Waterbury evening Democrat., 1903-10-31
THE LESSON OF
 THE STEEL TRUST
Facts About the Largest In- dustrial Corporation.
OBJECT OF ITS oRaANIzAT1oN'

The Dominant Motive said to Have
 Been Personal Rather Than Public
 Namely, to Buy Out Carnegie-Its
 Capitalized Value Declared to
 Have Been Calculated and Not
 Tangfble-What the Public May
 Learn From Its Promoters' scheme
 The United States Steel corporation is thus discussed in the Worlds Work for November:
 The United States Steel corporation was organized by men who were re- garded as the strongest fnanciers and promoters in the world. It is the lar gest industrial corporation ever organ ized. It's products are the very basis of commerce. Although their prices have shown great fluctuations n MT. Carnegie has called the steel business pauper and millionaire industry they are the first necessity of com merce. It was possible, therefore, to organize great steel and Iron business not so as to prevent, but surely so as to provide against, trade depressions, for there is no business about which there is fuller knowledge.
 And there were many facts about the, colossal steel corporation that were ad- mirable and attractive. For one thing, it began at once to publish much fuller reports than most corporations have published. It inspired unusual confi-' e1afxa to be, if there ever could be, great in- dustrial corporation which should real- ly take advantage of the economies of consolidation and be managed for the benefit of the stockholders. The great est financial organizer of our time, per- haps of any time, was identified with it. It's first president was man in the full vlgor of youth who had had re- markable career In this business. The great company was launched as no oth- CT ever was.
 But it was the handiwork of the pro- moter after all. as hundreds of other great corporations are. The dominant motive in its organization was not the better manufacture of iron and steel nor it's cheaper manufacture nor the better handling or marketing of the product nor the steadying of its price, although all these motives played a part. No great improvement has been made in processes or in management by the new corporation. But the dom inant motive was to buy out MT. Car negie. It was a personal motive rather than what may be called public mo- tive. It was not the improvement of the industry nor primarily the protec- ton of the owners of these great millss but promoters reasons.
 In the organization of 1t definite. conservative values were not set on the property. On the contrary, it was valued at its earning capacity in pros porous times--its maximum earning ca pacity. Much more than half it's capi- talized value was fictitious. The whole amount of its common stock $50O,- l000, ,0O0--was water. It represented no real, tangible value, but a calculated value based on earnings at the very maximum rate in prosperous times.
 But the purchasers of this stock were not plainly informed of this fact. | Every man had to dig this inforrnsl- ton out for himself and calculate for himself the chance of it's permanent or possible value. But the inference was. since honorable men were at the head of the company, that there was a reasonable expectation of continuous dividends on the common stock.
 It soon came out that enormous sums were required as fees for the un- derwriting syndicate Tn other words, the promoters took heroic profit for their risk and trouble. Promoters do not work without pay, nor do great | bankers take heavy risks for nothing truly, but from the beginning of the world no such promoters profits as these had ever been heard of
 Making great organizations Is an ex- citing game. Few men have heads cool enough to resist such excitement The president of the great company soon lost his head. He was soon buy ing and selling great steel plant on his own account at fabulous profit. But the business of the great company went on in a prosperous way, and its millions of dividends were paid quar- terly. Then plan was made to con vert some of its stock into bonds, leav- ing the rest of the stock, of course at a disadvantage. Was this an intima- ton that time might come when the stock would receive lessened dividends or no dividends at all? The public be- gan to be suspicious, and the stock be- gan rapidly to fall In the market.
 The iron and steel trade has fallen off somewhat, not greatly. It Is pros porous yet. But the high tide of the last two years is receding When the time for declaring dividends comes the dividend on the common stock is cut in two--one- half of per cent per quarter is declared instead of per cent on the common stock.
 There were some time ago more than 25,O00 persons who had bought this common stock alone-bought 1t because they were led to believe that 1t had good chance to continue to pay per cent dividends year. Now they are x11H 4v,,1x, &no4 %H,o lfrno+o~o un a~,.