New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1902-09-15
MIGHT USE THE SURPLUS.
LITTLE APPARENT DANGER IN THIS WAY
OF RAISING THE 100000 NEED
Ed BY THE. STEEL TRCST.

OF RAISING; THE S5oo01.n0n NEED
Ed BY THE STEEL Trust.
It is nov five and q half months since the plan
for retiring S2O00000GO Of the preferred stock
and issuing $3.50, 100000 new bonds was ap
proved by the board Of directors of the United
states Steel Corporation, and nearly four
months since it was ratified by tbs sharehold-
ers, but the legality OF the proposed action was
early called in question. and the litigation then
instituted may not be disposed Of for many
months to come. The plan. as is known to
every one, combined what are practically two
distinct propositions The issue of SZoo,VooVo
> per cent second mortgage bonds 10 replace
@Zou90O,uG0 of : per cent preferred stock which
was to be retired. and the issue OF S9eooQooo
bonds IN the same class to be sold At par for
cash The Berger and -Curtiss-Smith
suits have for Their principal object the pre-
vention of the substitution Of bonds for pre-
ferred stock, but that project and the pro
posed raising of $50 600 600 new money by
the issuance OF additional bonds are linked
together, that If the preferred stock
conversion scheme be finally declared illegal the
whole plan will fall. Il would then be necessary
Tor the United States Steel Corporation, TO raise
the new money desired. to adopt anew as sep
dfate proposition resolution providing for the
issuing of 100000 bonds to be sold for cash.
elapsed since the need for this new money was
| declared to be urgent and that perhaps six
months more may pass before the proposed de-
wee Tor obtaining it can be employed, mas
raised the question in Wall Street whether 1t
VIII after all, be necessary to ask the snare
holders to authorize the addition Of so large an
amount to the bonded indebtedness of the cor
Poration, and whether it may not he possible to
avoid entirely the putting out Of new bonds as
d means Of dischargng past and present ooh-
cations and getting funds for contemplated I'M
proNements. For the last six months have been
months Of prosperity. a prosperity which shows
signs of augmentation rather than dimtnution-
After the payment Of all charges, for interest,
dividends, sinking fund and depreciation, there
remained from the operations of the corporation
Tor the first six months of the calender year
undivided profits amounting to about SO
10000 or about $3.500HoO a month; al
though the period embraced four Of the
FIVE months during which the corporation is
handicapped by the closing of lake navigation
Taking this S3,500,000 d month as a conserva-
tive estimate, it appears that within ntteen
months from the issuing Of the present plan or
by July l, 1893. the fund of the Steel Corpora
ton applicable for surplus will have Increased
by $50,o00.oO0. The S5000OoO0 proposed to be
raised by the sale Of bonds to be applied as
follows: S2J.000O60 for improvements from
which was estimated the profits OF the Corpo-
ration would be increased by $1OUOD0uO a year;
SlI,0OO0OO TO replace the sum expended in the
first year for commitments made prior to the
corporations organiZation and $4,000 900 o
meet payments falling due within few months
after April ! OF this year for properties pur-
chased just after the corporation was formed
1t is reasonable to assume that the SIo,Chb,bbp
of purchase money obligations is being paid
these obligations fail due. Just as the
f1J.e00,O00 obligations were met
As for the SD pLOOn needed for Improvement
purposes. nothing be done toward raising
II by a bond issue, already noted, untl! tn-
pending litigation Is out of the way. But hy
that time, stockholders say the surplus VIII
have increased to amount sufficient, even II
r,Ckored only from April /. to provide tlllS
SD UrD 900: and they feel that the other 80
100000. required to discharge past commit
ments may also be met from surplus. before
next summer. thus ohviating the issue of more
was exhaustively presented in the recent am,
davit of George ". Perkins Of J. p Morgan a
Co and chairman OF the finance committee OF
tbs. Steel Corporation in the Hodge SUIT. IN
which he dwelt upon the necessity OF MAINTAIN
ing a large cash surplus in order that the cor
banker and avoid the danger Of being crippled
even temporarily by reason OF any tRhtness IN
the money market But many stockhoiuerS pc
lleve in view Of the fact stated by MI.
Perkins in the same affidavit. that the corpora
,ior has AT pr eSent in its treasury a cash sur
riis Of ahout $50 OrnOOO and the fact that the
further remedy exists cf reducing OF passHis
5jvidends in time OF stress, thus erecting III
tba case of this company large SAVING. TN,
diversion 70! A year or so to current needs Oh
the sr1rrlus as earned, in this PERIOD OF nien
-. +torai yrosDerity would be step which
I,,o,,,d not menace the credit prejudice the
future OF this greatest OF induSdid' COL P"'"