The Lexington intelligencer. [volume] (Lexington, Mo.) 1901-1949, 1903-10-03
THE u s. STEEL CORPORATION.

stock last week affords some interest
ing speculations. The preferred
stock sold as low as 81 cents and the
common stock as low as is cents on
the dollar. Yet ever since the organ
ization Of the steel trust it has paid
Z per cent on preferred stock and 4
per cent on common. At this rate
the trust would pay l13 per cent on
the present market value Of its
preferred stock and 22l per cent on
the present market value Of its COM
mon stock. The amount of the pre-
ferred stock at the last annual report
(the last semi-annual report is not at
hand) was S5OS, 3O2, 500; common,
$50, 281, 100. To this is to be added
bonded and debenture debt, $780,.
754, 1926 and mortgages and purchase
money obligations Of subsidiary COM
panies belonging to the trust, SO, $780,
$50 making, including several other
minor items, a total of 81, ABS, $40, CAB.
1t is upon such a capitalization that
the steel trust has been paying the
foregoing dividends. If it is taken
into account that according to the
sworn statement Of some of the in
corporators the greater part Of this
capitalization is water and that the
actual cost Of the properties included
in the corporation was only $780,
900, 900 aud that the value Of the
properties at the time of the con-
solidation, estimated on the basis Of
first cost value, was S24O, 00O, 900, it
will be seen that these dividends are
respectively SO per cent on the pre-
ferred stock at its present valuation
and 1881 per cent OF the common .
That is, it would be so if there we're
no water in the stock and the price
were as now. At a par valuation, II
there were no water in the stock, the
dividends would be AZ per cent and
"a per cent respectively. Nor is this
all. The distributed dividends
amounted to only half of the net
earnings of the corporation. The
total net earnings for the year 1902
according to the statement published
at the end of that year were SIT, S6S,
953 in excess of the actual value OF
the plants belonging to the trust.
1t is easy to understand how the
steel trust can make such dividents
upon such a capitalization when 1t Is
considered that by virtue Of the pro
tective tariff steel rails which can bt
made for SO per ton are sold at S2S
per ton and the other products Of the
corporation at similar rates 1t eX
plains too how it is possible to CAPT
tallze the properties at six time
their value and still pay dividends
equal to those Of other industrial
concerns, and it suggests the reason
for the fluctuations Of these stocks II
the market. So long as there is nj
tinkering with the tariff there will
be little trouble 10 keeping up thI
present dividend rate. But let any
thing disturb the earning capacity o
the trust and it will go into bank
ruptcy and be r%eorganized as th
property of the holders of It's bond
who Will be found to be the origiua
organizers of the trust, who issued t
themselves bonds to the amount @
the cost of the plants and sold t
others stocks to the amount Of 81
times the cost of the plants. Th
steel trust will go to the wall at tn
first serious threat of tariff revision
If that seems too far off TO the pro
moters, they may hasten l~iquidatio
by diScrediting the stocks on th
market.