The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1902-07-27

purchased about 5000 tons of steel in
Great Britain for shipment via Baltimore
to the Rankin mill
II had great difficulty in obtaining a
bankers credit to satisfy the European
makers. Finally I called upon Mr. Nor
q. and he very cheerfully gave US credit
for $4,000 sterling, which was more
money than we were worth.
owing to our exceedingly large pur-
chase in Europe the price Of steel advanc-
ed s. to SO a ton. which meant a profit
to US Of from $3.50 900 to $500, 900. sold
Il. 600 tons Of it 10 the Carnegie company
without touching it, simply delivering the
shipping documents to them, and thereby
made 100000 net profit. The balance Of
the steel We worked up into rods and
wire.
our profits in the manufacture Of wire
in 1885 were very small, caused largely by
the Grant-Ward wire panic. The year
1886 was fairly good. IN 1887 we realized
the profits Of the steel purchased in Eu-
rope in 1886 together with the steel sold
to the Carnegie-P hips company. We set
tied with them by taking their notes at
four and six months.
In 1887 we increased the capital stock
Of the Braddock Wire Company from
500. 900 to $780, CO., and paid cash divi-
dend of 500, 900-making a 500 per cent
dividend as the result Of work during 1851,
1855, 1856 and 1887
During all these years we were in bitter
litigation with the Washburn & Moen
Manufacturing Company and I. L. FL
wood on account of barbed wire patents
Our customers all over the United States
and in foreign countries where we were
trying TO work up a trade were harrassed
to such an extent that between the years
1850 and 1890 we paid out on account Of
patent litigation more than $1,000. 900.
In 1890 I persuaded Mr.. Elwood and
the Washburn 6s Moen Company that
they had better sell their patents to a
new company, which 1 would organize,
that would own all the patents on barb
wire and barb wire machinery. The pat
ents all went into what was known as the
Columbia Patent Company, OF which I
was president, and We had practically a
monopoly Of the wire fence business. This
company operated until the expiration Of
the patents. and for many months paid
dividends Of 100 per cent per month. Its
capital was s1OO,0 600.
In 1892 we took IN the Lambert & Bish-
op Wire Fence Company OF Joliet, H.,
and we purchased the Baker Wire Com
pany of Lockport, Ill, giving our unse-
cured notes at one and two years. We
paid off all the notes within a year.
In 1888 I bought control OF the Iowa
Barbed Wire Company of Allentown, Pa.
Its capital stock was $4O0. 900 and the bond
ed debt $3.50 900. It had a floating indebted
ness of 500 600. 7 divided my interests with
my partners, Mr.. Clifford and Mr.. Eden
born, giving them all they cared to take.
Confronted with an enormous floating
debt, we put it al into the shape of notes.
In twelve months they were all paid for.
In 1892 we consolidated the Iowa
Barbed Wire company with the
Braddock Wire Company of Pittsburg.
the Southern Wire Company of st. Louis
the Baker Wire Company Of Lockport
and the Lambert & Bishop Wire Company
of Joliet into the Consolidated Steel and
Wire Company, with an actual paid in
capital Of "a ,OOO. O0O managed that COM
panys affairs from 1892 till some time in
1895, during which period the average net
earnings were between q and Is per cent,
or about $1.10o,ooo per annum.
IN 1895 I was elected president of the
Illinois Steel company. I had acquired
an interest of q. 900 shares which I bought
at around $50 per share"
At this point in his narration Mr.. Gates
ceased divulging his profits, which are fig
ured by the millions since 1898. He told
briefly of the organization in 1928 of the
Federal Steel Company, with a capital
stock of Sss,0 O0,O0o, to take in the Federal
Company and several other companies.
He explained the consolidation of many
wire concerns into the American Wire
and Steel Company with a capitalization
of $4,000 900. Then followed his account
of how he suggested to Mr. Morgan the
billion dollar trust, which swallowed all
the Gates concerns, as well as those of
Carnegie and other iron masters.
He also revealed some OF the inside
operations of the deal in Louisville and
Nashville stock. Under the latter head he
said:
ION Louisville and Nashville we had the
in the country that IT was worth more per
share than Illinois Central. We knew
that it had s25. GOO 600 of quick cash assets
in its treasury. The public did not know
that When We started in to buy the
stock we started IN knowing the actual
intrinsic value of the company and its
exact physical condition. and we had re-
ports Of auditors on its financial condi-
ton.
when we obtained 9o6Ooo shares Of
stock-the amount We started out 10 get
there was short interest in the market
OF 10000 shares Of it 100000 shares was
foreign short interest, and $1,000 was stock
Nj Belmont had sold under resolution
Of the board of directors authorizing its
sale. These $4,000 shares were not good
deliveries for thirty days. and If we had
called the stock and insisted upon the
specific performance of contracts-as we
had every right to dove could have
caused a panic greater than the May 9
panic.
The proposition was mado to ne by a
thoroughly responsible man financially
that if I would cali and insist upon de-
livery OF Louisville he would sell 50eel
shares Of stock and give me half OF the
profits for doing it. Nir. Morgan's people
sent to my hotel and awakened me AT l 81
1 in the morning and stated that at a meet
ing OF bankers 1t had been determined
that we were owners OF Louisville and
) Nashville and they wanted To know what
We proposed to do about it, stating that
It meant a panic probably greater than