fJPr 'fy' rv-
JANUARY 1, 1909
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nation can impose upon the people, the income
tax is the worst."
"You agree with Gladstone in that?"
interjected Chairman Payne.
"I do," the steel magnate replied.
"So do I," said the chairman.
"If you want to do harm with money give
it away to those people who will not struggle
for themselves," was one of the numerous epi
grams brightening Mr. Carnegie's unique testi
mony. "That applies to the tariff on steel," he
added. "I think the man who can make three
or four dollars more profit than a lazy, inert
corporation management should be allowed to
make that profit for his country's good," was
an opinion expressed by Mr. Carnegie, when
being questioned with regard to what he con
sidered a reasonable profit.
Dealing largely in generalities, Mr. Car
negie Said he wanted ft understood that his
statement represented his opinion solely. He
said that he came before the committee because
summoned and that he gave his testimony be
cause he thought it his duty as an American
citizen. "I did not volunteer it," he said.
Pressed with questions from all sides Mr.
Carnegie arose from his seat and dramatically
declared that "he was a protectionist."
"I desire," he said, "to furnish to the con
sumer a cheaper Bupply and a more regular
supply than he could get abroad, and, if after
forty years' experience, we can not develop steel
with that condition, our protective policy in
that instance would have been a failure instead
of the triumphant success it has become." Point
ing his finger at the committee and raising his
voice to its highest pitch he declared that the
steel industry was now in the position where
it can say: "Take your protection. We are
now men and wo can beat the world in the
manufacture of steel. There is no reason for
the tariff Qn steel," he again emphasized. "You
should not coddle the industry with protection."
A recess at this point was ordered, Mr.
Carnegie inquiring if the committee was through
with him.
,"No," came in a chorus of voices.
"This is cruel," remarked the steel mag
nate as he retired from the room.
"His solicitude for his weaker brethren
is sublime," -said Mi Carnegie, referring to
Judge Gary's contention that the smaller steel
manufacturers could not stand for the abolition
of the duty on steel.
Mr. Carnegie said the manufacturers of
Wales could make a ton of tin plate a shade
cheaper than it could be made here, and that
the cost of manufacturing steel is greater in
Great Britain than here. He said the commit
teeshould send experts familiar with the steel
jnousfry to the large mills of Europe to study
'the question of comparative cost of labor.
,' "It is a condition and not a theory that
concerns the committee at this time," said Rep
resentative Longworth in reply. "It is under
stood that the president-elect will call a special
session of congress for the purpose of enacting
a, tariff bill, and we must prepare a bill for them
to pass on. We have no time to send experts
to Europe. What I want to know is what au
thority the side testimony given by you and
Judge Gary, whom I don't think went as far
as you do, have for taking the duty off of steel?" .
Mr. Carnegie pointed out that there is
practically.no foreign-made steel imported into
this country.
"Do you know of any combination to fix
the price of tin plate internationally?" asked
Mr. Hill.
"No."
"Do you know of any combination to fix
the price of wire nails?"
"No," Mr. Carnegie replied. "I am not
so positive about the existence of a combina
tion to fix the price of steel rails. In fact I
am without knowledge of any combination of
any kind."
Mr. ' Carnegie told the committee it must
not base its conclusions on the comparison of
the cost of labor in this country and abroad
as furnished them by witnesses. "If it takes
two men in Great Britain to turn out as much
steel as it takes one man here with our modern
appliances the difference would not be so
great," was his argument. "The cost of pro
ducing rails at Gary won't be half as much as
in England, notwithstanding the cheaper cost
of labor abroad."
Representative Gaines was desirous of ob
taining Mr; Carnegie's views as to the needs of
the tariff for the small manufacturer of steel.
Mr. Carnegie explained that there were no small
manufacturers of steel products, but Mr. Gaines
The Commoner.
persisted that thero wero small manufacturers
who mako some special articles from steal.
I don't know any small manufacturer who
makes just one article of steel, and I would
not regard him. I would think ho had not
managed well," said Mr. Carnegie.
Mr. Gaines wanted to know if it was not
impossible for a man to go into tho steel busi
ness to manufacture a specialty or if It would
bo if there was no tariff to protect him.
"There is always room for tho enterpris
ing man to make a specialty, and besides, ho
gets a high price for his article," was Mr. Car
negie's comment. "The man who would go
into the general steel business without tho
proper capital is a man you would not concern
yourself about. Things that are used by tho
thousands can not- bo made now except on a
large scale."
Mr. Carnegie further admitted that tho
time for the smaller manufacturer of steel is
past, except for tho man making a special
article.
Mr. Carnegie concluded his testimony
shortly before G o'clock, and was about to leave
when Alfred O. Crozler of Wilmington, Del.,
asked permission to be heard. He also asked
Mr. Carnegie to remain and hear his remarks,
explaining that they would bo in tho nature of
a criticism of the former steel king's views on
tho tariff. Mr. Carnegie took a seat with tho
evident purpose of listening to Mr. Crozior, but
t tho latter had not proceeded far when Mr. Car
negie arose and said that he had been before
the committee all day and that it was pretty
tiresome. He begged to be excused but said
that he would like to get a copy of Mr. Crozler's
remarks after they are printed.
"I shall read It with pleasure," ho said,
"and if the gentleman criticises me, I shall say
'w"hat a pity that man does not know better,'
and if he is with me I shall probably say, 'what
a wise young man he is.' "
With a few parting words of regret becauso
he could not stay Mr. Carnegie took his depar
ture. Mr. Crozler addressed his remarks princi
pally to the magazine article recently published
over Mr. Carnegie's name, which he said dealt
a severe blow to the entire protective system.
He said that Mr. Carnegie has kindled wide
doubt as to' tho wisdom, necessity for and, value
of protection. Mr. Crozler claimed that Mr.
Carnegie's proposition to take the duty off of
steel would have the effect of leaving the
United States Steel corporation forever in un
disputed possession of the American field.
One of tho most interesting features of
Mr. Carnegie's testimony was his account of
his remarkable rise in the iron and steel busi
ness. He said that his first venture was in the
manufacture of castiron bridges for railroads to
replace the wooden structures which they then
were using. Together with six others he invest
ed ?1,500 as capital for the venture, getting
his share of the money by means of a loan from
a bank.
Mr. Carnegie said that his capital was in
creased through the earnings of the company
and through the sale of Pennsylvania railroad
bonds. He also told of the Edgar Thompson
steel works, which he started with several part
ners at a capitalization of two or three million
dollars.
"Was there any additional capital put into
it, or did it expand itself by Its own earnings,
and by the reinforcement of its earnings?"
asked Mr. Cockran.
"I think tho Edgar Thompson works did,"
was the reply. "There may have been five or
six hundred thousand dollars or something of
that kind put in."
"And as the money was earned after the
partners took out what was necessary for their
support, the surplus was reinvested and the
work expanded?"
"Religiously," replied the witness, the
partners were not then millionaires; they had
an interest in the firm, but they worked for it."
"But they lacked for nothing?" interrupt
ed Mr. Cockran, "and they were putting back
their earnings into the company?"
"Yes sir."
"After tlie Edgar Thompson works started
the Carnegie iron or steel works was started?"
questioned Mr. Cockran.
"The Edgar Thompson started and none or
my partners would go into it," replied Mr.
CarncEio.
"That is, none of your old partners in the
iron business?"
"Yes "
Mr. Carnegie said that the Union iron mills
which started originally with the ?7,500 cap-
ital, was later consolidated with tho Edgar
Thompson stool works, becoming tho Garuuglo
Bros. & Co. Thus Mr. Carnoglo brougffl to
gether his Iron and stool business.
Mr. Cockran continued to Interrogate Mr.
Carnoglo closely regarding his oarly ventures.
"Will you -tell what you want to get at
and I will toll you?" askod Mr. Carnoglo.
"I will toll you frankly," said Mr. Cockran.
I want to got what tho actual profits of your
companies wore, tho company which was a groat
monument to your success. For that purpoHO
1 want to find out what cash capital wna put
into tho company and how that has grown."
"Why didn't you toll me that?" ro'plled tho
giver of libraries, amid much laughtor. "Do
you know, when you havo not thought of a
subject for thirty years you can not remember
everything. I could Ho down in my bed and
think for a whllo and study it up. Practically,
Mr. Cockran, one enterprise gave us tho capital,
of course, In a small degree, for anothor enter
prise, one was mergod into another and so on
and so on."
"So that practically Mr. Carneglo, when
you sold out your interest woll when you
withdrew, at tho tlmo of tho formation or prior
to tho formation of tho United States Steel com
pany, this vast property which had been creat
ed by your partners and yourself, represented
almost entirely profits earned?" persisted Mr.
Cockran.
"Why didn't you ask mo that question?'
"I started by citing what Mr. Schwab liad
said and you said you thought that was misap
prehension and you came along finally to this
conclusion."
"But Mr. Schwab was wrong," iutorruptod
Mr. Carnoglo.
"Yes Mr. Schwab wns wrong then two or
three million of dollars?"
"Yes, cortainly."
Mr. Cockran thon wanted to know what
amount was paid Mr. Carnegie when his enter
prise was sold.
"When my partners, young partners, re
ceived an offer for tho mills to convert them
Into this great company, to consolidate with
the others, I sent my cousin out to Pittsburg,
who was a partner himself, to ask tho young
men if they wero all in favor of making this
change; that If they wero, I would acquiesce,
because I had made up my mind when I was
young that I would never spend my old age
grabbing for more dollars."
Mr. Carnegie continued:
"There Is a phrase that you know, Mr.
Cockran, very well, 'when an old man sayn ho
retires, it is for the making of his soul.' Woll,
I made up my mind that I would retire early,
and, as I said, they all wished to sell out. Now,
I had nothing whatever to do with tho negotia
tions. They made their bargain and camo to
mo and asked what I would sell for and I said
I would soil for tho same amount of bonds as
they wero to receive, 7 per cent preferred stock.
You see they wero continued in tho business
and thoy took 7 per cont stock and I took 5
per cent bonds. Then thoy got $1,500 a share
more of common stock, and I declined to take
any common stock, because I thought it-was
then water." "K'.?-ifcrt
"li lias lurneu out wjuu. " wu""
ran.
"Yes. but I didn't take any."
"You regarded'water as not a thing finan
cially to bo used as a beverage?"
"Well, I was satisfied with the bonds."
Mr. Carneglo hero said ho could have got
the stock in addition to the bonds.
"You havo asked the committee to be care
ful about going after specific facts on which to
fix their tariff legislation," explained Mr. Cock
ran, "and I thought it important, for the pur
pose of getting the exact facts in considering
tariff legislation, to show how this company
has grown from a very small beginning to tho
stupendous amount of $1,780,000,000 as tho
value fixed by Mr. Gary."
"First of all I wanted to find out how
much your company is paying, how much It was
sold for, to get the growth of that, and then
I was in hopes I could find the corresponding
growth of the other companies, and get an
idea just what the profits of steel might be."
"If you want tho United States Steel com
pany to tell you the cost of everything, go to
them and get it," responded Mr. Carnegie.
"The only difficulty is that we have the
same difficulty with every one else. The mo
ment it touches information exclusively within
your own control, you do not care to give it
(Continued on Pago 8)
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