The sun. [volume] (New York [N.Y.]) 1833-1916, 1911-07-01

COulu ne SUCCESSFUL unless IL Included
the Carnegie Company. and Carnegie's
Cleveland. and thus invade the field OF
finished manufacture, was liz fact the
spark that lighted the flame.
QUICK DEALINGS IN MILLIONS
With amazing swiftnees. in the course
Of only few weeks the United States
Steel Corporation, according TO the
report. was organized and began busi-
ness on April 1, 1901. with total capitali-
zation Of little more than 81. 4O2, ,00O. 900,
including bonds The concerns acquired
we're the Carnegie Company of New
Jersey. the Federal Steel Company, the
National Steel Company. the American
Steel and Wire Company. the American
Plate Company. the American Steel Hoop
Company. the American Bridge Company.
the National Tube Company. the Bessemer
Steamship Company, the Shelby Steel
Tube Company and the Lake Superior
Consolidated Iron Mines.
At its formation the United States
steel Corporation. the report says, con-
trolled about two-thirds Of the country's
production of crude steel and from one
half to four f'hs Of the principal rolled
steel products The Steel Corporation
share Of the total pig iron production
at its Organization was only about ~ per
cent. However. of the output of steel
poration's share was not less than So per
cent.
Commissioner Smith adds:
ny this merger substantially two-thirds
of the steel ingot production and a pro-
portion Of the principal rolled steel products
of tho country. varying from one-half TO
tour-ifths or more. was transferred to the
control of single concern. The Steel
Corporations share of the total pig iron
production was only about ~ per cent.
However. Of the output of steel making
pig iron of the country the corporations
share VAS not less than 5s per cent
The position taken Ivy the Steel Cor
poration is that this great aggregation
Of property as in the main an assembling
and coordination of different branches
IN the industry. the primary object OF
which was to secure greater efficiency
and integration and OF course saving Of the
payment of profits to others. Their con-
tention is that most of the constituent
concerns of the corporation we're not in
actual competition with one another and
they are disposed to minimize the restric-
tion of competition brought about as a
result Of this great merger
II is true that certain of the const tuent
consultations, as for instance the Amer-
can steel and Wire Company and the Ma
tional Tube Company. we're not competing
with one another at this particular period.
However. there was active competition
between the three principal crude steel
concerns Carnegie company. the Fed
cral steel Company and the National Steel
Company: while these concerns. to some
extent at least, we're in competition with
some of the large consultations making
the lighter finished products. Moreover
the fact should not be lost sight OF that
nearly all OF the latter class Of COnsoida-
tions were originally created with the
intention of restricting competition. 4
more important matter is that a period
of violent competition among all of these
concerns was imminent at this juncture
and that the United States Steel Corpora
tion was organized for the specific purpose
of preventing tho new competition thus
threatened as we'll as eliminating that
already existing among these concerns.
The opportunity for reaping a huge pro-
profit out OF this situation un-
doubtedly was an important consideration
in bringing about the merger. Nevertheless
the primary object was the restriction or
prevention of competition.
The report adds that the corporation
has made three important acquisitions
OF competing concerns since l90i-the
Union Steel Company. the Clarion Steel
Company and the Tennessee Coal and
Iron Company. or the Tennessee pur-
chase. which has been the subject OF so
much controversy. the report merely
says:
By the purchase OF this company the
Steel Corporation secured the leading
factor in the southern iron and steel in
dlstry, and what was Of more consequence,
the extensive ore and coal reserves of that
company. The purchase Of this concern,
which was made in the height OF the panic
nf had AoA b,., a
attempts on the part OF other interests
10 Use IL as basis of a rival consolidation
which would also include the Sloss-She field
steel and Iron Company and the Republic
Iron and Steel Company.
the commissioner iustifes his effort to
determine the relation of the trust s in
vestment to capitalization and earning |
power on the ground of public policy |
He describes the Steel Corporation as the |
most conspicuous example of the modern !
corporate organization of great businesses
the greatest industrial concern in the |
United States.
The total capitalization in 1901, includ- |
ing bonds was 81, +0' ,Sis.sl7, made up as |
follows;
$4,000. 900 Of preferred stock: $685.
100000 of common stock. 1903 900, 600 of |
bonds. and about $sl 900, 900 .
Of underlying and miscellaneous obliga-
tions.
In analyzing the actual value Of the
physical properties upon which this huge
capitalization was based the bureau
adopted three methods first. by his
torical study of the organization and in
vestment of the constituent concerns at
the time of their formation; second, by a
Of the public estimate of the
value of the properties of these constituent
as reflected in the market prices
Of their securities; and third, by detailed
estimate Of physical properties classified
BY departments OF business
CAPITAL TWICE ITS FIRST VALUE.
The huge capitalization OF this corpora
tion, the commissioner contends,
amounted to the representation that
here was a value in this concern which
would justify fair business return on
his capitalization. The bureau finds on
The contrary, that in 1901 the fair market
value Of the corporations tangible prop
'rty was less than one-half its capitaliza-
ion. The valuation arrived al by the
bureau by the first method, which il
,hiefy for tangible assets. appro minated
1878 .Ooo .OOO; by the second method. which
includes intangible considerations. $7e3.-
O0 600, and by the third method. which is
'onsidered the most precise and which
Includes inly tangible assets, $8s2 900 600.
The Commissioner of Corporations con-
ends that the excess in capitalization
wei the actual property value in 1901
must necessarily be due To increased
'arning power from elimination of com
,etltion, concentrated ownership of the
,aSic natural resources iron ore and coal