The Detroit times., 1909-01-14
AIDED
MERGER TO STOP
MONEY CRISIS
READ HIS DUTY CLEAR AND
KNEW FOES WOULD iMPuGN
MOTIVE IN TENNESSEE COAL
AND IRON DEAL.

WASHINGTON, Jan. l4.-Presluent
Roosevelt permitted the absorption OF
the Tennessee Coal & Iron Co. TO pre-
vent financial catastrophe. says Ray
mond. In a dispatch to the Chicago
Tribune. Before entering upon the
the president predicted to
those who were concerned exactly
what has happened. D'evertheless.
he went into the AFFAIR with his eyes
open to the fact that there would be
future criticism.
During the first week of November.
1907, the country was in the midst or
a financial panic which threatened to
sweep everything before 1t. Strong
banks had gone to the wall and others
were tottering. Men who had had the
reputation of financial wizards. like
Heinze and Morse, dragged do" n
stronger men with them. Capital took
alarm and money could not be had at
any price. The banks OF the country
practically suspended specie pay
ments and resorted to the use OF clear
ing house certificates and similar de-
vices to take the place OF cash. No
one knew where the thing would stop
or how many good men and banks
would be involved In the crash.
In the emergency the government
did everything II could to restore con-
fdence and to increase the supply OF
money. The treasury balance was de-
pleted to the last degree Of safety SO
that money might be deposited in
banks to relieve this strain. Certif-
Gates of Indebtedness and bonds were
hurriedly put out to provide more
funds.
There was not public spirited citi-
zen In the United states who did not
desire the government to 60 to the
limit Of its authority to put stop to
the panic. The big men Of Wall-st
did their part, and bankers and finan-
ciefs In New York, Chicago. Philadel-
financial center were in hourly consul
tation, day and night, to do what they
could to stem the tide.
Funds Tied UP In Securities.
Just when things were at their
worst and when IL seemed that two or
three more big failures would put an
end to all hope Of restoring normal
conditions II was discovered that a
group, OF bankers and financiers rep
resented by the Trust Company OF
America. had tied up large share Of
their funds In the securities OF the
Tennessee Coal & Iron company, rep
resenting a majority interest In that
concern
The transaction was an entirely le-
gitimate one under normal conditions
The trouble was that depositors could
not be paid In steel stock. They had
to have money. This group of banks.
In no way connected with the United
States Steel company, had advanced
money on these securities, and, OF
course, could not get their money
back.
Unless a purchaser could be found
for the Tennessee steel stock these
banks would become insolvent. There
was just one concern In the United
States which had the cash on hand to
make that line OF business, 30 that the
transaction would be natural one.
That was the United States Steel cor
poration.
The big men of Wall-st. figured out
that II the big steel trust could be
induced to purchase the securities OF
enough money to save these banks
from failure, would protect their de-
positors, and would, above all. prevent
new catastrophe. the dire results OF
which no man cared to contemplate.
AS a matter OF course the steel trust
officials were averse to the transac-
ton. Like most prudent business men
they believed every cent OF available
cash capital should be held as such.
There was not then In the country.
probably any big corporation which
would OF its own motion have select
ed that time In which to have put out
millions OF It's cash resources for the
purpose OF wiping out rival.
Frlek Sees President.
The emergency, however, was a
great one and the steel magnates fin
ally agreed that they would come TO
the rescue Of the street and buy the
Tennessee securities for cash for the
sole purpose of protecting the banks,
provided only there was no danger OF
prosecution for violation OF the fed
eral antitrust law. They were will
ing TO risk their money but they would
not take chances on Imprisonment.
and they frankly said SO to friendly
bankers who were imploring them To
save the country from an additional
financial crash.
II was in this emergency that 4.
II. Gary and II. c. Frick, representing
the steel trust, called at the White
House on Nov. 4. 1907. They told
President Roosevelt, the facts. which
were that they did not want TO make
the purchase either at that or any
other time, but that there were certain
banks which would surely fail unless
the transaction were put through.
They came to ask the president to Sc
cure for them an immediate opinion
as to whether their action would be a
violation Of law. II that opinion were
adverse they would drop the matter
at once, and II II were favorable they
would open their vault doors and pour
their millions into the street to stop
the panic.
President Roosevelt acted with his
characteristic promptness. He called
up the attorney general and secured
from him. by word OF mouth. an opin.
ion TO the effect that there was no ap-
parent reason, under the law. why the
United States Steel corporation could
not acquire the securities OF the Ten.
nessee Coal q Iron company
~ a.