Evening star. [volume] (Washington, D.C.) 1854-1972, 1901-04-12
FINANCING COMBINATIONS
METHOD DESCRIBED ny r.. n,
CHAPMAN.
testimony Before the Industrial Conn
mfssfon-Attitude Of Dealers aud
Labor Toward Consolidation.

Mr.. f. r. Chapman, banker and broker.
of New York was before the industr iss
commission at the Bliss building yester-
day afternoon to testify concerning tho
financing Of industrial and railway corpo-
rauons. Mr.. Chapman has been prominent
ly connected with the financing OF the
Brooklyn Gas Company. the Continental
Tobacco Company. Pittsburg Coal Com
pany, American Smelling Company Pitts
burg Brewing Company. American Smelt-
ing and Refining Company. Cleveland and
Sandusky Brewing Company. Empire Steer
and Iron Company and others.
Speaking of the consolidation Of smelling
companies, he said the owners of these con-
Germs had long felt the evils of competition
and sought some method to avoid IL. In
the case of the American Smelling and Re-
inning Company, he said, that company
chiefly operates on silver and lead ores.
though 1t does include gold but not copper
in its works. The options given on indi-
vidual plants when the consolidation was
secured in 1898 were on cash basis. The
American Smelling and Refining Company
issued 81. 100000 OF per cent cumulative
stock and so 100000 OF common stock for.
the plants that were taken In the combina-
ton. Working capital TO the amount or
S6.JO0,o0 was placed In the treasury of the
company The s27. 100000 of preferred stock
represented the tangible assets and the
same amount Of common stock represented
the plants purchased there was given 81 .Ood
of preferred and 500 of common stock. par
value, the remaining $500 of common stock
being used for the expense attending MAX
cluded the patents and special processes
owned by the companies that were takef
into the combination.
Promoters Paid I'm stock.
He had never known of a case i'm which
the bankers and promoters were paid for
financing a great corporation through a
consolidation except in stock. They do not
receive money or any given amount OF
stock for themselves. They are given a
percentage of the common stock, and they
pay all the expenses of the reorganization
from it, their own profit being what is left.
In 1900 the net earnings of the American
Smelling and Refining Company amounted
to Si5OO,0oO. The combination had saved
5000, 600 in freight rates alone by the
smelling of ores at the mines.
Mr.. Chapman stated that the combination
includes all the smelters OF the country,
except the Guggenheim concerns, and he
admitted that IL these latter concerns had
been taken in, as was recently proposed, a
monopoly would have been secured.
Speaking of the organization of the Pitts
burg Coal Company formed of 40 sepa-
rate establishments within radius of sew
enty-five miles from Pittsburg, Mr. Chap
man said dealers have been entirely satis-s
fled with the combination, although they
pay Il little more LOT IHelr coal tnan they
did before. But they are satisfied because
of the stability given to the business and
the guarantee they have of always securing
a supply of coal. Previously they had to
make a contract ahead with one of the
small coal companies. and in case of
failure of that company to secure cars or
any other accident they might be left with
out coal. Now the big company always has
coal on hand and on the road and can d.
vert a supply to a customer at any time.
This company sells to the New York Cen
trail railroad for its own consumption $500
tons of coal day. Since the consolidation
the company had acquired S3.O00,O00 worth
of additional coal lands. which were pUr-
chased from their earnings.
Labor and Consolidation.
Mr.. Chapman said the labor organizations
dealing with the Pittsburg Coal Company
were well satisfied with the consolidation,
because they prefer to deal with one COM
pany instead of 40 separate companies.
The company does treat with the leaders
of organized labor. and the witness said he
personally believed in the organization of
labor. He thought that Intelligent capital
lists today believe in the organization of
labor as he did.
The witness also spoke OF the organiza-
ton of the Brooklyn Union Gas Company
and the Pittsburg and the Cleveland and
Sandusky brewing companies He said
that all the capital used in consolidating
the brewing companies of the cities men
toned was American. The Brooklyn Gas
Company has. he said. complete monop-
oily, and yet has reduced the price of gas
from lbs to 81 per thousand feet.