Omaha daily bee., 1902-05-11
OWTH OF THE SYNDICATE
BmOus Profits Made in Launching the
Modern Trust.
HoRY Or SEVERAL RECENT DEALS
N Millions Are MADE In Floating
aiIroad and Industrial Combines
-MOrEan's share in Syn
dictate Development.

dtcnte Development.
riticism cabled over from London OF the
op~ensatlon TO be awarded TO the syndi-
o which is underwriting the securities
dbe new shipping combine has excited
irest IN the history Of the development
cheese syndicstes and the extent Of their
pts in this consolidation Is to receive q
tus OF SIS 900. 900 in common stock and
800. 900 preferred.
! spite OF the Extraordinary attention
Nch has been attracted to this arrange
mt, relates the New York Times. It lie
pied out by a prominent financial inter
Elm Wall street that this is not so large
Iment as was received by the underwrit-
q OF the steel trust organization. The
Dping trust syndicate guarantees the
q Of $50, 900, 900 bonds and about s12O, OOO,-
Gin stock.
his syndicate has been called upon for
1000. 900 OF it's cash subscription. Inter-
e connected with the new scheme admit,
kever. that most Of the bonds OF the new
upany have already been subscribed for
,side Of the syndicate. All tina remains
he done, therefore. is TO Goat the issue
1920, 600. 600 Of stock. II is said that II
: syndicate itself were to buy these bonds
profit would amount to about IS per
At, which would be reduced to some 30
cent by the sale OF the shares Of stock
less than par value.
{ has been figured by responsible per-
as that the profits Of the syndicate will
cunt to about one-half the face value OF
, securities with which payment will be
do 20 Hhaw1 - -. go mn mo- - 49,
900. OF this amount IL is understood
It J. P. Morgan & Co. will receive about
100000 for managing the affair. This is
lHidered a low estimate in Wall street
syndIcnte's Development.
Since 1890 the underwriting syndicate has
I a remarkable development in this
lntry. 1t has made possible the forma-
n OF companies with hundreds Of millions
dollars capital; 1t has brought great
mixing houses into harmonious working
reements. IT has brought American and
'eign financial institutions into close CO.
GRAFTON and 1t has liked a very snug berth
the stock market manipulator-the man
40 acts as a sort OF selling agent for un-
rWriting syndicates.
Syndicates are paid usually In the securi-
IS OF the companies they underwrite. The
ock market operator turns those securi-
8 into cash. This Is why underwriting
indicates often remain in existence long
ter the apparent use for them has ex-
red.
Little is known outside OF Wall street
mixing houses Of just what the part is
lich is played by these syndicates. The
lEt rRmarka h1a sI1nu+pa+f,a - a. -
g OF such a syndicate is found in that
iich underworld the steel trust securities.
I'd Its operations will serve as a type Of
.ose OF all the rest.
Attention was called by Prof. z. S. Meade
the University Of Pennsylvania, in a lee
re before the New York university re-
ntly. to the fact hat the formation OF the
eel trust was brought about because New
ork banking houses still held a consider
lie amount OF securities they had received
commissions for forming the smaller steel
usts-American Steel and Wire, Federal
eel, Steel Hoop. etc. There were six
oh corporations, aside from the arnerie
mpany.
These trusts had been organized on the
sight Of he great demand for iron and
eel products in the years 1898 and 1888.
any Of them had been capitalized up to
leir fullest earning capacity, independent
any material assets. They had unified a
asst number OF miscellaneous companies.
"a many difficulties had been encountered
' the bankers who guaranteed their Sc
irities. Messrs. }. P. Morgan & Co, for
tample, had underwriters The Steel Tube
jmpany.
That is to say, the Morgan company had
greed 10 furnish the necessary capital for
1rchasing the securities OF the subsidiary
1mpanies and to provide working capital
'r the tube company when fully organized.
1 return for this cash which was supplied
ne Morgan company received a large
mount OF stocks in the new corporation.
likewise. a large amount OF securities Of
ie American Steel N Wire, Steel Hoop,
In Plate and other companies passed into
ie hands OF Wall street bankers.
So long as there was a great demand for
eel products. says Prof. Meade. and the
akers OF the finished product bought their
W materials from MIR. Carnegie, there
as no trouble. The bankers were gradu-
ly selling their stocks through operators
I'd there was no complaint from any
'urce. In 1900 the market for the finished
'oouct ieIl on some, however. and the
nerent steel trusts proposed producing
cir own raw materials.
Mr.. Carnegie threatened that II this was
me he would build large producing plants
ID compete with the product companies.
ais action on his part would have meant
in for the other companies and the total
So Of the holdings OF the Wall street
mixers. II was deemed necessary to buy
1t Mr.. Carnegie and consolidate all Of the
eel-produeing trusts.
To effect this consolidation It was neces-
lry TO purchase securities amounting to
oout $1,000 DOC, 900, Working capital had to
, supplied 10 the new holding company
cash had to be furnished for purchas,
lg such OF the necessary securities as
lust be bought In the open market.