Opinion of the Court.

Going east, we find at Johnstown, Pa., the Cambria Steel Company, a strong company also thoroughly integrated, and with an investment of nearly $70,000,000. From 400,000 tons finished product in 1901, the Cambria increased to nearly 1,200,000 tons in 1913, and it has (volume 6, p. 2199) further improvements in view looking to a large increase in its output. It has a 50-year's supply of Lake Superior ore and a Lake fleet of a capacity of 50,000 tons. At this point, the president of this company might be quoted. He was called as a witness both by the Government and the Steel Company. His testimony is enlightening, as showing that his and other companies in the steel business feel the Steel Corporation has no power, even if so disposed, to monopolize, restrict, or stop their business. We quote (volume 28, p. 12034) from his testimony:

"Q. Have or not the leading competitors of the Steel Corporation, since 1901, increased their capacity or further integrated or added to their holdings of ore or coke?-A. Oh, yes, sir; there have been a great many new properties secured by the other companies, and a large number of developments in both the coking regions and the ore regions.

“Q. And what would you say as to their progress, if they have made any, in the matter of integration and diversification of products? [72] A. I think all of the companies have expanded and improved their plants and strengthened their holdings of raw material. "Q. In your testimony for the Government, referring to Jones & Laughlin, the Lackawanna, Cambria, the Republic, and perhaps others, you stated as follows: 'I do not think that there is any one of those companies that could not compete with the United States Steel Corporation, and compete successfully.' You were not then asked to give your reasons for that opinion; be good enough to give them now.-A. It is a very simple proposition to build a furnace and steel plant or finishing mills fully the equal of the Steel Corporation's and labor can be employed at exactly the same price, and there is absolutely no difficulty in producing the various products at practically the same cost.

"Q. Has the Steel Corporation any such advantage owing either to its size, the extent of its integration, or any other circumstance as would enable it to put its competitors out of business did it choose to do so?-A. No, sir. It would be impossible for it to do so without committing suicide.

"Q. Why?-A. Well, their product is practically sold in this country. Of course, they do a small export business, but they sell to the

Opinion of the Court.

same people that we do, and we sell to the same people that they do, and if they would make prices so low that we could make no profit on it there would be nothing left for the Steel Corporation; and if they would undertake to put us out of business by selling below our cost, they would be selling below their cost, so that I cannot see how it would be possible for them to put a well-managed concern out of Jusiness.

"Q. Could the Steel Corporation confine any destructive warfare which it might undertake to any one competitor? In other words, could they wage a warfare against the Cambria or Jones & Laughlin or any of the other considerable concerns without involving the rest of their competitors?-A. No, sir; that would be impossible.

"Q. Could they confine any warfare that they might undertake either against a single competitor or against all other competitors to any particular locality?-A. No, sir; because the markets are all affected in sympathy, and if the price was made below cost in one market only, we would go to the other; we would seek other markets. "Q. Why do you say that the Steel Corporation could not make war against one competitor only without involving the rest of them?A. Because, for instance, we all sell to practically the same class of trade, to the same customers. We sell to many people who buy from Jones & Laughlin and the Steel Corporation and the Republic and the Inland Steel Company, and various other companies, so that it would be impossible to pick out the customers of any one manufacturer, and you cannot affect the price in one market without affecting it in all the other markets in the country.

"Q. Has the ability of the Steel Corporation to resist any such warfare increased since 1901? Are they any better able to take care of themselves in such a warfare now than they were in 1901?—A. No, sir; I would say that they are not. I do not fear the Steel Corporation as much as I fear other competition."

Without going into detail as to other companies in the foregoing list, we may refer to the Colorado Company, whose market, the proofs show (volume 26, p. 10935), covers the United States west of the Mississippi. This company is integrated, is independent of the Lake Superior ore, has more than 60 years' supply of its own ores in Wyoming, New Mexico, and Utah, and has largely expanded its plant since 1901. It has resources of $80,000,000, and its finished product has increased from 200,000 tons in 1901 to about 500,000 tons in 1912. This company has by its western location (volume 26, p. 10937) a freight advantage over the United States Steel Corporation and all other eastern [73] competitors in selling rails to most of the railroads west of the Mississippi.

Opinion of the Court.

The history of the next company is illustrative of the feeling of confidence and security among practical steel men, which warranted them in making since the Steel Corporation was formed large expenditures and entering into competition in the steel business. The Republic Iron & Steel Company, of Youngstown, Ohio, was in 1901 engaged principally in making iron. Its finished product that year was some 500,000 tons. It has since expended $25,000,000 in changing its business from iron to an exclusively steel one. Like all other steel makers, the Republic Company's policy has been one of simply following the progressive and universal practice of integration incident to the development of the use of steel. The Republic Company's process of integration its president (volume 2, p. 731) well describes:

"We have practically eliminated all our scattered iron mills, have concentrated them in the operation at a few points of production. So, to-day we produce practically but little iron and are manufacturing about 1,000,000 tons of steel per annum. This is what we call an integrating process; that was part of it, the addition of the mineral and coke and blast furnaces, and balancing up operations generally, completing the integrating process. This integrating process that I speak of attended our development of the steel end of our business. We did not need it so much when we were simply manufacturing iron. It was done for economic and trade reasons, on account of the increased demand for steel and the decreased demand for iron."

*

The Republic has increased the range of its product and production until it is now a million and a quarter tons and extends (volume 28, p. 11999) all over the United States and Canada. It has gone into the Birmingham, Ala., field, where it has plants, as well as in Pennsylvania, Missouri, Illinois, Indiana, Iowa, and Michigan. It has acquired 40,000,000 tons of Lake Superior ore reserve and 80,000,000 in the Birmingham district, and has a lake fleet of 18,000 tons. Its growth during this time was such (Topping, volume 2, p. 735) that it is producing one twenty-fifth of all the steel produced in the United States and one-thirtieth of all the iron. From a study of the testimony there is no doubt that the men who made these large expenditures in 1906 were satisfied that the field of fair business competition in the iron and steel business was open to them. These expenditures were made in completely integrating its manufacturing fa

Opinion of the Court.

cilities. This integration consisted (volume 22, p. 9131) in increasing its blast and open-hearth furnaces and ore supply and carrying their basic product forward to completion by additional plants which included finishing mills for merchant bar, for sheet bar, for billets, and for plate in addition to galvanizing works, rivet, spike, bolt, and nut departments, and by-product coke works. They have no more to fear from the competition of the Steel Corporation than they have from that of any other of their other competitors. The testimony of this company's president, who like the Cambria's president, was called as a witness both by the Government and the Steel Company, is instructive on that point. It is: "Q. Where is the market for your product?-A. All over the United States and Canada."

"Q. Has the Steel Corporation, in your opinion, power to put the Republic out of business?-[74] A. I think not.

"Q. Has it the power to put its competitors generally, or any of its principal competitors, out of business?-A. I would say not.

"Q. What is your reason for thinking that they have not that power? A. I would have two reasons: One, that they have not the physical ability to do it; and, secondly, if they attempted it, they would involve their own market to such an extent that they would suffer equally with us. What I mean by physical is this: Their principal competition, companies like ourselves and others as strong as we are, are properly integrated; in other words, being self-contained on raw material, well equipped, and at least fairly well managed and properly financed, so that a combination of that kind would give us as much power to produce within somewhere a close approximation of their cost: at least their difference would not be so great that they could put us out of business. They have some advantages, and so have we.

"Q. Now, as to your second reason, that it would involve them in loss as well as you, what do you mean by that?-A. Well, to illustrate, we might have a customer, we will say, in Michigan, engaged in the manufacture of agricultural implements, and another one in Illinois or Indiana. If we should sell in Michigan steel bars and plates that enter into the cost of production of a machine at a less price to A. in Michigan than we do to B. in Illinois, we would probably soon hear from B. in Illinois, because those two men would naturally compete in the general market of the United States with their machinery. So it would be with all other fabricated products made from steel. The markets are interrelated and interlaced to such an extent that you cannot reduce prices, in my judgment, in one market without affecting in a short time the market elsewhere for the same commodity.

Opinion of the Court.

"Q. Could the Steel Corporation localize a destructive warfare against its competitors?-A. Not in my opinion.

"Q. Why not, if there is any other reason than you have already indicated?-A. I should say that the reason I have already indicated would be a complete answer to that thought. There is a sympathetic relationship existing between all markets that is so close that my experience would compel me to say that you could not affect the price in Chicago without affecting the price in New York. As a matter of fact, that is the experience that we have had.

"Q. And could the Steel Corporation wage a destructive warfare against any one of its competitors without involving all of them?A. No; I would say not."

The same confidence to enter into competition thus evidenced in the Republic Company was also shown in the Inland Steel Company of Indiana. That company had expanded its investment from some $4,000,000 to $20,000,000. It has acquired Lake Superior ores and a lake fleet of considerable capacity. Asked the question (volume 22, p. 9144)

"From your knowledge of the iron and steel business, the relative capacities of those engaged in it, the capitalization of the United States Steel Corporation, its ownership of railroads, its connection with financial interests, state whether or not in your judgment it has the potentiality, if it uses it, to destroy its competitors?" -Its president testified:

"A. No; that is absurd. They cannot do it. I think it is a physical impossibility. I cannot imagine how they could do it.

"Q. Is there any possible doubt in your mind of the ability of the Inland Steel Company to maintain itself in any kind of competition?——— A. Well, that is what we are aiming to do. We think so. We think we are getting as well prepared as most of our competitors by the money that we have [75] spent there; and I believe it has been spent on the right lines. I know that we would not change any of it if we had it to do over again, as far as we have gone.

"Q. And you are very well integrated, as you have stated?-A. Yes; we did the best that it was possible to do.

"Q. Mr. Thompson, you stated, in answer to my question a short time ago, that the competition between the Inland Steel Company and these other companies had been active in the territory that you serve? A. Yes, sir.

"Q. What do you mean by 'active'?-A. Always at it. We were always trying to get business. I don't know how to express it any stronger than to say that we were all looking for trade in an active way, all the time, keeping ourselves posted on conditions and soliciting business from just such men as the witness who was examined here this morning and from other railroads; I say it is active because we are always at it-all of us."