The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1902-08-26
THE SUIT AGAINST
THE STEEL TRUST
me Affidavit Filed by George
w. Perkins.
BOND CONVERSION PLAN
Reasons for its Recommendation BY
the Committee.
TO PROVIDE FORTY MILLIONS IN CASH
This to Garry Out Improvements That Would
Increase Profits $4,000, OOOa Year. Aft.
davit Throwing Discredit on one Of
hodges Witnesses.
Hodges Witnesses.
(By the Associated Press.)

Trenton, N. j., Aug. ga supplement
tai affidavit in behalf of the United
States Steel Corporation was filed in the
Court OF Chancery today in the suit
brought against that concern by j. As
pinwall Hodge to restrain the CONVEX
sion of 5000, 600, 900, seven per cent pre- |
fcrred stock into 5000, 600, 900 five per
cent bonds. One of the affidayits is by
George w. Perkins, OF the firm of J. 2.
Morgan & Company, and also chairman
of the Steel Corporations finance COM |
mittee. Mr.. Perkins goes at length into
explanations as to the reasons that
prompted the committee to
the bond conversion plan and the pay
ment of $40, 600, 900 commission to j. T.
Morgan and Company. An affidavit by
Joseph Z. Corrigan, of the law firm of
Guthrie, Cravath and Henderson, tells of
a statement made to Mr.. Guthrie in his
presence by James Lancaster, who gave
testimony from Hodge to the effect that
the entire plant of the United States Steel
Corporation was not worth more than
$500, 900, 900. Mr.. Corrigan says Lancas-
ter admitted that when he made the af-
fidavit he did not know it was to be used
in any suit and that he was governed
only by his impressions, as he understood
that the affidavit was to be used only III
an advisory way in the matter OF stock
Investment. Corrigan goes on to swear
that Lancaster stated to himself and Mr..
Guthrie that he found out a few days
after making the affidavit that the affi-
davit was being used in the Steel Corpor-
alton suit, and that he protested to David
Lamar. who got him to make the affl-
daVit. Lamar then, accordlngn TO Ian
casters statement, agreed TO pay Ian
caster $3.50 a week and 100000 when the
suit was settled. Lancaster then made a
second affidavit and got $500. Subsc-
quentlv he got into a row with Lamar
about his compensation and finally got
$500, making a total of $1,e00 he having
received 500 for his first affidavit. 2
According to C~orrigan, Lancaster had
many meetings at the office Of Abram
l.. Elkus of the from of James, Schell
and Flkus. and Lancaster told Corrigan
in Elkus office that they expected TO
make big money out of the suit. Hedge,
the complainant in the suit, according to
Lancaster, told the latter that ne
Fodge) was acting for others and that
Lancaster need not look to him for any
money for his services. Corrigan states
that he learned of Lancaster through ms
efforts to locate Peter Power III the
Northern Securities Company suit, Pow
er haying been at one time employed by
Lancaster.
Mr.. Perkins in his affidavit stated mat
the financial committee of the United
States Steel Corporation realized the
necessity of having more cash capltal 10
protect itself against money stringencles
and the conversion plan was decided upon
because it would reduce the fixed charges
81. 800. coo annually. The commission OF
SO. coo. COO to ]. p. Morgan G co. was
agreed upon because of the risk that
that firm would be obliged to take IN
going into the market to purchase $50
600. 600 of preferred stock Of the corpora
ton and the advancement of $40, 000,O 0O,
both of which acts were part OF the
agreement between the corporation ana
]. P. Morgan & Co.
Mr.. Perkins, in his affidavit, said that
shortly after the organization of the
United States Steel Corporation, an IN
yestigation as to the extent, conditions,
capacity and needs Of its several proper
ties was begun by the legislative ana
finance committees, and that after a
wears close attention to those problems,
the executive committee brought to the
attention of the finance committee the
advisability of providing about S40,0OO,ooo
of cash, to be used in improving and eH-
tending the various plants of the SUP
sidiary companies. The members Of both
committees became convinced that the
expenditure of this new money would
increase the net profits not less than
$40. 900. 900 q year. The problem OF raising
the funds, continued Mr.. Perkins, pre-
scnted serious difficulties. The finance
committee determined that the corpora
ton would not take the risk involved ny
taking the sum required from the S2o'-
600, COO surplus, and that the funds Wouio
have to be raised or provided either by
the issue and sale of the preferred stock
or by borrowing on notes or bonds. IL
was finally determined that the most
economical and advantageous plan was TO
create and issue $3.50, 600, 600 face value
of second mortgage bonds and use the
bonds or their proceeds, first in procuring
the necessary cash requirements, and.
secondly. in purchasing and retiring
5000, OO0. 900 par value Of the outstanding
seven per cent. cumulative preferred
stock.
Mr.. Perkins then gave in details the
organization of the syndicate to carry
through the plant, the syndicate agree
ing to purchase and lodge with }. I.
Morgan & Co. $50, 600, 600 Of preferred
stock, not to be sold for a year ana d
half, further agreeing to exchange al
of this or only forty per cent. OF II at
the option of the steel corporations LOT
second mortgage bonds, and contracting
10 take second mortgage bonds from the
steel corporation at par in exchange LOT
500. 600, 600 in cash.
| For his the steel corporation was 10
allow the syndicate four per cent. COLI
mission on all the bonds it took III eA-
for stock and fOHr per cent. CONF