The Rock Island Argus. (Rock Island, Ill.) 1877-1885, 1882-11-24


wages and the probability that the tariff
will be reduced from $2S to S14 per ton on
/ steel rails were the prime causes for the
| closing Mr.. Potter added that Tin his
| opinion the disposition &c reduce the tariff
/ was caused by Mr.. Abram S. Hewitt's
declaration that the Harrisburg company
| in which Mr.. Hewitt was interested made
70 per cent. on its capital last year.
| The dispatch was shown to Mr.. Hewitt
| by reporter of the World yesterday. Mr..
| Hewitt said: First, | will say in refutal
that l never owned one dollars worth of
| the stock of the Harrisburg company and
do not intend to own adollar's worth. The
real cause of shutting down the Western
mills can be given in a few words, and that
| is, lack of demand forrails. The enormous
profits of the past few years
have been employed by the COM
panies, nine times out of ten, in
| Improving and enlarging their works.
| With increased facilities come increased
| outputs, and the result is that we have a
glutted market. The iron trade is as va
riable as weatheIcock and is quite as
easily disturbed. Every now and then q
| great. depression is met with, and the mar
ket falls terribly. This, | think, is the fact
at the present time"
'sDo you think that your remarks to
do with this action on the part of the
manufacturers"
mo, do not. The profits under the
existing tariff have been 81 per cent per
year and the undivided profits after paying
this dividend exceeded 100 per cent. Take,
for instance, the Pennsylvania Steel COM
pany, which in 1874 paid dividends of 8
per cent in cash and per cent in stock at
time when the iron business was losing
money by the immediate presence of the
panic of 1878. Now to go on. In 1875
this same company paid per cent stock,
or total of 6 per cent paid. In ~1S76
the payments were 6 per cent in al, and
in 1877 they paid per cent iEs cash. In
1878 they paid 81 per cent cash, showing
that the reserved profits were nearly ex-
hausted. In 1879 they paid 8 per cent,
and cash profits of $1,000 were added
to the sinking fund, which, on a capital
of $4,000 600, was Il per cent more. In
1880 the dividends were - per cent, or
two dividends of 6 per cent each, but in
1881 the dividends were % per cent in all
The company had on hand August 81,
1881. So, 2S6, 423.5 81. with capital placed
at $4,000 600. While passing through
great financial depression, it will yet be
seen that this company. after paying all
the dividends mentioned. had on hand an
company however. did not care to pay
taxes on larger sum than % per cent
dividends, and so they purchased from the
Pennsylvania railroad company, who own
1000 of the 10000 shares of stock in their
company, all but 1 900 of their stock, for
which they paid $3.50 per share Thus, if
the capital of the company, So 900, 900. is
added to the undivided profits of $685.,
42351 in hand, which makes just the
amount of the capital plus the surplus,
and if that sum is divided by 10000 1T
will be seen that the steel company
for that stock paid its value, as shown by
the books. which was worth, however a
great deal more money. Having bought
5000 shares from the Pennsylvania Rail
road Company the Steel Company issued a
circular marked confidential to each share
holder, which said that they would sell
this Just purchased stock, which had cost.
and was worth 1865 a share, for 800 a
share. That is. they paid out in the pur-
chase of these ), 900 shares 81 1926 600, and
sold them TO their shareholders for $780,
600. Thus they were enabled to distribute
$350.00o surplus profits to shareholders
without declaring dividend. Briefly the
steel company presented to each share
holder $165. The facts / have told you
are matters of history now, and came to
light during the proceedings in court in
the matter of the estate of John Edgar
Thompson, once President of the
Pennsylvania Railroad Company. The
income of the estate was devised to- his
widow and the question was whether this
stock, costing only 800, bat worth 1896,
per share should be added to the principal
as stock division or to be regarded as
income and delivered to Mrs. Thompson
The Judge decided that this purchase
aud sale of stock was merely a cover for
dividend.
After ali this was done and Lewiston
of % per cent in cash, in addition to the
$165 a share, had been paid, the company
had let So, 461, 1881, or over 1876 per cent.
have quoted the facts just given means
of showing what the profits of a reputable,
company were in 1881. But one year
later it is found that all of these vast sums
have vanished by the raising of the issue
of lower rate of tariff could not possibly
make such a shrikage Ia price as from $50
per ton to S42, as Mr.. Potter claims. The
real and only cause is over-supply. |
Legislation cannot create values. IF there
is greater supply than the demand, you
cannot keep up the price of any commodity
Let us quote a little from my published
speech, which advocates tariff for pro-
lection only: THE argument for pro-
tective duties is base entirely upon the
difference which exists between the com
in countries with which we compete. |
This difference is not due to protective du |
ties and cannot be affected by them, but |