The Portland daily press., 1899-06-23
THE TRUSTS.
Some Difficulties Attending their
Management.


Railroad Men May Have 90 be Em-
ployed TO Run Them.
IN. Y. Letter to Providence journal }
The period Of investigation Of the new
combinations is undoubtedly here. One
great comhinntiop with mills in Massa-
chusetts is already under the inquiry of
expert fnanciers employed by the insid-
ers. There is probability that com
plete change OF officials may be the result,
the President, Treasurer and others being
turned down for New York men. AT
present the officials are Western men who
have the fixed idea that to be successful
a combination has merely TO GO through
the paper formalitIes ofn combination.
Then of its own volition the combination
begins to save money right and left, and
topay dividends accordingly. The notion
is said on credltable reports to be SO abso-
utely entertained by the officials In
question that they had little other Idea
than that dividends we've TO be earned
automatically. Stories told about them
indicate that they made no attempt ut
economies from the day they came into
control. Instead Of doing away with un-
necessary duplication of labor they ordered
everything to remain as 1t was and in ad-
ditioD created huge central offics staff
of employees. the other stats of each inli-
vidual plant joining the trust being re-
tanned as branch staffs OF the central staff.
1t seems also chat the President was
perfectly honest la his calculations as to
the way dividends would be produced.
He counted on such an enormous increase
in business that IL would In his view
have been useless to discharge men only
to be compelled to hire them back again
when the business had expanded, as he
expected. At the tune there was as much
outside talk of the demand in the trade.
Supply was said to be far under what the
demand under any circumstances could
be. Since then the exaggerations of the
prediction have been discovered. Supply
has steadily rolled up in capacity, until
here is no longer any overwhelming of
the demand. In this emergency the trust
in question finds the outlook one OF CON-
mere waiting for business to roll into It's
lap. just about when the officials dis
covered this, IL was reported by the Treas
urer that for some reason dividends were
not coming in at the rate expected. The
directors got wind of the troubles, began
an Investigation on their own hook, but
not as body. The directors are now
divided some standing with the present
officials, and the rest maintaining that
the confidence of the public, which has
been led to buy the stock on promises of
certain dividends, have been violated.
The outcome of the quarrel Is to be
known this week, when the directors will
hold meeting to discuss the whole mat
ter and to pass the promised dividend IL
that is necessary.
In another trust Is trouble in the heavy
burden Of overcapitalization at the start.
Economies really were introduced and the
business is actually well and even ably
conducted. 1t is Western busines SIS con-
nected with the railways. The orders on
hand are for deliveries long ahead and
the shops In the &C mbination cannot very
we'll complete them all for the next year
to come Earnings for that length of
time are assured in advance, but the
tr ouble now developing is how to make
the earning lit in with the promises to
the purchasers of the stock. 1t was said
at one time that dividends were being
earned at the rate of IA per cent. on the
common. How the officials made their
calculation has never bsen discovered, but
the most patient investigation has shown
that the earnings are enough to cover
that promised on the preferred stock,
leaving few thousands over to go into
the reserve fund. To attempt to divide
the fqNv fhNnaat,dc in H.
common would have the ridiculous result
OF an award of few pennies apiece to the
common stockholders. This then is the
result Of all the great promises made TO
the buyers of the stock when 1t was
launched. The probabilities now are that
the outsiders who paid par for their sub
scriptions will never see half Of their
money again. They are not very many,
however, as The bulk OF the stock went to
insiders who paid less than par for 1t.
One great fact was overlooked at the
time of the consolidation fever. This
was the need of really great men at the
head OF combinations. Everybody knows
the names of the heads of the Sugar
Trust and the Standard Oil Trust. No
body can remember the names OF the
Pres idents of the greatest OF trusts organ
lied last year and this. Yet some of these
lave q capital on paper larger than that
of either the STANDARD or the Sugar Trust,
= AosAAohe od41 Va pho II CdCAai otcol Ouut-
pany and President Gates of the Ameri-
can Steel and Wire Company are.instanc s
in point Eaoh of the men nave tasks
before them which, in some respects are
beyond anything Havemeyer or John ID.
Rockefeller have ever done. Nobody
knows II they have the brains to do it.
Both are Western men and comparatively
unknown In this city. Neither are prac-
tical men in the truest sanse of the term,
and it is very well known that President
Gates is more ambitious to make his own
trust bigger than it Is than to dosthe best