iau,A Un3£ Columbia (Hnitattfiti) inttjfCmHiflirtBpnrk the libraries the seligman library of economics PURCHASED BY THE UNIVERSITY 1942 UNITED STATES REVENUE COMMISSION. Special Report 3STo. 12. 11E POUT IRON AND STEEL TREASURY DEPARTMENT: UNITED STATES REVENUE COMMISSION. Special Report ISTo. 12. REPORT IRON AND STEEL. TREASURY DEPARTMENT: 1866. Special Heport No. 12 REPORT 0N IRON. OFFICE OF THE UNITED STATES REVENUE COMMISSION, 1 February, 18G6. j Hon. Hugh McCulloch, Secretary of the Treasury. Sir: The production of iron in the United States during the last twenty-five years, the development of vast deposits of iron minerals and of fuel, demonstrate the capacity of the country to manufacture the whole quantity required for its progress in other manufactures, for the production of machinery and all other instruments of industry, and the continuous enlargement of its productive powers. Our natural advan¬ tages for the production of iron, and steel, and other great instruments of production, are not surpassed in the world. Our progress shows that we have learned to avail ourselves of these advantages. Ultimately, under a wise domestic policy, we shall become the largest producers of iron, and perhaps the largest exporters, as many of our mines are near the seaboard, and can furnish large quantities more promptly than any country except Great Britain, and better and more varied qualities than any country. It must be long, however, before it can be our interest to send iron from our shores. The race for national power and wealth will be indi¬ cated, not so much by our advance in the production of iron, as by its consumption. Our industry can never grow to its 'full height but by that profusion of machines and implements of production and facilities for transportation which iron only can furnish. England now employs iron to the extent of 1G0 lbs. per head of population, and exports con¬ siderably more than she consumes. We manufacture 1,500,000, and import about 300,000 tons. Our consumption does not yet exceed 120 lbs. per head. But considering the intelligence of our population, its activity, its ingenuity, its proclivities to the employment of iron, and the very superior quality of our iron, we may reasonably expect to reach a con¬ sumption of 160 lbs. per head, by the time our population numbers forty millions, making the whole product then equal to 3,200,000 tons. 4 The production of iron will, in a few years, be distributed throughout the whole country. The materials are in all the great departments of our territory; east and west, north and south; wherever these materials are found, and where the laborers and the food can be found, the people will be greatly wanting to their pecuniary as well as all their economical interests if they do not devote a portion of their labor to their conversion into iron, which admits of transportation to every State,, and is in uni¬ versal demand. That is, the labor and the food which enters into the production of iron, becomes available in the purchase of other commodi¬ ties throughout the whole country. It is very well known that tlie State of Pennsylvania could, by no means of her own, import yearly 50,000 tons of iron, but her mines, labor, food, and capital, can now furnish yearly 500,000 tons, worth over thirty millions of dollars; andean now, by the further aid of machinery, carry the value of this iron to sixty or eighty millions. Thus the people of Pennsylvania can by this medium exchange her minerals, labor, and food, for the labor and food and other raw materials of other parts of the country. The labor, the food, and the raw material of one part of the country combined by manufacture, become thus commodities exchangeable in all other parts, for other commodities, made up by sim¬ ilar combinations. The raw materials may differ, but the labor, skill, and food, effect a transformation into that which becomes equivalent to money, in places where neither the labor, nor the food, nor the raw ma¬ terial could be transported. The agricultural products which farms can produce in greatest quantity, cannot be carried far; corn, therefore, and grass, and root crops, if they have not a market close at hand, must be worked up into hogs, or horned cattle, or horses, or mules, or iron, lead, cloth, or something else which can be driven or carried into market. But making pork, or beef, or growing horses and mules, is not to be compared, in .point of public or private advantage, with those branches of industry which convert the products of the soil, by means of human and skilled labor, aided by machinery, into com¬ modities for distant markets. It is only by such means that a whole population finds employment, and that labor, skilled, intelligent labor, can be carried far to market. The value of a man’s labor in a commu¬ nity where manufactures are duly blended with agriculture, that is, where in close proximity these branches of industry support each other, is more than five times greater than in a purely agricultural district. The value of farms, gardens, and orchards, in the United States con¬ forms closely to the distance from those who consume their products. 5 Farms, gardens, and orchards, realize five to ten times more from a market not over five miles distant, than from that which is several hun¬ dred miles away; the product of the land intended for a near market, being of five times greater value per acre than that which is raised for a distant market., The pig iron of Missouri can he sent a thousand miles by water to Pittsburgh for a market, but the farm products con¬ sumed in the production of the iron cannot, much less those of the gar¬ den, and orchard, and butchers’ stalls. When Missouri shall take from her mines the material to increase the sum of her manufactured products from forty to eighty millions in value, the farms of that State will have risen from thirty-eight to seventy-five dollars per acre, and personal property will have increased not less than four times its present quantity and value. Massachusetts and Missouri are nearly equal in population, the latter having fifty thousand less. The former has over two hundred thousand hands en^a^ed in manufactures, the latter over nineteen thousand. Including the number dependent upon those engaged in manufacturing, Massachusetts has half her population so engaged, or six hundred thou¬ sand; if Missouri had half her population thus engaged, her farm lands would be worth one hundred dollars; intrinsically, they are worth double those of Massachusetts; but with such a market within her own borders as half a million of manufacturers, the farms would readily sell for $100 per acre. The product of the manufactures in Missouri is now nearly of the value of $42,000,000, or $35 35 per head; that of Massachusetts is $255,545,922, or $207 58 per head. The average production of man¬ ufacturing industry per head of the entire population of the United States is about $60 per head. Massachusetts exceeds that average $147; Missouri is $25 below it. The natural advantages of Missouri in climate, soil, mines, minerals, with the advantage of the whole Valley of the Mis¬ sissippi for a market, and free navigation to every portion of it, opens for her a career of successful industry, which must leave every State of New England very far behind. The States possessing in abundance mines and minerals, for the pro¬ duction of iron and steel, should not hesitate as to the direction which should be given to th’eir industry. Men have neither planted nor culti¬ vated these minerals; they do not grow; there is no waiting by man for a new crop of raw material. Nature has done her work, and is not to be asked for further assistance. The crop is always ready to be taken in and prepared for immediate use. Every step is one of labor, skill, and science. Every stage of the business requires intelligent and scientific 6 supervision. The employment is continuous. The products are anion* the most important necessaries of life—products necessary to national power and civilization. So far as the highest interest of industry, the permanent interests and welfare of the working classes are concerned no industry is of such essential utility as the working of mines, and the production of metals. They are indispensable to progress in all other departments of labor. They are equally necessary in peace and war to the national strength at home, and national respect abroad. Mining and metallurgy, if carried on as they should be, will support one-fifth of our population, and furnish materials needful to the various branches of industry which support the remaining four-fifths. The product of iron is now not one-half what it should be; not one- half what it would have been, but for the excessive fluctuations in price caused by foreign competition. The over-production of iron in Great Britain makes the price there very variable, and the fluctuations there are thrown upon our markets, in addition to those incident to our home manufacture. The injury done to the home production of iron by the manner in which foreign iron is thrown upon our markets, is many times as great as the whole value imported. The American manufacturer cannot en¬ counter variations in price with as little loss as the British maker. As a branch of national industry, the manufacture of iron has been eminently creditable; the country has been greatly enriched and bene¬ fited, but it would be easy to show that, as a Avhole, it has largely en¬ riched only a small portion of the individuals engaged in it. As much money has been lost as has been made by it. It is a lottery in which large prizes have been drawn, but the blanks have been more numerous than the prizes. The public has the full advantage; individuals bear the burden and the loss. These individual losses are due to various causes, which should not be overlooked in estimating^the progress of this manufacture and its pros¬ pects. The country has but partially overcome the checks which met the pioneers in the production of iron—the want of capital, of skill, and of experience. It could not bo expected that such requisites were at¬ tainable without much delay. Ourj>rogress seemed, to national impa¬ tience, slow and unsatisfactory, but now our advance appears to be all that should have been hoped. Our knowledge of iron manufacture will not suffer now by comparison with that of any other people. The supply of capital to aid those who are thus engaged is still deficient, but the success of a few, has been 7 sufficient to attract to the business those who have carried the production of iron very rapidly to its present quantity. The excessive fluctuations in price have severely tried all who have engaged in it, as may be seen by tables of English and American prices annexed to this report. The history of the manufacture of iron in this country reveals, as ! docs that of many other branches of industry, a striking characteristic of the American mind in its tendency to mechanical pursuits. No country ever rose so rapidly into manufacturing eminence, and no people ever suffered so much pecuniarily to attain it. In Great Britain, and on the continent of Europe, long apprenticeships were considered necessary to the attainment of skill in a mechanical pursuit. In many countries f expensive and tedious preliminaries had to be encountered before men were permitted to set up as masters in a business. All that has long ago been disregarded here; men with little hesitation engage now in all kinds of business, even those demanding the highest skill and scientific acquirements, make large investments, and spend years of toil and anxiety to perfect a business by the hard and losing road of oft-repeated trials and failures, and by dint of costly experience. In a vast number of cases, great establishments, on which hundreds of thousands and even millions have been expended, have been sold owing to failure of the first owners, for a tenth, or other small proportion of their cost, and become profitable only to the second proprietors. The result has been that our operatives have left the old ruts and struck out new paths, and while they have gained largely in new ideas, new processes, and new machinery, they have in their progress been able to look around the world and gather up what is best in the old paths. In the main this has been the method of all our great manufactures, and most of the lesser employments, and it is palpable that very great advan¬ tages have resulted. The inventive power of the country has been stim¬ ulated in an extraordinary degree. The nation owes no small debt to the long list of men who for half a century have given all their means, all their talents, and years, if not a life-time, to build up and establish an American manufacturing system, which gave to the most of them for its chief reward the satisfaction of being regarded as public benefactors. The productive power of the country, and of course its ability to en¬ dure heavy taxation, may be measured here as w’ell as in every other population by the quantity of iron consumed. Without machinery, im¬ plements of husbandry, tools for all trades, and instruments of produc¬ tion of every kind only supplied by iron, no high rate of production can be reached. The value of a million of tons of iron as it enters into 8 consumption is at least a hundred millions of dollars. All branches of industry not only profit by the use of this iron, but they profit by w hat they are called upon to furnish in aid of its production. They can all supply themselves fully at home with this indispensable article by ex¬ changing for it, directly or indirectly, the products of their own industry, and thus this exchange may go on indefinitely, the production of iron increasing with the increasing population, until the product reaches or exceeds the quantity made in Great Britain—six millions of tons. If we import our metals from Europe our consumption will not be on the scale of the needs of our civilization and of our industry, but on the scale of our ability to pay; that is, upon the scale of what Europe is willing to take from us. Whether as a people we can consume half a million, a million, or two millions of iron annually, will depend upon circumstances in Europe, such as the state of the weather, the harvests, and the fluctuations of commerce. But our home industry can furnish an indefinite and increasing quantity, meeting the utmost demand, and at a just price; that is, a rate adjusted to the price of labor in the country. If the rate is high the payment is easy, for there is no me¬ dium more abundant than that which is used to pay for the production of iron. We can be large consumers of iron manufactured at home, whatever the price ; we cannot import half the quantity we should use' however cheap. It is the exchange between the labor that makes the iron and the labor that furnishes the food, the clothing, the dwellings, and the furniture, that aflords means to pay taxes. Through the employees and the cred¬ itors of the Government, money disbursed by the public treasury returns after a short time to the same channels from which it was withdrawn by taxation. The persons who receive this money make the same use of it which others do who receive their incomes from other sources. The main current of the medium of exchange, whatever it be, is towards those who produce food and raiment, and other necessaries of life. It is from this current that the amount of the taxes is taken, not to be per¬ manently diverted from its course or destination, but to be returned after the delay of a few weeks or months to the same stream and the same destination. The sum abstracted from the earnings of domestic labor changes owners many times, but flows on until finally absorbed as com¬ pensation for labor and its products. If the States be taken separately, it will be found that they are able to pay taxes precisely in proportion to the exchanges produced by their industry. If one-half the population is engaged in manufactures and 9 mechanical employments, their labor is virtually exchanged for labor, and the exchange is rapid and large. Massachusetts, with nearly half her population dependent upon manufactures, pays over fifteen millions of dollars in taxes; Missouri, with about the same population, with a far more favorable climate, a better soil, three times as much of it in cultivation, and vast mineral resources, but with only a twentieth of her people dependent on manufactures, pays less than a third of that amount. If the industry of Missouri were so diversified as to give employment to her whole population, and bring about an exchange of products cor¬ responding to her natural advantages, that State could pay twenty mil¬ lions for taxes with less exhaustion than four millions now. [ The difference between taxing home production and foreign will be seen in this, that by imposing a duty of from ten to fifty per cent, on foreign products the Treasury realizes one hundred and thirty millions, whilst domestic taxation, by a charge of from one to six per cent., pro¬ duces over two hundred millions. A careful estimate has been made of the articles purchased by 150 men and their families, out of the wages received for making 1,000 tons of iron rails from the ore at present rates: For such articles as tea, coffee, sugar, molasses, candles, oil, matches, t soap, vinegar, brooms, coopers’ ware, medicines and doctors’ fees, i hardware, queensware, &c. $12, 000 For coarse muslins and hosiery, checks, calicoes, ginghams, k cloths, cassinets, flannels, made-up clothing, boots and shoes, k all of domestic manufacture. 18, 000 Beef, pork, veal, and mutton. 10, 000 Bread, corn and wheat, vegetables and fruit. 15, 000 Beer, whiskey, tobacco, &c. 7, 000 Sundries. 8, 000 Savings of the laborers. 8, 500 Profits of manufacturers. 6, 500 $80, 000 This is the way iron is paid for when at home, and this statement shows that there is no limit to the quantity which may in this manner be brought into consumption. It is in striking contrast with the mode of supplying the country with iron from Great Britain. Of the items thus converted into iron none will be received there for iron except wheat or flour, when it may happen to ]0 be wanted. The importance of this exhibit is not chiefly in the fact that the value of a thousand tons of iron rails has been created, but largely in this, that it has not only furnished a living to the 150 hands employed and their families, but to as many more in other branches of industry employed in producing these supplies for the men who took the minerals from the ground and converted them to so useful a purpose as iron rails. Similar exhibits can be made in every department of American in¬ dustry, showing that they are all bound together by a mutual depend¬ ence, uniting their interests like the links of a chain. The iron is none the less important to the country because the men who made it are paid three times as much for their labor as they would have received in Great Britain, nor is the country the poorer, for all the wages remain in it, and the iron is a clear gain. "We have imported into this country within the last six years at least one million tons of iron, at a cost to the consumers of not less than fifty millions of dollars. This iron would have cost at home from seventy to ninety millions in our currency, but the manufacture of it at home would have furnished a market for thirty-five millions worth of our agricultural products, of that kind which gives the largest profit to the cultivator, tends to raise land to its highest value, and yields a market for the home •products, to the value of twenty-five millions more. Our working men have lost the advantage of making it out of our own materials. Nearly half our furnaces on this account stood still for a large portion of last year, whilst the British farmers were feeding and British manufacturers were clothing the men, who were making at least a fourth of the iron thus imported. If our industrial policy were such as not to permit any damaging or destructive competition with foreign cheap labor in the production of staple articles of clothing, such as cotton, or woollen, or flaxen, or leather goods, or such things as iron or steel, or other metals, or articles of which they are the chief materials, or other staples needful to na¬ tional independence and self-respect, there would always remain a large variety of commodities of foreign manufacture which our people would import to the full value of what foreign nations would take of our pro¬ ducts. The largest foreign trade would assuredly grow out of the largest domestic production, because that would most increase our ability, both for importation and exportation. In the progress of British iron manufacture it enjoyed special a ad¬ vantage denied to the American manufacturer, who has suffered con- 11 stantly under the reproach of requiring so much legislative aid. It had the unwavering support of the Government, and the benefit of high prices in all iron-producing countries, as the following sketch will show: The first duty upon iron imposed by the English government, was ten shillings per ton, in 1G79. In 1710, it was advanced to <£2 Is. 6 20 87 00 00 29 25 29, 370 41 22 74 08 . . 27 81 18,211 43 50 78 71 . gSlO 05 20 <>1 <>0 642 45 47 74 29 . ‘2G 50 62,095 104 ‘>04 32 13 «)t-5 ::::::::: 15 00 21 00 29.092 . .. . 15 00 21 00 23,253 . . . 13 00 14 50 24,970 . . . 17 00 25 0(1 9, 054 $25 00 . 17 00 25 00 15,677 25 00 . 17 00 25 00 21.812 25 (X) . 17 00 25 00 . 5,897 25 00 . 13,530 :ifKad val SCO 10 30 “ 29, 489 30 “ . 02 25 30 u GO, 1 <*>3 30 “ 63 88 30 “ 142,030 30 “ S24 12 47 83 30 “ 188,626 30 “ 25 0] 45 00 30 « 245. 025 30 “ 30 49 48 4.3 30 “ 298, 995 30 “ 41 99 77 2.3 30 “ 282. 800 30 “ 38 88 80 08 30 “ 750,000 127,510 30 “ 35 80 02 90 30 “ 155,495 30 “ 37 28 04 33 30 “ 179,305 .30 “ 37 70 50 00 •■>4 « 7.">. 74o 24 “ 30 62 50 00 04 “ 09.905 24 “ 30 21 49 63 04 “ 890, 200 122,174 24 “ 20 71 47 95 24 “ 74.490 Si 2 00 25 05 42 .38 Si5 00 per ton. .. 8,488 12 00 25 92 41 73 17 00 “ 17,088 1.3 50 29 07 70 ft4 22 40 “ 1 .100,000 118,714 13 50 30 47 120 02 22 40 “ 1,108, 300 74,702 f 13 44 33 10j 98 02 io TO ♦Exclusively from Great Britain. J Nearly all from Great Britain. II Average yearly prices in Glasgow, mixed Nos. f, o, b. + These quantities include only bar and bolt, merchant bar, rails, and pig. § Average price in London during whole period from 1843 to 1850, botli inclusive, too cts.'per 100 lbs., act of July 1,1804. Present duty, 015 68 , being 70 cts. per 100 lbs. % 31 REPORT ON STEEL. All that lias been or can be said of the importance of the domestic manu¬ facture of iron is equally applicable to the domestic manufacture of steel. There is, perhaps, no circumstance connected with the progress of our home manufacture upon which we have more reason to congratulate ourselves than upon the complete and extraordinary success which, within a few years, has crowned the efforts of those who are engaged in this business. The attempt to make a high quality of steel has been continuous for for more than thirty years. Much toil of brain and hand have during that time been thus expended, and large sums of money have been sunk. We now see the fruit, though, as often happens, it has not rewarded the pioneer. Whether the success is due to the great necessities and de¬ mands of war, or to the results of discoveries and experience occurring previous, cannot, perhaps, be fully known; but certain it is, that but five or six years since, many of the best informed on such subjects doubted whether we should not always be indebted to foreign mines and foreign labor for steel. Now, no one who is well informed has a doubt that our country has nearly emancipated itself from such dependence, and is secure of a full supply of the best qualities of steel in peace and war, and for all the demands and exigency of industry. It is fully demonstrated that the requisite qualities of iron are found within our boundaries, that the requisite skill and knowledge is now attained, and that the requisite confidence in American cast steel and common steel 32 is. now established. It has been tried throughout all the manufacturing States by the most skilful manipulators of steel in fine cutlery, edge tools, in both heavy and delicate machinery, and the evidence of its suc¬ cess is complete and irrefutable. Testimony on that subject will be sub¬ mitted with this report, which cannot fail to carry conviction to all friends of domestic labor, and to satisfy them that American persever¬ ance and ingenuity has triumphed in the production of the highest qual¬ ity of cast steel, an object vitally important to the progress of national industry. While there remained a doubt as to our having attained the art of making steel of the best quality in this country, or of our having the material of which to make it, our dependence on England for a supply might be endured as an evil without remedy; but now, as it has been de¬ monstrated that we have abundance of iron adapted to the manufacture of this indispensable aid to industry, not an hour should be needlessly lost in establishing this branch of production, not only in the safest but the strongest position that legislation and public favor can place it. Our manufacturing system, our national defences, cannot afford to be depend¬ ant upon England for steel any more than for iron. Our metal should not be less reliable than that of those who are our competitors and rivals in manufactures, and who may be our enemies in war. The importance of steel is evinced by the proverb, “ true as steel,” which is thus made the emblem of truth and faithfulness. If this country shall only be as true as steel to one of its highest interests, it will seize the present opportune occasion to place its manufacture upon a basis which cannot be shaken nor endangered. It needs only the home market to give it this position of safety and success. The permanent progress of that indus¬ try to which the country looks for its internal revenue, is not less in¬ debted to steel than to any other other agency placed in the hands of labor. From answers under oath to interrogatories propounded by the Com¬ mission to James Pauks, Esq., of Pittsburgh, of the highly respectable firm of Park, Brother & Co., we take the following statement and figures 33 in regard to the manufacture of steel, its prices, and the cost of labor in England and the United States: “The grade of steel we are now (1865) selling in Pittsburgh for 13 and 15 cents per pound sells at 6 and 7J cents in Sheffield, England. The grade of hammered steel we are now selling in Pittsburgh at 19 cents per pound sells at 11 cents in Sheffield, England, and is sold in this country at from 14 to 15 cents per pound in gold. The rates of wages paid by the cast steel-manufacturers in the year 1860 were as follows: For puddling . $4 20 “ rolling . CC CC 55 “ heating . CC cc 55 “ heater’s helper. u cc 18 “ catching. cc cc 30 “ straightening. cc cc 25 “ converting. cc cc 1 90 “ converters’ helpers. cc cc 85 “ shearing and steel breaking... cc cc 60 “ mixing. cc cc 40 “ melting. . . it cc 4 50 u pulling out. u cc 2 50 “ moulder .. u cc 1 50 “ coker . u c. 1 50 “ chipping ingots . a cc 54 “ hammering to finished bar . u a 21 00 “ inspecting . a cc 2 10 “ laborers . u cc 90 “ porterage . a cc 75 Cost of labor per ton of 2,000 lbs. delivered at Pittsburgh ware- in 1 . §45 07 Cost of fuel and crucibles in Pittsburgh in 1860 : For 320 bush, coke to ton of 2,000 lbs. finished steel @ 4c. 12 80 “ 190 “ coal “ “ u u @ 4bc, . 8 55 “ 12 “ charcoal “ “ u u (a) 7c. 84 “ 15 crucibes “ “ u u @ 1 80c. 27 00 Cost of labor, fuel, and crucibles per ton of 2,000 lbs. of cast steel in 1860. §94 26 5 34 “ The rates of wages paid at our works during the year commencing August 1, 1864, and ending August 1, 1865, were as follows. The same rates are now being paid. Our business year ends on the 1st of August, and we therefore give you figures taken from our books from our last year’s business: 2,000 pounds... $7 33 “ rolling. 44 44 1 12 “ heating . 44 44 1 12 “ heater’s helper. 44 44 37 u catching. u 44 63 “ straightening. u 44 50 “ converting. 44 44 3 50 “ converters’ helpers. a 44 1 40 “ shearing and steel breaking.... u 44 1 25 “ mixing.. u 44 85 “ melting. a 44 5 50 “ pulling out. u 44 3 50 u moulder... u 44 2 00 “ coker. 44 44 2 00 “ chipping ingots.. <4 44 1 20 “ hammering to finished bar. 44 44 24 00 “ inspecting. % 44 44 3 10 “ laborers. (4 44 1 70 “ porterage. 44 44 1 25 Cost of labor per ton of 2,000 lbs. delivered at Pittsburgh ware¬ house, 1846-5. $62 32 Cost of fuel and crucibles in Pittsburgh in 1864-5 : For 320 bush, of coke to ton of 2,000 lbs. of finished steel @ ll^c. $36 80 “ 190 *• coal “ 44 “ @ 12fc. 24 22 “ 12 “ charcoal “ 44 « @ 16c. 1 92 il 15 crucibles “ 44 “ “ @3 20c. 48 00 Cost of labor, fuel, and crucibles, steel in 1864-5. per ton of 2,000 lbs. of cast “ Thus it is seen that the amount of labor, fuel, and crucibles in 1860 was $94 26 per ton of 2,000 lbs., whilst the cost of the same in 1864—5 was $173 26, showing that these items alone cost $79 per ton of 2,000 lbs. more in 1864-5 than they did in 1860. 35 I . As we were not engaged in the steel business in 18G0 we are conse¬ quently without any reliable data to enable us to arrive at correct figures as to the full cost of manufacturing cast steel in that year, but we will . proceed to give you the cost per ton, incurred from interest, salaries, r repairs, rents, and expense, adding excise tax, which will show the whole ( cost incurred in manufacturing cast steel in 1864-5: Cost of cast steel in 1864, 1865. Cost of labor, fuel, and crucibles.per ton of 2,000 lbs... $173 26 “ interest account. “ “ ... 23 70 “ salaries. “ “ ... 5 80 “ repairs. “ “ ... 15 20 “ rents. “ “ ... 82 “ expense. “ “ ... 30 25 “ direct excise tax. “ “ ... 15 00 264 03 Cost of iron before being worked, and loss on same. 70 00 334 03 Selling price now, 15 to 19c. per lb. average per ton of 2,000 lbs. 340 00 Gain per ton of 2,000 lbs. $5 97 “In 1860 the description of iron, same as we quote for 1864-5 at $70 per ton, could be purchased at $25, which with loss on same would make it cost, say $28 per ton. The rates of wages paid by the cast-steel manufacturers in Sheffield, England, in 1865, are as follows. These rates were recently obtained from one of the prominent cast-steel manufacturers of Sheffield whose letter is now in our possession. Upon making careful inquiry from the Sheffield men in our employ, we find their testimony proves the rates we now give as being the prevailing ones paid throughout their native town. We would here mention, that the waste from the pig iron or bloom, to the finished bar of cast steel, is about the same in England as it is in this country, whilst the cost of interest, salaries, repairs, rents, fire¬ brick, and all general expenses is not more than one-half what they are in this country. 36 “The rates of wages, per ton of 2,000 lbs., paid by the cast-stecl man¬ ufacturers of Sheffield, England, in the year 1865, are as follows: 5. d. For puddling. 10 @ 24c. to shilling... $2 40 “ rolling. 1 4 << u 32 “ heating. 1 4 << a 13 “ heater’s helper. 6 u tt 12 “ catching. 10 (( u 20 “ straightening. 9 u a 18 “ converting. 4 6 u a 1 08 “ converters’ helpers. 2 8 a u 64 “ shearing and steel breaking.... 1 6 a u 36 “ mixing. 1 u a 24 “ melting. 6 2 u a 1 48 “ puller-out. 5 8 a «< 1 36 “ moulder. 3 a a 72 “ coker. 3 10 u a 92 “ cellar boy. 10 u a 20 “ chipping ingots. 1 u a 24 “ hammering to finished bar. 30 a u 7 20 “ inspecting. 3 6 <( a 84 “ laborers. 1 8 a (< 40 “ porterage. 1 a a 24 £A 1 1 819 46 Cost of labor per ton of 2,000 lbs., delivered at Sheffield ware- house, in 1865. .$19 46 Cost of fuel and crucibles in Sheffield, in 1865, per ton of 2,000 lbs. finished steel: s. d. For 320 bushels of coke. ... ....15 per ton @ 24c... 20 70 “ 190 “ coal. ...10 U U 15 60 “ 12 “ charcoal .. 2 04 “ 20 crucibles. .... 1 3 each “ 6 00 Cost of labor, fuel, and crucibles, per ton of 2,000 lbs. cast steel in England, in 1865. .$63 80 “From the foregoing statements it will be seen that the cost of raanu- 37 factoring one ton of cast steel in Pittsburgh, for the year commencing August 1, 1864, and ending August 1, I 860 , embracing the items of labor, fuel, and crucibles only, amounts to 8173 26, whilst to the Eng¬ lish manufacturer the same items cost but 863 80, being 8109 46 upon each ton of 2,000 lbs. of cast steel in favor of the foreign maker. When the item of Government direct excise tax, viz.,815 per ton, is added to the cost of the American steel, the difference will show 8124 46 in favor of the English manufacturer. “Taking one-half the amount for interest, salaries, repairs, rents, and expense, as shown to have cost us in 1864-5, (and we believe the amount would be as near correct as possible,) as being the cost to the English, and leaving the cost of iron out of the question, and a difference is shown in his favor of 8162 35 on each ton of cast steel. “Not being engaged in the business of manufacturing cast steel in I860, we have no aggregate amount of wages to report for that year. “Our ‘hands’ pay’ for the year commencing August 1,1864, and end¬ ing August 1, 1865, amounted to 870,251 24. If our works were com¬ pleted and in full operation, producing their maximum capacity of pro¬ duct, at the present rates of wages, the “hands’ pay” would fully, if not exceed in amount 8300,000 per annum. And for the items of fuel, crucibles, and iron, would exceed in amount the sum of 8870,000 an¬ nually. “9th interrogatory: What testimony can you furnish of the compara¬ tive qualities of American and English steel? State to what uses American steel is now applied chiefly. “Answer: We forward with this paper a number of original letters received from some of the most celebrated edge-tool manufacturers and machinists of this country. From these letters you will notice that the steel of our manufacture is esteemed fully equal in quality to that of the best English makes. American cast steel of the higher grades is now chiefly used in the manufacture of edge tools, drills, machinists’ tools, &c., &c., whilst the rolled cast steel of American manufacture is exten¬ sively used in the construction of cotton, woollen, agricultural, and other machinery, and is esteemed as being much superior in quality to the English cast steel of similar grades. “ 10 th interrogatory: What is the present condition and prospects of the steel manufacture in this country, and what docs it suffer from foreign competition ? “Answer: The present condition and prospects of the cast-steel manu¬ facture of this country are extremely gloomy. Government and other taxes, high price of material, high rates of interest, &c., about equal in amount the present tariff, and nothing but the present high rate of pre¬ mium on gold enables some few of the manufacturers of cast steel in this country to keep their “heads above water,” whilst it is a well-known fact that many of them, for w&nt of protection against the low rates of wages, low rates of interest, and low cost of materials to the English manufacturer, have “gone under,” and their works are now lying idle. The business of manufacturing cast steel in this country is compara¬ tively in its infancy, and consequently “skilled labor” has to be im¬ ported, at great expense, from across the Atlantic, until workmen of native growth can be educated to the business. Extreme high rates of wages have to be offered and paid, to induce the foreign skilled laborer to come and make his home in this country. “12th interrogatory: What would be the effect upon the manufacture of steel if gold were suddenly to come t roduced 762 of iron and nail, which was sold for S99 VoO, paying an excise of $1,230. The steel mill produced 175 tons 2! ’1 *? k | nds ' which ™ sold for $52,500, paying an excise of ¥1,088 89, showing that the manufacture of American cast steel at that date, was taxed 150 percent, more than the kindred manufacture of iron with all the advantages of the latter in experienced and skilled labor, edu¬ cated at home. But lest it might be supposed that this case was not a fair criterion by which to determine the relative domestic tax paid on iron and steel lospectively, the following tables, obtained from the assessors of the 22d and 23d districts, Pennsylvania-commencing with the first operation of the internal revenue laws-are submitted as confirmative or conclusive proof of the facts alleged: ve 47 Comparative statement of Iron and Steel returned for excise from asses¬ sors books in 22 d and 23 d districts of Pennsylvania, from 1st Septem¬ ber, 1802, to 30 tli June, 1804 —one year and ten months. Iron in bars, hoops, plates, advanced beyond slabs, cut nails, and spikes: Weight. Value. Duty . 179,085 tons. $34,104,700 $202,458 85 Steel in ingots, bars, sheets, or wire: 8,948 tons. $3,952,900 $77,504 13 Showing that steel, for the first year and ten months of the present rev¬ enue system, paid 150 per cent, ad valorem more excise than iron. For the next three months, say from the 1st of July, 18G4, to 30th of September, 1804, when the new excise bill went into operation, the re¬ sults were as follows, viz: Iron in bars, hoops, plates, advanced beyond slabs, cut nails, and spikes: Weight. Value. Duty. 25,968 tons $4,920,471 $88,292 59 Steel in ingots, bars, sheets, or wire: 1,600 tons $703,096 $19,911 96 Showing that steel under the new excise still paid 58 per cent, ad valo¬ rem more domestic duty than iron. The subsequent act increasing the excise 20 per cent, operated equally on both these interests, so that there still exists the large discrimination against the steel manufacture as compared with that of iron exhibited by the table for three months last stated. We now proceed to show the revenue derived by Government from every ton of steel manufactured in this country. The figures arc obtained from a carefully prepared statement published by order of the American Iron and Steel Association, to which has been added the indirect tax upon labor, founded upon the estimates of D. J. Morrell, Esq., of the Cambria Iron Works, as applied to the manufac¬ ture of iron rails. We have adopted the same percentage upon steel, although, from the higher character of the skilled labor employed, it is more than probable the taxes incurred upon the consumption of the latter class of operatives are considerably greater than those upon the former. The following is intended to show the revenue of Government upon 48 each ton of rolled or hammered east steel made in the United States under the law as it now stands, viz: The excise per ton on rolled or hammered steel is. $15 qq “ of blooms used in making steel is. 3 go “ “ “ of bar iron “ “ . 3 00 “ “ on cost of crucibles consumed is. 3 qo “ “ on 10 tons coal. no “ “ on cast iron moulds, castings for repairs, fire brick, oil, &c., used in making one ton of steel is. 60 The cost of stamps on letters, notes, checks, bills lading, &c. 60 The indirect tax on labor on same basis as that estimated by D. J. Morrell, Esq., at the Cambria Iron Works, on average value of cast steel, 6 per cent., inclusive of income tax. 23 00 50 00 From which it appears that the direct and indirect tax paid by the American manufacturer, upon every pound of cast steel produced by him, amounts to 2 £ cents. Now for the sake of comparison, take the official returns on page 44 of steel imported into New York, Philadelphia, and Baltimore, giving the quantity under each of the several classifications, and it will be seen that the whole quantity of imported steel amounted to 31,296,043 lbs., which at the present rate of duty will amount to $870,030 38, or 2 T ^ cents per lb. duty, being about £ cent per lb. more duty than the American manufacturer pays in the shape of excise on his production. J hus it becomes manifest, that in the competition in our own markets betwecen imported and American cast steel, the advantages are all on the side of the foreign article, the difference of £ cent in duty being seal cely appreciable, and placing the American manufacturer in a much worse position than he could have occupied under the very lowest free trade tariff ever enacted in this country. It is no amelioration of this burden to say that the premium on gold, m which the foreign duties are paid, operates as a protection to the American manufacturer. If this was even true, it is not a legitimate argument, because our legislation on questions involving such grave results, upon the invested capital of our people in manufacturing pursuits, should never be regu- 49 lated upon any other than a solid specie basis, so that the foundation should be sure, even if the superstructure was occasionally shaken by external causes or fluctuating circumstances. While we freely admit, that under the present tariff our business would perish, but for the premium on gold, we still contend that upon the whole, this very cause has operated most disastrously upon our interests, subjecting us to sudden inflations of prices, followed by corresponding contractions, without any regard to regularity or discrimination. The result since the war ceased is, that while gold commands a premium of less than 50 per cent., the cost of labor and materials is fully 100 per cent., and of fuel more than 200 per cent, above the prices of 1861, or when gold was at par. These are not wild or random statements. They are sober and stub¬ born facts, well known and understood, and requiring no proof to sus¬ tain their truth. In close connection with this branch of the subject, and in order the more fully to elucidate the probable effects of increased duties for the protection of the manufacture of steel in the United States, a brief resume of its past history may not be inappropriate. Common, or blistered steel, and plow and spring steel, have been ex¬ tensively manufactured in this country for thirty years, the most ordi¬ nary descriptions from American iron, and the better sorts from imported or Swedes iron. During all this period, frequent but ineffectual attempts were made to produce cast steel, until the opinion became very general that we had no iron in this country suitable for being converted into good cast steel. It was reserved for Pittsburgh to bring about the first substantial and enduring success in the year 1860, and encouraged by our example, numerous establishments have sprung into existence, as already indicated in this paper. For many years previous to the introduction of American cast steel, the duty on the foreign article was below the revenue standard, being only 12 per cent, ad valorem , and the price of best English cast steel continued to range at from 17 cents to 19 cents per lb. As soon, however, as it was found that the manufacture in this coun¬ try was likely to be a success, and it was discovered that it was making its way into favor at a little below the English rates, which was neces¬ sary in order to induce consumers to forego their prejudice in favor of the foreign brands, the prices of English steel were reduced from time 50 to time, until the best imported cast steel was currently sold at 13 cents per lb., and in some instances as low as 12| cents per lb. The low price of labor, materials, and fuel in this country, enabled us still to compete with our foreign antagonists, and to make some progress in spite of their systematic attempts to crush out this new development of American industry. So resolute were these efforts for our destruction, that the increase of duty afforded by the Morrill tariff of 1861, which, though specific amounted to about 25 per cent, ad valorem , or 100 per cent, upon the former rates, assuming the foreign valuation to he the same as before that no increase of price was demanded by the importer, and both American and English cast steel continued to be sold at the lowest rate^, until the suspension of specie payments created a rapidly increasing premium on gold, and thus compelled a large advance on both descrip¬ tions. English cast steel advanced according to the gold barometer, and the American manufacture sympathized with the advancing tendency of labor, materials, and fuel. The highest prices reached were in July, 1864, when best English cast steel was sold at 45 cents per lb., with gold at a premium of 170 to 190 per cent. American cast steel of the same quality was never sold for more than 32 cents, the difference being from 13 to 15 cents per lb. in favor of the latter. Taking the prices at which best English cast steel was sold in this country, for twenty-five to thirty years before the successful introduc¬ tion of the domestic manufacture, and we find the average price to be about 18 cents per lb. Add to this price the 'premium on gold or foreign exchange, which we have seen as high as 185 per cent., and then estimate the effect upon prices of the extraordinary demand created by the war for the manufac¬ ture of arms, entrenching tools, &c., for both belligerents , as well as for the large increase in the general consumption of the country, and it is not a violent presumption that the price of English cast steel would have been greatly in excess of the maximum rate of 45 cents per lb. if we had been left to the tender mercies of our friends across the water for a supply of this indispensable material in providing for the national defence. If w e estimate our consumption for the last four years upon the ascer¬ tained basis afforded by 1864 as amounting to 1874 millions of pounds, si and it is conceded that the prices of imported cast steel, in the absence of all American competition, would have been 15 cents per lb. higher than the average prices paid for American cast steel during that period, of which there cannot be a reasonable doubt, it is clear, that the Gov¬ ernment and people of the United States have already been gainers to the extent of not less than twenty-eight millions of dollars by the fortu¬ nate introduction of this important manufacture in this country in time to defeat the British monopoly. The largest consumers of steel in the United States fully appreciate this view of the subject, and some of the most sagacious manufacturers of steel goods have been from the first inclined to encourage the Ameri¬ can article, in order to build up a competition that should prevent a foreign monopoly. As gold declined the prices of steel receded until the present time; that for English being now about 14 to 15 cents per lb. gold, or 20 cents per lb. currency, whilst American cast steel is sold at a fraction less. The nominal rates always fluctuate downward more or less in the con¬ flict for tra^e; and the American steel manufacturer now finds himself in a position that a further decline in the gold premium to 30 per cent, would at once arrest the conversion of all the ordinary and medium qualities of cast steel, and a further decline to 25 per cent, would effec¬ tually destroy all competition, by putting a stop to the whole manufac¬ ture in this country. Under these circumstances, we ask for such a reconstruction of the rate of duty, and of the several classifications, as will protect us from the ruinous competition of the foreign article, for we have already shown that, practically, the duty on foreign steel in the aggregate does not exceed one-fourth of a cent per pound over the direct and indirect excise upon American steel. We therefore propose that the duties on imported steel may be ad¬ justed upon a principle, which, while they will afford us substantial pro¬ tection, will not be deemed unreasonable; nor lessen materially, if at all, the revenues of the Government from this source. We believe that if the following adjustment and rate of duty were fixed upon, we could continue to maintain the struggle for ascendancy with moderate prospects of success against foreign competition, under all reasonable contingencies; and thus preserve the manufacture of American cast steel in all its branches, until it shall have acquired a substantial foothold, by reason of our having had time to educate our 52 Own skilled labor, and to improve upon our present /acilities to such an extent, as to defy all attempts from abroad for the destruction of this new and interesting development of our national industry: 1st. On all puddled or blistered steel, or all steel other than cast and shear steel in bars, sheets, plates or coils, a duty of. *3 ets. per lb. 2d. On all cast and shear steel, in bars, ingots, sheets, plates or coils, valued at 7 cts. per lb. or less ... G cts. per lb. 3d. On all cast and shear steel, in bars, ingots, sheets, plates or coils, valued above 7 cts., a duty of G cts. per lb., and 10 per ct. ad val. 4th. On all steel wire, not exceeding £ inch diameter, a duty of G cts. per lb., and £5 per ct. ad val. 5th. On steel in any form, not otherwise provided vided for...50 p Cr cfc a ^ These rates will not exceed the present tariff more than the direct and indirect tax for excise upon domestic steel, which, as already stated, is about 2| cts. per lb. The first class being but one remove from iron, and converted by a very simple and inexpensive process, does not require the same protec¬ tion as cast steel, which is a very laborious and costly manufacture, espe¬ cially in the destruction of crucibles, involving also the most skilful treatment in all its manipulations, to secure the best and most uniform results. The second class includes all the lower descriptions of cast steel, such as machinery and rolled steel, for cutlery, forks, files, &c. Much of this quality will be found to be imported in the lowest classification under the present tariff, which is apparent from the fact set forth in the official statements already given, from which it appears that considerable more than one-half the entire foreign importations for 1864 were crowded into this class. The same remarks apply with equal force to the proper relation be¬ tween the second and third class in the existing tariff, for it is manifest that all best tool steel of ordinary sizes is now brought into the grade or classification of steel over 7 cts. per lb., and not over 11 cts. per lb., * * eCent CVents and later informatiou has compelled the manufacturers to change this figure to 4 when it was doubtless intended to be included in the highest or third class for duty. By the proposed arrangement of duties, the higher qualities, or what is known as best cast steel, will be brought into the third or highest class, where it properly belongs. The addition of 10 per cent, ad valorem on this class, preserving the language and principle of the present tariff, was wisely introduced, to secure a fair increase of duty upon costly descriptions, such as large circular saw plates, &c., on which the specific duty would be trifling, compared with its actual value, but which will thus be taxed for the additional cost conferred, by extra quality, and unusual form or shape. The above rates we propose shall be modified to conform to any change in the present excise or domestic duty, either by an increase or a reduction thereof, as the judgment of the Commission may deem expedient, in the adjustment of the internal revenue laws. We arc entirely satisfied, that under the classifications of the tariff as now arranged, advantage has been taken, by the universal practice of charging foreign steel at the mere cost of its manufacture abroad, to enter it for duty at rates not contemplated by the framers of the law. It certainly never entered into their calculations that any cast steel would be entered at our custom-houses at lower rates than common bloom iron could be sold for in this counti*y; and yet such is undoubtedly the fact—for it will be seen by the table on page 44, to which we have sev¬ eral times referred, that a majority of the entire importation into the city of New York for 1864, was entered at a cost of 4£ cts. per lb., or $90 per ton of 2,000 lbs. Without exhausting the subject, we forbear to trespass longer upon your indulgence, by a further array of argument and illustration in sup¬ port of the necessity of additional protection to the manufacturer of American cast steel. From what has been stated, it is obvious that while labor, and all the materials (which arc but labor after all) entering into the production of steel, arc so much higher in this country, it is not possible for us to con¬ tend successfully with the cheaper labor and materials employed by our competitors at the present rate of duty. The protection we require is practically, not so much for the benefit of the manufacturer as for the laborer; and the question to be deter¬ mined is, whether it is desirable to degrade American labor to the miserable standard of England, France, and Germany, or whether it is 54 better to elevate it by liberal legislation in favor of home industry so that the working men of the United States may enjoy all the advantages of education and good living, which are denied the unhappy operatives of the workshops of Europe. All of which is respectfully submitted. HUSSEY, WELLS & CO., PARK, BROTHER & CO., SINGER, NIMICK & CO., COOK, ANDERSON & CO., HALLMAN, RAHM & CO., Pittsburgh , Pa. RE I PER & CO., Allegheny, Pa. PRENTICE, ATIIA & CO., Newark , N. J. WHIPPLE FILE MFG. CO., Ballardvale , Mass. SWEET, BURNEY & CO., Syracuse , N. Y. WALTER, GREGORY & CO., Adirondack Works , N. J. WHEELER, CLEMSEN & CO., New York. JAS. R. THOMPSON, Jersey City , W. J". JAS. HORNER & CO., Pompton, N. J.