It has been estimated that if we had maintained our 1953-57 average participation in world export trade, and had been able to prevent further import erosion, we would have shipped 6 million more tons than we actually shipped during 1961. This means a loss of $1.2 billion in annual sales volume, a loss of 50,000 jobs, and a loss of over $300 million in wages annually, for American steelworkers.

In addition to the grave consequences which disclosure of the information called for by the subpeñas would have with respect to competition from foreign steel producers, there would also be a serious domestic impact. Producers of aluminum, plastic, glass, paper, and other materials competing with steel would have for the first time steel-cost information which could prove of great benefit to them and great damage to us, in the steel industry. So it seems to us, gentlemen, that the steel industry's problems should not be made more difficult by requiring steel companies to make burdensome and competitively damaging disclosures of confidential cost information. We believe on the contrary that Government and business should be working shoulder to shoulder to provide this country with the healthy, growing, and prosperous steel industry that is so essential to our national security and a sound national economy.

And may I say that a big stride in this direction and in restoring the confidence of the business community can be taken by this committee by relieving us of the serious competitive threat to which these subpenas have exposed us.

May I, as an official of Republic Steel Corp., state that we have taken the position that we have in this matter because of our responsibility to our nearly 47,000 active employees and the 11,000 other employees who have been laid off for some months because of lack of business, and because of the stewardship entrusted to us by our more than 100,000 shareholders, located in all the States of this Nation, and because of the obligations we owe to the many communities in which our plants are located and to the thousands of other Americans who indirectly depend upon our company for their daily living and well-being.

Before I conclude, let me speak briefly about the failure of the nine subpenaed officials to appear at the hearing of the subcommittee on August 31. As you know, the subpenas that were served on us as individual officers of the four companies here involved were served some time after the companies had made their respective decisions to decline to furnish the information called for in the April subpenas addressed to the corporations only, and after the chairman of the subcommittee had been advised of these decisions by letters stating the companies' reasons in considerable detail.

The clause in the printed subpena form referring to testifying was stricken out before the subpenas were served on us as individuals. We were not called upon to testify, but only to produce records. Counsel advised us that, inasmuch as we had already declined to produce records, we need not appear. I assure you gentlemen that there never has been any intent on the part of anyone connected with the steel companies in this proceeding to defy the Senate of the United States or its subcommittees in any manner whatsoever. I again want to thank the chairman and the members of the committee for according us the courtesy of this presentation, and to offer for the record copies of this statement.

Thank you.

(The charts follow:)

MERCHANT WIRE PRODUCTS (Nails, Barbed Wire, Fence)

RATIO OF IMPORTS AND EXPORTS TO INDUSTRY SHIPMENTS

The CHAIRMAN. Mr. Patton, you say that the Common Market cannot get costs?

Mr. PATTON. Sir?

The CHAIRMAN. Did I understand you to say that the Common Market could not get costs of the companies in the countries that are members without the consent of the company?

Mr. PATTON. That is right.

The high authority who is in charge of the steel industry cannot get these costs unless the companies explicitly agree to give them. The CHAIRMAN. What other facts are there about Britain?

Mr. PATTON. Britain, as you know, has a Federation which sets maximum prices, and they have to furnish information to that body, but it is a criminal offense if any of that information is made public in any shape or form.

The information we are requested to give here, it is intended will be made public in some form, as you know.

The CHAIRMAN. But the Government is involved in the production of steel in Britain, is it not?

Mr. PATTON. Yes, it is, sir.

The CHAIRMAN. Senator Kefauver?

Senator KEFAUVER. Mr. Patton, how long have you been in the steel business?

Mr. PATTON. About 28 years.

The CHAIRMAN. By the way, you are chairman of the board of the American Iron & Steel Institute, is that correct?

Mr. PATTON. I am currently chairman of the board of the American Iron & Steel Institute, Mr. Chairman, but it is not involved in any way in this particular proceeding.

Senator KEFAUVER. You have been in the steel business 20-odd years?

Mr. PATTON. Yes, sir.

Senator KEFAUVER. And, of course, I am sure you are familiar with the history in the last 50 years, at least, of the steel industry.

Mr. PATTON. Generally.

Senator KEFAUVER. And what has happened in connection with the various major litigations and Government policies?

Mr. PATTON. I think, sir, I am generally familiar.

Senator KEFAUVER. You are familiar with the fact, Mr. Patton, that in the late 1900's, 1918 and 1919, that when the Government brought suit against Big Steel, United States Steel, under section 2 of the Sherman Act to dissolve or break up part of the corporation, that the company introduced cost data for the purpose of showing that a breakup would make the company less efficient?

Mr. PATTON. I am not familiar, but I must say in all candor that conditions in the steel industry were entirely different in those days than they are today, and there may have been considerations involved there which are not involved here in any manner whatsoever. We are in two different periods.

Senator KEFAUVER. In this decision in 251 U.S. 417 back in 1920, the United States Steel Co. itself brought forth the cost data stated to show that it might be less efficient if there was some dissolution of the steel company.. That was one of the major points considered by the court in its 5 to 4 decision.

That is a matter of record.

Mr. PATTON. Whatever you state to be the record, sir, I accept as the record.

Senator KEFAUVER. You were with United States Steel during the war days I mean with Republic Steel during the war days of OPA? Mr. PATTON. Yes, I was.

Senator KEFAUVER. You had a comptroller and accountant named Mr. John Bricker, did you not? I do not know if he is related to the former Senator or not.

Mr. PATTON. No, sir, we never had such a man as the comptroller. I do not recall.

Senator KEFAUVER. He was an official of one of the steel companies. Mr. PATTON. Not of Republic, Senator.

Senator KEFAUVER. That was my understanding.

Anyway, the record does show that he came down as an official of OPA, and that he worked with the accountants of all of the steel companies in getting up a form for the steel companies to submit cost data to the OPA. You are familiar with that?

Mr. PATTON. I am familiar with such forms at that time.

Senator KEFAUVER. I have here one of the forms that the steel companies themselves, working with Mr. Bricker, prepared during OPA days.

This was the form that was used when the original subpena of April 14 was sent out, on the theory that you kept your books in such a way as to make the answering of these questions not burdensome because you had answered them and worked them out that way yourself back in the 1940's.

I might say parenthetically that later on when some suggestions of burden were made, a great many things were left out.

92394-63

The companies were asked to report by companies and not by plants, so that this form was very much simplified in consultation with John Tenant, counsel for United States Steel.

And, by the way, was not Mr. Tenant in touch during this time with your counsel ?

Mr. LUMB. He was.

Senator KEFAUVER. He kept you advised?

Mr. LUMB. He did.

The CHAIRMAN. OPA days were not operated under a competitive economy.

Mr. PATTON. May I say I was waiting for the Senator to finish, and then I hoped I would have an opportunity to comment on this

statement.

Senator KEFAUVER. Counsel for Republic-I wanted to see if he was not familiar with the fact that this was the original plan.

And then later on a simplified form was shown you by Mr. Tenant.
Mr. LUMB. That is correct.

And it was attached to letter of July 2, in fact.
Senator KEFAUVER. Yes, July 2 is correct.

Mr. PATTON. Senator, may I have the privilege of making an observation on what you have just stated?

Senator KEFAUVER. Oh, yes.

Mr. PATTON. You must realize and I am sure that all of the memnbers of the committee realize that the OPA was an instrumentality of the Government set up during a wartime period when business was not done as it is in a normal manner in a free, competitive society such as we have today. Things were changed because the country's very life was at stake, and it is quite a different situation in peacetime when we do not have price control, and we are trying to operate in a free economy.

The things that are permissible in wartime certainly should not be permissible in the normal course of business in peacetime in the operation of a free enterprise economy such as I hope we have here. Senator KEFAUVER. Yes, thank you, Mr. Patton.

I bring out the point to show that we had reason to believe that the giving of information in the subpena would be feasible and when it developed it would be burdensome, we changed the type of form. Mr. PATTON. May I suggest, Senator

Senator KEFAUVER. I take it

The CHAIRMAN. Wait just a minute.

Mr. PATTON. May I say, Senator, that our comptroller advises me that to get the information, no matter how simple the form may seem, would cost our company a minimum of $78,000.

Senator KEFAUVER. Well, that is surprising, Mr. Patton, in view of the estimates given to us by other companies and the ease with which they could get it up.

(At this point in the proceedings, Senator Eastland leaves the hearing room.)

Senator KEFAUVER. But, in any event, Mr. Patton, within the limits of OPA prices, you did compete within wartime one with the other. The steel companies did continue to try to get what business they could during wartime.

Mr. PATTON. During the wartime business was allocated sir. The Government told us what business we had to take and what we should do at each mill, and we were not selling in competition with anyone.