The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1906-03-09
UNITED STATES STEEL
Corporation to Issue Bonds In connec-
ton With Indiana Plant.


From the Wall Street Journal.
The statement that the United States
Steel corporation is seeking control of
the Republic Iron and Steel company
Tennessee Coal and Iron company. sloss-
Sheffield Steel and Iron company, La
Belle Iron works and a few other steel
companies. with the object of forming
a gigantic combination, Is a pure fabri-
cation.
The fact that the corporation has al
ready taken initial steps toward the
building of the largest open hearth steel
plant In the world in Lake county, In
diana. is sufficient to set at rest all ru-
mors of further acquisitions of independ-
ent steel companies for some time to
come.
Plans involving the financing of the
new Indiana constituent are now being
worked out. It Is understood that within
the next five years s75,oO00o0 will be
spent on the plant which will have a
capacity when completed, of about 1,750,-
coo tons a year.
A sum of $l0,000,0O0 has already been
set dSluG lOI nslIQtliDH pui PODtS. Do
fore the plant is completed, it is sup
posed by some. per cent underlying
bond inssue representing from % per cent
to IS per cent of the cost of the plant, or
from 500, 100000 to $35,o0o.oo0 may be an
nouneed All other expense will be eharg
cable to earnings. The bonds will probably
be guaranteed by the United States Steel
corporation.
While the entire cost of the Indiana
plant could be paid for out of earnings
without severely taxing the working cap
ital of the Steel corporation, it is felt
that greater benefits would be derived
through bond issue representing a per-
centage of the cost of construction. The
building of the Indiana plant does not
mean that construction work on other
constituents will be neglected
A bond issue of, say SIS 900, 600 on a &c.,
100000 steel plant with a capacity of L.
600 tons of finished steel year, would
involve an additional fixed charge of
about $1,250,000 The plant when completed
would be capable of earning from $780,
100000 to $15,oo0,0OO year under normal
conditions.
The Steel corporation, since its organlza-
ton. has spent more than $10O. 900 900 in new
construction, and between s4o00O.000 and
$500O00OO in extraordinary requirements,
which practically can be termed new
construction, without the issuance OF a
single bond.
The only bond issues of consequence
since the organization of the Steel cor
poration outside of the bonds created
through the retirement of preferred stock
were those involving the Union Steel
company and the Clarion Steel COM
pany, which are not included in the fore
going totals That the Steel corporation
secured bargains in these plants is EVIL
dent from the fact that their aggregate
earnings within the next few years are
expected to total a sum equal to the
amount paid for them.
Few people realize the additional ply
steal and financial strength given the
Steel corporation through its policy of
new construction and acquisitions since
its organization. 1t is estimated by GER
tain manufacturers that the earning pow
er of the corporation since its organiza-
tion has been Increased to the extent of
nearly s40.000090.