Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-05-05
Financial News Letter
BY W. G. NICHOLAS.
Of The Star.

The really interesting happening in this
full week in Wall street is the announce
ment of the dissolution of the House OF
Twelve Partners" the firm that John w.
Gates founded when he came to New York
to play the great Wall street game. While
there have been rumors that Mr.. Gates
was badly hit in the March panic, his
friends say that he is worth $25,0O00Oo,
and is giving up his brokerage business be-
cause he wants to enjoy more of the pleas
ures Of life Gates has had "A meteoric
career. He was a farmers boy out west.
and young man he ran hardware
store in a country town. When barbed
wire began to be used by the farmers
Gates saw what possibilities there were
business and went to see the man in 1lli-
nois from whom he had been buying his
barbed wire. This was Col Isaac Elwoo1
pioneer in the business. He was not
looking for partners, but he gave the coun-
try shopkeeper a position as travelling
agent for the concern. The trade grew
rapidly Col Elwood prospered, and so
did Gates in a lesser degree. But he
wanted an interest in the business. Not
getting it, he left Col Elwood and put all
his savings into barbed wire factory.
Soon Gates became dangerous rival. Col.
Elwood brought an acton for infringe
ment of patent rights. A bitter fight was
the result Gates hung on with bulldog
tenacity. The end Of it was that Col. Ell
est in his business.
( From that day Gates rise was rapid. He
began "corralling'' barbed wire factories
through the west, and when he became
master of the situation he formed a
trust" the nucleus of the combination
he formed later under the name of the
American Steel and Wire Company, with
capital of $sO,OO0,OOO. When the Steel
Trust was fioated Mr. Gates turned his
company over to the underwriters for
nearly 800, 100000. s5o,ooo,Ooo in preferred
part of this stock was Mr.. Gates per-
sonal share of the transaction. Gates,
trolling in wealth" from the sale Of steel
shares on buoyant market, became
daring free lance. With a practically I'M
limited amount of free capital at his COM
mand, and an all-absorbing passion for
playing for high stakes, he made Wagers OIL
a magnitude that made the veteran finan-
ciers of Wall street gasp. And behind
him he had crowd of recklessly cour-
ageous westerners ready to follow him
blindly. The Gates crowd" became big
market factor.
Now that Union Pacific Is again showing
strength in the market, the rumor mongers,
instead of predicting par for the stock
and telling what an awful man Mr.. Harri-
man is, are making bets that a holding
company will be formed for the treasury
holdings Of the securities of other roads
and that Union Pacific stockholders will
receive valuable rights In the form of stock
in this holding company. But this was
just as trHe when Union Pacific was SELL
ing $50 lower as 1t is today. The treasury
eyes and whatever course the company
may be forced to adopt by reason of gov
eminent interference. no power can take
from the stockholders the property that is
---eirs. Whether the Union Pacific prop
erty goes on as it is or whether the rail-
road is divorced from the treasury holdings
in other roads, the value of the whole
property remains the same. In this con-
nection an interesting question arises as
to the participation of the preferred stock
in any rights
-
1t is understood that the Morgan First
National Bank party is to have a repre-
sentative on the Union Pacific executive
committee and a larger representation on
the board of directors of that company.
On the big break in Union Pacific 100000
shares were acquired In one block by
private sale. The price at which the stock
was acquired was said at the time to have
been Sill. Other stock was bought by the
same interests about the same time. The
aggregate holdings of the Morgan First
National Bank party entities 1t to voice
J. P. Morgan's SON is to go on the executive
committee and that possibly he may be-
core its chairman although this latter
statement does not receive general credence.
Il
In this correspondence attention has been
called to the need Of cutting up standard
bonds into smaller lots SO that they will
appeal to a wider range Of investors. In
this connection an investment authority
says: BASED upon a safe and sane study
of the situation, it seems reasonable to
conclude that when railroads, public
Die of small means in their investment
securities, they will accomplish as much
tow I'd protecting their property rights as
by any other one act. But such policy not
only would thrift and economy be en-
couraged, but thousands of investors of
small means also would be converted from
the vicious habit OF buying securities ex-
plotted by dishonest promoters and the
commendable custom would largely pre-
vail of investing such money in the issues
of legitimate corporations A railroad, or
the investment banker. is dependent upon
the public as the market for its securities.
This being indisputable, two things are
essential: First, ,t the .I genuine
ket for the investment. Then why should
not the corporations and the bankers COM
bine in educating the public as to the at
Effectiveness of bonds for investment pur-
poses, issue them in small denominations
and thereby create the broadest market
possible?
When copper tOucneQ 70 Genus III tne VIII
ter it was pointed out in this correspond.
ence that the consumers Of the metal would
not go ahead paying these high prices.
There must be a limit at which commodity
used in the arts could sell without curtaif-
ing its consumption. Five years ago nine
pounds Of copper could be bought for a dol
lar Many mines could not make money
selling their product as cheap as this. But
the copper mines were doing a bic, profit |
able business when dollar would buy six
pounds of copper. Now a dollar will buy
only four pounds of copper. That the con-
sumers Of copper are beginning to feel the
depressing effect of high prices for the
metal is evidenced by statement from
the president of the Western Electric Com
pany q concern that last year, did a gross
business of $7O,OOO,O0 The company was
then employing 2o,0O0 men. Now it is en-
ploying only 10000.
4
Some of the large stockholders in United
Wireless Telegraph Company, the $20000O00
attempted merger of the DeForest and Mar
conf companies. are trying to GUST the chief
promoter from the company. One of these
large stockholders is Col. c. c. Wilson, from
Texas and Colorado. who has known Abra-