The sun. [volume] (New York [N.Y.]) 1833-1916, 1899-10-20
FEDERAL STEEL COMPANY.
H. LTNDE sTETsON AND President
ELBERT III. 6ARY TESTIFY.

They Toll the Industrial Commission How
the Company Was Organized and Why
II Was Incorporated in New Jersey-J. +.
Morgan BrouGh the Companies Together
WASHINGTON. Oct. 10.--F. Lynde Stetson. one
OF the firm OF j. p. Morgan Co. OF New York.
appeared before the Industrial Com mission
this morning and testified concerning the or
ganization OF the Federal Steel Company. the
operation OF the New Jersey Corporation laws.
and the general relation between railroads and
the Interstate Commerce Commission.
The Federal Steel Company was organized
In 1893" said Mr.. Stetson. and l have been
familiar with its affairs from the hrst 1t sus-
tains a closer relation between its capital stock
and the actual value OF its holdings than almost
any other large corporation in the country. l
10 capitalized for 100000 900. that stock rep
resepting the amalgamation OF the Mnne-
apols Iron Company. the Illinois Steel Com
pany and the Elgin Railroad Company.
The Morgan Company acts as agents for tbs
com bnation. but holds mono OF its certificates.
New Jersey law. he said. was better suited
for the incorporation Of the Federal Steel
Compan than the law OF any other State. Much
Of our property. for instance. Ia held In other
States. and the Now Jersey law Ia the only
legislation which docs not restrict such hold
ings beyond all reason. An additional advan-
tage is that the stockholders OF New Jersey
corporations may examine the books only as
the law provides In other States corporation
books are an uncertain quantity be-
cause OF the continuous moddling OF
others than CORPORATION officials. The
truth OF the matter Is that the greater the de-
gree Of freedom permitted the directors Of a
corporation the greater is the benefit to the
stockholders. II stockholders ever require
protection against the directors OF a company
the various State legislatures will be quick to
grant IL. But the directors make risks. not
the stock holders. and they assume the re-
sponsibty. would give the Board OF Direc-
tors OF every corporation the right to increase
its own number at will.
New York has lost corporation business
steadily because OF her unsta BILE and inequita-
BILE taxes on corporation capital. The indi-
vidual stockholders are liable. moreover. to
various degrees. for the debts OF the corpora
ton In which they hold stock. In New Jersey.
on the contrary. there is no individual liability
for corporation debts and the tax rate estab-
lished is fair and unchanRnR. This has not
involved any great danger to the State OF New
Jersey A corporation Is generally conceived
to be a benefit and as such Is permitted to
come into existence. As a benefit. New Jersey
not only permits it to live but gives 1t life.
Fake companies are not more numerous
there than anywhere else"
Questions asked by various members OF the
Commission elected the following general
comment:
capitalization has as rule almost nothing
to do with fixed values. II a company 10 Or
ganized with q capitalization OF S100.000O00
and sells 800 stock at SO per share no one
considers 1t to be worth Sl0O.000.000 Not
decentralization, but ruinous freight and
passenger rates have caused the greater por-
ton of the railroad foreclosures Of the past
twenty years. Had the rates been fraction
higher most OF the failures would never have
occurred
The railroads OF to-day are better directed
than ever before. Their officers represent the
best business men in the country. As such
they court publicity In managing their affairs.
| believe publ knowledge to be most desirable
for banks. raj lroads. insurance companies and
all organizations which deal with many people
state Commerce Commission has done the
railroads much good In promoting this kind OF
oTSt to- be- abe bresH sd
iormanee Of good contracts and to abolish un-
reasonable tariffs IN accordance with its own
work If It's Officers were made judges and APP
Ebert H. Gary. Presiden. Of the Federal
Steel compsII testified in the
out Of which the Federal Compan was created,
Mr.. Gary said: These companies in combina-
Gn E ana
ships included in the com bnation do large
part Of the. transportation, We have no mo-
Germ profitable except for the economy incident
to complete cooperation between the smaller
or the actual consolidation. Mr.. Gary said:
Mr.. j. Pierpont Morgan really effected the
union and brought the SEPARATE c9smpSnni6eGs ito 9
and $500. 100000. with which he bought con-
trolling interest In each OF tho corporations We
hn raj md IN in n w a n a AG ar n
lied. the stock OF the Federal Steel Company
approximately 5000 900-was regulated to
Of The stock obtained by Mr. Morgan. Ths
snes t ns N4s sen
competing companies have been received. by
accepting which we might have preclnded a
portion OF the com petition we must meet now.
But at no time have these PROPOSALS been en-
business. The main Office Is constantly in con-
ference with the heads OF those companies.
with the Officers OF the Federal Company. This
is In brief the whole scheme OF our business.
Our books h; would hardly make II any more
we are very willing to omen our accounts for
eX!amnation at any time; ooo.,,
last year The monthly payroll Of ou Eg com
Since our organization wages have been ad-
yanced generally ~ per cent; The complete
freedom permitted tnes6 employees Is evident
from the fact that at no time since the creation
of the Federal company has the management
taken any Iart in politics or attempted to sway
the votes OF its workers.
Some protection in the way OF tariff is re-
quirsd by American steel industries think"
continued Mr. Gary. But wo do not need
tariff large enough to create n monopoly for
the American producer by destroyinK compe-
titon Tariff, however. has nothing TO do
with the present high price Of steel That is
an effect OF superiority OF product and OF ac-
tolerated demand"
or Federal law intended to control the Gre
alton OF corporations and estGblish uniform
regulations to govern them. Mr.. Gay said {:
- II such a law could be passed, which doubt
think personally would not be opposed to
ton to be governed by Federal than by State
Courts"
s. NJ Rice. Secretary OF the Whiskey Trust
and Edison Bradley one oi tho men conspicu-
Gus in its management, are to be examined to-
morrow.
Mccarthy Gets tho Contract for State
Printing.