New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-07-01

ct will be seen at once" the report
| says. that the securities issued by the
! Steel Cooperation very greatly exceeded the
indicated value Of the property acquired. as
/ established by any one OF three methods
/ Of valuation. The valuation Of the tansi-
| bic property arrived AT by historical study,
as well as that by departments OF the
! business, shows an excess of capitaliza-
/ ton greater than the indicated value itself.
/ The valuation by departments. S6S2G0l00,
shows an excess of nearly s72l 001,OCo. Even
! taking the indicated market value of the
securities of the subsidiary concerns, $685.
100000, which valuation includes the public
estimate for intangible considerations as
well physical property, the excess of
the Steel Corporations capitalization was
still over 500 900 Naturally the valu
alton arrived at by this method exceeded
those obtained in the other two cases" 1t
i. adds.
| VERY convincing evidence o. & ruling
| tendency toward excessive capitalization is
/ afforded by the enormous payment the
! Steel Corporation allowed its underwriting
| syndicate. 1his syndicate provided the cor
| poration with S25O0),0O of cash capital ana
| also incurred expenses OF about SOOOVyO
| either in buying scattered parcels OF stock
| or otherwise making its total cash ek-
penditure $2S,010001 For this cash consid-
| GRAFTON. plus its underwriting services, the
syndicate received from the Steel Corpo-
| ration the enormous total or practically
! 10000 shares of its stock (halt preferred
! and half common) OF an aggregate par
| value OF practically $3.50 coo goo. This stock
| appears TO have realized approximately
| Ss0,j000Oo counting $4,000 unsold pre-
! ferred stock at par), leaving az profit 10
| the syndicate over and above the NS,OJ,-
! coo cash expenditure noted a net sum of
! about So, 100000. OF this Cne-tifth. or Sl2,-
| 10000. went to the syndicate managers for
! their services as such, the remaining $50,
/ 10000 being distributed to the syndicate
members.
! II should he pointed out that the syndi-
/ cate managers were prominently identified
/ with the management of several OF the
/ companies acquired by the Steel Corpora
! ton, and also with the management of
! the corporation itself Three partners OF
/ the firm of j. =. Morgan & Co. the syn
/ dictate managers. were on the directorate
I Of the corporation, and one of them was
! also chairman of the finance committee.
Moreover, the underwriting syndicate in
| cluded the heads OF several constituent
! companies These facts are entitled TO
| great weight In connection with this enor-
/ nous commission allowed 10 the syndicate
! In other words. as managers OF the Steel
/ Corporation these various interests vrtu-
/ ally determined their compensation as
/ underwriters.
| This eXtrRvaGant compensation to the
/ SyuulcdIe may Ialrly be cited
az further evidence of a general DISPOSE
! ton toward excessive issue Of securities
Value on December I, 1910.
| The report notes the fact that the cor
poration has made numerous additions to
| its property. and estimates its investments
+ OF December !. 1910, as follows:
't,IscoId 10 sssssIo "a uonnqIrsIp ihoulM ,oS
! uolllSInbJB sll S0uls ol9I5Vl :