MISCELLANEOUS (INCLUDING TOILET ARTICLES, ETC.)—Continued.

1 Produce 60 per cent United States output asbestos goods.
2 Produce 80 per cent United States output.

COSTS AND PRICES OF IRON AND STEEL PRODUCTS.

The following tables and diagrams, prepared in the office and under the direction of the Industrial Commission, show the monthly cost of producing pig iron, steel billets, and steel rails, including raw materials and cost of labor and incidentals, together with the selling prices of these products, and the margin between the cost and the selling price. They cover the years 1890 to 1901.

The complexity of the iron and steel industry makes an accurate presentation o the elements of cost in a given product very difficult. The commission has, however, obtained information from three or four of the leading establishments in the country manufacturing the products named, which shows the amount of the raw materials entering into a ton of pig iron, billets, and rails, respectively. Some of the figures submitted for the proportions of the constituents in these products are in the nature of general estimates rather than of minute statistical records; but one or two establishments have submitted data drawn up from long and careful records, and the average of all the establishments represents approximately the average amount of raw material actually required. On the basis of the ascertained monthly or yearly prices of these raw materials the aggregate cost of the quantity required to produce a ton of the respective products has been computed.

The establishments which furnished these statements as to the amount of raw materials required have also given estimates as to the cost of labor and of incidentals in the manufacture of the various products. It should be remarked that the cost of labor and of incidentals in the manufacture of each of the products has been treated as a fixed quantity for each year since 1890. The actual figures given for these costs cover only the most recent period. Beyond question there have been steady improvements in the methods of manufacture tending to reduce the cost of labor and incidentals per unit of product. On the other hand, the advance of wages, from 1899 to 1901, especially as compared with the years immediately preceding, no regard to which has been given in making up the figures, may in part have offset the reduction through such improvements. In any case the comparison as to costs will not be greatly vitiated by inaccuracies in the items of labor and incidentals, since these represent a comparatively small proportion of the cost of transforming the respective raw materials into the finished products. It should of course be remembered that a large part of the cost of the original raw materials of iron and steel-ore, coke, etc.-is that for labor; but since the raw materials have an ascertainable price, the margin of cost and profit in turning them into pig iron or steel may be computed separately.

While it can scarcely be hoped that the estimates of cost presented from month to month represent a strictly accurate average for all establishments, the information has been gathered with sufficient care to give, it is believed, a fair representation of the general movement. It may specially be noted that, even if a given factor be wrongly computed, it will, if treated as a fixed quantity throughout the entire term of years, not prevent a fairly correct view of the movement of costs from time to time.

PIG IRON.

The three raw materials in the manufacture of pig iron are iron ore, coke (which is used in such large quantities that it may be considered as raw material rather than fuel), and limestone. According to the reports of several establishments to the Industrial Commission, the average quantity of Lake Superior ore required to produce a long ton (2,240 pounds) of pig iron is 3,817 pounds; of coke, 2,035 pounds are needed, and of limestone, 1,048 pounds. The price of limestone has varied little during the past ten years, and may be taken as approximately 40 cents per ton, plus freight to the mills, which varies according to the distance, but is a comparatively small amount in the aggregate. The average labor cost of making a ton of pig iron from the ore, as reported by the several establishments, is 99 cents, and the average outlay for extras and incidentals is 50 cents. In preparing the tables the three factors of limestone, labor, and incidentals have been treated as a fixed amount, aggregating a cost of $1.68 per ton of product.

The figures given in the table immediately below for the prices of iron ore as a Ibasis of cost in the manufacture of pig iron are those of Lake Angeline ore at the lower Lake Erie ports. These figures have been furnished by one of the leading establishments manufacturing iron and steel. A comparison with the figures for various other kinds and grades of ore, which are presented in the annual reports of the American Iron and Steel Association, shows that the movement of the prices of all the leading classes of ore is very nearly the same from year to year as the movement of prices for Lake Angeline ore. The latter is a hematite ore from what is known as the Old Range. It is one of the best Bessemer ores, and sells on an average at about 10 cents per ton more than Norrie ore, which is regarded as a base or standard ore. The prices of iron ore are fixed by yearly periods and do not fluctuate from month to month in the same manner as the prices of finished iron and steel products.

To the prices of iron ore in the computation of costs of producing pig iron has been added $1 per ton as representing approximately the railroad freight rate from the lake ports, the basis of the prices, to Pittsburg. This freight rate has varied within comparatively narrow limits above and below $1 during the past ten years, but owing to the impossibility of ascertaining these variations it has been treated as a fixed quantity. The variations would not be sufficient to affect the cost statistics materially.

The prices of coke, which have been taken as the basis for estimating the cost both of pig iron and of other products into which coke enters, are those f. o. b. Connellsville. These prices have been taken for the years up to 1899, inclusive, from a recent report of the Department of Labor on the prices of products of industrial combinations. (Bulletins of the Department of Labor, No. 29, p. 813 ff.) For the years 1900 and 1901 the average monthly prices have been computed from the weekly reports in the Iron Age. The freight is not considered, but the cost of transporting coke from Connellsville to Pittsburg is not great and has not varied materially from year to year, so that the omission of this item of expense would not affect the tables of cost to any extent.

The price of pig iron, with which the cost is compared, is that of Bessemer pig iron at Pittsburg, the figures up to 1899 being taken from the report of the Department of Labor, above cited, those for 1900 from the annual statistical report of the American Iron and Steel Association (from which, indeed, the figures of the Department of Labor are also taken), and those for 1901 from the weekly reports in the Iron Age.

On account of the fact that the chief element in the cost of pig iron, the price of ore, is fixed by yearly periods, the diagram has been prepared to show the average cost of pig iron by annual periods, without endeavoring to present monthly fluctuations, which would be misleading in the case of the transition from one year to another. The vertical movements of the line of costs at the end of each year are not to be taken as indicating actual corresponding sudden changes in the cost of

manufacture. The ore purchased during one season of lake navigation at the price of that season is held over in large quantities into the winter and even the spring of the succeeding year.

The monthly fluctuations of prices, on the other hand, are presented in the diagram, particularly because of the interest attaching to some of the rapid movements within yearly periods. While it is scarcely correct to compare such a variable selling price with a uniform annual cost of manufacture, the variation in the cost of manufacture within a single year is undoubtedly comparatively slight in most cases.

It should be observed in studying the margin between the cost of production (an annual figure) and the price (a monthly figure) that sharp variations in the margin necessarily appear at the end of each year, which are in a sense misleading. The rate of interest and profit does not, of course, increase or decrease immediately at the beginning of the year in accordance with the new annual price of iron ore. Nevertheless the indication regarding the margin, as shown in the diagram, gives the correct movement of the general level from year to year, and also a fairly correct view of the variations from month to month within each year, except for the change from December to January.

The detailed figures showing the average annual cost of production of pig iron, the monthly selling price, and the margin between cost and selling price from month to month, are given in full in the general tables below. The diagram illustrating the movements is herewith presented. (Diagram A.)

STEEL BILLETS.

The chief ingredient of steel billets is pig iron, and the process of changing pig iron into billets is not a very expensive one. It requires, according to the reports of leading establishments, on the average, 2,607 pounds of pig iron to make a long ton of billets. To this is added an average amount of 114 pounds of scrap steel1 and 19 pounds of ferromanganese. Of coke, on the average, 180 pounds are used, and of coal 580 pounds, per ton of product. The total cost of the raw materials has been ascertained from month to month on the basis of these quantities and of the monthly prices. The price of pig iron taken as a basis is that of Bessemer pig at Pittsburg. The price of coke is that at Connellsville, while the prices of coal and of scrap have had to be taken as at Chicago, since Pittsburg prices are not available. It may be noted that the price of coal is materially lower at Pittsburg than that of high grade coal, such as is taken as the basis of the table, at Chicago. The difference would be sufficient to reduce the cost of production of billets at Pittsburg, were the correct figures for coal available, from 20 to 40 cents per ton.

The following table shows the monthly prices from 1890 to 1900 of coal at Chicago, as given in the annual reports of the Chicago Board of Trade. The prices for the year 1901 not being obtainable, have been estimated in figuring the cost of billets as equal to those for the year 1900, leaving some margin of error, but not enough to affect the general figures materially. The same table shows also the monthly prices of scrap steel at Chicago, which are taken from the weekly reports of the Iron Age (those up to 1899 inclusive having already been published by the Department of Labor in the report cited).

Only one of the establishments furnishing data as to the amount of material required in the production of billets speaks of the use of scrap steel. In the other establishments a larger amount of pig iron is reported as being necessary. The use of the figures as indicated in the text gives, doubtless, the correct average of the materials used for all the establishments.