The San Juan islander. [volume] (Friday Harbor, Wash.) 1898-1914, 1911-06-02
GATESG|VESDETA|LS
OF STEEL DEAL
MANY ADMISSIONS DRAWN OUT
BY CONGRESSIONAL
INQUIRY.
CORPORATION Came Into Existence by
Absorbing All Its RivaIs-Tennesee
Coal and Iron a Big Factor-Carne-
ole Wins Million from Frick and
Moore.

Washington, May 29.-Hearings be.
fore the special committee elected by
the house of representatives to deter
mine whether the United States Steel
Corporation is operating in violation
of the Sherman antitrust laws began
Saturday, That the investigation
would be thorough and prolonged was
indicated by the special direction of
the resolution creating the committee.
the members of which unanimously
expressed the determination to go in
to every phase of the industry that
may have any bearing on the ques-
tons at issue.
Representative Stanley, of Ken
lucky, author of the resolution and
chairman of the committee, unsuccess-
fully urged a similar inquiry in the
last congress. The first witness sum-
moned by the committee, John w.
Gates, was called especially to en-
tighten the committee regarding the
amalgamation of the United States
Steel Corporation and the Tennessee
Coal & Iron Company. The commit
tee also purposed questioning Mr..
Gates concerning the steel corpora
tons relations with the American
Steel & Wire Company.
The special committee, of which
Representative Stanley, of Kentucky,
is chairman, had determined that an
investigation of the Tennessee Coal &
Iron deal, which is said to have been
approved by President Roosevelt,
should be the first subject taken up.
Mr.. Gates was the first witness to ap-
pear.
Asked by Mr.. Stanley if the deal
with the United States Steel Company
was not prompted by the embarrass-
ment of the Trust Company of Amer
lea, Mr.. Gates declared he had heard
that j. Pierpont Morgan had suggested
the transaction to relieve a distressed
condition of banking house.
Not Dollar Changes Hands.
1T has been stated on apparently
good authority" said Mr.. Stanley,
that at the time the Tennessee Coal
& Iron Company was acquired by the
United States Steel Corporation, GER
tain business firm, the name not given,
would have failed if help had not been
given and that this firm had among it's
assets the majority of the Tennessee
Coal & Iron Company stock and that
advances were made to the United
States Steel Corporation to purchase
this stock in order to avert a panic.
What do you know about that?"
In the exchange of this stock" Mr..
Gates replied, mot a dollar changed
hands. No bank gained any assets by
it."
did any member of firm or bank
make a proposition to the United
States Steel Corporation to accept the
Tennessee Coal & Iron Company as a
comparatively worthless property"
asked Mr.. Stanley.
In other words who flew the signal
of distress?"
There are great many under
ground wires in New York." Mr.. Gates
replied. Il was told that a certain
bank in November, 1907, applied to the
clearing house for assistance. A COM
mittee was appointed to examine its
assets. They discovered several mil
lions of the banks funds out on stock
of the Tennessee Coal & Iron Com
pany. They reported to the clearing
house that too much had been loaned
on Tennessee Coal & Iron collateral.
Morgan Makes Suggestion.
Stock brokers told me that as re-
suit of this investigation gentleman
was invited to Mr.. Morgan's house.
Mr.. Morgan suggested to him that to
relieve the situation the United
States Steel Corporation might acquire
the Tennessee Coal & Iron Co. That
led up to the negotiations afterward
concluded"
Mr.. Stanley wanted to know II Mr..
Morgan and others had ever tried to
acquire the Tennessee Company be-
fore with view to securing mon
opoly. Mr.. Gates said he could not
tell what was in the minds of the pur-
chasers.
He outlined at length the sale OF
stock to the United States Steel Cor
poratlon. He said that in 1904 or 1905,
during his absence in Texas, syndi-
cate was formed, managed by Grant
b. Schley and Charles s. Guthrie, then
president of the Republic Iron & Steel
company, which purchased the stock
OF the Tennessee Coal & Iron Com.
pany. He related how Mr.. Guthrie
died soon afterward and 8. C. Hanna,
brother of former Senator Hanna, had
oeen made assistant manager.
In July, 1907" said Mr.. Gates, Il
sailed for Europe. I returned in No
vember, 1907, and on the ship bought
paper that read that the stock Of the
tennessee Coal & Iron Company had
been sold to the United States Steel
corporation. The panic was on then,
met Mr.. Schley at his Office as soon
as reached New York and found ne
gotiations going on between Mr.
ocnley, Mr.. Hanna and their associates