Page images
PDF
EPUB

and indignant that he refused to sign the Tariff Act, which, however, went into force, under a provision of the Constitution, without his approval. Consequently, under the revision of 1894, the iron and steel manufacturers of Pittsburgh and the other centres of the industry in Pennsylvania, Ohio, Illinois and Maryland lost little or none of their effective protection. The duties on pig-iron were reduced from $6 to $4 a ton; those on bar-iron and structural steel, which in the McKinley tariff had ranged from $16 to $20 and from $10 to $18, were reduced to $12. On wire rods the duty was continued at $16 a ton; but on rails there was a reduction from $12 to $7.

The failure of the Democrats at this revision to act in accordance with the platform on which they had been elected in 1892, coupled with the attitude of the party on the silver question, brought about their defeat in the elections of 1896; and the Republicans were so much in a hurry to secure another revision of the tariff-this time by its friends-that, in April 1897, President McKinley convened Congress in extra session solely to revise the Act of 1894. Duties in most of the schedules were now raised to a point much higher even than the general range of duties in the McKinley Act of 1890. But by this time many of the revolutionising changes in the economy of iron and steel production, which have been described, were obviously affecting the industry. At Homestead and other of the great works,

wonders [are] performed as amazing as those of the "Arabian Nights." Machines endowed with the strength of a hundred giants move obedient to a touch, opening furnace doors and lifting out of the glowing mass enormous slabs of white-hot steel, much as a child would pick up a match-box from the table.' (Bridge, op. cit. p. 164.)

Pig-iron was being manufactured at some furnaces at a cost of $6-7 a ton-raw material, labour, and establishment charges all included; similarly steel rails were being turned out at as low as $12.50, and sold at $16; and, as Mr Carnegie assured the world in 1908, 'sold at a profit. Thus, while it was still pleaded before tariff committees at Washington in 1897, as it was pleaded at every tariff revision from 1861 to 1909, that the iron and steel industry in the United States, manned in 1897 almost as

much as in 1911 by Slavs and Magyars working twelve hours a day and seven days a week at wages ranging from 15 to 16 cents an hour,t must be protected from the 'pauper labour' of England, Germany and Belgium, there was no successful movement for the re-enactment of the high duties of the McKinley Act, some of which, as we have seen, were reduced at the revision of 1894.

[ocr errors]

The textile manufacturers, and manufacturers in many other lines of industry, were at this revision of 1897 granted even higher duties than in the tariff of 1890; but there were no new concessions to iron and steel manufacturers engaged at the primary and early secondary stages. On the other hand, notwithstanding the enormous economies in cost which were being effected at this time in mining, transport and manufacture, the duties of 1894 were not appreciably reduced in the interest of consumers. Pig-iron, of which the labour-cost in 1909 was 82 cents a ton, as compared with $1.25 in 1902, was by the Tariff Act of 1897 afforded a protection of $4 a ton. The Big Business Interests' of the United States are always amazingly vigilant in the interest of labour when a tariff is being revised; so persistently vigilant that a visitor at Washington, attending for the first time the public hearings of the Ways and Means Committee, would be apt to go away with the impression that sympathetic care for labour was the one great and sustaining joy of life with the 'Big Business Interests,' whose representatives are invariably at hand when a new tariff is before Congress. To the same end— ostensibly to safeguard American labour-duties on bariron were enacted in 1897 at the rate of $12 a ton. On wire rods the duties ranged from $8 to $12; on structural steel they were fixed at $10-$2 less than the rate in the Wilson Act, and $8 less than in the McKinley Act. For steel rails the Dingley duty was $7; and for fishplates

Of the total of employees appearing on the pay-roll of January 1910, 2322 worked in occupations requiring regularly twelve hours a day for seven days in the week, and 2233 in occupations requiring twelve hours a day for six days a week. Report on strike at Bethlehem Steel Works; Senate Document No. 521, Sixty-first Congress, 2nd Session, p. 10.

+ Cf. Fitch, pp. 39, 62, and 154; Bethlehem Report, 10; also report on labour conditions in the iron and steel industry laid before the Senate, August 1, 1911.

Stanley Committee, Bulletin V, 291.

Vol. 216.-No. 430.

and splice-bars, the etcetera' of the steel rail business, the rate was $8 a ton.

This was the tariff in force when the Steel Corporation was organised in 1901. This was the protection that was treated as an asset and, as such, capitalised by the promoters of the Steel Corporation, as it had been capitalised by the promoters of earlier 'mergers' of iron and steel manufacturing companies. The tariff of 1897 was that under which the Steel Corporation and its socially federated independent companies* operated from 1901 to 1909. In the latter year there was another revision of the tariff. On this occasion, in order to accommodate the Republican party and its leaders at Washington, the Steel Corporation and the independent companies, acting as a unit, and having no apprehensions of British, German or Belgian competition-except as regards structural steel called for at the Pacific coast cities of San Francisco, Portland, Tacoma and Seattle-graciously sacrificed a little of their non-effective protection.† As a return for this sacrifice there was inserted an adroitlyworded paragraph that contained what in tariff slang is known as a joker,'‡ which, while apparently fixing the duty on structural steel at from $6 to $8 a ton, made all such material, when punched and ready for the erectors, subject to a duty of 45 per cent. ad valorem.§ For all practical purposes this duty is as prohibitive as though a clause had been inserted excluding structural steel from the United States; for, if structural steel is landed at an American port in the condition which would admit of it paying only the $6 or $8 duty, it must go to a mill, with furnaces and other equipment, for punching, before it is available for the building for which it is designed.

By the Act of 1909 the duty on pig-iron was reduced

* Cf. evidence regarding Gary dinners, 1907-1911 (Stanley Committee, Bulletin V, 263-272).

+ Cf. letter of Mr James M. Swank, of Philadelphia-January 12, 1911to Mr Gary of Steel Corporation, Stanley Committee, Bulletin XX, 1428.

It is in the tariff schedules that half of the monopolies of the country have found covert and protection and opportunity. If you go through the schedules you will find some nigger in every woodpile, some little word put into almost every clause of the Act, which is lining somebody's pocket with money.'-Dr Woodrow Wilson, Governor of New Jersey, in 'The Outlook,' August 11, 1911, p. 944.

§ Tariff Act of 1909, Schedule C, Clauses 121, 199.

to $2.50 a ton, and that on rails to $3.50. But, so long as the existing harmony between the Steel Corporation and the independents, and between these colossal American interests and the manufacturers of iron and steel in Great Britain and on the Continent, are maintained-and there are to-day no signs of a rupture *-tariff details have little practical interest for people in the United States, who are forced to buy what they require from the Steel Corporation and its federated iron and steelmaking companies.†

V. The mergers and consolidations of the four or five years that preceded the organisation of the Steel Corporation are part of the history of the Corporation.‡ It grew obviously and directly out of them. It was formed in almost every detail on the pattern of the Federal Steel Company, which is technically, like the Steel Corporation of to-day, a holding company. The Federal Company was organised and in business for two years and a half before the Steel Corporation was chartered in Febuary 1901. It was a 'holding company,' which controlled eighteen previously independent mining, transport and manufacturing companies. Included in this number were five manufacturing companies, owning eleven plants situated SO far apart as Johnstown (Pennsylvania) and Chicago; six railway companies owning as many railways; one mining company, with mines and undeveloped ore lands in the Lake Superior country; three coal and coking companies; a lake steamship and also a lake dock company; and a waterworks company.§

The history of the Steel Corporation really begins

Cf. Stanley Committee, Bulletin III, 81, 82, 94, 263-272: Out of a world's production of 64,000,000 tons of steel yearly,' said Mr Drummond, *60,000,000 tons were represented at the Conference. The object of the meeting was the formation of an international association of steel men, for the purpose of exchanging information on all matters relating to our business, and making easier an interchange of ideas and communications.' -Interview with Mr Drummond of the Canada Iron Corporation, regarding the International Conference of Iron and Steel Manufacturers at Brussels, July 5 and 6 ('Witness,' Montreal, August 3, 1911).

+ Cf. Stanley Committee, Bulletin XX, 1429-30. ↑

See Article on 'Pools, Trusts,' etc., in the 'Q.R.' for January 1904, and 'President Roosevelt and the Trusts,' July 1907.

§ Cf. Stanley Committee, Bulletins II, 67; IV, 202; and Report of Commissioner of Corporations on Steel Industry, Part I, 14, 15.

with the creation of these holding companies, which are a device of American lawyers and American companypromoters and financiers. A large number of these holding companies had come into existence between 1897 and 1900. But these holding companies, in their turn, were only a new and enormously wider development of a movement in American industry and in home marketing of American manufactures which can be traced at least as far back as 1880. For the last thirty years there has never been a time when carefully organised pools, or (in the absence of pools) 'gentlemen's agreements,' or the later device of holding companies,' were not in existence for the purpose of dividing territory between manufacturers, for eliminating competition, and for maintaining manufacturers' profits at the highest possible level. The experience of both the United States and the Dominion of Canada since 1880 seems irresistibly to suggest that these three devices-pools, 'gentlemen's agreements,' and holding companies-are inevitable in countries where there is high protection, and where manufacturers are consequently associated in political action to secure the permanence of protective tariffs and to pocket all the gains accruing from them.

Canadian experience has run on lines almost exactly parallel with that of the United States. First, as in the United States, came pools for price regulation-'combines' as they are called at Ottawa; then 'gentlemen's agreements,' when pools broke down or became illegal under new enactments aimed at monopolies; and finally the 'mergers,' which serve much the same purpose in Canada as holding companies have served in the United States since about 1897. The merger was not developed in Canada until 1907, much later than the development of the holding company in the United States; and it was 1909 before the merger attracted much attention, and 1910 before the Canadian parliament enacted a law aimed at this new device to evade the older enactments against monopoly. In both countries there was a wellmarked difference between the older and the newer devices; for their methods and aims were appreciably different, and the only common features were the elimination of competition and the maintenance of profits by fixing prices as high as the tariff would permit.

« PreviousContinue »