The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1901-03-29

torious that when the Federal Steel com
panys the American Steel < WIRE com
pany and the other pig combinations that
were Dlongnt INTO the United states Con-
sonGated oteet corporation, were organ
lied, their common stock represented pos
SIDE earning power and not Gct1ai money
invested ina the case OF some OF them
the common stock was given as a bonus
TO the buyers OF the preferred Hat. or
more, OF the capitalization or these con-
Germs was water. In the process of bring
ing them ali together INTO one corporation
ABOUT IS per cent more water was in
jecLed.
The compensation of the financiers who
engineered The oeai is something enor-
NOES Mr. Morgan organized "a Itnancier-
ing syndicate with 30 milnous or capital
To tins syndicate was given the entire
La IniilohS OF STOCK and bonds OF the
Jmted states Consolidated Steel com
pany- and IN exchange therefore the syn
eicate agreed 10 secure the entire amount
o. stocks and bOnOs OF the merged COM
pahles aud pay % millions OF cash into
the treasury OF the new steel company for
working capIlal- a direct exchange OF
stock was erected by the syndicate With
the stockholders OF all the -comDsries i'm
the comoIne except ne Carnegie company
TINS exchange required 53s5t. millions OF
the new sIocsS 10 secure "A rbe Cvsr,,e-
gle interests took the 3lH mnuons in bonds
z .rU4 9 nan 10 millions of the stock OF
the new companies, leaving ia the hands
--~ - .-,..~eee0 e.Dout 100 iniiiiOns or the
80 ~, worm az present market value.
something over 100 million dollars in cash
Gut OF TINS the syndicate IS 10 furnish 20
cash for WoT King capital, leaving il about
Z? million dollars as its profit Tor finan-
cierlEg the deal.
This syndicate included J. =. Morgan
q Co, some OF the large stockholders in
the steel companies and nearly all the
prominent BANKERS and commission firms
an al street All o. these persons are
therefore interested IN booming the stock
OF the united states Consolidated steel
coIpofatiOn, so tnaJ the syndicate's hold
ing may De uniOa0ed at high prices
ih.s IS the reason lor AL the bull pointers
IhaI wan street houses are senulns, out
on the steer STOCKS. 1t IS animated, Tor
example, that the common stock OF the
eorpotaJlon, now worth about % cents on
tut collar Will some time sell as high as
the common stOckO- 1 sugar, which Is
ABOVE I4U.
Another strategfcal play bv Morgan has
been 10 get prominent railroad men inter-
ested, so that they VIII tUrn their con-
tracts Tor steel to the company. and not
SeiSHAe ABOUT the prices they VIII pay.
= q
With the iron and steel market starting
on anoIher boom similar TO that OF two
years ago Win over $lu0OGJ,UOJ earned
IN $50 Dy the companies constituting the
consolidated corporation and prospects or
stiI Sreater earnings this year: with a
reasonable certainty that a ran dividend
VIII be PAID on the common stock tnis
year, 1t Is natural to suppose mat the
stock OF the big concern viii have a
boom But who can beileIve. thar high
prices can be maintained long Tor the
sh2feS OF corporation or sucn gigantic
warerg
a
q stronS incentive Tor competition. The
UnlJeu states consolidated steel corDora-
uon Goes not now control ali the ousi-
ness ana II, cannot maintain monopoly
unleSS II reduces prices to "a point wnica
VAL discourage attempts AT competition.
Sucn poncy VIII mean Curtallment OF
protlt dividends on the common stocks
With the economies OF management that
are possible IN business OF such gigan-
nc proportions, and with a normal manu-
iacturer profit, the United states Con-
soLdated Steel corporation probably
could shut out all competition. But Il
Sl 40 II and pay dividends on over
$0lN,0VteO of watered stock
q p q
such corporation would be a fearful
menace 10 the financial stability of the
country II its stock were doomed To- "A
high price and bought generaIIv by the
public, Tor a collapse would De inev1Ia bic
carrying with 1t hundreds of millions OF
dollars loss TO investors. There is no
evidence as yet that the public is going
10 take much of the stock. 1t may be
thaI systematic and JudiciOus EXPLOITATION
Will arouse public ddmand. There ara
les o. BlSalltlc speculation In thu
thing The suggestion that it is 10 be "a
second standard OIL enterprise for the
I1SIltieSS OF It's dividends IS very 4lluEinE
70 the man who wants 10 get rich quick
Ihus Tar, however the public has kept
out, just as II refused to buy the stocks
or the big combinations which have en-
tered into this greatest of combines The
American Steel * WIRE common STOCK has
/ dragged under so and at times under $40
! a snare, though il has paid ( per cent
1 dividends, making over 10 per cent in
come on its market price. The record of
the others is about the same The
reason Is that the public knew the com
mon stock represented only water and
Its dlVldends We're not likely to be main
tanned II this same feeling prevails re-
Sa-dlng the common stock of United
state Consolidated Steet-as it ought to
tine Shares VIII be LETT in the hands OF
the people who now own them-the
financing syndicate and the original own
ers OF the steel and iron plants of the
country It IS probable, however. that
I MnSn everything Is ripe for il, activity
Z in I Hp srrT.r
ton in these stocks, the attempt VIII be
made 10 draw the public into the whfrI
OF me excitement and prices will be
pushed up. But it may be considered
quite certain that insiders will want to
unload when the price gets high enough
If they can find buyers.