Cbe Conservative *
STEEL , ANI > WIRE
This Trust liaised Trices Over 10O Per
Cent In 181)9.
The theory of the protectionists from
Carey to McKiuley and Dingley has
been that while protective tariffs might
at first somewhat increase prices they
would result in lower prices just as soon
as our manufacturers were once well
established. According to promise con
sumers were then to get back in low
prices what they had paid in high prices
in order to secure "industrial indepen
dence. " Results have shown that these
theorists have omitted several important
factors. Two of these are the helpless
ness on the part of manufacturers , re
sulting from tariff bounties , and the
tariff trust which intervenes , as soon as
the manufacturers are ready to compete ,
to prevent consumers from getting back
what they invested in protective tariffs.
If such duties could be removed when
an industry has been firmly established
the protectionist's theory might possibly
prove true in exceptional cases. But
neither the manufacturers nor the pro
tectionists are ever ready to admit that
a tariff-nurtured industry is sufficiently
established to get along without further
tariff pap. The men in such charity
industries become demoralized and de
pendent and conclude that it is the duty
of the government to continue to sup
port them.
Manager Gates' Admissions.
These demoralizing and socialistic
effects were well illustrated by the testi
mony of Mr. John W. Gates , managing
director of the American Steel and Wire
Company , before the Industrial Com
mission on November 14,1899. Without
a blush he stated that
Prices of wire nails , etc. , had been
doubled ; he deprecated the necessity for
such high prices ; they were due to the
high prices of raw materials ; his com
pany exported 700 tons of wire a day ;
it furnished England with GO per cent of
her supply ; goods were sold lower to
foreigners ; such prices were necessary
"to hold outside trade ; " not infrequently
new plants were shut up and dismantled ;
this was done for "various reasons ; "
five plants had been closed ; his com
pany had a monopoly of the barbed wire
business ; therefore , higher prices were
charged for these products ; his com
pany was making big profits ; his com
pany did not recognize labor unions as
such ; subsidies should be paid to steam
ship lines and to corporations with
$5,000,000 or more capital ; the govern
ment should supervise all such corpora
tions ; he went to Europe to form a
world trust ; he proposed to increase
prices $10 a ton if such a trust were
formed ; the Germans contemplated a $2
increase ; the Germans wanted too big a
share of business ; Germany's bounty
system was excellent ; if it were applied
here we should soon be doing 90 per cent
of the iron and steel business of the
world ; the protective tariff had had
much to do with building up the in
dustry ; the continuance of the policy
was necessary to the future prosperity
of the industry.
Can any sensible , fair-minded and
patriotic man take the statements and
admissions of Mr. Gates and reach his
conclusions as to the necessity for tariff
duties or bounties ?
Is it not clear that he has received so
much from the government that he now
thinks it owes him and his kind a
living ?
Will any honest man think it fair for
these manufacturers to sell their products
at the highest possible notch to those
who pay the tariff bounties and to bestow
upon the untaxed foreigners the bless
ings of low prices even "to hold outside
trade ? " Why not tax the foreigner
awhile and give home consumers a
chance to get some of their tariff taxes
back ?
Consider to what use the tariff has
been put in the wire and nail industry
by the millionaires whom it has pro
duced.
Earlier Wire Combinations.
Going no farther back than in 1895
we find the Consolidated Steel and Wire
Company , an Illinois corporation of 1892
with $4,000,000 capital , as the barbed
wire trust , with Mr. John W. Gates as
manager. Various pooling agreements
were formed in 1894 , ' 95 and ' 96 , be
tween all of the barbed wire manufac
turers but they wore only temporarily
successful in producing higher prices.
The Export Barbed Wire Association
composed of four principal exporters was
in force several years previous to 1895
and did much to steady prices. It was
partially revived in 1896.
In September , October and November ,
1895 , "prices were fixed by agreement" ,
as the Iron Age stated , and were $2.85
per hundred pounds for barbed wire.
The previous April the price was $1.90.
The average prices for previous years
were 1894 , $2.18 ; 1898 , $2.55 ; 1892 ,
$2.29 ; 1891 , $2.72 ; 1890 , $2.97. In De
cember , 1895 , the combination broke and
prices fell to $2.
Cut anil Wire Nulls Previous to 1808.
Early in 1895 wire nails were selling
at a "base" price of 75 to 80 cents a keg
in Pittsburg. In May two associations ,
one for cut and one for wire nails , got
together , and put this price up to $1.20.
These associations pooled and the wire
nail people "contributed financially to
enable the Out Nail Association to keep
control of the market , especially in the
payment of subsidies to keep idle the
large number of cut nail machines" , as
the Iron Age of December 8 , 1896 , tells
us. The associations regulated the
amount of nails offered for sale each
mouth and the price at which they
should be sold. "Understandings were
had with Canadian manufacturers.
Nail machine makers were subsidized
not to sell to those outside the associa
tions. Jobbers who did not cut prices
were given rebates. .
"Prices were advanced almost steadily
for one year. By May , 1896 , wire nails
were selling at $2.70iu Chicago and
$2.55 in Pittsburg. The pool held
together until December , 1898 , when
prices broke more than one cent per
pound. "
Home Prh-pH More Than Twice Export.
On December 8 , 1896 , the Iron Age
said that high prices of cut and wire
nails had reduced consumption from
over 9,000,000 kegs in 1891 and 1892 to
less than 8,000,000 in 1895 and in 1896
to probably "far less than in 1895 , not
withstanding the fact that a large
amount of nails had been exported into
foreign countries at less than half the
price that the American public paid for
their nails. "
It is often difficult to ascertain the
exact export prices. In November , 1896 ,
however , it is a fact that the price to
foreigners was $1.80 while the price to
Americans was $2.70. At least one
dealer bought a large quantity of nails
at export prices and after shipping them
to Amsterdam and back and paying
freight and other charges both ways
made a handsome profit while underselling -
selling the trust in its own market. He ,
however , was boycotted by the trust and
was thereafter uuable to buy nails at
any price , either as an American or a
foreigner. The exports for the fiscal
year 1896 were 28,762,187 pounds.
Trust Formed In 1898.
Agreements were broken and patched
up in 1897 and 1898. In April , 1898 , the
American Steel and Wire Company , of
Illinois , was formed with $24,000,000
capital. It contained 14 mills , 7 of
which constituted the Consolidated
Steel and Wire Company formed in
1892 with $4,000,000 capital. This trust
was not large enough to fully regulate
production and prices. It was swallowed
up by the new American Steel and Wire
Company , a New Jersey corporation
formed on January 18 , 1899 , with
$90,000,000 capital , $40,000,000 of which
is 7 per cent cumulative preferred stock.
This trust includes practically all of the
wire , wire-rod and wire-nail mills of
this country. The value of the 26 plants
and other property absorbed is about
$20,000,000 , which even admitting the
$18,000,000 other capital claimed would
leave over $50,000,000 of water. It owns
its own sources of supply. Its monopoly
conditions and advantages wore thus set
forth in March , 1899 , by its president ,
Mr. John Lambert :
"It will not be necessary to make any
further purchases , for the reason that
we have all the producing capacity that
we need. It has been our policy to so