cember 31, 1937 (these are the stockholders of record), by the Cliffs Corporation, the Cleveland-Cliffs Iron Co., A. C. Brown, vice president of the Cleveland-Cliffs Iron Co., C. S. Wachner, director of the Cliffs Corporation, and William G. Mather, chairman and trustee of both Cliffs Corporation and Cleveland-Cliffs Iron Co. common stock.

(The document was marked "Exhibit 5203" and appears in the appendix on p. 13895.)

Senator LA FOLLETTE. This statement was prepared by the staff of the committee. The information on which this tabulation is based was secured from reports filed with the Securities and Exchange Commission. This exhibit shows that this group owned 12.9 percent of the total common and preferred stock at the end of 1936, and 9.04 percent at the end of 1937.

I offer for the record a tabulation of investments of Cliffs Corporation and Cleveland-Cliffs Iron Co. in so-called "Little Steel" companies as of December 31, 1937, taken from annual reports to the Securities and Exchange Commission on Form 10 K. This tabulation shows that Cliffs Corporation and Cleveland-Cliffs Iron Co. were large stockholders also in Inland Steel Corporation, Youngstown Sheet & Tube, and Wheeling Steel Corporation.

(The document was marked "Exhibit 5204" and appears in the appendix on p. 13895.)

Senator LA FOLLETTE. Mr. Girdler, for the record, is Mr. Mather, who is chairman of the board and trustee of the stock of Cliffs Corporation and Cleveland-Cliffs Iron Co., connected with Republic Steel Corporation in any official capacity?

Mr. GIRDLER. A member of the board of directors.

Senator LA FOLLETTE. Are any of the other directors connected with either Cliffs Corporation or Cleveland-Cliffs Iron Co., connected officially with Republic Steel?

Mr. GIRDLER. A. C. Brown is a member of the board of directors of Republic Steel Corporation. I don't know exactly what his connection is with Cleveland-Cliffs Iron Co. He has some connection. Senator LA FOLLETTE. How about Mr. Wachner-if I pronounce his name correctly?

Mr. PATTON. Wachner is the way to pronounce it.

Mr. GIRDLER. He is a director of Republic Steel Corporation. 1 don't know what his latest official title is with Continental Shares or Cliffs Corporation.

Senator LA FOLLETTE. I offer for the record two charts prepared by the staff of the committee, enlargements of which hang on the wall behind me. indicating the interlocking directorates held by directors of the Republic Steel Corporation, the Youngstown Sheet & Tube Co., Cleveland-Cliffs Iron Co., the Cliffs Corporation, and the partners of the firm of Pickands, Mather & Co. The source of the information upon which the tabulations are based is Poor's Directory of Directors, 1937 edition.

(The charts were marked "Exhibits 5205 and 5206." Exhibit 5205 appears in the appendix on p. 13896; exhibit 5206 appears in the appendix facing p. 13896.)

Senator LA FOLLETTE. What is your compensation as chairman of the board of Republic Steel?

Mr. GIRDLER. I would have to figure it up; I think my salary prior to the last reduction was $175,000 a year.

Senator LA FOLLETTE. After the reduction what has it been?

Mr. GIRDLER. I think I had a 10-percent reduction. That figures out exactly, except for social-security tax. [Laughter.]

Senator LA FOLLETTE. What was your compensation as president and chairman?

Mr. GIRDLER. Well, I think part of the time it was $150,000 a year, and part of the time it was $175,000-I am not sure of those dates. Senator LA FOLLETTE. Did you receive any other compensation of any kind for your services to the corporation or in connection with the merger?

Mr. GIRDLER. I was paid a salary when the Republic Steel Corporation was in the process of formation, of $100,000 a year, I think. On April 8, 1930, when the Republic Steel Corporation came into official being, I was elected chairman of the board and paid a salary of $150,000 a year, as I recollect.

Senator LA FOLLETTE. Did you have arrangement of any kind which might be termed in the form of compensation?

Mr. GIRDLER. I don't understand your question-with whom?

Senator LA FOLLETTE. To refresh your recollection, and to clarify the chairman's question, which he admits is not very clear, I offer for the record a photostatic copy of a contract between T. M. Girdler and Republic Steel Corporation, dated August 23, 1932.

(The document was marked "Exhibit 5207" and appears in the appendix on pp. 13896–13897.)

Senator LA FOLLETTE. Will you look at that and tell me whether it is a copy of the contract?

Mr. GIRDLER. Yes; that is correct, I think.

Senator LA FOLLETTE. Do you know

Mr. GIRDLER (interposing). That was a stock purchase plan. Senator LA FOLLETTE. Do you know whether there were any other similar contracts with other officers of the company?

Mr. GIRDLER. Yes.

Senator LA FOLLETTE. With which ones?

Mr. GIRDLER. Well, I would have to say that from memory.

Senator LA FOLLETTE. I offer for the record contracts similar to the exhibit just introduced, between the Republic Steel Corporation and B. F. Fairless, R. J. Wysor, M. A. Wick, N. J. Clarke, C. M. White, and A. E. Walker.

(The documents were marked "Exhibits 5208-A to 5208-F" and appear in the appendix on pp. 13897-13902.)

Mr. GIRDLER. That is right.

Senator LA FOLLETTE. Briefly, Mr. Girdler, what were the terms of this contract?

Mr. GIRDLER. Do you want me to read this?

Senator LA FOLLETTE. I thought we might save some time if you would just give us the essentials of it?

Mr. GIRDLER. Well, it was an agreement made between the Republic Steel Corporation and the parties mentioned. Republic agreed to sell and the party of the other part agreed to buy at $6 a share, plus interest at the rate of 4.5 percent or with interest at the rate of 4.5 percent, in five annual installments.

Senator LA FOLLETTE. Over a period of years, was it not?
Mr. GIRDLER. Over a period of 5 years.

Senator LA FOLLETTE. Do you remember whether you exercised this option in all of the years provided for?

Mr. GIRDLER. I think I exercised all except the first.

Senator LA FOLLETTE. Which would be 1932?

Mr. GIRDLER. December 31, 1932.

Senator LA FOLLETTE. Why did you not exercise the option in 1932?

Mr. GIRDLER. Because the stock was lower than $6 a share.

Mr. PATTON. For your information, Senator, the price set in this contract was the average selling price of the stock for the 6-month period prior to the date of the contract.

Senator LA FOLLETTE. I offer for the record a tabulation of the price of Republic Steel stock at December 31, 1932 through 1936, inclusive.

(The document was marked "Exhibit 5209" and appears in the appendix on p. 13902.)

Senator LA FOLLETTE. It also shows the price on August 23, 1932, the date the contract was executed.

Mr. Girdler, for the record, will you outline, for the benefit of the committee, what the duties and responsibilities are that you have as chairman of the board of Republic?

Mr. GIRDLER. I am chairman of the board and chief executive officer. I report to the board of directors of the Republic Steel Corporation. The president of the Republic Steel Corporation, two secretaries, and one airplane pilot report to me. Everybody else reports to the president.

Senator LA FOLLETTE. As executive officer, will you describe briefly the difference between the responsibilities as an executive officer and chairman of the board, and the responsibilities as president of the corporation?

Mr. GIRDLER. Well, that is all in the bylaws; if you have a copy of the bylaws here they will state them, I couldn't quote them from memory. I am chairman of the board and chief executive officer.

Senator LA FOLLETTE. It is the practice I am interested in. To what extent do you exercise executive authority in your capacity as chairman of the board?

Mr. GIRDLER. Well, as a matter of fact, I give very few orders. I sit in on a great many discussions about policies, and so forth. If something can't be decided they come to me, and if I can't decide it the board of directors decides it. An ordinary procedure that is, in a corporation of that kind.

Senator LA FOLLETTE. Would you say that you, as chairman of the board, or some other official of the corporation, was the party

responsible to the stockholders for the proper supervision of the funds of the corporation?

Mr. GIRDLER. Oh, I am responsible more than anyone else.

Senator LA FOLLETTE. Do you have a limit on expenditures which cannot be undertaken without authorization by the board?

Mr. GIRDLER. I don't know whether we have an official limit or whether that is just an unwritten law.

Senator LA FOLLETTE. What is the unwritten law?

Mr. GIRDLER. I don't know the amount.

Senator LA FOLLETTE. Well, do you have any idea, approximately, what it is?

Mr. GIRDLER. Maybe Mr. White could tell me, if you don't mind. Senator LA FOLLETTE. NO.

TESTIMONY OF CHARLES M. WHITE-Resumed

Mr. WHITE. During the course of emergencies, Senator, which often arise, we have to make a change in a plant because say a large automobile concern has made changes which may make it necessary for us to make a different kind of steel, and it may be impossible to get the board of directors ready in an emergency, in which case, Mr. Girdler or Mr. Wysor, and in many cases Mr. Gillies or some of the other officers, would contact several of the directors, ask them. whether they found anything wrong with going ahead with an expenditure of $150,000 or maybe even as much as a quarter of a million dollars, and would they vote for it if that thing came up, in which event we go ahead.

Now, a minor expenditure up to $25,000 we will discuss at times and if it looks like a real emergency that will be gone ahead with and cleared with the directors at their first meeting, but that is very unusual and only in the case of necessity.

Five thousand dollars I think would be the limit under ordinary conditions that we would pass on without action by the directors. That only relates, of course, Senator, to capital improvements.

As far as repairs, which sometimes for instance arise, such as relining a blast furnace, maybe $150,000, but that is classed as routine and that is a matter for the direction of the operating department.

Mr. GIRDLER. Every day, every week, every month, there are large expenditures in the regular conduct of business that go on, and the board of directors don't know anything about them or never hear anything about them unless they display an interest or unless for some reason we want to tell the board about it. Capital expenditures, as I recollect it, sooner or later, anything over $5,000, is probably acted on.

Senator LA FOLLETTE. To what extent, if any, Mr. Girdler, are questions of labor policy discussed with the board of directors?

Mr. GIRDLER. Questions of labor policy have been discussed with the board of directors many times. We have no rule about that any more than we have any rule about the purchase of coal, discussing it with the board of directors.

Senator LA FOLLETTE. You apply, I assume, the rule of reason? Mr. GIRDLER. We try to keep the board of directors informed as to all matters of general policy. Sometimes we do that informally and sometimes we do that in formal meetings. The greatest trouble in meetings of the board of directors of a large corporation is to try to keep them there long enough to tell them all the things you would like to tell them.

Senator LA FOLLETTE. Mr. Girdler, while you were superintendent of the Aliquippa plant, who was in charge of labor relations at that plant?

Mr. GIRDLER. Well, if you mean while I was assistant to the general superintendent, while I was assistant general superintendent, and while I was general superintendent, the period of from some time in 1914 to some time in 1920, I think there was several people there. I cannot remember but two names, and I do not know the periods, and I do not actually know whether one of them was in that period. One was a man named Titus and another was a man named Blank. I think Titus today is with the Allegheny Steel Co.; I think Blank is with Jones & Laughlin.

Senator LA FOLLETTE. Did you have any responsibility, or did you not, for labor policy?

Mr. GIRDLER. Everybody in any large steel company that I know anything about, in any supervisory capacity, has responsibility in connection with the labor policies.

Senator LA FOLLETTE. Were you familiar with labor policies in the years when you were assistant to the superintendent?

Mr. GIRDLER. I would say very familiar.

Senator LA FOLLETTE. Did the policies which existed during the time that you were assistant to the superintendent meet your approval?

Mr. GIRDLER. The labor policies of Jones & Laughlin during the time I was assistant?

Senator LA FOLLETTE. Yes.

Mr. GIRDLER. I would say in the main; yes.

Senator LA FOLLETTE. Was that also true or not when you became superintendent?

Mr. GIRDLER. Yes.

Senator LA FOLLETTE. I offer for the record an excerpt from page 774, volume 446, of the hearings held by the Senate Committee on Education and Labor in 1934 when that committee had under consideration as I recall it, the so-called Wagner bill, and you, as I remember, appeared before the committee.

(The document was marked "Exhibit 5210" and appears in the appendix on p. 13903.)

Senator LA FOLLETTE. This is an extract from your statement:

For a number of years I was superintendent of the Aliquippa plant of the Jones & Laughlin Company located on the Ohio River. This plant employed anywhere from 5,000 to 10,000 men, according to the condition of business.

All of the plants of that company were operated on the open-shop basis. We did not have any labor union to tell us what to do, but I made it my business to know the needs of my men. I previously had personal experience