Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-09-15
STEEL TRUSTS CALL.
Indications That Heavy Loss Has Beer
Sustained

The New York Tribune today says: 1t
was learned in Wall street yesterday that
a call for 100000 cash had been made
on the members by the managers of the
United States Steel bond conversion syn
dictate. This is considered additional proof
that the plan which was fought in the
courts for year has failed. and that the
syndicate has sustained a heavy loss. In
the spring of 1902 the bond conversion plan
of the United States Steel Corporation was
put out. 1t provided for issuing $3.50, O00, OOC
5 per cent second mortgage bonds for the
retirement of 500, 100000 7 per cent pre-
ferred stock and raising s5O,O00O00 addi-
tional working capital for the corpora ton
and it's subsidiary companies. The stock
holders received two optons-first to ex-
change pro rata at par s200,00O,00O pre-
ferred stock for new bonds, and, second,
to subscribe in cash at par for $4,000, 600
new bonds. An underwriting syndicate
agreed to take at least 500, 100000 of the
bonds not taken by stockholders in ex-
change for ssO,OO0,OOO preferred stock and
syndicate was to receive a cash commits
sion of per cent on all bonds issued. This
syndicate is composed of principal stock
holders of the corporation.
Considerable mystery has surrounded the
opera tons of the syndicate, and it has been
Impossible to get any of the managers to
tell anything about its affairs; but it has
been no secret that the syndicate has been
greatly disappointed at the failure of the
stockholders generally to convert their
holdings into bonds 1t is commonly re-
ported that the public converted only about
$50, 100000 preferred stock and furnished
$1O,OOO,QOO cash, or one-fifth Of the entire
amount. 1t Is not known whether stock
hn11 nff Of =
in this total, but 1t has been accepted that
not more than $12O,OOOOOO preferred stock
was converted and $30,000000 cash fur
nished. Assuming this to be true it is
interesting to figure the syndicate's losses
to date. The syndicate put up $50 600 600 Of
preferred stock worth at the market 81
This was converted into bonds. These
bonds sold yesterday at about 7s This is
a loss of sixteen points, and on $SOO0o0OO
would cause a loss of $12, 100000 In addi-
ton. the syndicate must furnish 500 600 900
cash to buy similar amount Of bonds at
par, which would add another loss of
a, 100000, or total of $17,2OO,O0O. From
this should be deducted the cash commits
sion of per cent on $50, 100000, or 81, COO =
600, leaving a net loss of 81 100000. The
syndicate, however, probably made money
from its operations In the market, so the
actual loss to date may be set down at
$40 600 600, as was estimated at the time
the bond conversion scheme was declared
legal. AS 1t was generally supposed the
syndicate had paid in all it's cash obliga-
tons Wall street was surprised at the call
yesterday Whether this s., 900 600 included
the total liabilities of the syndicate could
not be learned.
Steel common made another low record
yesterday. selling down to 1874, the pre-
vious low figure being 1875. The weakness
Of the stock was ascrbed generally to the
reports that the next dividend will be re-
duced. if not passed. AT the same time it
may be said that assurances have come
from official sources that there will be no
change in the rate at present.