The men from the zinc industry will also appear, and zinc is asking for protection of 2 cents per pound for all ore of over 25 per cent zinc content, with other rates on various grades of refuse zinc.

1

I have prepared two charts of mineral production, which I now present and will describe for your information.

These two charts represent relative movements of price and production in two groups of mineral industries, protected and unprotected.

The charts are composites of price and production movements, the ratios being computed in units of price, production, quantity, and time peculiar to each industry in question, the ratios for the same period then being correlated. The continuous line represents price movement, the broken line production. The upper chart represents. these movements in a group of 10 unprotected mineral industries over a period of 12 years.

It will be noted that as price falls, production falls with it, until at the low point of the price there is a flat level of theoretical nonproduction, which in some industries is actual nonproduction and in others is a minimum of production. When this flat level of low production is continued for a long enough time, price immediately starts upward. Production is stimulated thereby until at the high point of price, which in reality represents profiteering to the producer; price is speedily overtopped by production; stimulated by these high prices and there is great overproduction. Price then starts rapidly down; production follows it until the low point of price is again reached; another flat level of nonproduction, when price starts back up and there is another big angle which represents excessive prices for the materials and large over-production, followed by rapid cut of price, diminution in production until another low point in the industry is reached, which represents bankruptcies for many operating companies, and a flat level of nonproduction, which accelerates another upward price move.

It will be seen that under such circumstances the swing of prices is rapid and over a wide area. The important thing about this chart is that the price fixed by the manufacturer who uses any one of these raw materials as part of his finished product is based not on the low price range nor on the intermediary price range, but on the top price range. The manufacturer must be prepared in the price of his finished product to meet a cost for his raw material represented by the possible high ranges of price. For example, in 1918, when the price of quicksilver, one of the metals from which this composite chart was made up, was at its peak of high price, about $100 per flask, the price of fulminate of mercury caps into which goes 65 per cent of mercury produced, was $17 a thousand.

Today, with the price of quicksilver at the low point on the chart and at the lowest point seen in years, $30 to $35 a flask, the price of fulminate of mercury caps is $17 a thousand.

This policy on the part of the manufacturer is due partly to the fact that advanced stages of manufacture can not follow cuts in raw material with immediate accuracy, and partly justified by the fact that the manufacturer must be protected against the possible

1 Not printed.

recurrence of high price in replacing his stocks of raw material. The cost, therefore, of the finished article to the ultimate consumer is based on the top range of cost of the raw material at the points of widest fluctuation.

The lower chart represents price and production movements in 10 protected mineral industries over the same period of time. The continuous line represents production and the broken line price, as above. It will be noted that price and production in this chart follow the laws of supply and demand as in the upper chart, but with this vital difference: The industry being protected from extreme low ranges of price by tariff, the price does not drop to a point where there is widespread bankruptcy in the industry and where the price is below the cost of production. Therefore, production does not fall to the flat level of nonproduction shown in the unprotected mineral industries.

Similarly, as there is no flat level of nonproduction, there is no rapid stimulation of price which forces production up to a point of overproduction. There is a price movement and a production movement in response to the laws of supply and demand, but over a range of differentials scarcely one-third as wide as in nonprotected industries. Just as there are no low points, similarly there are no high points of profiteering, and the important thing to the consumer is that the cost of the raw material on which the manufacturer bases the cost of his finished product is at a much lower top range of probable price than is possible under the unprotected industries. Tariff in short has acted as a huge economic gyroscope in maintaining a smooth running level in the price and production movement in the industry so protected.

That this applies to industries other than mineral is shown in the woolen industry. In 1912 a company in the Middle West which operated its own woolen mills where it manufactured wool from entirely domestic sources into woolen cloth, and made this woolen cloth into clothing, this company made a high-class, all-woolen suit of clothes which sold at wholesale as low as $8 per suit. It did this under a protected market for domestic wool. While a comparison with to-day's condition is somewhat distorted in view of the economic disturbances following the war, yet with wool on the free list to-day and the domestic wool lower than it has been for many years and begging a market at any price, this same woolen mill is not selling the same suit of all-wool clothes at $8 wholesale; it is selling the suit at from $18 to $29 wholesale. Why? Simply because the manufacturer has had his price raised by an extreme fluctuation in the cost of his raw material. He can not follow this fluctuation down as rapidly as it occurs in the raw material because he must protect himself against the possibility of a wide upward swing in the cost of this same material, because the market for it is unprotected, and with bankruptcy in the industry, there is bound to be a flat level of nonproduction which will send prices shooting upward.

Having prepared this [indicating] for the record I will submit it to the committee before the hearings have ended.

The objection has already been brought before the committee and will be brought before the committee with regard to certain minerals during the period of the war which were stimulated and encouraged

in an attempt to secure a supply to meet our domestic needs, exclusive of foreign competition. The ratio of the consumption of domestic and the consumption of foreign minerals as shown here will range from 50 to 75 per cent under the tariff for which we are asking. Had these mineral industries had a protection sufficient to insure their continued existence, all of this activity which was stirred up without any definite promises of any kind of stable conditions would have been unnecessary, for the industry would have already been in existence on a stable basis.

The representatives of the different branches of the industry will appear before you to ask, however, that the need for protection be recognized the protection to stabilize the market to the point shown on this small chart [indicating].

They are not asking for protection to relieve themselves of the present situation, which is brought about distinctly by a collapsed business condition. They are asking for protection under what you would normally expect would revive the industry, and under more normal conditions in the world's business.

When any American mining industry buys its machinery, its equipment, its supplies, and its labor in a protected market it should be permitted to sell its minerals, which are its product, in a protected market.

The American Mining Congress on behalf of these industries asks then that they be given such measure of protection as will enable them to employ American workmen at an American scale of wages based on an American standard of living in the operation of an American industry.

JONES & LAUGHLIN STEEL Co.,
Pittsburgh, January 25, 1921.

DEAR SIR: With the thought of assisting your honorable committee in arriving at a conclusion as to the protective-tariff requirements of the steel industry and the manufacturing, commercial, and agricultural industries of the country in general, we take the liberty of inclosing excerpts from two letters recently received by us from abroad.

Trusting the inclosures may be of interest to you and offering any assistance we may be able to give in supplying other information,

W. T. MOSSMAN, Advertising Manager.

[Excerpt from letter of Gustave Cornelius, iron and steel broker, Stockholm, Sweden.]

The German mark is not likely to rise in value at least within the next two or three years. Germany will require to import millions of tons of foodstuffs, whereas its general exports will be limited owing to scarcity of coal. According to the Spa protocol Germany should deliver to the Allies 1,600,000 tons of coal a month, to be allotted as follows: France 52 per cent, Great Britain 22 per cent, Italy 10 per cent. Belgium 8 per cent, and Japan and Portugal each three-quarters of 1 per cent, the remaining 6 per cent to be divided among Serbia, Rumania and Poland, this in preference to German domestic consumption, which will suffer accordingly.

Since the protocol was signed in the middle of last July it is reported this coal has been coming forward with consistent regularity. Germany will be able to successively increase the output of coal notwithstanding the tonnage scheduled for delivery to the Allies; thus in a couple of years bringing the output up sufficiently to furnish the home industries with an amount equivalent to the tonnage consumed before the war. Then the world might begin to discount the approaching higher value of the German mark.

Germany will require to pay heavy sums yearly to the entente, therefore enormous taxes in the country are to be expected with no development of in

land trade and consumption; therefore emigration to follow and finally Germany will have to concentrate its whole industrial power on export, but not as previously; also to develop the inland market. With the population decreasing no buildings will be erected; likewise no more railways will be required. Taking all in all Germany, for years to come, will have to work for other countries, selling cheap, consequently as coal is the basis for the industries and export, Germany will have to calculate a far lower price for its own coal than other countries, thus German coal has year by year to pay off the war debts of the country.

The idea has been suggested that if Germany can keep, notwithstanding the high taxes, the necessary number of workmen to supply the steel industries in time of peace, it will have millions of tons of steel for export, as its own consumption will only be a small part of what it formerly was.

[Excerpt from letter of Joseph Ward, general manager Hall & Pickles, Manchester, England, à large iron and steel jobbing house.]

The year 1920 has certainly been an exceptional one as far as we have been concerned here, and I believe in all parts of the globe. We commenced full of hope, more or less justified, which gradually, as the months wore on, turned toward fear, and finally finished in more or less failure to achieve our desires. Business over here is decidedly bad, so bad in fact that it could hardly be worse. We are faced with Belgian, German, and French steel landed in our city at 50 per cent below British prices and probably 60 per cent below American, with demoralizing results, and making would-be buyers more diffident than

ever.

This situation is, of course, entirely caused by the demoralized rates of exchange on London as regards other parts of Europe; theoretically on normal parity Germany is getting 12 times the value of her goods and France and Belgium at least twice. On your side the situation is reversed, your dollars being so high in value as to make European sales almost impossible, and the Belgian, German, and French steel is of very high-class quality and their goods can be landed here within four weeks of placing the order. I have seen and had tested quite a lot of it recently, and it is quite up to the British standard. Only the other day I saw a quota for cold rolled steel at 50 per cent below your present quotation (German make). Apparently the plethora of the world's gold is not altogether a blessing to Uncle Sam.

Even on an even quotation the United States maker would be hard put today to get business in Britain against Belgium with their quick shipments. Of course the foregoing remarks apply chiefly to hot-rolled steel.

WASHINGTON, January 28, 1921.

MY DEAR MR. FORDNEY: I am inclosing a memorial from the State legislature to Congress asking for a tariff on ores, metals, and their products which in any manner come into competition with like ores, metals, and their products produced in the United States.

I will be pleased to have your committee consider this item.

[House Joint Memorial No. 3.]

GUY U. HARDY.

To the SENATE AND HOUSE OF REPRESENTATIVES OF THE UNITED STATES IN CONGRESS ASSEMBLED:

Your memorialists, the General Assembly of the State of Colorado, respectfully represent:

That the mining industry throughout the United States is at low ebb, production curtailed and market prices depressed, much of which is attributable to the practically unrestricted importation of metals produced in foreign countries: Therefore, your memorialists respe tfully urge the speedy passage of an act of Congress fixing a tariff upon the importation of all ores, metals, and their products which in any manner come into competition with like ore, metals, and their products produced in the United States.

It is directed that copies of this memorial be transmitted to the President of the Senate, the Speaker of the House of Representatives, the chairman of the Committee on Mines and Mining in each of the Houses of Congress, and to the Members representing the State of Colorado in the United States Congress. DENVER, COLO., January 10, 1921.

CRUCIBLE STEEL.

[Paragraphs 102, 105, 106, 109, 110, 113, 114, 117, 121, and 127.]

JOHN A. MATHEWS, PRESIDENT OF THE CRUCIBLE STEEL CO. OF AMERICA, PITTSBURGH, PA.

Mr. MATHEWs. John A. Mathews, president of the Crucible Steel Co. of America, Pittsburgh, Pa.

I represent not only the Crucible Steel Co. of America, but also other manufacturers of crucible fine steels, of which there are some 30 or 40 individual plants in the country, with an invested capital of probably $250,000,000, and employing 30,000 to 40,000 men.

Mr. YOUNG. What paragraph of the law is that dutiable under? Mr. MATHEWS. Paragraphs 102 to 142 generally, and specifically paragraphs 102, 105, 106, 109, 110, 113, 114, 117, 121, and 127.

The special point I desire to make before the committee is the distinction between our industry, the crucible steel industry, and the manufacture of heavy steel.

That distinction is not made in the previous tariff classifications, with the result that crucible steel is classed under the same paragraphs, and pays the same rate of duty, and has the same protection as the heavy tonnage steels. In crucible steel the principle item of cost is represented by labor rather than by the material.

The result of that classification is that the fine steel industry, which requires the most skilled labor, from three to four times the invested capital per ton of product, and the least output per man in the industry, has suffered almost the entire burden of imports. Since the armistice approximately 12 per cent by weight of the total steels imported affected our part of the industry and represented 60 per cent by value and paid 70 per cent of the total duties collected under the paragraphs of the iron and steel section.

So you see that almost the entire burden of the importation is directed against that portion of the industry where the labor investment is high, where the capital investment is high, and where the output per man per month is approximately 1 ton of steel. I have had reports from a great many different plants, and the average product is just about that much.

Mr. HAWLEY. About what proportion of the cost of your product is the wage cost?

Mr. MATHEWS. That varies a great deal. It will vary from 15 per cent labor and 85 per cent for raw materials to 85 per cent labor, with 15 per cent for raw materials. The latter condition arises when the material is taken down to small sizes, such as needle wire.

Under the present tariff these distinctions are not as well made as we would like to see them, and we are suggesting in the brief which I will leave with you some proposed revision in the wording of the present tariff bill which we hope will make the distinctions clear in the future.

Mr. LONGWORTH. All of those steels are high-speed steels?

Mr. MATHEWS. No; the high-speed steels are small in amount, although relatively high in value; but there are very many crucible steel plants in the country which produce high-speed steel along with other products. The tonnage is a very small item.