Senator KEFAUVER. So you do not want to have any price competition with your competitors?

Mr. PATTON. Oh, yes, yes, there is considerable price competition. Senator KEFAUVER. But you want to quote the same price that they quote?

Mr. PATTON. Well, when we are competing for a piece of business, we have to meet the price of the other steel companies.

We think we ought to be able to get that business at as good a price as they do. We do not think we can get any more for our steel than they can and are not willing to take any less.

Senator KEFAUVER. I am talking about increases-identical increases. Your costs of operation are different, you will admit. Some companies are more efficient than others. Why do you have to raise your price the same identical amount as United States Steel, regardless of whether you need the extra profit, regardless of what capacity of production you are operating at?

Mr. PATTON. Most of the time if we were free and did not have a competitive market to contend with, we would have raised our prices higher because we needed higher prices to recoup our costs.

But we could not raise it any higher than our competitors and hope to get business, so we raised them to the extent that we were meeting competition in the marketplace.

Senator KEFAUVER. In other words, you raised them to meet competition in the market?

Mr. PATTON. Yes, sir.

Senator KEFAUVER. Would you not have had more competition if you had not raised them so much?

Mr. PATTON. Not for over an hour because the purchasing agent of the company would have called up another steel company and said, "Republic's price is $1 lower, will you meet it?" And they would have met it, and the result would have been we would have gotten the business at $1 less and have lost $1 profit.

Senator KEFAUVER. How do you know that? When did that ever happen?

Mr. PATTON. It has happened in the past.

Senator KEFAUVER. Give me your documentation.

Mr. PATTON. I do not have any right at the moment here, except to say this:

We raised-I will give you an example—we raised the price of bars $2 a ton several years ago higher than our competitors, forging bars, and we kept that in for several days and nobody else met the price, so we had to come down or we did not get any business.

Senator KEFAUVER. Naturally, if you got a higher price, but give me the documentation when you raised your price less than your competitors.

Mr. PATTON. I do not know.

We have raised our prices and our competitors have come up, met them, in the marketplace.

They have raised theirs; we have met them.

Some have been lowered, and we have met those.

Senator KEFAUVER. Whether you call it follow the leader, acting together, monopoly

Mr. PATTON. Oh, no,

We want to get the business at the going price.

Senator KEFAUVER. There is your problem, operating at only 50 percent of capacity, all selling at the same price, not competing in the foreign markets, even though you do not know whether your cost of production is higher or lower than that of your foreign competitors. That is the reason the Antitrust Subcommittee is interested.

Here is an interesting example. You will remember in 1958, Mr. Patton, when a little company, Alan Wood, raised its price $6 on July 8.

Do you remember when that happened?

Mr. PATTON. Yes, I have a recollection.

Senator KEFAUVER. Alan Wood is a small company in Pennsylvania. They raised their price, and then they had to rescind it because United States Steel and the others did not go along.

The president of Alan Wood stated, as carried on page 4481 of the subcommittee hearings on the 1958 steel price increase:

We are disappointed that the big mills have not increased their prices. We have no alternative but to stay competitive with their prices.

Do you remember that?

Mr. PATTON. Yes, sir.

Senator KEFAUVER. And then you came along with Armco on the 29th of July, and you and Armco on exactly the same day announced that you were raising your prices by $4.50 a ton.

You remember that, do you not?

Mr. PATTON. No, I do not remember that.

Senator KEFAUVER. This is the clipping from the Washington Post of July 30.

Mr. PATTON. What year?

Senator KEFAUVER. 1958. I will ask that it be put in the record at this point.

(The document referred to is as follows :)

[From the Washington Post, July 30, 1958]

ARMCO STEEL BOOSTS PRICE

MIDDLETOWN, OHIO, July 29.-Armco Steel Corp. said today it will increase prices on a dozen steel products effective Thursday and Republic Steel Corp. indicated it will follow suit shortly.

Thomas F. Patton, president of Republic, the Nation's third largest steel producer, said in Cleveland:

"If Armco sees fit to raise its prices, we will follow promptly. We will meet in the morning to discuss the situation."

The Armco announcement said the increases will average 2.75 percent on the products involved. Armco is the Nation's seventh largest steel producer.

A month ago Republic had take the position that it could not raise prices unless United States Steel acted first. Board Chairman Charles M. White said then: "If we did (raise prices before Big Steel acted), we wouldn't sell any steel."

Armco's price increase action was the first by a major American steelmaker this summer. Its announcement followed word earlier this afternoon from United States Steel's chairman, Roger Blough, that "we haven't anything in mind at the present time" on a price hike.

With Armco breaking the hold-the-line front and Republic promising to follow, it seemed likely other producers would take similar action. For months they have been asserting that the July 1 wage increase given under the United Steelworkers contract and estimated as adding $4 a ton to their costs would have to be passed along to consumers, at least in part.

President Patton, president of the third largest steel producer, said in Cleveland:

If Armco sees fit to raise its prices, we will follow promptly. We will meet in the morning to discuss the situation.

And then it points out that a month ago Republic had taken the position that it could not raise prices unless United States Steel acted first.

Charles M. White said:

If we did (raise prices before Big Steel acted), we would not sell any steel. You did raise them $4.50 a ton the same day that Armco did. Did you know that United States Steel was going to back up your price when you raised yours?

Mr. PATTON. I certainly did not, no, but if Armco was willing to test the market, we were willing to test it, too. We needed a price increase badly.

Senator KEFAUVER. Mr. White had said that if you raised the price before United States Steel, you would not sell any steel, and you could not raise prices unless United States Steel acted first, and, yet, you did act before United States Steel?

Mr. PATTON. Yes, we acted, and I will say that if United States Steel or the other steel companies did not become competitive pricewise, our price rise would not have stuck.

Senator KEFAUVER. And the next day United States Steel did raise its prices?

Mr. PATTON. I cannot answer that.

Senator KEFAUVER. That is a fact, by $4.50 a ton.

Now, how did you and Armco both know that you would raise your prices the same day and the same amount, $4.50 a ton?

Mr. PATTON. I presume that we found out from our customers that day that Armco had raised its prices, and we were going to raise our prices to get the same price for our product that Armco was getting for its, because we needed a price increase.

Senator KEFAUVER. Why did you not just raise it to $4.40 a ton? Mr. PATTON. Because if we raised it less, we would have our price met at a lower price and we would be giving a dollar or whatever it was of our profits away. We are not in business to do that.

Senator KEFAUVER. How do you know that Armco would come down?

Mr. PATTON. If they did not, we would have gotten some business. Senator KEFAUVER. If you want to get your operating capacity up 50 percent, make steel for lower cost, which you could if you raised capacity, if you want to get your markets back, put all these people back to work that you have been talking about, might it not be in the public interest for you to raise prices less and have the others come back, if they want to, and meet your lower price?

Mr. PATTON. It is in our interest to get as high a price for our product as the market will permit us to get, and if another steel company raises the price, we think our salesmen and our product are as good as theirs and we hope to get the same price that they do.

Senator KEFAUVER. One notable exception that I know of when a steel man did not go along with the price increases, thereby serving the public interest and bringing some competition into the industry, was in the early 1930's when Mr. Weir did not go along with the in

dustry's price increases. He was competitive and brought some competition and lower prices to the steel industry. Since that time I know of no occasion when that has happened.

That helped build up Weirton Steel, which increased their business and made them more competitive, did it not? You are familiar with that story, I presume?

Mr. PATTON. Back in the early 1930's?

Senator KEFAUVER. Yes.

Mr. PATTON. No, I am not familiar with that story.

Senator KEFAUVER. Very well.

Mr. PATTON. Way before my time.

Senator KEFAUVER. It has been written about. You may be young, Mr. Patton, but I thought you would remember that.

Mr. PATTON. I am not as young as I would like to be, no.

Senator KEFAUVER. Mr. Patton, in 1958, when you and Armco brought about a price increase, when you really started losing your markets, your operating rate was very low, was it not?

Mr. PATTON. In 1958 it was a poor operating rate year. It was also a year, as I recall it, in which we had a substantial labor cost increase. Senator KEFAUVER. We will make this next table a part of the record. It is derived from the magazine Steel.

(The table referred to is as follows:)

Source: Prices: Steel, the metalworking weekly, Jan. 4, 1960, pp. 8-17, "Finished Steel-Arithmetical Price Composite." Operating rate: Ibid., pp. 5-8, and Department of Commerce, Business Statistics, 1951, 1953, 1955, and 1957 editions.

Senator KEFAUVER. The operating rate of the steel industry generally was 61 percent of capacity. You raised the price to $4.54. Then in 1954 when steel's operating rate was only 72 percent of capacity, you raised the price by $4.32.

Do you not think you would be more competitive and attain a higher operating rate, Mr. Patton, if you did not all raise by the same amount, particularly in recession years.

Mr. PATTON. Senator, I know from experience that if you put a price in that is any different than the going price, up or down, the purchasing agent of your customer is going to be calling the company, and you are either going to have the same price-if your price is lower, your competitor is going to come right down to meet it, and if your price is not as high as your competitor's you are going to lose money, and you are not doing the job you should do to make

money.

Senator KEFAUVER. You say that if you raise your price less, that your competitors will meet it. I asked you to document that and you have no documentation.

Mr. PATTON. Look here, here is the Wall Street Journal. I can read it all over. Here is the Wall Street Journal of April 7.

"United States Steel boosted their sales discount" to their pipe distributors to 4 percent. That means they get 4 percent less for their product.

We came right down to meet that, because if we did not, we would not get any pipe business.

Here United States Steel cuts mill price on all-country goods to meet dealers, July 13. If we were going to get any business, we had to do the same thing, and we did.

Here stainless steel price, June 1, 1961, Wall Street Journal, stainless steel price cut by Ludlum on verge of spreading. We had to cut our prices or we were not going to get any stainless business.

Here is a sheet that shows price cut after price cut in the last year and a half and we all had to come down or we were not going to get business.

Senator KEFAUVER. They were made by somebody else, not by you. Allegheny & Ludlum is a small company. What all this amounts to, really, Mr. Patton, is that even though you have a number of companies in the steel business, there is no real price competition. There may be competition among salesmen, for better service, but there is no real price competition.

Mr. PATTON. What would you call this? On June 6, 1961:

United States Steel cuts seamless pipe prices $18 a ton.

We had to cut ours $18 a ton or we would not have gotten any business. I suppose the other pipe producers did the same thing. Is that not price competition, sir?

Senator KEFAUVER. I will be frank with you, that is what I would like to see more of.

Mr. PATTON. And frankly that is what is ruining us, because we are not making any money.

Senator KEFAUVER. These are mostly fringe items. I am talking about basic steel.

Mr. PATTON. Pipe is basic steel, one of the big items of basic steel. Senator KEFAUVER. On hot-rolled bars, cold-finished bars, sheets and strip plates—the basic steel items the price increases have been exactly the same.

Now, to recapitulate, Mr. Patton, unless Senator Ervin wants to ask some questions

Senator ERVIN. I have been interested in some of the questions. Do you know any people who are seeking to purchase steel in the United States today who are unable to find the steel to purchase? Mr. PATTON. I did not get the question, sir.

Senator ERVIN. Do you know any people in the United States who are desirous of purchasing steel who are unable to have their needs. satisfied at the present time?

Mr. PATTON. I do not.

Everybody is looking for the people who want to purchase steel, and everybody who wants steel in the United States can get it today.

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