New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1902-06-01
THE ATTACK OK STEEL BOND PLAN

John Trehane. Of London. England, who recently
issued pamphlet in opposition TO the proposed
conversion bonds Of $500 100000 preferred stock
IF the I-r:ted States Steel Corpora ton. has now
supplemented that open letter to the directors
with another article which is as follows
An inHuentialiy signed request for three months
/ delay was last Saturday cabed to the directors OF
the United States Steel CORPORATION from mere.
meeting The Daily Mall Of Tuesday The
proxies but the minority Protested in passoned
Speeches The directors We're askea way Inc cons
conducted without enormously expensive
nogfno5 the It Grq Ho In his exfraordnaTv af
fair the conundrum which puzzles me is this: Why,
say il is they in such indecent haste TO re-
agSe ahg 6rgae dc c1 per 20 @ not
as prosperous as they say 1t is how dare they,
manage With mortgage in their own favor for
Of honor will their position be il. through
management the corporation shall one day be un-
able 70 meet the new fixed charge OF $lo8ooo" they
clos on themselves. and for their own protection
The circular Of the directors contained financial
eri@nced nanciers as J p P Morgan and his part
gentlemen invited the stockholders to increase the
mortgage debt of the corpora ton ny $2o0090,000
would thereby gain the following advanta ge-and
this mark YOU is the only inducement they
Mortgage. The consequent si7o00oo0 reduction Of
dividend payments. compared with the $3.50 600
increase OF interest. would result in a net annual
saving Of 81 go exceeding by $4,000 the annual
sinking fund contribution of 100000 required by
the proposed mortgage.
Now q me If that J. F Morgan and
Mr. Perkins fail TO understand the difference be
tween interest debt and a dividend stock
The interest y which 1he corporation is
be working loss and il is a fixed charge on
the assets The dividend * not a charge on the
assets: il only payable of profits; il is the
residue of the profits which the corporation-having
literally supplied its needs in the way of re-
serve funds. etc.-has no use for. and which 1t
therefore distributes its stockholders
Apply this distinction To the IN point Sup
posing after paying the interest and sinking
fund of Mr.. Carnegie.s first mortgage there should
be just SI4.0n04 on hand. Under the directors
scheme. before il could dollar for its own
needs the corporation would have 10 pay out Sl3-
$4,000 and sinking fund for the $3.50 600
600 mortgage and il would be left with the pittance
Of $4,000 with which make good its necessary
P reserve But without the conversion scheme the
only forced payment of the $l4Gl0,OO0 would be
50 700 600 being the interest and sinking fund on
the $50 e0o00 mortgage 1t would, therefore, be left
with the handsome sum of Sl1,3Q0s instead of only
$4,000 and out OF this II would be able to ma Ike
good its reserves and supply all its corporate needs
having done that il would distribute the residue,
which il did not want itself. among its stockhold-
scheme. instead of increasing the saving power of
the corporation by the trivial sum Of $3.50 00
would decrease II bv S10SOG0 being the difference
between the S135190eo fixed charges under the mort
sage for $3.50 600 and g. 7nAhAa fixed charges
under tfe S7A fhn Gla mortgage.