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Company, which controlled from 65 per cent. to at times even as high as 95 per cent. of the output of wire nails, was formed. Moreover, at the beginning of 1899 there came a very strong and rapidly increasing demand for steel products of all kinds. The price of steel billets and pig iron as the raw material and the price of all kinds of steel manufactures rose very rapidly in consequence. Even then it was not possible for manufacturers to meet fully the demand. It will be noted that the margin of profit on steel nails increased also readily,' although not quite so rapidly as did the price of steel billets. Besides the increase in profit which doubtless was made by the American Steel and Wire Company, there was also an increase in the cost of production of nails that explains part of this increase in the margin. First, there had been a decided increase in the wages of laborers engaged in the manufacture of wire and wire nails. From testimony given before the Industrial Commission, this increase in wages among workers in this class was greater than that among the laborers engaged in the manufacture of steel billets, so that this would normally bring about more increase in the margin.

Another reason for the increase in the margin is the additional cost of waste. There is always, of course, a considerable waste in turning the raw material, steel billets, into wire and wire nails. If, for example, the loss were 5 per cent. in the case of steel valued at $15 a ton, it would amount to 75 cents; whereas, if steel were $30 a ton, the loss would be $1.50. During this period of increased prices steel more than doubled in price. In consequence, with the same profits, the margin should

have increased quite noticeably. On the whole, however, both from the chart and from outside testimony, there can be no doubt that the wire company decidedly increased its profits during this period of the rise in price.

In October, 1899, occurred a fall in the price of steel billets; but, while the price of nails was put down a little, shortly afterward another increase followed, so that during the early part of 1900 the profits again increased.

It is fair to say that, even without any combination on the part of the manufacturers, there would in all probability have been a decided increase not merely in the price of the finished product, but also in the margin between the crude and the finished product, on account of the enormous demand. The testimony seemed to be uniform that none of the manufacturers in any of these finished products of steel were able to meet the demand. It seems likely, however, that the combination was able to take rather better advantage of the opportunity than the individual manufacturers could have done.

While the chart represents the general market conditions as they were furnished to the Iron Age, it is probable that they do not represent with entire accuracy the actual conditions in the steel trade. Each manufacturer made his sales independently, and these sales were frequently made by contracts extending over a period of some months. In the case of some contracts, such as those for rails or beams, the period was sometimes as long as from one to two years. In consequence of that business custom, the majority of the manufacturers of steel might well have been fur

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nishing their output on a contract price fixed six months before, while a few manufacturers making late sales might have been obtaining a price 50 per cent. higher. On the other hand, during the first half of the year 1899 probably the market prices were considerably higher than those actually realized by the manufacturers. When the sharp fall in prices came, early in 1900, of course the situation was reversed, and some manufacturers were delivering output at a price decidedly above that quoted in the market. Taking all of these circumstances into account, it seems nevertheless true that the chart throughout represents fairly well the changing conditions of business during the period covered.

The very high prices of 1899 led to the usual result. The very great demand followed by the high prices gradually slackened, while the production continued until there were large stocks in many instances on the market. The awakening to the new situation came very suddenly. In April the chairman of the American Steel and Wire Co. suddenly ordered a shutdown of a number of mills of that company, and, in addition to that, gave expression to a number of pessimistic opinions regarding the state of the steel trade, saying that he thought the trade was in a very dangerous condition. Naturally, sharp declines in prices followed not merely in nails, but in smooth wire, barb wire, and in all other lines of products. The declines were followed promptly by others, and yet there was a decided stagnation in the market. The decline in steel billets, that had begun in the latter part of 1899, continued through most of the year 1900. The large profits shown in wire nails declined promptly; but, as the price of steel billets continued to go down after

the fall in the price of nails was checked, the margin rose again and continued high until the increasing price of steel billets in 1901 and 1902 brought the margin back again to about the position where it had been after the breaking of the nail pool in 1896, and before the formation of the steel and wire company in 1899. With more or less fluctuations, the margin has remained through the changing prices of steel billets and nails much the same from 1902 and 1903 until the outbreak of the European war, with a tendency toward a slow decline. After that came a large increase in the margin.

The Carnegie Company was organized in 1900, and its new organization was followed in the early part of 1901 by the organization of the United States Steel Corporation, an organization which took over not only the Carnegie Company and the American Steel and Wire Company, but also a number of other leading manufacturers of finished steel of various kinds. The policy of the United States Steel Corporation appears in the prices not merely of steel nails, but perhaps even in a more striking way, as is shown on the chart, in the prices of barb wire and smooth wire. It will be noted that the prices of both barb wire (line A) and smooth wire (line B), the second line beginning only. in 1895, have since 1895 followed very steadily the price of steel billets. Before that date the price of barb wire, as in the case of wire nails, was falling more rapidly than that of steel billets. In very many cases the fluctuations seem to go almost regularly with the price of the billets. Since the organization of the Steel and Wire Company, in 1899, followed by that of the Car

negie Company and then that of the United States Steel Corporation, there comes a decided change in the appearance of these lines on the chart. It will be noted that the price once established is likely to be maintained for a period of some months without any change; that there comes then a change, either up or down, and the price is again maintained in some instances for nearly two years. Although these prices correspond in a general way to the prices of steel billets, those prices vary almost from month to month, while the prices of these finished products change much less often, giving a marked steadiness of prices.

It will be seen that the price of neither smooth wire nor of barb wire followed regularly the price of wire nails at the time of the wire nail pool, in 1895-1896, although there was a sudden increase in the price of barb wire, followed by an immediate decline.

Through the ownership of patents, the American Steel and Wire Company, now owned by the United States Steel Corporation, has a legal monopoly in barb wire, quite regardless of any effect of combination so that we should expect a wide margin between the price of steel billets and of barb wire. It is possible that this margin, which is so much wider than that between the billets and either smooth wire or wire nails, is due in part to an increased cost of manufacture; but it is probably due also to this legal monopoly, coming from the ownership of the different patents. Although the difference between the price of barb wire and of steel billets increased very rapidly during 1899 and the earlier part of 1900, its increase was not much more rapid than that in the price of wire nails and of smooth wire. There can

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