The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1911-05-28

Washington, May 27.-John W.
Gates revealed to the house steel
trust" Investigating committee today
the history of the United States Steel
Corporation and described it as the
natural outcome of the refusal of An
drew Carnegie to be bound by
''gentleman,S agreement" that marked
the early 3 es of open competition in
the steel business. He told of the
millions made and lost almost in a
breath, and how the Carnegie mills,
appraised at $3.50, 000, 900, were recog-
nized as worth $320,000,00O almost
within the time required to make the
transfer to the corporation. and of. the
grim clash when Rockefeller was pre-
vented from Joining in the corporation
and. forced to sell out at 40 cents on
the dollar.
- Gates admitted the combination was
formed to throttle competition. When
relating how Carnegie had been forced
TO abandon his plans of extending his
steel business he told of a midnight
conference between himself, Pierpont
Morgan and Charles M. Schwab,. at
which the steel corporation was con-
cefved, and how it. resulted in Carne-
gle getting $32O, 000, 900 in corporation
securities for his steel business which
he had offered previously for $160,O00,-
900.
Gates also told the committee about
Making over the Tennessee Coal & Iron
company by the United States Steel
during the panic of 1907, stating it
was a forced transaction by Morgan
and other leaders to save the Trust
Company Of America from ruin, with
which it was threatened because 1t
had loaned too much money on t. G.
& l. stock. Gates interestingly related
how plans had been made by Carne-
gle in 1889 to circle his steel interests
with railroads of his own and compete
with the National Tube Company Just
organized BY Morgan, by erecting an
AshtahuIa. Ohio, plant. all Of which
factors led to the birth of the steel
combine.
Asked by Mr.. Stanley If the deal
with the United States Steel corpora
tion was not prompted by the en-
barrassment of the Trust Company of
America, Mr.. Gates replied that he had
heard that ]. Pierpont Morgan had
suggested the transaction to relieve
a distressed condition of a banking
house.
TT has been stated on apparently
good authority" said Mr.. Stanley,
that at the time the Tennessee Coal
and Iron Company was acquired by
the United States Steel corporation,
certain 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
stock of the Tennessee Coal and Iron
Company, and that advances were
made to the United States Steel COR
poration to purchase this stock in or
der to avert a panic. What do you
know about that?"
Tn the exchange of this stock" Mr..
Gates replied, mot dollar changed
hands. No bank gained any assets by
It,"
Did any member Of a firm or bank
make a proposition TO the United
States Steel corporation to accept the
Tennessee Coal and Iron as compare
lively worthless poperty?" asked Mr..
Stanley. Tn other words, who flew
the signal Of distress?"
There are a great many under
ground wires in New York." Mr.. Gates
replied. II was told a certain bank in
November 1907 applied to the clearing
house for assistance. A committee ex>
amined its assets and discovered sew
eral millions of the banks funds out
on stock of the Tennessee company,
reporting to the clearing house that
too much had been loaned on Tennes-
see Coal and Iron collateral.
Stock brokers told me that as a re-
suit of this investigation, a gentleman
Continued on Page Nineteen)