The Savannah morning news., 1902-07-21
THE ORIGIN OF THE STEEL TRUST.
John w. Gates Talks Entertainingly
Hbout 1t.

same factory, but IN an independent
factory. We started an unincorporated
concern under the name of J. w. Gates
& Co., into which eight of US put each
s., $780, making a total of $40, 600. All of
those gentlemen are still alive. We
declared dividends of about so per cent.
per week. I would travel and sell the
wire, come back, invoice it, bill it,
paint it, market it and collect the
money.
Our profits for the first year were
$4,000. AT the end Of the year l sug-
gested that l either buy out or sell out.
They accepted my offer and sold, leav-
ing no one with me but Clifford. Then,
in 1880, we incorporated the Southern
Wire Company, with capital stock of
$4,000, of which l was the owner of
As per cent, Mr.. Clifford As per cent,
and a Mr.. Rowe per cent. Profits
for the next year were s1SS,000.
I'm 1884 we began erection Of what
is now known as the Braddock Mill,
near Pittsburg. We began operations
in the mill early in 1886, and / went
abroad for the purpose of buying steel,
it being unobtainable in the United
States-1 mean steel billets. / pur-
chased about $4,000 tons of steel in
Great Britain for shipment via Bal
timore TO the Rankin mill. l had great
difficulty in obtaining bankers credit
TO satisfy the European makers. Fin
ally called upon Mr.. Morgan and he
very cheerfully gave us credit for
G60.000 which was more money than
we were worth.
Transaction with MIR. Carnegie.
lowing TO our exceedingly large pur-
chase in Europe the price of steel ad-
Yaneed IS to SO a ton, which meant a
profit to us of from $3.50, 900 to $500 900.
! sold 10000 tons of the steel to the
Carnegie Company without touching
it, simply delivering the shipping doc
uments to them, and thereby made
100000 net profit.
In 1887 we realized the profits of
the steel purchased in Europe in 1886,
together with the steel sold to the Car
negie-Phipps Company. We settled
with them by taking their notes at
four and six months. They had no
money to pay us for the steel.
In 1892 we consolidated the Iowa
Barbed Wire Company of Allentown;
the Braddock Wire Company of Pitts
burg; 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 Com
pany, with an actual paid-up capital
of s4,00o,O00
I'm 1897 conceived the idea
of putting all the wire COM
panies in the United States to-
gether into one company, and
either obtained options or purchased
outright all the plants and submitted
my plan to Mr.. Morgan. He under
took to finance the deal, providing the
profit showing justified.
When Morgan & Co. rejected this
nlan I nj Oh ~
best and most economically operated
plants and put them together into
what was known as the American
Steel and Wire Company, of Illinois,
with a capital stock of $24, 000 900. In
1898 l again undertook to put all the
wire companies into one company.
During the months of December and
January we succeeded, either by out
right purchase or by exchange of Sc
curities, in getting all of the companies
we desired consolidated into what was
known as the American Steel and Wire
Company, of New Jersey, with cap
| ital stock of 100000
The U. $. Steel Corporation.
I'm talking with Jamas ]. Hill one
evening in January of 1901 he informed
me that ]. 2. Morgan was very much
disturbed over the iron and steel sit
uation. The Carnegie Steel Company
was threatening to build a large steel
| tube plant and become competitor of
the National Tube Company, in which
| Mr.. Morgan was largely interested and
instrumental as a banker in bringing
out After several hours talk with
Mr.. Hill / told him that, in my opinion
| there was but one way to manage the
iron and steel business of the United
States, and that was by an actual con-
/ nd fhof AN
! would go to work at 1t right all the
iron and steel companies of the United
| States could be brought into one COM
| pany. Next day Mr.. Morgan tele-
| phoned me and asked me to come down
| to the bank and explain what l had
said to Mr.. Hill. II did So and outlined
to Mr.. Morgan a plan for the forma-
! ton of what was afterward named the
/ United States Steel Corporation. told
| him about the lines and general terms
/ l thought would have to be adopted
to obtain the Carnegie Steel Company
/ which being the largest and most ag.
gressive steel works in the world. was
the bone of contention among all the
iron and steel manufacturers. / as.
| sured him that there was but one way
to accomplish the consolidation, anC
that was by getting Mr.. Schwab with
whom l had talked about the matter
| many times, to agree to a plan III
advance, and submit that plan to Mr.
| Carnegie and get his approval, anc
then go ahead and consummate the
consolidation.
Mr.. Morgan requested me to see Mr.
Schwab and arrange a meeting at hi.
| residence. This l did, having frs
posted Mr.. Schwab regarding my for,
mer talk with Mr.. Morgan on the sub
1ect. We finally mapped out a plar
after several hours talk that Mr.
Schwab thought Mr.. Carnegie would
agree to, and that / strongly recon
mended. After many conferences witt
the various concerns that now form
the United States Steel Corporation
namely, the National Steel Company
the American Steel Hoop Company
the American Steel and Wire Com.
pany, the Federal Steel Company, tn.
Carnegie Steel Company, the American
Sheet Steel Company, the American
Bridge Company. together with tht
H. c. Prick Coke Company, which, Ii
reality, was Carnegie concern--tht
basis was made and all these prop
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