The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-05-10
ACKNOWLEDGEMENT MAN
THAT DISTINCTION, 1T Is SAID, BE-
LONGS TO MIR. ROCKEFELLER.
His Wealth Growing So Fast that the
Increase Will Reach a Billion
Dollars i'm Ten Years.

New York Letter In Philadelphia Press.
Mr. Morgan could not have had the stocks
and bonds of the United States Steel Cor
poration in mind when he spoke recently
for publication of undigested securities.
Those shares of stocks and the bonds
with which the underwriting syndicate was
remunerated appear to have been so well
assimilated by the great public that it
is at last possible to announce to the
syndicate that its day is over, its hon.
orarium is paid or payable. except that
il has been underwritten into a second
syndicate. the one whose purpose is to
finance the exchange of steel corporation
preferred stock for bonds
Whatever happens hereafter in the way
OF large financing the record made by this
syndicate is sure to stand chief among
the traditions of what is called the un-
derwriting syndicate. II Is only fifteen
years since the first OF them was organ
lied. That blind pool 0or these syndicates
really differ but little from the chief fea-
lures Of the blind pooh was organized to
finance its sugar trust, a true trust, not
corporation, but an agreement which our
courts declared to be Illegal and which
was, therefore, dissolved.
Some OF these syndicates made money,
fair profit, two or three of them found
that their venture was Unexpectedly rich
in returns, but it was not until Mr.. Nor
gan proposed to his friends that they bind
themselves to stand for $500 OO0, 5000 of the
obligations issued by the United States
Steel Corporation. nor until after several
fascinating and romance-like of all of these
artificial methods of filliping the securi-
ties of corporation to success took its
{ m
To the uniformed public II seems as
though the profits approximating 200 per
cent. upon the cash outlay were exorbit-
ant, were an unjust tax upon the steel
corporation and involved the charging
of higher prices for the products of this
| corporation. But it would not be fair to
make any judgment unless there were COM
| PARSONS with other ventures. 1t so hap
pens that a very just and instructive COM
parison is possible since a majority of
| syndicate also became members of a syn
| dictate more recently organized by Mr..
| Morgan for the purpose of financing the
| securities of the so-called North Atlantic
| Shipping Trust.
The members of the earlier syndicate
| were called upon for 1874 per cent. of their
| subscriptions in cash and not many months
passed before this cash was returned to
them. The various and frequent checks
they have received since that return repre-
sent dividends, the profits that were pos
| sible through the marketing of the stock
/ and bonds awarded to this syndicate, the
very stock and bonds which it agreed to
| carry and pay for in cash provided there
was no market for the securities. 1t has
| all been velvet pure velvet, except that
| original payment OF 12i2 per cent.
| NOT so WITH SHIPPING TRUST.
| On the other hand the members of the
so-called shipping trust syndicate, almost
| all of whom are also of the steel under
writing syndicate. have been compelled to
meet demands for cash until nearly all of
L A~I
| them in cash. They have the securities,
but they find no market for these securities
| at present, and he is an audacious man
| who ventures to predict the day when
these securities can be marketed. Some
| time in the near future there may be and
doubtless win be a profit. but no financial
| almanac names the day.
| The earlier syndicate undertook what till
then was the largest financial responsible
| ty involving risks ever accepted in this
| country. 1t was thiS-they agreed to see
! to ii that securities aggregating $780, O0.-
| 600 were marketed and the cash furnished
| to the syndicate. If these securities could
| not be sold to the public then the syndi-
| cate would have been compelled to pay
| for them and keep them.
Therein lay the risk, since the very mag
| nitude of the Steel Corporations project
caused 1t to be viewed with apprehension
| or with doubt, and to this day the public
has not accepted the common stock. ex-
cepting at discount of from so to 60 per
| cent, varying according to market condi-
| tions and has not maintained the pre-
| ferred stock. excepting for a brief period
at or above par.
1t has been a frequent comment that in
view of several developments, the Northern
| Securities being one, and the belief that
| If the Cupreme Court affirms that decision
| and Congress does not modify the law the
| government will be compelled to act all
along the line, since it would be unfair to
| discriminate; in view, too, of market con-
ditions and the belief of the financiers that
| ii will be harmful to feed any more pro-
| motive stocks, there will be for a long time
no new underwriting syndicates
| But that view is ERRONEOUS. We are hav-
| ing now most remarkable illustration of
| what is virtually an underwriting syndi-
| cate operation, although those who have
part in 1t look for no direct profit James
| Stillman and his associates have in effect.
| in spirit If not in direct terms, under
| written the proposed exchange in 3 and
per cent. government bonds into the re-
| funding issue of per cent. bonds, the ag-
| gregate being lO0,OO0000. The greater oper-
| atoms In the railway world will invite IL
they do not compel the underwriting of
| new securities and there are in existence in
this city to-day several underwriting syn
| dicates
1t may be that hereafter corporations
will be able TO finance their own under
takings without calling in outside insur-
| derwriting syndicate means. Mr.. Car
negie. mad he perfected the plan whose
conception caused the organization of the
United States Steel Corporation, would have
called upon no underwriting syndicate and
it is very doubtful in case Mr.. Rockefeller
and MIR. Gould perfect their contemplated
plan of transcontnental railway system,
they will commit the financing of the secur-
tiles to a general underwriting syndicate.
That is not Mr.. Rockefellers way, nor
did Mr.. Gould, when ne, for some years
after his fathers death, was obliged to
borrow vast sums of money, appeal to an
organization of this kind.
SOME INDIVIDUAL PROFITS.
An estimate is given of the profits
which Mr.. Morgan and mis- partners in the
bank Of which he is the head receive for
managing the syndicate. The general esti-
mate in their payment is somewhat in
excess of S2O,OO0OOO, some say as large a
sum as $25,OO0OO0. The sum is prodigious,
but the influence, the command of re-
sources and the ability for which il is a
payment, justify, in the opinion of all
financiers here, this recompense
Those who fond of computing the
! manner In which the wealth of rich men
expands after the first nucleus has been
obtained estimating that in the course
Of five years at the rate of increase noted
for the past five years Mr.. Morgan will
stand in the list at the head of which is
Mr. Rockefeller. and in which are 10 be
found the names of the Vanderbilts Rus
sell Sage the LewiSSohns, the AStors the
Goelets and a lew others