Mr. LONGWORTH. What was the effect of the various stimulating war measures Congress passed during the war to stimulate the production of the various alloys, what was the effect on prices?

Mr. MATHEWS. Well, naturally the price of the product advanced like other things.

Mr. LONGWORTH. I do not mean the price of the finished product; I mean the price of alloys.

Mr. MATHEWS. Well, the price of the alloys advanced. We were required to import the ferro alloys. We also imported the ores, and the price of the ores reached a very high value, but has receded now to somewhere near what we may call normal.

Mr. GREEN. You say that they are getting somewhere near normal?
Mr. MATHEWS. Not exactly normal, but they have come down.
Mr. GREEN. What alloys are used the most?

Mr. MATHEWS. The principal ones, I suppose, are tungsten, vanadium, chromium, nickel, and molybdenum to some extent, and there are a great many more of them.

Mr. GREEN. The use of molybdenum is growing?

Mr. MATHEWs. Yes; it is used for steels such as go into aeroplanes and automobiles.

Mr. GREEN. It is more valuable for toughening and hardening? Mr. MATHEWs. Yes; it is valuable as a hardener, but its field has been pretty well located, and it is used in the structural types, the structural steels.

Mr. HAWLEY. It adds to the tensile strength?

Mr. MATHEWs. Tensile strength, and it toughens too. It seems to make a desirable steel where there is great shock imposed upon the product.

Mr. GREEN. Tungsten is used for high speed steel?

Mr. MATHEWs. Yes, sir. It is valuable also and is used in lower percentages in other grades of steel, and in permanent magnet steel. Tungsten metal also has some other applications.

Mr. GREEN. You are aware, I suppose, that some parties have been appearing before us asking for additional tariff on tungsten and ferromanganese, and chrome, and those other metals, a supply of which we did not have in this country?

Mr. MATHEWS. But we do not have our own supply.

Mr. GREEN. If now they have an additional tariff put on those alloys, I suppose you will want a compensating tariff added?

Mr. MATHEWS. I assume that will be necessary; yes, sir.

Mr. GREEN. Is the cost of these alloys sufficient to make any great difference in the cost of the finished product in which they are used? Mr. MATHEWS. Well, that varies a great deal. It depends upon the product, but with the high-speed steels those alloys enter into it as one of the chief elements of cost.

Mr. GREEN. One of the chief costs?

Mr. MATHEWS. Yes.

Mr. TILSON. The quantity at the present time is abundant?
Mr. MATHEWS. Yes.

Mr. TILSON. They are easy to secure?

Mr. MATHEWS. Very easy to secure. As a matter of fact, they are a drug on the market since the close of the war.

Mr. TILSON. How large a percentage of the total cost of tool steel is the tungsten which goes into it?

Mr. MATHEWS. I do not know; I can not give you that.
Mr. TILSON. Roughly, can you give us an idea?

Mr. MATHEWS. I should say 25 to 30 per cent.

Mr. TILSON. Of the total cost of the steel?

Mr. MATHEWS. I should say that that is approximately what it is; I would have to verify that.

Mr. OLDFIELD. What proportion of your product is manganese?

Mr. MATHEWS. Manganese is used to a certain extent in all steels. It is not one of the elements of the greatest cost in any steel excepting what is known as commercial manganese steel.

Mr. GARNER. What foreign countries are your principal competitors?

Mr. MATHEWS. England has been in the past; England, Sweden, Germany, and Austria. We do not know what we may expect from France now that they possess ores.

Mr. GARNER. Are you making any suggestions in your brief as to what you contemplate will be the countries which you should be protected against?

Mr. MATHEWS. All of those four countries.

Mr. HAWLEY. Have you any competition from Japan?

Mr. MATHEWS. I have not heard of any in the eastern part of the United States; I think possibly there is a little bit in the West; not as much on the high-grade steels as on the common steels.

Mr. OLDFIELD. How much of an increase in the rates are you asking?

Mr. MATHEWS. With regard to that point, we have a series of rates proposed, varying with the classification of the products and the amount of labor involved. In the production of, say, 1-inch round merchant bar of open hearth steel, starting from pig iron, from 20 to 25 per cent of the cost represents labor and from 80 to 75 per cent of the cost represents materials. In the cost of a 1-inch round bar of crucible-tool steel 60 to 65 per cent goes to labor, exclusive of selling and administrative expense, while if this same material were still further reduced to the form of fine wire, such as needle wire or small sizes of drill rods, labor would get from 85 to 90 per cent of the cost. Mr. GREEN. You are able to furnish just as good a product as can be obtained anywhere in the world?

Mr. MATHEWS. We think we do. We have the capacity and equipment and the skill to make any kind of high-grade steel.

Mr. HAWLEY. The test of Mr. Green's question would be the use. Do the American users buy yours as readily as they do the foreign product?

Mr. MATHEWS. They will on equal prices.

Mr. TILSON. Did you have any difficulty in getting tungsten during the war to make these steels?

Mr. MATHEWS. Yes; there was a great shortage, and we could not get it fast enough because the ships were not available, and there was not enough produced in this country.

Mr. TILSON. Do you know where the present supply comes from? Mr. MATHEWS. China: just prior to the war I believe India was the principal source. That source was taken over by the English Government during the war.

Mr. TILSON. Your supplies in this country increased during the war?

Mr. MATHEWS. Decreased.

Mr. TILSON. From what part of the country does the principal supply come from, the domestic supply?

Mr. MATHEWS. Why, I suppose Colorado has been the principal

source.

Mr. TILSON. Do you know whether or not that supply is increasing in the West?

Mr. MATHEWS. I understand that they are producing none at all at present, but they do produce it.

Mr. HULL. I understood you to say that you wanted protection against England, France, Germany, Austria, and what other country?

Mr. MATHEWS. Sweden.

Mr. RAINEY. Have you noticed in the morning papers the collapse of Austria, and is going to turn over the government to the reparation committee?

Mr. MATHEWs. Yes: I saw the headlines. I did not read the article. Mr. GARNER. You are still afraid of Austria in view of that fact? Mr. HULL. I just want to call your attention to the report that Austria, as a State, has collapsed financially, industrially, commercially, and politically, and still you are afraid of Austrian competition?

Mr. MATHEWS. Well, when those conditions pass away, and they are able to straighten out their home affairs, they will probably assume their former place commercially.

Mr. GREEN. I think that part of Austria is a different part, a different territory, and is under a different government from what was known as the Austrian Government. The present Austrian Government only comprises a small portion of what was formerly Austrian territory.

Mr. RAINEY. Let's find out where it comes from.

Mr. MATHEWS. They come from down the valley of the Danube. I do not know from just what points.

Mr. TIMBERLAKE. I would like to ask a question. I understood you to say, Mr. Mathews, in reply to a question, that the supply of tungsten had decreased in this country during the war. Did you intend to make that statement?

Mr. MATHEWS. I believe that it did not decrease absolutely, but relative to consumption. I do not think that, relative to consumption, there was as much produced in this country as was consumed during the war when prices were so high.

Mr. TIMBERLAKE. You do not have any definite information, though?

Mr. MATHEWS. I only have what we imported and what was consumed of tungsten ore in our plants. From 1900 to 1915 we used over 50 per cent domestic ores, and in 1916, 1917, and 1918 we used about 75 per cent foreign and only 25 per cent domestic ore during those three years.

Mr. TIMBERLAKE. I simply understood you to make the statement that the supply had decreased. I do not know how about the proportion.

Mr. MATHEWS. Proportionately, but not absolutely.

Mr. TIMBERLAKE. They were producing in this country at the beginning of the war about 2,000 tons, whereas at the close of the war they were producing about 6,000 tons?

Mr. MATHEWS. Yes: the absolute supply was increased, but proportionately I think they did not keep up with the demand for the country's requirements.

Mr. OLDFIELD. Have you decreased your wages any?

Mr. MATHEWS. We have not done so as yet.

Mr. OLDFIELD. Are you going to in the immediate future?
Mr. MATHEWS. Well, that is a hard thing to answer.

Mr. OLDFIELD. Have you considered the matter?

Mr. MATHEWS. No.

Mr. GARNER. Are you giving the figures in your brief that will show the ratios? Do you show the amount of consumption in this country and the amount of importation?

Mr. MATHEWs. I have not shown the importation.

Mr. GARNER. We will not know anything about it unless we know something about the consumption; we can not get the ratio unless we can find out how much the consumption is in this country and how much the importation is.

Mr. MATHEWS. I do not know just how to express what I have in mind. The consumption, even taking the present importation, applies against our industry rather than against the rest of the steel industry. There is a greater proportion of crucible steel and fine steel imported. I do not have the figures to make the comparison.

Mr. GARNER. Well, we had gentlemen here yesterday representing pottery clay, and they made a statement in regard to the importations and showed where the importations were almost 101 per cent. Each one told us that they were coming in, but they did not give us any real suggestions. I am just wondering what proportion of the consumption is imported into this country from foreign countries.

BRIEF OF THE CRUCIBLE STEEL CO. OF AMERICA, PITTSBURGH, PA.

The portion of the steel industry of the country known as the crucible steel or fine steel industry represents about one-half of 1 per cent of the tonnage and possibly 2 per cent of the value of the entire industry, yet it is this small portion of the business that is seriously affected by imports from various European countries, and, ,in fact, in the two years since the signing of the armistice some 12 per cent by weight of the imports of crucible steel, tool steel, and specialties represented 61 per cent of the total value of the imports and paid 70 per cent of the total duties collected under the present tariff. The reason why this relatively small industry is so seriously affected by imports is that the products which it makes are those involving the expenditure of the highest amount of labor, the use of expensive raw materials and alloys, and also the investment of a much higher capital per ton of output than is required in the manufacture of soft or commercial steels. On the other hand, the heavy steel industry of the country, in which the ratio of labor to raw materials is much lower, and depending upon the cheap and abundant raw materials of the country, is not only able to hold its own against foreign competition, but is also able to engage in a very extensive export business, while the crucible or fine steel trade is practically excluded from any possibility of large exportation to Europe or other countries. This inequality between the different branches of the steel industry arises from the fact that no attempt at scientific or logical classification of steel products is made in the paragraphs of the tariff bill, and to remedy this defect so that no injustice may be done any portion of the industry it is necessary to give serious attention to the wording of the paragraphs so that those articles representing a very small investment of labor shall be distin

guished, for tariff purposes, from those in connection with which the labor item is very great.

The crucible or fine steel industry is essentially a handcraft industry. A large amount of skilled labor is employed, while in the tonnage industry the output is the result of a relatively small amount of skilled labor operating highly specialized machinery.

There are in this country nearly 40 individual plants engaged in the manufacture of crucible or fine steels. Some of these plants also use the electric furnace process, and some use both crucible and electric. In other instances open-hearth products are subjected to processes in finishing which entail the use of high-grade skilled labor coupled with low production. These specialty products of fine steel, as has been said, represent a small tonnage, a high initial investment, and the employment of much labor. The output per man per month in this industry may be considered as not over 1 ton. In the tonnage industry the production per man per month would be from 25 to 35 times as much.

In order to assist the Ways and Means Committee in the preparation of a new and more equitable tariff act we will submit later in this brief some proposed changes which would tend to differentiate the fine stee' products from the tonnage steel products, hoping that they will be given protection somewhere nearly in proportion to the amount of skilled labor involved.

Under the tariff act of 1909 the crucible steel industry was not as well protected as was the cheap or tonnage steel trade. Taking an import price of 4 cents per pound as the dividing line between the two trades, we find from customhouse records that steels valued below 4 cents per pound were subject to from 30 per cent to 35 per cent duty, while steel valued at over 4 cents per pound were subject to only 20 per cent duty. That this was unfair to the crucible or fine steel industry was apparently conceded by the committee which prepared the tariff act of October 3, 1913, for, while general cuts were made in all lines, an attempt was made to better the classification of steel products as contained in the act of 1909, with the result that the committee decided upon a 10 per cent ad valorem duty upon the tonnage steels and a 15 per cent ad valorem duty upon products representing greater refinement and greater expenditure in labor and materials.

It is difficult to give the amount of investment in the crucible or fine steel industry because of the fact that many of these plants represent departments of large mills making tonnage steels, and relatively few of them are entirely and exclusively devoted to the production of high-grade steels. We would estimate, however, not less than $250,000,000 of invested capital. We may also state that the country possesses ample capacity, equipment, and skill to take care of all of its requirements for high-grade steels and specialties. There are employed from 30,000 to 40,000 men in our branch of the industry. Since the signing of the armistice some six or eight companies have either failed or totally discontinued operations.

The special reasons we would advance for a reclassification of steel products which would distinguish between those of the fine steel industry and those of the tonnage steel industry are as follows:

1. The proportion of labor to raw materials is many times as great in manufacturing crucible steel as it is in the manufacture of open-hearth or Bessemer steel. We may illustrate this condition as follows:

In the production of pig iron about 6 per cent of the cost goes to direct labor.

In the production of, say, 1 inch round merchant bar of open-hearth steel, starting from pig iron, from 20 to 25 per cent of the cost represents labor and from 80 to 75 per cent of the cost represents materials.

In the cost of a 1 inch round bar of crucible tool steel 60 to 65 per cent goes to labor, exclusive of selling and administrative expense, while if this same material were still further reduced to the form of fine wire, such as needle wire or small sizes of drill rods, labor would get from 85 to 90 per cent of the cost.

2. The capital invested in the crucible steel business is from five to six times as great per ton of product as is necessary for mills making merchant bars, structural steels, or rails.-The investment in the latter, depending upon the nature of the plant and equipment, might run from $32.50 to $75 per ton of output, while in plants making tool and high-grade steels exclusively this investment is customarily from $300 to $400 per ton.