have rates that would be decidedly higher than | put in in actual capital in addition to the sum to any such competitive points as Louisville, that represents the indebtedness! Cincinnati, Chicago or St. Louis. Q. As to the rates that the railroad chooses to charge to Columbia, that is a matter over which you have no control? A. None whatever. Q. Is that true throughout Kentucky, and through the different States of the North that you pass through to reach your markets? A. Yes sir; our through rates in all cases, so far as I have personal knowledge of local rates, are lower than the local rates to intermediate points. Q. State whether, in view of the small amount you have named, there is any market in the South for the production of the iron industries of the South? A. Certainly not. The entire consumption of pig iron in the Southern States would not keep one half of our own works running, let alone those of all the other gentlemen engaged in the business. Q. You say this paralysis has existed from the time of passage of the Law? A. Yes sir. Q. Tell the Commission what it is that the iron men desire for their protection. A. As far as I am able to judge, I do. Some of the stock, at different times during the entire history of the various companies, has been sold at a discount to persons who have bought it. Against that, however, for a period of many years the money which has been earned in the business has been appropriated to cap ital account and improvements; and I believe the one will fairly offset the other. Q. Will you tell us who these parties are that formed the companies; I do not mean the names, but from whence they came, whether they were parties residing in the vicinity, or residing elsewhere; and if so, where? A. The company which I first served in this country was composed entirely of Englishmen and represented the investments of some two hundred gentlemen from the coal and iron regions of the north of England. That company was the Southern States Coal, Iron & Land Company. The Sewanee Furnace Company was composed of gentlemen resident entirely in Tennessee. The Pratt Coal & Iron Company, or the Pratt Coal & Coke Company as it was originally, was composed chiefly of gentlemen resident in Tennessee and partly A. We want relief in such form as the Com-in New York. The Ellis Furnace Company mission feels itself able to give. If the represented Alabama, Tennessee and Kenmaintenance of the fourth section of the Act tucky capital. The Lynn Iron Works repre prohibits the railroads from maintaining the low through rates that we want, then we want the temporary suspension of the fourth section made permanent. If it does not affect the railroads in carrying out the old contracts upon the faith of which we built our works and invested our capital, then we want an authoritative declaration to that effect, so that they may know it and govern themselves in their action toward us accordingly. sented Alabama capital. The original parent company into which the others have merged, which was originally the Tennessee Coal & Railroad Company, embraced originally New York capital exclusively, but after several changes, during which time the control of it has passed into Tennessee and out again, it is now owned chiefly in New York. Q. The operations of this consolidated company, as I understand you, are at Birmingham and vicinity? A. Birmingham and the vicinity constitute the largest individual point out of several. Q. About what is the population of Bir Q. As I understand you, all of you are now suffering seriously, and it is not a matter of any consequence whether it is a real or an imaginary trouble. A. I am sorry to say there is nothing imagin-mingham? ary about it. The trouble as far as we are concerned is very real. By the Chairman: Q. Have you with you any of the contracte about which you have spoken? A. I am not a resident of the city and I would not like to do it injustice in the hearing of some of my friends. It was I think about 40,000 at the last census; but if I said it was less than 60,000 they would mob me when I A. I have not, sir, but I can furnish them.get outside, so I would like to be taken as anI came here unexpectedly, being away at answering 60,000, with a mental qualification. other point, or would have brought them with A. Yes sir. (Laughter.) The Chairman. We will see you are protected in that statement. The Witness. It is fair to say and it is due to Birmingham, I should say this: that Q. If you please you may forward them to the business which Birmingham represents is us as soon as you get home. A. Do you prefer the originals? in no sense identical with its municipal boundaries. For example, one of our own works, Q. Oh no; if you will give us copies of them our chief works, is outside of the municipal that will answer. A. I will do so. Q. What capital is invested in these enter prises of which you have spoken? A. The enterprise under which I serve is an aggregation of six, and the entire capital stock is $10,000,000, and the bonded debt is $6,000,000, representing $16,000,000 of money which is really being used in the business. Q. Do you mean that $10,000,000 has been boundary of the city and will involve a pop, ulation of between ten and fifteen thousand people, which could not be counted at all as part of the city population proper, and still the business is essentially the business of Birmingham. Q. Do you know the quantity of the coal land owned by this organization? A. Yes sir; we own about 108,000 acres of coal land. Q. Can you tell something near what the investment of this company has been, in buildings and machinery? A. I would say not less than 5,000,000. Q. Do I understand you to say in your opinion, the sum of $16,000,000 has been actually invested in the lands, and in the buildings and works of this company? A. That is my judgment sir. A. Yes sir; it is necessary to make them so. The largest individual consumers of pig iron are the manufacturers of gas and water pipe. They, in their turn, make their contracts chiefly with municipalities; and as only certain times of the year, especially in the North, are available for laying gas and water pipe, the ground being frozen in the winter, contracts for such work are usually made considerably Q. And its capital represents an actual in- in advance; and in our company we contract vestment of money to the full extent? A. Yes sir; I think it does. three, six, nine and sometimes twelve months for deliveries of round lots of iron to these Q. Has the stock been very much the sub-pipe makers, and it is necessary for us to be in ject of sale in the market? a position both to guarantee our own price at the furnace and to guarantee the rate of freight. A. Yes sir; it is listed on the New York Stock Exchange, and subject to daily transactions. Last December the stock reached as high a point as 116. To day it is not more than 44 or 45. Q. When did this decline begin? A. My statement is open to be misleading, unintentionally so. A readjustment of internal working, in new works and adding both to the bonded debt, and the capital stock took place since it was at 116, and the highest quotation that the stock has had on its present basis is 543. Q. When was that? A. That was about February last. Q. Since then it has continued to decline? A. I do not know of any other than the Q. Tell the Commission how many acres of iron ore land your company owns? A. As I said at the beginning, we own about 200,000 acres of land, of which 108,000 are coal lands and the remainder practically all ore land. We do not buy land unless it is either coal or ore land. By the Chairman: Q. You spoke a moment ago of the number of men in your employ. Has the number of men employed by you diminished in consequence of the stagnation of business? A. We have not yet shut down any department or work, because we believe, we hope and believe no such consequences are going to follow the administration of this Act as will continue to paralyze our business. Q. Is the fear of the operations of this Act, the sole cause of the stagnation of business? A. Most emphatically; I believe it to be so. Q. You express the opinion, do you, that that is the sole cause? A. I do, most emphatically. Q. But up to this time you have not dismissed any of your men. You are continuing them in your employ? A. We have heavy contracts upon our books, which will carry us on for probably ninety days to come. Q. And you are proceeding in the fulfillment of those contracts? A. Yes sir. By Mr. Marks: Q. I want to ask you with reference to your contracts. Do you have to make them for a long time in advance? By the Chairman: Q. Then you do not accumulate a stock on hand? A. We could not afford to, in the magnitude of our business. Q. You do a business upon contracts for performance in the future? A. Yes sir. Q. That is the course of your business generally? A. Yes sir; the value of our pig iron amounting to about $10,000 per day, we cannot afford to accumulate stock very long. Q. Has there been, or has there not been, an over production in your line of business through the country in general? A. Not within the past eighteen months. On the contrary, within the last eighteen months the consumption has been greater, and is greater to day than the production; and the stock of coke made pig iron is diminishing month by month. The stock of iron such as we make west of the Alleghany Mountains is at least sixty to seventy thousand tons less to day than it was six months ago. Q. Then you expect the demand in the line of your business to keep up; not to diminish but to increase; and the question as I understand from your testimony is whether, in respect to your own business, you are to be crippled by this Act? A. Yes sir. Q. And not whether there is, in consequence of an over production anywhere, to be a diminished demand for your productions? A. I am sufficiently familiar with the business to know that there is no lethargy in the trade, because of over production today; and am satisfied and know perfectly well that if I could say today, to our customers in St. Louis, Milwaukee, Chicago, Pullman and Detroit that we would deliver iron to them three months or six months from today and fix the prices upon the same freight rates that we have been enjoying for years past, we could sell twenty, thirty or fifty thousand tons of iron inside of twenty days. Q. Who are your competitors in this business? A. We have varying competitors in almost every district. Take first the New York and New England district where we deliver. Our chief competitors there are the Anthracite Manufacturers of the Lehigh Valley; and in Philadelphia the Eastern Pennsylvania men and above all the Scotchmen. Take for instance the City of Providence. We have some Q. But are not these advantages which you obtain in your business advantages for which somebody else pays? large customers in Providence. Our competi- | continue to furnish them with that cheaper Q. You have the coal and iron right together at present? A. We have. A. If it were not so, we would not be able to pay even the low rates of freight which the railroads charge us and still get there. Q. And of Missouri; you manufacture more tonnage than they do, in this part of the country? A. Yes sir. in the north ten or twelve years ago, its life Q. Is it because of these contracts which you have with the railroad companies for very low rates that you are enabled to deliver the output of your works to the markets you have spoken of, the Ohio market, the Michigan market and the Missouri market, in competi tion with the works right upon the ground? A. Yes sir; we couldn't begin to do it if we had no special rates and had to pay local rates. QIs it your opinion that the manufacturers in Pennsylvania, Michigan, Missouri, would regard that as just on the part of the railroad companies; that by reason of these very low rates they should have manufactures laid down at their doors, manufactures that were made at a distant point, but more cheaply than they could make them? Is not the tendency of that to drive them out of the business where they are? A. I have always supposed that legislation was intended to imply the greatest good to the greatest number, and that whatever might be their opinion on the subject, the consumers of pig iron throughout the North and West, who number fifty for every producer, would hold up their hands and invoke blessings upon the head of the Commission if you enable us to The Chairman. Of course we do not propose to enter into any argument of the question with you. That is not our purpose. The Witness. I did not venture to offer it in that sense, The Chairman. What we want is to draw out from you the reasons upon which you think the railroad companies should be per mitted to make rates for the advantage of works where the manufacture is cheaper than it is elsewhere in the country, that will enable those works to compete at the very doors of those other manufacturers that have not the same advantage of very cheap production, but must, nevertheless, contend for existence as against you. The Witness. Will it be necessary for me to offer any further reason than the sanctity of contract upon which we came here? The Chairman. When you submit your Q State to the Commission whether or not the hay, grain, flour and manufactured goods of the North and West are shipped here, and whether or not those cars in the main were returning empty, and that was the reason why you availed yourselves and could avail your selves of the cheap rates you did obtain? A. Yes sir. Q Because the bulk of the commerce was in their favor? You 1 We D Q. Do you know anything about the local rate of sales in Pennsylvania? A. I don't know very much. I only know it by the prices that we ourselves realize there. We sell a little in Philadelphia, but not so much as in New York. Q. I do not know that it belonged to this in A. I mean there is a surplus of cars coming A. But after giving credit for all the cars which go back to the North with the southern products, this is still true. Q. The cotton is very largely sent that way; and is not the fruit business now a very large business from the South? A. Surely; but permit me to draw this point very especially to your attention: That the southern products are, owing to the climate, simply a season class of freights. There is a time, I frankly admit, for two or three months, when the handling of cotton, the corn, the tobacco, the sugar, and also (for local and domestic use) the coal, in the Southern States brings a pressure upon the railroads for cars that they have great difficulty in meeting; but we give them freight every day in the year. Q. I understand that; but you spoke in such a way as to lead to the inference that almost nothing went in one direction and a great deal in the other. have any objection. It is stated in the newspaper accounts of your wonderful feats down here in producing iron products, that you make tons of iron as low as nine or ten dollars? A. I am afraid Mr. Watterson is responsible for that. Q. No sir; such an intelligent gentleman as Mr. Hewitt, who makes iron himself, thinks it can be made for as low a figure as ten dollars. A. Occasionally, undoubtedly, it can; but the difficulty is that very few people, in desiring to put the most favorable construction on the resources of any section, give allowance for the series of expenses in the manufacture which are incident to every second or third year, in the relining and practical renewal of the plant. From every two to three years it is necessary in the case of each individual furnace to spend, according to circumstances and according to the good fortune and good management of the plant, from seven or eight up to as high as thirty thousand dollars in re A. Practically there would be scarcely any-pairs. thing to go back in the dull summer months. By Mr. Marks: Q. What is the difference between the value of a train load of cotton and a train load of corn? A. That is out of my element. I would rather some other witness would say. Q. Is it not true of the southern products that for bulk and weight they are much higher in value than the products of the West and North, so as to make the exchanges unequal in bulk and weight, as a rule? A. I think so, generally; but I cannot speak as an expert upon a question of that kind. Q. Outside of lumber and wood and iron we ship no manufactured products North and West, do we, or but very little? A. Very little indeed; very little. The great preponderance is coming South. Q. The whole of our supplies come from the North and West? A. The great preponderance comes to us over what we ship. By Commissioner Morrison: Q. Beside the competitors that you meet in New York City, you meet a competition from the State of New York also? A. Yes sir. Q. I do not want to inquire into your business affairs, but have you any open sales made Q. In that respect you are like the railroads; you have to be renewing all the time? A. Yes sir. Making allowance for that, I would say that we have not yet attained that point; or year in and year out no furnace has reached the ten dollar limit. Q. How much exactly do you say you pay to New York? A. Three dollars and seventy-five cents is my recollection. Q. How much does your Scotch or English competitor pay? A. I have been, and still am, interested in shipping myself, having been interested in the business in England; and I have known iron to be handled from Glasgow to New York for twenty-five cents a ton. The habitual, usual freight, however, that at which I would undertake personally, if it were necessary to have twenty thousand tons brought inside of the next three months, is $1.75. That is a standing rate. Q. Then it costs you two dollars more to get to New York from here than it does from Glasgow? A. Yes sir. Q. And then if the foreign iron pays six dollars duty you have four dollars the advantage? | A. Supposing our case is the same. Thomas A. Mack appeared before the Commission, and having been duly sworn was examined as follows: By Mr. Marks: Q. State your connection with the iron industry at Birmingham. A. I am the Superintendent of the Eureka Furnace Company. I am also a director in the company, and have been for four or five years. Q. How many companies have you engaged there in the production of iron? A. We have in Birmingham district the Tennessee Coal, Iron & Railroad Company, the Sloss Steel & Iron Company, the Debareleben Iron & Steel Company, the Eureka Company, the Woodward Iron Company, the Pioneer Ming & Manufacturing Company, the Williamson Iron Company, the Mary Pratt Furnace Company, the Birmingham Rolling Mill Company, and the Birmingham Iron Works. There is in addition the Gadsden Furnace, that might be called in the Birming ham district, and two or three within thirty miles of Birmingham besides. Those are in the immediate locality. Q. How long do you say you have been engaged there in the iron business? A. About five or six years. Q. Tell the Commission about the history of your organization there, your arrangement and development, and how it was brought about. It A. The history will go back to the war. was built, I believe, under the patronage of the Confederate Government in 1863, and was run by them, I believe, until it was destroyed by the United States cavalry in 1865. It was started up in 1866 or 1867, and failed. It was started up again in 1873 or 1874, and failed again. It was started up under its present organization in 1876, and is now running. Q. State the conditions under which you reorganized it in 1876, and why it is that you succeeded with it? and live. The furnace company conceded Q. I will ask you to state whether the rail- A. I am not enough of a railroad man to answer that. They say so. Q. What is the capacity of your furnaces? Q. You sell your product over the North, A. Everywhere North, West and East. A. In the first place, it has created a great deal of uncertainty, first in our own minds, and secondly, in that of the consumers. That has been the first effect. The direct monetary effect is this: We have made an agreement with quite a number of companies, some in Chicago and some in Pittsburgh, agreeing to deliver them so much iron running through the various months of the year, and agreeing to deliver it there at those points at a fixed rate of freight, netting to us so much money. We agreed with the railroads to deliver it at that rate of freight, and so we sold it to the parties at that price. The railroads come back and say they cannot haul it. They say they are not charging any more, but the roads north of the Ohio River are charging more. The result is that we are held to our contract and they are let loose from theirs, and we lose from three to five or twelve thousand dollars, as the case happens to be, according to the A. In the first instance there was no rail amount of the contracts. That is one of the road when run by the Confederate Govern-effects. There is another effect. We have to ment. It afterwards had railroad transportation, but the railroad was a new one, poorly built, costly managed, and with high rates of freight which taxed us out of existence. The second failure was largely due to the same cause, with the additional cause that there was not a thorough and sufficient knowledge of the district as an iron manufacturing district. The third and present attempt was organized with a specific understanding with the railroad company. Heretofore our freights were from $4 to $6 a ton to reach Louisville, as a minimum. The present rates of freight as a minimum are $2.50 per ton. Those rates have enabled us to succeed, and we entered into a specific agreement with them for ninety-nine sell iron for future delivery. It is the custom of the iron trade everywhere, in America and everywhere else, to sell for future delivery on long contracts. That is, we sell to a rolling mill say five hundred tons a month, delivered six, eight and ten months ahead. We sell to pipe works, to large car works, and various manufacturing trades. Unless we have a fixed rate of freight we cannot do that; and on the other hand, they cannot buy unless they know how long the contract price will continue, be cause they themselves are under contract. They must have a contract from us or they cannot make a contract with their people; and so the whole thing is tied up with a chain of contracts going from the last consumer to our selves, the first producer. Q. Have you the statement from the railroad association with you? A. I have here a tariff in which they give us rates of freight that are nearly like those given last month when this Interstate Law was not in effect, and a little bit higher than they were a month before that, but they say at the foot of it "The rates to numerous points heretofore published are omitted from this circular on ac R |