it. I say, supposing Congress rejects your idea of that commission?

Mr. CARNEGIE. Yes.

Mr. GARDNER. And takes the other course in deference to what they believe to be the will of the people and perhaps in accordance with their own judgment; and supposing these great units are dissolved by order of the court. In your opinion would that result in lower prices on steel products?

Mr. CARNEGIE. Not unless there was a tribunal to fix prices. You mean that they can do anything of that sort and there would be destructive competition?

Mr. GARDNER. We will say, instead of being the mere dissolution of the United States Steel Corporation and the resolution of all these constituent companies into independent companies, that it is even more drastic than that. Let it be as drastic as you choose. Would that, in your opinion, tend to lower prices for steel products? Mr. CARNEGIE. If there was a law by which they could not confer or unite in any way to make a common price?

Mr. GARDNER. If you destroy them as they stand by dissolution and under the order of the court and do not establish the commission which you advocate and which I will admit is at all events worthy of consideration.

Mr. CARNEGIE. Why, my dear sir, if you dissolve them into small parts they will do as they did before when they were small parts. Mr. GARDNER. Of course they will. Will that, in the long run, make cheaper steel products or more expensive steel products?

Mr. CARNEGIE. No; because they would have understandings. They would be driven to understandings against destructive competition which would ruin them all.

Mr. GARDNER. No matter what they are driven to, would it, in your opinion, result in the consumers of this country getting their steel cheaper in the long run?

Mr. CARNEGIE. Not permanently; no, sir.
Mr. GARDNER. That is your opinion?

Mr. CARNEGIE. It is my opinion.

Mr. GARDNER. That is one of the objections that is working in my mind to this dissolution process.

Let me go in the other direction and show you what is working in my mind as an objection to your commission, which you propose.

Would you clothe this commission with the power to prescribe a maximum price for products which enter into interstate commerce? Mr. CARNEGIE. All products?

Mr. GARDNER. All products.

Mr. CARNEGIE. We are dealing now with steel, are we not-all products of steel?

Mr. GARDNER. If you establish a court you must establish it under general laws.

. Mr. CARNEGIE. All manufactures?

Mr. GARDNER. Yes. Then you would say that it should apply to all manufactures?

Mr. CARNEGIE. Yes; certainly.

Mr. GARDNER. That would allow them putting a price on any manufactured goods, irrespective of whether they were manufactured under a patent or no matter how competitive the business was.

Supposing it was some manufactures like the boot and shoe industry in my own districts, where each man is fighting every other man and where there is unlimited competition; would you say it was proper for the Government to have the right to set the price at which those articles should be sold?

Mr. CARNEGIE. The maximum price?

Mr. GARDNER. Yes.

Mr. CARNEGIE. If it became necessary, I would.

Mr. GARDNER. You would clothe them with that power, in case of necessity?

Mr. CARNEGIE. Yes; that court to be the supreme judge.

Mr. GARDNER. Suppose the whole people should enter into an agreement to take the maximum price, and everyone of them charge the maximum price, and that under ordinary forms of competition there would be many shoes sold under the maximum price; how would you reach a condition like that?

Mr. CARNEGIE. I should not want to reach it.

Mr. GARDNER. That is, you would permit the agreement that they should all charge the maximum price?

Mr. CARNEGIE. Yes.

Mr. GARDNER. I have indicated two of the difficulties which must work in any man's mind who is trying to systematize this thing, because it seems to me that the course of dissolution and the course of Government control are leading in two absolutely different direction, no matter how much we may confuse the issue to-day, and whether a man says he is for more drastic laws or for the amendment of the Sherman Act, when he means the repeal of the Sherman Act under an amendment form; that really the issue which is arising in men's minds is whether we shall follow a policy which, ultimately, leads to dissolution, or whether we shall follow a policy which ultimately leads to the recognition of the large units, coupled with absolute Government control, such as we have over the railroads.

Mr. CARNEGIE. I think, sir, you and I differ in this: I see one next step clearly before me. I go there, and I leave my successors to manage affairs after I am gone. They will see the subject more clearly than you can imagine it or I can imagine it, and therefore I would take this indispensable step at the time.

Mr. GARDNER. Ah! But you could not take it if the American people would not take it?

Mr. CARNEGIE. Just allow me, about the will of the people, to say this: Gentlemen, I have faith in the good sense of the American people. There is not a voter that sends you gentlemen to Congress, with few exceptions, who will not come under this rule the great mass of your supporters are men who will say: "I know him; he knows more than I do; he is going to study this thing; he will be a good guide for me." Your constituents have that faith in you. The will of the people is not to be assumed if they are excited unduly at these changes that are taking place. It is for minds like yours, sir, and you other gentlemen on the committee. You have to exercise wiser judgment than that of your constituents.

Mr. GARDNER. Mr. Carnegie, you miss my point. It is not because we are so weak as to be afraid of standing out against our constituents, but we are human, like our constituents, and probably taking the line of thought running through Congress, the genuine line of thought, it is more or less the same line of thought which is running through the minds of the people.

I think I should defer to your experience in the steel manufacture, but I think that my judgment of the way my fellow members' minds are working is certainly not so very far wrong in that respect.

Mr. CARNEGIE. You know about the gentleman who could not make up his mind which road to take

Mr. GARDNER. I know.

Mr. CARNEGIE. There is one path, it seems to me, one step necessary, and then let the future reveal, and let that be attended to when the time comes.

Mr. GARDNER. I can see that; but I say, supposing that Congress will not take that step?

Mr. CARNEGIE. I can not suppose that Congress will not do so. That is hypothetical.

Mr. GARDNER. I will not ask you a hypothetical question, but I would like to get your opinion.

Mr. CARNEGIE. My opinion is that Congress will, as a result of what you gentlemen are finding out, and yourself, among the other members of the committee, have to make up your mind which way you will go; and I believe that the preponderating majority of Congress will see the necessity for giving Government control. I think so.

Mr. GARDNER. There will be, I have no doubt, more Government control. The question is whether they will go in the direction you recommend, or in the direction of dissolution.

In my opinion, the issue that will be presented to us to decide in Congress is not whether we shall recognize these units and control them, but the issue which will present itself, as a practical thing, for us to vote on, is whether we are going to strengthen the Sherman law in order to make dissolution more easy.

Mr. CARNEGIE. In that case I would say, with great respect for my fellow members, if I were a Member of Congress: "But see, we

have had some experience in this direction, and we have had none in the other."

These are all hypothetical questions which you raise. We have the experience of a demoralization in the railway field that nothing in industrialism ever equaled. We appointed a commission. We have a satisfactory result. Gentlemen, let us follow the path which has led us to that result in the railway system and try it in the other direction.

Mr. GARDNER. I want to be perfectly clear. I am saying this to you, but it is really addressed to other people: That in saying what I have said this morning I am expressing only the things that are working in my own mind. I happen to be the senior member of the Republican side-the minority side-of this committee, and I do not want anybody in the world to think that I reflect any discussion with them, or commit them in any way, or indicate anything that might look in the least like anything except the expression of my own ideas. I admit that I have expressed them rather prematurely, because I have not been all through this matter; but I wanted to get at your view.

Mr. CARNEGIE. I am delighted. You and I have walked so far together that something is necessary. Then, I present this to you as being only one step. You have followed it in the direction of the railroads, and it has succeeded. I ask you to continue on the path, and apply to industries what you have applied to railroads. That is all.

The CHAIRMAN. At that point, Mr. Carnegie, let me see if I understand you. You are in favor of having this commission say that no manufacturer in the United States shall charge more than $28 a ton for rails, we will say, as a hypothetical amount; not more than $20 a ton for billets, no more than $25 per ton for structural shapes, and no more than so much for plates, and so much for skelp, and so on ad infinitum through the whole gamut of the steel market.

Suppose that that should be done, and that these obedient manufacturers should get together, not for the purpose of making a combination in retraint of trade-far from it-but for the purpose of obeying the law; and each one, with his hand on his heart and the law before him, and with the fear of God and of his countrymen in his heart, should say:

"Verily, we will charge the amount, and the exact amount, that the law has fixed as a maximum."

Then, they would get together legitimately, as they would have a right to do, and they would urge their representatives to see that that good and righteous law was not amended in one jot or tittle. And suppose further, in the meantime, in the future as it has occurred in the past, inventive genius should work miracles in steel, in the processes of smelting ores by electricty, we will say, superseding the more expensive process of coke and gas, and you should learn to reduce recalcitrant ores, ores containing titanium and a high degree of phosphorus, and these other things that now render certain of your ores useless; that they should learn to handle lean ores, with a lower per cent of iron, and, as a result, the production of ores would radically increase in four or five years. Do you believe that those good manufacturers would disobey the law they had agreed to follow so religiously, and would automatically decrease their price