The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1905-12-04

-
petitors. This did not work. because
some members OF, the pool would give.
rebates in order to make a larger show
ingSof output in order to have a larger
share in the pool. Gentlemen 3 agree
ments were next tried, familiar de
vice in railroad circles some years. ago
but worked no better with the manu-
facturers than with the transportation
companies. 1T was then that the law.
yers suggested the consolidation Of
competing companies under a single
stock issue. The idea did not, he say:
semanate from Wall street and the
bankers at first refused to have any
thing to do with the securities. The
stocks were. held by the owners Of the
constituent companies, and this Mr..
Untermeyer considers the best period Of
the consolidation. The element of
personal interest was retained and the
consultations still had the undivided
attention of the men who had made
the subsidiary companies successful I
They were not obliged to pay dividends
when a better use could be made or
cash on hand. They could buy new
plants or extend old ones instead.
But the fotation period came along.
Bankers. tried the securities and found
them profitable. They took more and
more of them. and the manuf acturers
quickly came to the idea that they.
could sell out at handsome profits and
still retain magnificent positions. They
became highly salaried agents instead
of owners and the trusts were now on
the down grade.
Mr.. Untermeyer cites the case Of Mr..
Charles M. Schwab as one in point. Mr..
Schwab won his great reputation with
Carnegie, where he had nothing to think
! of but steel. When he became presi-
dent OF the great trust organized by
Morgan he was obliged to consider the
market value of the stock. He was
| obliged to think of dividends and the
financial side Of the company rather
than it's manufacturing side. Both the
fnanciers who had foated the stocks
and the investors who had taken them
clamored for dividends. Mr., Schwab
made partial failure, but since he got
out of the trust and went back to the
Bethlehem steel works he has made a
development which. is. marvellous He
is no longer concerned with dividends
but with development and with steel.
MIR. Untermeyer s explanation Of the
weakness of some consultations and
the strength, Of others amounts simply
to this, that some were combined on
business lines, their combined value
fairly appraised and their combined
stocks kept within their dividend-pay-
ing power. These consultations have
had no trouble maintaining themselves
nor of retaining their original owners
personal interest in the business. The
original owners could not do better than
remain with the new company. But
when the era Of exploitation came
along, when companies were put in: at
two or three times their actual value,
the men who combined knew better
than to hold these stocks. They sold
and sitting tight with good salaries
waited for the inevitable t'passing OF
the dividend.' z@ J.
Industrial consolidation is not all Of
one piece. There have been consolida,
tions whichwere good not only for the
| companies but for the countries, These
2 are easily distinguished from the ofK fItst
They are the ones which were honestly
brought about. @ ss s ..:;: