¹ Urofsky, Melvin I., Big Steel and the Wilson Administration (Columbus, 1969), 32–36Google Scholar, 41, 63–64, 86–87.

² Urofsky, Melvin I., “Josephus Daniels and the Armor Trust,” North Carolina Historical Review, XLV (Summer, 1968), 237–63.Google Scholar

³ Daniels to Elbert H. Gary, March 31, 1917, Exhibit 1726, and Memorandum by Bernard Baruch, March 30, 1917, Exhibit 1727, both in the United States Senate, Special Committee Investigating the Munitions Industry, Munitions Industry Hearings …, 74 Cong., 1 Sess. (Washington, 1935), XXII, 6534 (hereafter cited as Nye Hearings). See also Baruch, Bernard M., Baruch, The Public Years (New York, 1960), 64–65Google Scholar; Entries for April 3, 4, 5, and 6, 1917, Cronon, E. David (ed.), The Cabinet Diaries of Josephus Daniels (Lincoln, Neb. 1963)Google Scholar, hereafter cited as Daniels Diary; and Iron Age, April 12, 1917.

⁴ Baruch to Wilson, May 15, 1917, Records of the War Industries Board, Record Group 61, Federal Records Center, File 21A-A4, Box 1147 (hereafter cited as W.I.B. Records). See also Baruch to Daniel Willard and Willard S. Gifford, March 31, 1917, and April 19, 1917, in the Records of the Council of National Defense, Record Group 62, Federal Records Center, Suitland, Maryland, File 2-A8, Box 86 (hereafter cited as C.N.D. Records).

⁵ Frank A. Scott to Franklin K. Lane, May 3, 1917, C.N.D. Records, File 2–AB, Box 86.

⁶ In May 1917, the President discussed with Daniels a plan by which the government would suggest “good” prices, yielding profits of from 10 to 20 per cent, and if the producers refused to cooperate, they would have to declare so in writing. The President could then appeal to the country and demand that they sell at fair levels. Daniels Diary, May 22, 1917. Also see Beaver, Daniel A., “Newton D. Baker and the Genesis of the War Industries Board, 1917–1918,” Journal of American History, LII (June, 1965), 43–58.CrossRefGoogle Scholar Baker argued that neither Congress nor the American people would sanction outright federal control of the steel industry. Baker to Wilson, May 28, 1917, Papers of Woodrow Wilson (Manuscript Division, Library of Congress), hereafter cited as Wilson MSS.

⁷ Iron Age, May 10, 1917.

⁸ The steel industry at this time was dominated by United States Steel, the Bethlehem Corporation, and the newly formed Midvale Iron & Steel Corporation, which together produced close to two-thirds of the industry's output. Gary had won over the executives of these companies to his programs, but many of the smaller independents still clung to the older beliefs of a free-swinging, competitively-structured market. For all practical purposes, however, Elbert Gary spoke for the entire steel industry during the war, despite occasional flare-ups among the independents. See Kolko, Gabriel, The Triumph of Conservatism (Chicago, 1967), 30–39Google Scholar for a brief description of U.S. Steel's unsuccessful but persistent search to end competition before the war.

⁹ Taking the average price of all steel products from July 1, 1913, through June 30, 1914, as a base of 100, the April, 1917, index stood at 340, and by July had shot up to 435. Pig iron went from $42.20 to $57.45 per gross ton, and billets from $73.75 to $100.00 per g.t. Bars increased from $3.75 to $4.50 per cwt; for the same quantity, beams rose from $3.88 to $4.50, and plates to $9.00 from $5.88. Division of Planning and Statistics, W.I.B., “Steel Price Chart,” n.d., copy in Papers of Bernard M. Baruch (Princeton University). The editors of Iron Age argued in July that some action was needed to head off a possible market collapse. See Iron Age July 12, 1917.

¹⁰ “Memorandum adopted by the Joint Conference of Army and Navy Officers with James A. Farrell, Representing the Iron and Steel Institute, June 21, 1917,” Exhibit 1730, Nye Hearings, XXXI, 6535.

¹¹ Baker to Scott, Exhibit 1731, .; and New York Times, June 28, 1917.

¹² Baruch and Scott to Baker, July 5, 1917, W.I.B. Records, File 21B–A3, Box 166. Throughout June and July, government purchasing bureaus found it difficult to obtain steel. Robert E. Wood (General Purchasing Officer) to General George Geothals, June 28, 1917, W.I.B. Records, File 21B-A3, Box 166; Daniel Willard to William C. Redfield, July 6, 1917, Records of the Department of Commerce, Record Group 40, National Archives, File #75024/164; also see Iron Age, July 19, 1917.

¹³ Iron Age, June 28, 1917. For evidence relating to the demand by secondary manufacturers for fixing steel prices, see: American Machinist, July 26 and August 23, 1917; C. M. Woolley (president of the American Radiator Company) to Burwell S. Cutler (Acting Chief, Bureau of Foreign and Domestic Commerce), July 30, 1917, Department of Commerce Records, File #75024/185.

¹⁴ New York Times, July 12, 1917.

¹⁵ Daniels Diary, August 1, 1917. See also Col. Edward M. House to Wilson, August 4, 1917, Wilson MSS, Series II, Box 155.

¹⁶ Gary to Baruch, July 18, 1917, Box 149, Papers of Josephus Daniels (Library of Congress), hereafter cited as Daniels MSS.

¹⁷ Alva Dinkey to Baker, July 31, 1917, and similar message in John A. Topping to Baker, August 1, 1917. .., Box 38. Dinkey claimed that only the U.S. Steel Corporation, with its low costs, could afford to make the same price to both the American and Allied Governments; his company, he declared, could not possibly do it.

¹⁸ Baker to Dinkey, August 2, 1917, Baruch MSS. Series VIII, vol. 1.

¹⁹ U. S. Senate, Special Committee Investigating the Munitions Industry, Minutes of the War Industries Board from August 1, 1917, to December 19, 1918, Committee Print 4, 74 Cong., 1 Sess. (Washington, 1935), Meeting of Aug. 7, 1917.

²⁰ For a description of the Federal Trade Commission's general role in price fixing, see the testimony of William B. Colver in House of Representatives, Select Committee on Expenditures in the War Department, Expenditures in the War Department, Hearings …, 66 Cong., 1–3 Sess. (Washington, 1919–1921), II, 2673–696.

²¹ Iron Age, July 19, 1917; and see E. A. S. Clarke (president of Lackawanna Steel) to Baruch, August 10, 1917, W.I.B. Records, File 21A–A4, Box 1147.

²² Iron Age, September 13, 1917.

²³ ibid.., August 23, 1917, and W.I.B. Minutes, September 18, 1917.

²⁴ “Report of the Federal Trade Commission made upon the Direction of the President of the United States, on the Costs of Iron Ore, Coke, Pig Iron, Steel, and Certain Steel Products, September 8, 1917” enclosed in William J. Harris to Woodrow Wilson, September 18, 1917, Wilson MSS, Series IV, Case File 4178. Commissioner John Franklin Fort disagreed with the pooling plan in an addendum to the F.T.C. report. Although the F.T.C. favored contract negotiation throughout the war, the W.I.B. never pursued the matter. Undoubtedly, Constitutional proscriptions regarding the sanctity of contracts would have made such a policy, even in wartime, highly questionable. See F.T.C. “Report;” Iron Age, October 4, 1917; and the Annual Report of the Federal Trade Commission for 1917.

²⁵ For an account of this meeting see Bernard Baruch, The Public Years, 66–68.

²⁶ Quoted in the New York Times, September 25, 1917. Engineering and Mining Journal suggested the prices settled upon were close to those quoted for several months whereas the WIB compared the savings with unrepresentative buyers. According to one observer, “The new schedule, while representing a radical reduction in current quotations was not low, even while making allowances for the higher costs of production under war conditions.” Berglund, Abraham, “Price Fixing in the Iron and Steel Industry,” Quarterly Journal of Economics, XXXII (August 1918), 597–620CrossRefGoogle Scholar, 612. Iron Age noted that the WIB statement put the former price of pig iron at $58 per ton when the recent level was $50 or less. It became $33 per ton under the WIB agreement. See Iron Age, September 27, 1917, See also Hardware Age, October 4, 1917, for a similar observation. The W.I.B. reported the following reductions: coke, then selling at $16.00 per net ton, reduced to $6.00; pig iron from $58.00 to $33.00 per gross ton; bars from $5.50 per hundred weight to $2.90; shapes from $6.00 to $3.00; and plates $11.00 to $3.25. Robert S. Lovett to Gary, September 25, 1917, in W.I.B. Minutes, September 28, 1917.

²⁷ Iron Age, September 27, 1917.

²⁸ Ibid..

²⁹ The specter of the Pomerene Bill remained to haunt the industry for some months, but it never did reach the statute books.

³⁰ Iron Age, November 1, 1917.

³¹ ibid..

³² W.I.B. Minutes, December 10, 1917; “Conference of Steel Manufacturers and Members of War Industries Board … December 10, 1917,” W.I.B. Records, File 21A–A1, Box 2; and Daniel Willard to Wilson, December 22, 1917, Wilson MSS.

³³ lron Age, May 2, 1918.

³⁴ Hagedorn, Hermann, Brookings: A Biography (New York, 1937)Google Scholar, passim; Weinstein, James, The Corporate Ideal and the Liberal State (Boston, 1968), ch. 8.Google Scholar The other members of the committee were: F. W. Taussig, Chairman of the Tariff Commission, a noted authority on the tariff and highly respected in the business community; William B. Colver of the F.T.C.; Harry A. Garfield, president of Williams College and wartime Fuel Administrator; Hugh Frayne, labor representative on the W.I.B.; Henry C. Stuart, former governor of Virginia, representing agricultural interests; and W. W. Phelps, a New York financier who served as secretary. In addition, at Secretary Daniels' request, Wilson had agreed that the Army and Navy should each have a representative on the committee. Commander John Hancock represented the Navy; Lieutenant Colonel Robert H. Montgomery sat in for the Army. Both service representatives took very little part in P.F.C. discussions; their main function was to insure that their own service's special contracts and arrangements were not jeopardized by P.F.C. rulings. In addition, Bernard Baruch held ex officio status.

³⁵ Iron Age, March 14, 1918.

³⁶ Senate, Special Committee Investigating the Munitions Industry, Minutes of the Price Fixing Committee of the War Industries Board. Committee Print No. 5, 74 Cong., 2 Sess. (Washington, 1936), Minutes of March 20, and 21, 1918 (hereafter cited as P.F.C. Minutes).

³⁷ Iron Age, September 11 and 26, 1918; P.F.C. Minutes September 19, 1918.

³⁸ John Kenneth Galbraith has suggested that governmental pricing is more successful in industries where some sort of pricing cooperation had previously existed than in ones where competitive markets prevail. The case of steel during World War I would seem to support this hypothesis. Despite some breakdowns, the steel industry had for the most part followed U. S. Steel's pricing policy since 1903, and the basing-point system of “Pittsburgh-plus” had further assisted in informally stabilizing prices. The WIB and PFC had no difficulty establishing pricing mechanisms after the September, 1917, agreement, since the industry had already informally established such mechanisms. See Galbraith, , A Theory of Pricing Control (Cambridge, 1952)Google Scholar, and for “Pittsburgh-plus,” Marengo, Louis, “Basing Point Pricing in the Steel Industry” (Ph.D. dissertation. Harvard University, 1950).Google Scholar

³⁹ Brookings to John Skelton Williams (Director, Purchasing and Finance Division, United States Railroad Administration), August 23, 29, 30, 1918, W.I.B. Records, File 21A–A3, Box 34; and Brookings to the Price Fixing Committee, September 16, 1918, ., Box 38.

⁴⁰ Brookings to J. A. Campbell, October 16, 1918, W.I.B. Records, File 21A–A3, Box 163. The oft-professed belief by both industry and federal officials that excess profits would be recovered by a discretionary tax proved, in the end, unsound. Although the War Revenue Act of 1918 established rates as high as 70 per cent, governmental inexperience with collection and chaos over accounting procedures failed to hold down profits to desirable levels. During the war years, U.S. Steel had after-tax profits of over a half-billion dollars, and averaged over 15 per cent return on investment, well above the proposed limit of 12 percent. Bethlehem and the other companies did even better, averaging 24 per cent return on investment after taxes. See Federal Trade Commission, Report … on War-Time Profits and Costs of the Steel Industry (Washington, 1925), passim.Google Scholar

⁴¹ Brookings to W. M. Wells (of the F.T.C.), October 28, 1918, W.I.B. Records, Füe 21B– A3, Box 163; and Brookings to John A. Topping, October 16, 1918, ..

⁴² John A. Topping to Brookings, November 11, 1918; Brookings to Baruch, November 13, 1918, and to John A. Topping, November 15, 1918; and to Elbert Gary, November 15, 1918, all in Ibid..

⁴³ “Minutes of Special Meeting with Committee Representing the American Iron and Steel Institute with Members of the War Industries Board for the Purpose of Discussing Means of Stabilizing the Industry During the Transition Period following the Signing of the Armistice, November 13, 1918,” enclosed in H. P. Ingels to Baruch, January 3, 1919, Baruch MSS, Series 2, vol. 14. Also see Himmelberg, Robert F., “Business, Antitrust Policy, and the Industrial Board of the Department of Commerce, 1919,” Business History Review, XLII (Spring, 1968), 13–14.Google Scholar