The Birmingham age-herald., 1903-05-24
STOCKS MOST
 WRITTEN ABOUT U, s, SteePS Conversion Plan a
 Financial Failure, HEADER OF STANDARD OIL H. H. Rogers Reappearance May Make A Change in Stock Markets in
 Activity-He Is the Ma
 nipulatlng Genius.
 
LEADER OF STANDARD OIL
BY ". G. NICHOLAS.

New York, May 2S-The United states Steel corporations conversion scheme whereby 1t was proposed to retire s2oO.- O00O0O of the per cent preferred stock and issue s250 00O,O00 of per cent second mortgage bonds. appears to have been a 5 financial failure The plan was to ex- change $2OO 00O. GOO of the bonds for like amount of the preferred stock and real ize cash on the remaining $50 OO0,00O The Underwriting syndicate undertook to fur snish $S0OO0O00 in preferred stock and pay The term of the conversion privilege eX pired on Saturday, May 16. At the office of J. Pierpont Morgan X Co. they re- fused this week to make any statement 2 of the result but it has become known through unofficial sources that in addi- ton to the SSOOOOOOo of preferred stock furnished by the underwriting syndicate , only about $4O0vJ,000 was presented for 5 conversion by outside holders and that the only bonds sold at par for cash was the block of $2OOO000O which the syndi- cats under it's contract had to take.
 It is not to be !, ondered at that out side holders of the preferred stock de- cined to avail themselves of the priv ilege to pay par for 8 bond that has been selling below S5 in the open market for a long time. So it would seem that the actual conversion involved only $12O0O GOO of preferred stock of which the un- derwriting syndicate furnished S0O00 900 and outside stockholders $4O,0O0 900, a total of $120, O000O0. The syndicate paid cash for an additional S2O,0O00OO in bonds causing the entire transaction to amount, in conversion and cash to $140.000 900. The underwriting syndicate. receives per cent commission of this total, or S5600,- GOO. This commission of course, is to be deducted from the $2O 000,00O cash so that the United States Steel corporation real izes only $14 900 net. In other words the underwriting syndicate exchanged SS0 900, GOO per cent preferred stock for a like amount of per cent bonds paid cash for $2O000,O GOO more bonds at par and received back $5, ,600,0OO as a commission Its $20, 900 900 block of bonds therefore nets it only $14 600. With the bonds selling in the market around S5 there would see.a to be very little pront in the trans action for the syndicate, but 1t does not deserve perhaps the sympathy that has been wasted upon 1t.
 This underwriting syndicate is composed largely of what are known in Wall street Nernacular as insiders. They were nunB mp with a quantity of United S,ates Steel preferred after James R. Keene had concluded his remarkable campaign of distribution and they conceived the idea of converting the stock into bonds and selling the bonds to the United States Steel corporation. sinking fund has been established by means of which the new bond issue will be automatically re- deemed within sixty years. The insiders convert their surplus preferred stock into bonds and sell the bonds to the sinking fund maintained by the United States Steel corporation. The advantage O. a
 bond over a preferred stock in the steel Business Is almost too obvious to men ton. The bond carries foreclosure rights which mean a great deal when it is con sidered the extent to which the steel trade is subject to ups and downs. An other point which has been gained by putting second mortgage bonds on the properties of the United States Steel cor poraton is that the Morgan interests have anticipated the possibility of a Carnegie foreclosure.
 United States Steel is more written about more talked about and more thought about than any other five stocks in the market This is not to be won dered at if one but stop to consider how