The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-09-20
And Formally Enters Upon n Struggle
with Foreign Manufacturers i'm
Their Own Territory.
ACTION ALARMS EUROPEANS
MORGAN AND THE SUBSCRIBERS TO
STEEL BOND CONVERSION.
Secretary Shaw Surprises Some of the
Season OF Depression.
Special to the Indianapolis Journal.


has resumed its interrupted invasion of the
markets of the old world. The giant COM
bination is showing its hand in Great
Britain and on the continent, and has
formally, although quietly, entered upon a
war with foreign manufacturers in their
own territory. This is in accordance with
the original programme, and is one of the
reasons why the trusts managers have
been accommodating an enormous working
capital, larger than there seems to be any
real use for. 1t is also noted in the trade
that the huge Steel Trust is putting the
screws on rivals in the domestic field. More
than a year ago the policy was decided
upon Of marking up the prices of raw ma
terial on competitors who were Obliged to
obtain their supplies from the big concern.
This was a move in anticipation of keener
competition later on. AT the time this
policy was decided upon there was bust
ness enough for everybody, and strong
opposition to the adoption of the plan
developed among the insiders on the board
Of directors and in the executive commit
tee. Sentimentalists in the management
feared the criticism which might follow
the discovery of a premeditated attempt to
place rivals at disadvantage by taxing
them for raw materials of which the trust
had obtained a practical monopoly. The
harder-headed element prevailed, however,
and now independent concerns in the iron
and steel trade are confronted with the
unpleasant necessity of paying top prices
to the trust for materials entering into
competitive production. This is precisely
the situation the trust management had
looked forward to- and it enables them to
underseli opposition at every point. There
are only a few independents with complete
supplies of raw materials, and these insti-
tutions are not of first Importance in the
general trade, being. engaged in the manu-
facture of specialties and being in con-
troll of more or less restricted territory.
Through its ability to tax competition by
putting up the prices of raw materials, the
trust finds itself in practically the same
position held by the Standard Oil Com
pany during its early years OF struggle for
supremacy In the case of Standard Oil
the advantage was obtained by rebates
from railroads, its deal going so far as to
collect a percentage of the freight paid by
competitors. The day of freight rebates
is supposedly past, but the device hit upon
by the Steel Trust effects the same net re-
suit by another route. 1t thus appears
that the heavy hand of the Steel Trust is
likely to be felt wherever there is sale
for metal products. 1t has long been the
announced purpose of the management of
the great combination TO keep its mills
going to the fullest possible capacity dur
ing lean years as well as fat years, and
if this can be done during hard times it
must be at the expense of somebody else.
There is substantial agreement among
representatives of the iron and steel trade
that prices are likely to continue to de-
cline until they become attractive to con-
sumers to the extent of restimulating &C
tivity in the various lines of construction.
1t is the hope and expectation of the
great manufacturers of iron products that
the demand will be resumed in something
like it's former extent before quotations
decline far, but this leads them into the
realms of speculation and conjecture.
Meantime the big trust is taking no chances
and is going on the assumption that it is
in for a long pull. and that only early and
persistent effort for business will keep it
going under high pressure. Already notes
of alarm are heard in Great Britain and
Germany, which will feel more severely
than any other foreign nations the force
and effect of stern competition from this
side. Manufacturing conditions abroad
will adjust themselves TO the necessities
of the times in the iron trade as they did
in the flour milling trade, which was at
one time threatened with utter ruin on
account of the invasion of the millers of
the American Northwest, who threw flour
into the foreign markets by the millions of
barrels at prices which defied competition.
XXX
The demand upon the subscribers to the
Morgan steel bond conversion syndicate is
accompanied by the declaration of an
Irish dividend" Tan assessment.) The
strike for cash is presented in two forms,
one or the other of which the subscribers
must submit to. If the members of the
syndicate grant the demand for nine
months additional leeway they will only be
called upon to pay into the Morgan firm
100000. II they conclude they have had
enough of it and insist upon exchanging
their receipts for the preferred stock placed
in the custody of the Morgan firm, they
will have to pay their proportion of $2O,-
100000 for a release from contingent liabili
tives involved in the undertaking. When
the syndicate was formed the subscribers
turned in $SO,W0,OO0 in preferred stock,
which was to be converted into bonds. and
also committed themselves for S20,OOo,OoO
in cash TO carry out the deal. That was
eighteen months ago, when the preferred
stock wos selling close to par and the
common stock around 10 or 80. During the
entire intervening period the subscribers
who put up their preferred stock have had
no use Of the securities, and all they have
had to show for the property were the re-
ceipts of Morgan * CO., which had no
selling value and were unavailable as col
lateral. They now have their first chance
of taking down the stock deposited with
Morgan * Co., but 10 do this they must
staAd an assessment of so a share. The
stock is now selling under 40. and the pay
the underwriting agreement would bring
the stock down tO $50 a share-a loss of
90 per cent. on their commitments They
would stand show at some indefinite time
in the future OF getting back all or part
Of that $50 assessment. the extent of the
favor depending entirely on the syndicate
manager Morgan. The proposition made
by the Morgan firm has been received in
Wall street with varying comment In
some quarters IL is held TO be an express
sion of confidence by Mr.. Morgan that IL
he is given nine months more TO nurse the
deal he will be able TO carry it through sue
cessfully, and that this expression at the
present time ~ "A favorable market indica-
ton. On the other hand, there are critics
unfriendly enough to say that IL any other
firm OF bankers had tried to do a thing of
that sort its credit would be at once as
sailed. In the case of the dissolution OF
the Realty syndicate, the securities put up
by the underwriters were returned To the
owners, together with their proportion of
OF the Sll. 00o.0ov in cash advanced. Sub
scribers to the Steel conversion syndicate
We're not called upon In the beginning for