The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1911-05-27
'%Ohn w. Gates Tells House In
vestigating Committee
How Steel Trust Acquired Tenn.
Coal and Iron Co.
1T WAS FORCED SALE
Not a Dollar Changed HANDS III
the Transaction.
The Hand of Morgan Visible III
the Deal.

Washington. May 27.-John w.
Gates, who appeared as witness
fore the special house commlItee IN
vestigatlng the steel trust To-Day ue
clared that the accumulation by the
Trust Company of America of New
York in 1907 of a great block OF the
collateral of the Tennessee Coal ana
Iron company made possible the ac-
QUESTION of that company by the
United States steel corporation. Mr..
Gates said he regarded the transaction
as a forced sale.
The special committee of which
Representative Stanley of Kentucky is
chairman had determined that an in
vestigation Of the Tennessee Coal and
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 before the committee Asked by
Mr.. Stanley if the deal with the Unlted
States steel company was not prompt
ed by the embarrassment of the Trust
Company of America, Mr. Gates de-
Jared ne had heard that j. Pierpont
Morgan had suggested the transaction
to relieve a distressed condition OF
banking house.
ut mas been stated on apparently
good authority" said Mr.. Stanley.
that 1t the time the Tennessee Coal
and Iron company was acquired by the
United States steel corporation, a GER
tain business firm, the name not given,
would have failed if help had not
been given and that this firm had
among its assets the majority of the
stock of the Tennessee Coal and
Iron company and that advances were
nd
company to purchase this stock to
avert a panic. What do you know
about that ?"
I'm the exchange of this stock Mr..
Gates replied, mot a dollar changed
hands. No bank gained any assets by
it."
Many Underground Wires.
"Did any member of a firm or bank
make a proposition to the United
States steel corporation to accept the
Tennessee Coal and Iron company as
a, comparatively worthless property
asked Mr.. Stanley. ''In other words,
who flew the signal of distress?"
''There are a great many under
ground wires in New York. Mr.. Gates
TenIied. 'I was told that a certain
hank in November, 1907 applied to the
clearing house for assistance. A COM
rnittee was appointed to examine its as
sets. They discovered several mllllons
of the banks funds out on stock OF the
Tennessee Coal and Iron company. Tney
reported to the clearing house that too
nuch had been loaned on Tennessee
Coal and Iron collateral. Stock brokers
told me that as a result of this in
Vestigatiop a gentleman was invited TO
Mr. Morgans house. Mr.. Morgan sug-
gested to him that to relieve the situa-
tion the u. S. Steel corporation might
ACQUIRE the Tennessee Coal and Iron
company. That led up to the negotla-
tions afterward concluded"
Mr.. Stanley wanted to know If Mr.
Morgan and others had ever tried to
acquire the Tennessee company be-
fore with a view of securing a monopO-
". Mr.. Gates said he could not tell
what was in the mind of the purchas-
ers.
He outlined at length the sale of
stock to the .. S. Steel corporation
He said in 1904 or 1905 during his alb
sence in Texas, a syndicate was form
ed, managed by Grant B. Schley and
NCharles S. Guthrie then president of
tNl Republic Iron and Steel company
which purchased the stock of the Ten
nessee Coal and Iron company. He re-
lated how Mr.. Guthrie died soon after
wards and S. c. Hanna. brother of for
mer Senator Hanna, had been made
associate manager. I'm July 1907
said Mr.. Gates. "I sailed for Europe.
l returned in November 8, 1907 and on
SQlp L
the stock of the Tennessee Coal and
Iron company had been sold to the
u. S. Steel corporation.
The Panic Was On.
1.-THE panic was on then. l met Mr.
Schley at his office as soon as reached
New York and found negotiations going
on between Schley, Hanna and their
associates and Judge Gary. Mr. FricI5
and Mr.. Morgan. The latter We're then
in conference at Morgan's house trying
to acquire the Tennessee Coal and Iron
stock The terms proposed were that
for each 10 shares of Tennessee Coal
and Iron stock we were to get the
United States Steel second five mort
gage bonds. 1 said it was not enough
and held out until we made trade on
the basis Of 119A in United States Steel
sinking fund fives. The next day 1 in
sisted that the minority stockholders
be given the same terms and the deal
was made"
Mr.. Schley," suggested Mr.. Stanley,
has declared that the sale of Tennes-
see Coal and Iron company, was a
forced sale. DO you so consider it?"
Il regarded it as a forced sale" said
Mr.. Gates.
What financial power forced it?"
well, as I have said l surmfsed il
was the finding of too much Tennessee
Coal and Iron as collateral in one of the
banks"
Did Mr.. Morgan have a decided in
fluence over this bank?''
I don't know" said Mr. Gates. II
is difficult to tell where a mans IN
flp11ce starts or ends in Wall street.
IT. Gates said that the bank in uues-
aun, the Trust Company of Americ 4
wanted dO,OOo,OOO and. he added. ''they
got it,"
--S
Not Rot, Nor Sympathy-Teachar-
WINE, did your father cane YOU for wi,
You did in school yesterday? Pupil-No
ina am. he said the Iiclir,.r -......fIi ~,