Mr. GATES. It had no bonded debt. I think it had about four

million capital issued.

The CHAIRMAN. Did it acquire other properties?

Mr. GATES. Yes; we were young and ambitious, and as fast as we got a little money we bought another property.

The CHAIRMAN. What other property?

Mr. GATES. Forty or fifty, I should say, one by one, beginning with the Washburn Wire Co., in Worcester, Mass., and extending to San Francisco.

The CHAIRMAN. After the acquiring of these properties

Mr. GATES. They were not necessarily acquired by the Consolidated. Most of them were acquired by I. L. Elwood, recently deceased, and myself; but they were amalgamated eventually into the American Steel & Wire Co.

The CHAIRMAN. There was another organization called the Consolidated

Mr. GATES. Consolidated Steel & Wire.

The CHAIRMAN. Of Illinois?

Mr. GATES. That was 20 years ago. The first wire corporation I was interested in was the Southern Wire Co., about 1880, in St. Louis. Then we acquired the St. Louis Wire Mill Co., and we built a concern near Pittsburg called the Braddock Wire Co. We operated those concerns separately in the early eighties. Later on we acquired a controlling interest in the Lambert & Sheffield Wire Fence Co., of Joliet, Ill., and one or two other companies, and then we formed the Consolidated Steel & Wire Co. of Illinois.

The CHAIRMAN. What was the value of that property?

Mr. GATES. What date-the date of its incorporation or the date of its amalgamation?

The CHAIRMAN. Say, November, 1897?

Mr. GATES. It had been out of business for years.

The CHAIRMAN. Was there ever an option given to Mr. Tenbroeck

on that property?

Mr. GATES. No. He claimed there was, but he was never able to show it.

The CHAIRMAN. What time was that?

Mr. GATES. 1896 or 1897-along there.

The CHAIRMAN. Do you know the value of the property then?
Mr. GATES. Of the Consolidated?

The CHAIRMAN. Yes.

Mr. GATES. I have no idea.

The CHAIRMAN. Do you know about the cost of these properties? Mr. GATES. Do you mean the initial cost or the cost as of the date of the turning over to the American Steel & Wire?

The CHAIRMAN. The date of the consolidation of the companiesabout 1898.

Mr. YOUNG. The consolidation of the American Steel & Wire? Mr. GATES. The Consolidated Steel & Wire Co. went into the American Steel & Wire Co. of Illinois at about $200 a share; perhaps a little less. The American Steel & Wire Co. of Illinois was merged into the American Steel & Wire Co. of New Jersey, which took over all the companies. Those companies in the meantime were generally purchased by Mr. Elwood and myself for cash and turned in at what we paid for them. We never attempted to make a dollar out of any purchase, directly or indirectly.

The CHAIRMAN. The A nerican Steel & Wire Co. was capitalized at what?

Mr. GATES. Forty million preferred and fifty million common.
Mr. YOUNG. That is the New Jersey Co. ?

Mr. GATES. The New Jersey Co.; all issued.

The CHAIRMAN. Was this company, at the time of its first consolidation, capitalized at $24,000,000?

Mr. GATES. That was the American Steel & Wire Co. of Illinois, which was afterwards turned into the American Steel & Wire Co. of New Jersey.

The CHAIRMAN. What properties were acquired between the time of its capitalization at twenty-four millions and the time of its capitalization at seventy-five millions?

Mr. GATES. It was capitalized at ninety millions. The Washburn Manufacturing Co., of Worcester, Mass.; the Worcester Wire Co.; the Cleveland Wiring Mill Co.; the American Wire Co., of Cleveland; the R. B. Nail Co.; the Cincinnati Barb Wire Fence Co.; Oliver's concern, the Oliver Wire Co.-I can not remember them all; there are a great many of them.

The CHAIRMAN. Speaking approximately, do you remember what was the average price of barb wire, the kind used by the farmers as fencing, for the three years preceding the formation of the Consolidated Co.?

Mr. GATES. I can not keep those prices in my head. I started selling barb wire in 1874 at 20 cents a pound. We sold the same class of wire later at 1.7 cents per 100. There is the price, between $400 a ton and $34.

The CHAIRMAN. What is barb wire selling at now?

Mr. GATES. I do not know.

The CHAIRMAN. Such as is used for fencing?

Mr. GATES. I do not know. I have not asked a price on it. I should say it was 2 or 3 cents a pound, but that is just a guess.

The CHAIRMAN. Do you know the cost per ton of producing this wire, such as is used for fencing?

Mr. GATES. No; I could not tell you closely. I should say there was 10 or 15 per cent profit.

The CHAIRMAN. What was the effect on the price of wire nails and the other products in the American Steel & Wire Co.? Was there any variation in price after its formation.immediately succeeding the formation of the American Steel & Wire Co., just prior to its sale to the United States Steel Corporation?

Mr. GATES. I do not believe there was much change. We tried to run the mills we could operate the most economically and shut down those that were the most expensive, and I do not think we particularly advanced the price. That is my recollection.

The CHAIRMAN. How many did you shut down, Mr. Gates; do you know?

Mr. GATES. Probably we had 50 and shut down 20-dismantled them.

Mr. BARTLETT. How many?

Mr. GATES. Two-fifths of the properties were probably dismantled-shut down and eventually dismantled, or concentrated. The machinery has been moved to our other plants; the machinery was not wasted.

Mr. BARTLETT. That is the usual way when you concentrate business into one central company?

Mr. GATES. That is the sensible way.

Mr. BARTLETT. Not only to shut down, but to dismantle?

Mr. GATES. Dismantle; yes. One superintendent does the work whether you are making 100 tons or 300 or 500.

Mr. BARTLETT. That, of course, lessens the number of employees? Mr. GATES. Not necessarily.

Mr. BARTLETT. What becomes of the employees who were engaged in the plants that were dismantled.

Mr. GATES. They follow the men in charge; they go where the machinery goes.

Mr. BARTLETT. All the employees? There is no change in the number?

Mr. GATES. You may have 4,000 men in the five plants. and you may work only 3,700. It is not a material saving.

five plants and you may be working You settle them in one central plant, You may save 300 men out of 4,000.

Mr. BARTLETT. Were these plants situated any considerable distance from the Consolidated plant?

Mr. GATES. One might be in San Francisco and another in Portland, Me. We might agree to settle back in Pittsburg.

Mr. BARTLETT. Where was the new Consolidated plant located? Mr. GATES. The corporations have, I suppose, 20 plants now.

Mr. BARTLETT. Those employees in Boston or in California, when the plants were dismantled, did not follow up and get employment at these Consolidated plants?

Mr. GATES. About 90 per cent. Not all of them, but it is safe to say that about 90 per cent of the wireworkers would follow the plants the skilled men. We had a plant at Everett, Wash., just out of Seattle; we dismantled that plant and I think moved it to Pittsburg.

Mr. BARTLETT. There is really a loss, so far as the employment of labor is concerned, of only about 10 per cent by this consolidation? Mr. GATES. Yes; very small.

The CHAIRMAN. What was the approximate cost per ton for barbed wire such as is used for fencing in 1900, do you know? I do not ask to the cent, but approximately.

Mr. GATES. You are asking me an impossible question.

The CHAIRMAN. Do you know what it is now, or what it was in 1910?

Mr. GATES. The cost of production?

The CHAIRMAN. The cost of producing such as the ordinary wire that is used for fencing?

Mr. GATES. I answered that by saying that I thought they were making to-day probably 10 or 15 per cent on their output. If you get their selling price and take 10 or 15 per cent off of that, you will get about their cost price.

The CHAIRMAN. Do you mean the output of fencing wire?

Mr. GATES. On the average line. Some articles pay more than others. They will get $3,000 a ton for watch-spring wire, but would get very much less for common wire.

The CHAIRMAN. I am speaking of ordinary fence wire.

Mr. GATES. Have you ever had any experience in manufacturing?

The CHAIRMAN. Not of barb wires.

Mr. GATES. Do you realize how impossible it is to figure out what any one specific article cost when you are making 1,000? We might have, as an illustration, 1,000 nail machines in a mill. We might be making escutcheon pins out of No. 32 or No. 33 wire, three-sixteenths of an inch in length, and they might cost 10 cents a pound. We might be making a boat spike on the next machine, which would be of No. 2 or No. 3 or No. 4 wrought wire, 20 inches long, which would not cost a cent. If you come and ask me what it costs to make escutcheon pins, I have to get out a tabulated statement running over a term of months. The same is true of the different kinds of barb wire, the different kinds of plain wire. We go on an over-all proposition. The manufacturer tries to earn from 10 to 15 per cent on the output. Sometimes he sells it at 2 or 3 per cent; he may occasionally sell it at a loss.

The CHAIRMAN. I am speaking now of this ordinary woven wire. Mr. GATES. You were talking about fence wire a moment ago. Woven wire, I think, pays 30 or 40 or 50 per cent, galvanized field fence wire.

Mr. McGILLICUDDY. Why so large a profit in that line of wiring in comparison with the other?

Mr. GATES. It is supposed to be covered by patents, and each fellow claims he has a patent that is good and the other fellow's are bad, and he threatens every other fellow with a suit for infringement, and gets an extra price for doing it.

Mr. McGILLICUDDY. What percentage of the iron ore of this country is owned or controlled by the United States Steel Corporation? Mr. GATES. I could not tell you.

The CHAIRMAN. What was the basis of exchange of stocks between the American Steel & Wire Co. and those of the United States Steel Corporation at the time the corporation took over the American Steel & Wire Co.!

Mr. GATES. I am ashamed to tell you.

The CHAIRMAN. Overcome your modesty.

Mr. GATES. It is a matter of record; you may easily find it.

The CHAIRMAN. It is stated that the twelve million of the preferred American Steel & Wire

Mr. GATES. We had forty million.

The CHAIRMAN (continuing). For twelve million of your preferred stock you got twelve, and seven million two hundred thousand of the common stock; for the twelve million of the common stock you got fourteen million four hundred thousand of common stock, or a total of $33,600,000.

Mr. GATES. Mr. Stanley, as a matter of fact, I think we got $46,800,000 of United States Steel preferred for the $40,000,000 of Steel Wire preferred, and between fifty and sixty million of common, perhaps a little over sixty, for the fifty million common, two or three times as much as that states. And yet the Steel & Wire Co. went into the United States Steel Corporation at a comparatively lower figure than any other concern.

The CHAIRMAN. What percentage of the business did the American Steel & Wire Co. own at the time it was acquired by the United States Steel Corporation?

Mr. GATES. Of the wire and nail business?

The CHAIRMAN. Yes.

Mr. GATES. Wire and its products?

The CHAIRMAN. Yes.

Mr. GATES. I should think we owned 75 to 85 per cent.

The CHAIRMAN. Did the United States Steel Corporation acquire any other properties producing similar products to yours at the time it acquired your property?

Mr. Gares. They acquired later the Union Steel Co., of Pittsburg, which was owned by Mr. Frick and the Mellens, largely, as I understood, I think $45,000,000. That was a wire plant.

Mr. YOUNG. Was that later than the organization of yours?
Mr. GATES. Yes; several years later.

The CHAIRMAN. What percentage of the business did they do at the time they were acquired?

Mr. GATES. Not very much.

The CHAIRMAN. Five or ten per cent; as much as that?

Mr. GATES. I would not care to hazard a guess, because I was never at the mill.

The CHAIRMAN. Do you know of any other properties they acquired producing similar products to yours?

Mr. GATES. I do not remember of any others.

The CHAIRMAN. The United States Steel Corporation was really formed by the merging of nine separate concerns, was it not, Mr. Gates?

Mr. GATES. I do not remember whether there were nine or what they were. I can call them over. There was the Carnegie Steel Co.-let me explain. The Federal Steel Co. was a holding company. The Federal Steel Co. owned the capital stock of the Minnesota Iron Co. The Minnesota Iron Co., in turn, owned the Duluth & Iron Range Railroad. They owned the Loraine Steel Co., of Loraine, Ohio, and the Illinois Steel Co. of Chicago. So that in the turn-in of the Federal Steel Corporation into the United States Steel they really got three separate and distinct corporations, good-sized ones. Then the Carnegie would be four, the National would be five, and the Hoop would be six, the Tin Plate would be seven, the Wire would be eight, the Tennessee Coal & Iron would be nine, the American Sheet Steel would be ten, the American Bridge would be eleven. There were 11 or 12 concerns. The National Tube would be twelve. The CHAIRMAN. I was speaking of the Federal Steel Co. Mr. GATES. The Federal Steel Co. is a holding company.

The CHAIRMAN. As one concern; just as you speak of the United States Steel Corporation as one concern, although there are many concerns in it. I am not now counting them as operating companies but as corporate entities.

Mr. GATES. The Illinois Steel, you know, was an operating company, and the Loraine Steel was an operating company, and the Minnesota Iron, and are to-day.

Mr. YOUNG. The Illinois Steel Co. itself was formed by a consolidation of a number of other companies, was it not?

Mr. GATES. The Illinois Steel Co. was formed by an amalgamation of the North Chicago, the South Chicago, the Union, the Joliet, and the building of the New South works.

Mr. YOUNG. Did it take in that Milwaukee property?