Mr. Frear. That is what is shown hy the Manual of Statistics,
along with other companies, and I take it to be so.
The Anaconda Copper Co. controls all of the stock of the United
Metals Selling Co.?
Secretary Baker. I do not know about that.
Mr. Frear. That will be shown in the memorandum which I have
asked to be inserted, and with that it is shown that Mr. Ryan is the
President of the United Metals Selling Co.
Secretary Baker. I know nothing on that subject.
Mr. Frear. That statement will be added to the others.
Under the head of Anaconda Copper Co., page 62, The Manual of
Statistics, 1918, is to be found:
In February, 1915, purchased from the Amalgamated Copper Co. the entire stock
of the United Metals Selling Co.
When the Government was engaged in purchasing copper for war
purposes it purchased from the various producers and allocated all of
its purchases through this United Metals Selling Co., 42 Broadway,
New York; or do you know that to be a fact?
Secretary Baker. I know of the general arrangement that was
made by which there was a committee that allocated the supply of
copper, and that the price was fixed by the Government, but the
allocations were made through a committee which represented some
kind of cooperative arrangement among the producers.
Mr. Frear. In this connection I will read, briefly, so as to have it
as a matter of record, from a letter from the War Industries Board,
Washington, D. C, signed by Pope Yeatman, nonferrous metals
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76 WAR BXPB2n)ITTJRES.
section, addressed to Hon. W. G. Edmonds, House of Representatives,
one paragraph of which is in relation to this matter.
Mr. Lea. What is the date of that letter ?
Mr. Freak. August 31, 1918.
Mr. Lea. Why not let the whole letter go in?
Mr. Frear. All right. I only feared it would encimiber the record.
(The letter referred to is printed in full, as follows:)
War Industries Board,
Washington, August SI, 1918.
Hon. G. W. Edmonds,
Committee on CUwfns, House of Representatives^
Washington, D. C.
Dear Sir: Your letter of August 23 to the secretary of the War Industries Board
has been referred to this section, which handles copper.
The War Industries Board does not purchase copper, but when requested, advises
the various Government purchasing departments, who place their orders through the
copper producers committee, 60 Qroadway, New York; Mr. Hamilton Brush, secretary.
Purchases for domestic consumption are allocated by this committee to the various
? reducers through the agency of the United Metals Selling Co., 42 Broadway, New
ork, and for export to our Allies, through the agency of the Ajnerican Smelting dc
Refining Co., 120 Broadway, New York.
Copper is now sold at the maximum price of 26 cents per pound, in accordance with
the proclamation recently approved by the President, copv of which we inclose you
herewith. On September 20, 1917, the President approved the price agreed between
the War Industries Board and the producers of 23| cents per pound f. o. b. New
York, subject to revision after four months. On January 22, 1918, the President ap-
proved an extension of this price to June 1, 1918. On May 27 this price was again
continued, failing any revision, until August 15, but on July 2 the President approved
a revision of the price to 26 cents per poimd, taking effect on that date and enective
until August 15, f. o. b. cars or lighters at refinery if shipped from eastern refineries
and f. o. b. New York if shipped from western refineries. For certain unusual shapes
premiums have been allowea by the price-fixing committee, as per inclosed copy.
The principal uses of copper as refined copper in the military program are for bands
for shells, tubing, electrical apparatus, wire for the Signal Corps, rods, etc., in alloys
of brass, bronze, monel metal (67 per cent copper), admiralty metal (65 per cent)
copper, etc., for shell cases, cartriage cases, tiunine blades, propeller blades, brass
parts for engines, trucks, ship accessories, etc. The railroads also require a large
amount of copper.
During the first half of 1918 the quantities of copper sold and delivered by the
producers have been as follows, in tons of 2,000 pounds each:
Tons. Tons.
Domestic commercial 222, 616
United States Government 150, 594
373,210
Foreign commercial 36, 028
French Government 119,099
British Government 70, 187
Italian Government 31, 255
Belgian Government 1, 120
257,689
Total 630,890
It should be noted that the shipments to foreign private consiuners were practically
all for war purposes, and to domestic consumers a very large percentage was for indirect
war purposes.
We inclose you a copy of the 1917 report on copper by the United States Geological
Survey, and an abstract from the August bulletin of our Division of Statistics.
We trust that this information is what you require, but if you wish any further
information we shall be glad to have you call upon us.
Yours, very truly,
Pope Ykatmax,
Nonferrous Metals Section.
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AVUTION. 77
Mr. Frear. Purchases were made bjr the Government from these
various producers of copper at prices fixed by the Government after
the war was entered into?
Secretary Baker. Yes.
Mr. Frear. I have one of these orders attached to the letter, under
date of August 10, 1918, which, presumably, was just prior to the
letter that was written to Congressman Edmonds; and in this state-
ment is shown the price of copper as approved by the President,
August 10, 1918, from which I will quote
Mr. Lea (interposing). Why not just put in the whole statement?
Mr. Frear. Very well; I am perfectly willing that the whole
statement should go in, and I only had the idea that it would help
in reading the record just to have that part which is relevant.
The entire statement is as follows:
flTATSMENT OF THE PRICE OF COPPER APPROVED BY THE PRESIDENT AUGUST 10, 1918.
The President has approved an agreement, made between the producers of copper
and the price-fixing committee of the War Industries Board (after investigation by
t his committee in conjunction with the Federal Trade Commission as to cost of pro-
duction), that the maximum price of copper shall be 26 cents per pound, taking
effect August 15, 1918, for shipment after said date, but subject to revision after
November 1, 1918, f. o. b. cars or lighters at eastern refineries, f. o. b. cars or lighters
at Pacific coast refineries for Pacific coast destinations, and f. o. b. cars or lighters
New York if shipped te eastern or interior destinations from Pacific coast refhieries
and from refineries in the interior of the United States. All shipments made after
November 1, 1918, are subject to any change in price made by the price-fixing com-
mittee te take effect after that date. The maximum price is subject to the additional
chaiges on copper shapes approved by the price-fixing committee on June 5, 1918.
The conditions are: First, that the producers of copper will not reduce the wages
now being paid; second, that they win sell to the United States Government, to the
public of the United States, and to the allied Governments at not above the maximum
price; third, that they will take the necessary measures, under the direction of the
War Industries Board, in the distribution of copper to prevent it from falling into the
hands of speculators, who might increase the price to the public; and fourth, that
they will pledge themselves to exert every effort necessary to keep up the production
of copper so as to insure an adequate supply so long as the war lasts.
Mr. Fbeab. The purchases of copper that were allocated, by the
United Metals Selling Co. included practically all of the copper that
was used by the Government, I take it ?
Secretary Baker. Oh, very much more than that.
Mr. Frear. That is, you mean that they handled very much more
than was used by the Gfovemment, or what ?
Secretary Baker. The Government allocated to them very much
more, or ordered from them very much more than the Government
needed.
Mr. Frear. For foreign governments ?
Secretary Baker. Yes. The purpose of that organization, in
order to have the record clear, was to prevent competition between
foreign governments and om^elves, as well as among foreign govern-
ments, and therefore running up the price. Therefore an arrange-
ment was made by which the War Industries Board made purchases
for foreign governments, and allocated orders, so as to prevent a
shortage for foreign governments and ourselves alike, and to keep
the pnce uniform.
Mr. Frear. That was the general understanding, I suppose.
Secretary Baker. Yes, sir.
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78 WAR EXPENDITURES.
Mr. Freak. The effect of that was to fix the price for copper pro-
duced by these men, Mr. Potter, Mr. Ryan, and all the various com-
panies in the country, and that price was determined by the Grov-
ernment through the action, either of Mr. Baruch or the President —
and I assume by the President — after it was undertaken, but prior to
that time it was sold in the open market, of course.
Secretary Baker. Undoubtedly. I would not say that it was
fixed byMj. Baruch. Of course, while Mr. Baruch was the chairman
of the War Industries Board, I do not know just what his particular
relation to copper fixing was; that was done by a committee on
copper, nonferrous metals — and investigations were made by the
Federal Trade Commission as well.
Mr. Frear. That was done before the
Secretary Baker (finishing the question). Formalofganization of
the War Industries Board ?
Mr. Frear. Yes.
Secretary Baker. After that the fixing of the price went by the
order of the President. I think all the tmie it went by the order of
the President, either directly or indirectly.
Mr. Frear. When Mr. Baruch fixed it it was by order of the
President.
Secretary Baker. If Mr. Baruch fixed it at all it was done by
order of the President.
Mr. Frear. The general understanding by the press is that it was
fixed by Mr. Baruch.
Secretary Baker. Mr. Baruch is here and can answer for himself.
I do not remember who the members of the nonferrous metals com-
mittee was in the Army; there was an organization which under-
took to do that.
Mr. Frear. Copper was bought at that time by the Government
running all the way from 16 cents to 26 cents a pound, as I understand.
and those prices were paid to the various producers imder the United
Metals Selling Co. arrangement.
Recently a contract was entered into on the 10th day of April,
1919, between the United States, through Mr. Hare, director of sales,
of the first part, and the United Metals Selling Co., of the other part,
for the sale of 100,000,000 pounds of copper by the Government
baok to the same company at the prices to be determined. I will
read this, from the contract itself, which contract appears in the
hearings held by subcommittee No. 5 (Ordnance), serial 6, part 2:
The contract price for copper in usual commercial shapes, is hereby fixed at the
monthly average New York price for electrolytic copper, as quoted by the Engineering
and Mining Journal (published in New York).
That was for the delivery by the Government of 100,000,000
pounds of copper, running over a period of 15 months, I believe,
with the privilege on the part of the United Metals Selling Co. of
taking it over at an earlier time, if desired, except that for certain
months the purchaser should take not less than 6,000,000 pounds
and for other months not less than 10,000,000 pounds.
You are familiar with that contract ?
Secretary Baker. Perfectly familiar with it.
Mr. Frear. I am asking if you know, Mr. Secretary, tliat the
copper purchased at prices ranging from 16 cents to 26 cents a pound.
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AVIATION. 79
was resold by the Government at from 15.8 cents a pound to 17.6
cents a pound, as shown in testimony presented before subcommittee
No. 5 (Ordnance) of the Select Committee on Expenditures in the
War Department; and that the less than 15;000,000 pounds still on
band is expected to net around 23 cents, the present price, according
to that testimony.
Secretary Baker. I do not know that, but it does not surprise me.
Mr. Freab. I am not familiar with the fact and am quoting, in
fart, from a newspaper statement which asserts that to be a fact,
was asking if you know.
Secretary Baker. I will be very glad to describe that arrangement,
and about the reason for it.
Mr. Freab. We will be glad to have you do it.
Secretary Bakeb. The situation was this: That when the armis-
tice came the War Department had on hand a very large quantity of
copper. It was in all the forms in which copper is gotten, native
copper, electrolytic copper, and in the various bar forms. The
copper-mining industry m the United States was in a very serious
situation. There was no foreigju market for copper, absolutely none.
The output of the American mines has been the chief reliance of the
world for copper for a long time, and exports of copper from the
United States have taken up the major part of our production of
copper. There was no foreign market ; undoubtedly foreign markets
wanted it, but the disturbed state of the world, finance and other-
wise, made it impossible for anybody abroad to buy copper, and there
were no orders given in this country for a long time for copper. The
copper producers in this country, of course, during the war, had been
producmg the maximum capacity, and had an advantageous arrange-
ment with their laborers, I mean advantageous to their labor, based
upon sliding scales of payment. That was hy which a bonus of a cer-
tain amount was paia to the men, and their scale of pay depended
upon the quantity of output.
The situation therefore was that the United States had this very
large stock of copper. The mining companies, from the armistice
forward, had continued their operations so as not to turn their labor
out of the mines. They had very large accumulations of copper— as I
recollect, hundreds of millions of dollars worth of copper, with no
market lor it. The effort on everybody's part was to continue pro-
duction of copper, and for tw^o reasons: In the first place, it was
known that tne world's supply of copper was short, and that ulti-
mately there would be a demand for this copper, so that the world's
needs might be supplied. A very great deal of copper had been
destroyea in munitions; but the paramount and controlling reason
for production of copper was to Keep the copper men's labor em-
ployed, as far as possible, not to bring about such diminution in their
wages, under the sUding scale arrangement, as would cause unrest in
the copper mines.
I was waited upon by two different sets of interests with regard to
it. A very strong delegation of copper miners came to Wasmngton
and had conference after conference with the Secretary of Labor, in
which they laid out — and I know only in general terms their general
representation of the situation — that the copper miners of the country
were in great unrest, with agitation among them, which had been very
great to start with. There had been labor troubles in practically all
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80 WAB EXPBNDITUBES.
of the copper mines, from time to time, in the copper-mining regions,,
and the menace of miemployment in those regions at that time was
re^rded as an exceedingly serious matter.
The Secretary of Labor brought those representations first to my
attention, and 1 saw one of those delegations and listened with very
great iaterest and some concern to what they represented.
The other set of delegates that I saw on the subject were the copper
producers, who explained to me that they had no market for tnis
enormous accumulation of copper, and if the Government supply of
copper were simply dumped on the market for what it would oring,
the Government would get a very smaD price, and it would have the
eflFect of closing their mmes, so that their labor would all be thrown
out (Jf emplovment and their own surplus of copper would be seriously
affected in the price to which it would go if the Government threw
upon the market this large accumulation.
I therefore worked out an arrangement of having the Government
supply of copper sold in conjunction with the rest of the copper of the
country; that is, have the Government copper fed into the general
demand. I was not wilUng to have the demand for copper, as it
should revive, absorbed entirely by the copper producera and have
the Government to hold this great bulk oi copper indefinitely; nor
was I willing to diunp this Government copper upon the market and
reduce the price, so that we would not get practically anything for it,
in addition to having this disturbing effect.
So I directed the Director of Sales to make an arrangement with the
copper distributing agencies whereby they would act as selling agents
for the Government and sell the Government copper along with their
own as the demand began to revive and as our own industry in this
country began to get back on a peace-time basis, and to take up the
manufacture of things in which copper would be used. Also, as the
foreign demand came on, some of our Government copper would be
sold as well as some of th6 accumulation of the copper producers
would be sold, and thereby two streams of surface supply would go
out together, and it would protect the labor situation m the mines.
Mr. Frear. Apart from the labor situation this arrangement en-
abled the United Metals Selling Co., which had sold or allocated this
copper to the different branches of the Government and other govern-
ments at, eventually, a price of 26 cents a pound, and prior to the
war at very large amounts, to then buy it back at whatever figure the
copper would be quoted at in the various months mentioned in the
contract. The result of that was — and I am asking this as a question —
the result of that was, was it not, to give to the copper producing com-
panies^ representative, the United metals Selling Co., which again
purchased back this copper under that arrangement, a profit of all
the way from $5,000,000 to $10,000,000 on Uiis particiilar amount
of copper that was handled ?
Secretary Baker. I think not, Mr. Frear. I do not understand
that to have been the fact.
Mr. Frear. Let us see if I am mistaken in that. The 100,000,000
pounds of copper mentioned in this contract had been purchased from
the copper men and allocated at a price fixed by the Government,
which ran up to 26 cents a pound, as you recall?
Secretary Baker. Yes, sir.
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AVIATION. 81
Mr. Fbear. When it was sold back to the copper producers,
through this same United Metals Selling Co., it was sold at the price
fixed that month on the market, which was a low price, running
around 15 and 16 cents a poimd?
Secretary Baker. Yes, sir.
Mr. Freak. And they took practically all of the copper back at
that time at the bottom figure mstead of waiting for the 15 months,
as provided in the contract, except the 15,000,000 pounds stated in
that communication ?
Secretary Baker. Your point is, that by taking advantage of the
option in the contract to buy in quantity early in the period rather
than late in the period
Mr. Frear (interposing). Yes; and when the price had been de-
pressed to 15 cents or 16 cents, in April and May, they took it back at
that time, notwithstanding they had sold the copper to the Grovem-
ment at a price running up to 26 cents, by the President's order?
Secretary Baker. TheV sold it for us. They did not buy it from
us; they sold it for us. We would have gotten more money for it on
the theory of these market quotations, which you have just men-
tioned, if they had not sold it so fast for us, if that is the point you
make; but they made no money out of it, except that they sold it to
us for a higher price than we were able to sell it for.
Mr. Frear. This 100,000,000 pounds of copper was sold through
the United Metals Selling Co. to whom ?
Secretary Baker. Sold to purchasers, users of copper.
Mr. Frear. Well, the purchasers were largely producers, were
they not?
SecretRTy Baker. Oh, no; I understand not. They were sold on
order. For instance, some copper-fabricating company or some
copper-using company, or some copper-wire company, or something
of that sort, would write in to the copper companies and say: We
want 10,000,000 pounds of copper. They would get 8,000,000 pounds
of their copper and 2,000,000 pounds of ours.
Mr. Frear. Did you deal to the purchasers direct ?
Secretary Baker. No, sir.
Mr. Frear. You were dealing with the United Metals Selling Co.,
and they could sell to anyone at any time they chose ?
Secretary Baker. Yes, sir.
Mr. Frear. At the market price ?
Secretary Baker. Yes, sir.
Mr. Frear. The United Metals Selling Co., in this case, through
Mr. Ryan, its president, if it desired to buy this copper on a low
market, could ao it ? And I am inquiring of you dia they do that,
or do you know ?
Secretary Baker. I do not know the facts about. that.
Mr. Frear. After those sales occurred at 15 or 16 cents, all except
15,000,000 pounds of copper, then the market rapidly rose until it
was up in the neighborhood of 18 or 20 cents, as I understand it
is now ?
Secretary Baker. Undoubtedly, if we had had prescience enough
to have foreseen a rapidly rising market we would have made some-
thing, but at the time we made that arrangement the copper market
was at the bottom.
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82 WAB EXPENDITURES.
Mr. Freak. And that contract left the United Metals Selling Co.
in a position absolutely to control the market, and to depress the
market, and to raise the market afterwards. That company repre-
sents the copper producers of the country, does it not?
Secretary Baker. Well, I can not say just how much control they
had in the matter. The price of copper is regulated by demand.
Whether there was any sort of conspiracy among the copper people to
depress the market until they sold the Government copper and then
raise it to sell their own, I do not know anything about that.
Mr. Frear. Would it be surprising to nnd that here were
100,000,000 pounds of copper dumped upon the market, in addition
to the regular production, that was kept up in the mines, and yet
copper is rapidly reaching back to the price at which it was sold
when we bought it originally? The price of copper is now in the
neighborhood of 20 cents a pound ?
Secretary Baker. Mr. Frear, I do not know enough about the
situation to answer that question. I do not know whether that is
remarkable or not.
Mr. Frear. We know this, Mr. Secretary, from past experience,
that those who control the supply and who deal in commodities of that
kind on the markets are engaged in manipulating the market con-
stantly, are they not ?
Secretary Baker. That is the current belief. How much is founded
upon fact 1 do not know.
Mr. Frear. Here is a case where the producers sold the Grovem-
ment at the price of 26 cents a pound through the United Metals
Selling Co., and now they take it back — ^whether as the agents of the
Government or in. what capacity they are acting, they are the ones
with whom the Government deals alone, and when they purchase
they purchase at 15 and 16 cents a pound, as to the great bulk of this
copper?
^cretary Baker. They sold it for us at that price. I do not think
they bought it at that price.
Mr. Frear. They would not buy it back as the United Metals
Selling Co., but perhaps they bought it back for the Guggenheim
interests or the Anaconda Co. Instead of drawing it from their
own accumulations wouldn't it be a natural thing to buy it from the
United Metals Selling Co., when they could get it at that price,
and dispose of it in that way ?
Secretary Baker. That is possible.
Mr. Frear. In fact, it is provided in this agreement that this
copper can be collected from various points now held by the Govern-
ment including Baritan Arsenal?
Secretary Baker. Yes, sir.
Mr. Frear. And the United Metals Selling Co. also in addition
charged a commission against the Government for handling the
copper at the time?
Secretary Baker. That may be so.
Mr. Frear. That appears in the contract, which speaks for itself,
and that contract was approved by yourself ?
Secretary Baker. It was made pursuant to an arrangement
which I approved. I did not see the contract in written form, but
I approved the arrangement.
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AVIATION. 83
Mr. Fbear. The contract appears on pages 54, 55, 56, and 57 of
the hearings held by Subcommittee No. 5 (Ordnance) of the Select