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Honorary Chairman of Cleveland-Cliffs, an honorary position without responsibilities or compensation created by the Board of Directors of Cleveland-Cliffs. He has not been a director of Cleveland-Cliffs since April 1947. He is not and never has been Honorary Chairman of Republic Steel Corporation and has not been a director of Republic Steel Corporation since May 1950 when, because of advanced age, he asked not to be re-elected. The number of shares of common stock owned by Cleveland-Cliffs in Republic Steel Corporation is stated on the chart to be 391,416, whereas the number of such shares owned by ClevelandCliffs at the time the chart was introduced was 373,114.

The chart states that Cleveland-Cliffs owned 1,429 preferred shares of Wheeling Steel Corporation. All of such preferred shares had been sold and were no longer owned by Cleveland-Cliffs at the time the chart was introduced in evidence.

I appreciate your providing me with an opportunity to comment upon the enclosed chart. I request that this letter be placed upon the record of the hearings before such Special Subcommittee, together wtih such chart, at the place in the record where such chart appears.

Very truly yours,

J. H. KERR, Secretary.

EXHIBIT S-207

ADDITIONAL STATEMENT OF SENATOR ARTHUR V. WATKINS-PORTION OF MINORITY REPORT OF THE JOINT COMMITTEE ON THE ECONOMIC REPORT HEARINGS ON DECEMBER 1949 STEEL PRICE INCREASES-RE: ACQUISITION OF GENEVA STEEL PLANT

Even though I heartily endorse the minority report which comments briefly on the reference in the majority report to the purchase of the Geneva, Utah, steel plant by the United States Steel Corp., I feel impelled to make additional comments on that stiuation as well as on some other aspects of the majority report.

I am at a loss to understand why the purchase of the Geneva steel plant was brought into the discussion at all. There seems to have been no reference to it in the testimony before the committee. If the majority had in mind that it emphasizes the bigness of the United States Steel Corp., and its alleged influence in determining for the industry future price of steel productions, I think they have spoken without evidence to support the claim.

The price paid for Geneva steel plant was $47,500,000. United States Steel Corp. also pledged that it would, in the event of the acceptance of its bid, use $18,600,000 additional of its own funds for the peacetime conversion of the plant. It is a matter of record that the corporation has kept its part of the agree ment. In fact, it has gone far beyond the sum pledged for the conversion of the plant facilities.

Under the Surplus Property Act, the Surplus Board was set up to recommend to Congress a policy for the disposal of the property owned by the Government that was declared surplus and that the Government would want to sell. In the fall of 1945, Mr. Fairless, president of the United States Steel Corp., addressed a letter to the Defense Plant Corporation that had supervised the building of the Geneva steel plant, saying that the steel corporation was ready to discuss the purchase or lease of the Geneva steel plant when it was no longer needed for war production.

Some members of the War Surplus Board expressed opposition to the disposal of the Geneva plant to the United States Steel Corp.

In August 1945 the steel corporation wrote to the Defense Plant Corporation: "After full consideration of the whole situation, including the various problems which seem to be involved in the attempt to establish Geneva mill after the war as a sound and successful commercial enterprise, the directors of the United States Steel Corp. have decided that no further action to acquire the Geneva plant be taken.

This action of the United States Steel Corp. brought deep disappointment to the people of the Intermountain and Pacific Coast States. There began then in this section a concerted movement which in fact took on the proportions of a crusade to get the United States Steel Corp. to reconsider and offer a bid for Geneva. Chambers of commerce, trade associations, labor organizations, civic groups,

church leaders, and the press in general made strong pleas to the steel corporation to reconsider its refusal to bid on Geneva.

It was reported at the time that even the President of the United States interceded with the steel corporation. Numerous United States officials added their urging to the voices of the West. In Utah the movement was led by the Governor and all members of the Utah congressional delegation (all Democrats) and substantially all civic organizations of the State joined in. In fact, the western feeling was almost universal that only a strong company, with ample resources and the know-how, could take over and successfuly operate a plant as huge as Geneva.

It should be remembered also that the economists of the country had predicted that immediately following the end of hostilities in World War II, there would be a great deal of unemployment and that in general business would have a slump. There was also considerable speculation on the ability of the West to absorb the output of a plant as large as Geneva. In fact, a number of experts had predicted that the plant could not operate successfully because of its distance from heavy consumers of steel. In other words, whether or not Geneva could be a success being so far away from markets was considered highly speculative. In view of this over-all situation, the statement in the majority report that the United States Steel Corp. was "allowed" to purchase certain Government plants is anything but expressive of the real situation. It goes far beyond being merely amusing to the people of Utah and the West generally.

The fact is that the United States Steel Corp. was really "dragged" into the bidding. When the bids were open, it was the only bidder who made a firm offer of its own money; it was, in every respect, far and away the best bid. About this time the Surplus Property Administrator made the following statement (this was before a joint committee of the two Houses of Congress): "The Surplus Property Administration feels that the best company to purchase this plant will be the United States Steel Corp. We believe that they may be the only company in the steel industry that can carry on this operation unless the Government subsidizes."

And then later the War Assets Administration, which was given the responsibility of disposal of surplus war property, made this comment in accepting the bid:

"It will foster the development in the West of new independent enterprise. The operation of the Geneva steel plant as a part of the integrated operations of the United States Steel Corp, should tend to foster the development of the steel-consuming manufacturing plants in the Western States."

And, in addition, the Attorney General of the United States, who was required by the Surplus Property Disposal Act to investigate any possibility of a monopoly being created by the disposal of surplus war plants, added his approval to the sale of Geneva to the United States Steel Corp.

It should be added that at the time, the United States Steel Corp. announced that it would make Geneva a basing point for the purpose of pricing steel. What happened as a result of this pledge and of the taking over of the mammoth plant is a matter of history that should be well known to the committee and certainly to the chairman who represents the State of Wyoming.

But our memories are short, so I think it is well worth repeating, even though I follow the majority precedent and go outside the hearing record for the facts. Here's what happened to steel prices in the West:

Prices for steel plates and structural shapes (the only kind of steel produced at that time at Geneva) were set in May 1948 at the same level as at Chicago, Pittsburgh, and Birmingham where the country's lowest prices for steel prevail. This action resulted in a reduction in the delivered price of steel plates which amounted, for example, at Salt Lake City, Utah, of $19.16 per ton, and to $18.54 per ton at Ogden, Utah; $14.02 at Pocatello, Idaho; $12.36 at Boise, Idaho; $12.36 at Reno, Nev.; $7.50 at Eugene, Oreg.; $10.30 at Spokane, Wash.; $6.64 at Sacramento; $3.64 at Los Angeles; and $3.44 at San Francisco, Calif., points. Reduction in structural steel followed the same pattern.

The effect was to reduce the price of steel in Salt Lake City from the highest price in the country to the lowest price quoted anywhere in the United States. (See table from Iron Age, below.) Other sections of the West got corresponding proportional benefits.

Another important factor was the revised schedule of freight rates which became effective on April 1, 1947. It provided an additional source of direct benefits to the consumer of steel products in the West. These reductions vary from a situation of no change in the central Utah area to a maximum saving of $4.54 in the coastal cities of California.

This reduction, solicited and supported by the United States Steel Corp., was supported by most of the civic and industrial organizations in the West.

The result is that the entire West has benefited and will continue to benefit by reason of the purchase of the Geneva steel plant by the United States Steel Corp. For the first time in its history, the Intermountain and Pacific Coast States were placed in a competitive basis with the rest of the United States.

The majority will have some difficulty in convincing the Bethlehem Steel Co. and the Kaiser management at the Fontana plant near Los Angeles, and other western companies and steel consumers, that there isn't any genuine, active competition in the steel business in the western part of the United States.

It should be kept in mind also that it was not necessary for the United States Steel Corp. to make these reductions and solicit lower freight rates. Westerners are convinced that, had any of the smaller companies purchased the Geneva plant, the public would have been charged all the traffic would bear. And as a matter of principle under our system of free competitive enterprise they would have been entitled to do just that.

That any of these companies would probably have so acted is established by the fact that during the current sellers' market at least one of the independent companies is reliably reported to have charged an average of $15 per ton over and above the price set by the United States Steel in the western area based on Geneva.

The proof of whether or not there is genuine competition rests largely on what happens in the market place. Judged by that criterion, the implications and the assumptions of the majority that there is no effective competition in the steel industry fall flat so far as the West is concerned.

This committee as a matter of law is interested in recommending and fostering such programs "as will bring about and maintain conditions under which there will be afforded useful employment opportunities, including employment for those able, willing, and seeking to work and to promote maximum employment, production, and purchasing power."

The sale of Geneva plant to the United States Steel Corp. and the resulting competition growing out of that sale is making it possible for the establishment of numerous fabricating enterprises in the Western States; enterprises which would have been impossible without a large supply of steel at prices competitive with other sections of the United States.

Out of these industries should come employment for hundreds of thousands of American citizens and an increased production of necessary commodities. Increase in purchasing power flows from such production and employment.

Let me say in conclusion on this part of my comments that only a strong company with large assets could purchase and maintain and operate a steel plant large enough to furnish the basis for the increased employment and prosperity of the West. Instead of acting along the conventional lines of a monopoly which charges all the traffic will bear, all the evidence is to the effect that the United States Steel Corp. in its western operations based on Geneva has adopted a contrary course. It is almost unbelievable, but I submit that it is true.

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Since the adoption of the minority report by its signers, I have had occasion to review an additional statement contained in the chairman's release of March 15, which was received after our meeting in regard to the report. This statement has been included in the majority report as a preface to its recommendations. I have not discussed this section with other members of the minority, nor has it been taken into account in that report. I therefore wish to comment on two paragraphs contained therein:

"One of the witnesses before the committee, Mr. W. H. Colvin, Jr., president of the Crucible Steel Co., in an additional statement submitted after the hearings and appearing at page 556 of the printed hearings, made this important declaration:

Some force somewhere is driving the (steel) industry toward elimination and concentration. If conditions exist and persist which make survival for many units impossible, no law you can pass can prevent elimination and, therefore, concentration'."

I have read the additional statement submitted by Mr. Colvin and find that the quotation given in the report has a somewhat different meaning when standing alone than in its context. Accordingly, I wish to call attention to the whole paragraph in which this statement is found in the printed record (p. 556):

"The point about which I want to write you, and which is illustrated above, is to state that it seems to me that your committee should be much more concerned about the nature of conditions in this country and in this industry which could bring about such a threatening state of affairs. I think that a healthy steel industry is essential to a healthy national economy and such a strong indication that the industry is in fact anything but healthy should concern you gravely. You should be entitled to know if this is attributable to inefficient, weak, and indifferent management; whether it is a victim of the power of a labor monopoly; if it is being subjected to laws, regulations, or such political interference as eventually to reduce it to the chattel state of the railroads today; if it is competitive to the point of madness and self-destruction without regard to the future, or are there other factors and what the trends portend. What is the matter? The industry's future is being sold for peanuts. Some force somewhere is driving the industry toward elimination and concentration. If conditions exist, and persist, which make survival for many units impossible, no law you can pass can prevent elimination and, therefore, concentration."

That the meaning of a sentence of Mr. Colvin's statement, out of context, does not adequately reflect his views is further attested by an item appearing in the Washington Post of March 14, as follows:

"William H. Colvon, president of Crucible Steel Co., charged that the Joint Economic Committee, headed by Senator Joseph O'Mahoney, conducted a biased inquiry into the industry's wage-price set-up.

""The committee was not seeking information in those hearings,' Mr. Colvin said. 'It was seeking, most of its members at least, confirmation for their preconceived notions'."

This is additional evidence of misuse of selected quotations to support the position of the majority in connection with these hearings.

EXHIBIT S-208

Acquisition and dispositions of property by United States Steel, 1940-49

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1 Does not include facilities constructed for the U. S. Government and subsequently acquired ($144,127,46) or facilities which United States Steel constructed for itself ($1,175,353,135). Acquisitions from others than the U. S. Government were 1.3 percent of the total expended for all properties and less than one-third of the sales proceeds of generally similar properties sold to others.

2 Sold in 1942.

* Sold in 1944.

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