Omaha daily bee., 1901-03-01
WATERING THE STEEL COMBINE.
Tall Figures Calculated TO Make Com
sumers Perspire.
Philadelphia Times.


The new steel trust, which has Just been
incorporated in New Jersey with authority
to do everything, deals in such enormous
figures that IL is we'll calculated to excite
public apprehension and to provoke legisla
tion In restraint OF such combinations. 1t
seems likely, however, that the natural
laws OF trade will prove more effective
against 1t than any artificial statute could
be. 1t Is the most inflated industrial com
bination that has yet been attempted, and
while 1t may accomplish the immediate
purpose OF the promoters, 1t requires large
faith to believe In its permanence.
or the eight concerns or combinations
that are to be taken over by the United
States Steel corporation, the greater number
are largely overcapitalized already. The ag-
gregate OF their outstanding securities is
$3.50, III, 200. These are to be represented
In the new organization at a total of
81, 100 600 900, an addition of $316 229, 500, or
40 per cent Of water" That statement
is in itself sufficient to show the nature of
the speculation.
The Carnegie concern is, of course, the
foundation OF the whole business. Its
present capital Is represented, in round
numbers, by $3.50, ZOO, 900 In stock aud
| $3.50. .000, 900 in bonds Mr.. Carnegie owning
| majority of the stock and all OF the bonds.
The new company is to take 1t at some
thing over $50, 900. 900, replacing the bonds
and giving Carnegie also sl6O 900 900 in
bonds for his stock, the minority stock
| holders getting preferred and common
stock in exchange for their shares at the
| rate OF three for one. Mr.. Carnegie thus
gets first mortgage on all the property
Of the combine for $3.50 900, 900, and an add.
| tional $40. 200. 900 of bonds are to be issued
for Expenses OF organization" That is the
promoters rakeoff
After this comes the stock, preferred and
| common, some $4,000 900 of each class
| being issued in exchange for the various
| outstanding securities, whose aggregate
valuation is about $537. 900 900 and $40 OOO-
900 Of each offered to the public. In other
words, the whole property. first bonded for
| $500, ,000,0 Is given stock valuation of
! $500, 100000. to replace "industrals" now
reckoned at little more than two-thirds that
| sum. And this is expected to promote
| economy"
1t is easy to see where Carnegie comes
In and where the promoters come In. but
where the future dividends are TO come
from for all this stock is not so clear.
Even granting that the combination can
secure the same efficient management that
built up the original establishments, Il
has no monopoly OF the steel trade, since
| II represents less than one-half OF the
actual producing capacity of the country.
and its capitalization is based on conditions
more favorable than can possibly be main
tained. The company's mills are expected
to consume the product OF its furnaces,
but whenever business revusion comes the
consumption Of steel is checked and Gus
toners are lacking at both ends. When that
time comes the present promoters will
doubtless be found to have got from under,
but somebody will be caught. II requires
no act OF congress to limit the flight of
balloon.