The Topeka state journal., 1911-07-01
OVER HALF WATER.
steel Trust Was Heavily Capitalized at
the Start.

washington, July 1.-The long ex-
pected and much discussed report from
the bureau of corporations on the Uni
ted States Steel corporation recently
submitted to President Taft, has been
made public here.
signed by Herbert Knox Smith, COM
missioner of corporations, the repoi :
makes no recommendations and is al
most wholly narrative in form: MI
Smith declares that restriction or conf
petition was a prime object of the or
ganizers of the steel corporation or So
called trust
Capitalized at $1,402, 100000, the cor
poration, he asserts, had tanglole pro
perty worth only $6s2, 100000. By a con-
slant reinvestment of earnings, now
ever. the report points out much OF the
water in the company has been elirt4i-
mated.
The steel corporation now owns 70
per cent o. the lake ores having re-
Gently concentrated it's efforts to se-
curing these properties. On this point
the report says:
Indeed, insofar as the steel corpora
tfon's position in the entire iron anu
steel industries is of monopolisttc char-
acter, it is chiefly through its controi
of ore holdings and the transportation
of ore" .a
Discussing in detail how "the impend-
ing struggle of the giants was avert
ed almost over night by the 1ormatulh
of the great cOnDludLlOn u
tions. taking in 250 subsidiary com
nanIes controlling 60 per cent of the
total crude and finished steel produc-
tion Of the country, the report says;
Until 1898 the bulk OF the business
was distributed among very consider
able number of concerns. There was
sharp competition, modified by frequent
nools of greater or less duration and et-
fectiveness." ,..
Then came an era Of great ccmpl-
nnTftfnHnG
capitalizations ranging from $3O'OVV,-
600 to $1OO,0O0,000, mergers OF many
smaller companies, which, instead OIL
eliminating competition, threatened 10
bring price cutting on larger scale
than ever before. In 1SS9-199O there
were three great compa nles.lne "a "a
negie company, Federal Steel ana Ma
tional Steel-dominating the produc-
ton of crude and semi-finished prod
ucts, and six concerns-the American
Steel and Wire, American Tinplate,
American Steel Hoop, American Sneet
steel National Tube and American
Bridge=controlling the lighter mn
ished products
This was the period when the
struggle of the giants" was impend-
| ing and when the formation of the
United States Steel corporation was
/ conceived and brought about. All nine
of the companies named were COM
| bined and later the Union Steel COM
pany. the Clarion Steel company and
in 1907 the Tennessee Coal, Iron and
Railroad company was taken over
The promoting syndicate putting the
deal through netted s62,50O,000 in
cash.
/ During the ten years of its opera
ton. the report says, the trust has
/ paid average annual profits of II per
cent on the money invested. In this
connection attention is called to the
fact that a considerable part of the
investment is in undeve!oped or un-
worked property. showing that divi-
dends from paying properties must be
much larger than the average would
indicate. Insisting upon computing
profits upon n tangible property value
I basis, the report says tha the steel
corporation. in defending it's book
valuation, undoubtedly would claim
that there was a merger value"
Since the corporation has been Direct
/ Ing its efforts particularly toward az
! quiring and extending complete control