Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1911-05-28
Gates DESCRIBES
BIRTH OF GREAT
STEEL TRUST
MILLIONS LOST AND
CREATED INSTANTLY
Fear of Carnegie Forced For
nation OF Corporation Which
Added $160,000,000 to
Wealth of Laird of Skibo.

HCQIllI VI lQltu VI ONlUOI
TBy Mornlns Journal special Leased wirel
Washington, May 27.--John w
Gates told the house steel trust In
vestigating committee today the his
tory Of the United States steel corpora
ton. Present at its birth. he describ-
ei bow l. was the natural outcome
of what he described as refusal of
Andrew Carnegie 10 be bound b., the
"gentlemens' agreement" that marked
the early days of open competition in
the steel business.
He also told of millions lost and
created almost in breath. how the
Carnegie mills appraised at sl60,000,-
600. were reorganized as worth $780,
900. coo, almost within the time re-
quired to make the transfer TO the
corporation: the clash In the forma-
tive days when John ID. Rockefeller
was dissuaded from joining In the ere
alton of the corporation and the man
ner In which others were prevented
from engaging in the steel trades'sf
Relating how Carnegie had been
forced to abandon plans for extending
his steel business, Mr. Gates frankly
admitted the combination was formed
John ID. Rockefeller had sought to en-
ter the steel business deal was put
through which forced him to sell out
for forty cents on the dollar.
Characterlzlng Mr. Carnegie as "a
bull In China shop" Mr.. Gates told OF
a midnight conference between him.
self. Charles w. Schwab and j. T..
Morgan. at which the steel corpora
ton was conceived. and how IL result
ed In Carnegie getting s320, 10000 in
the corporations securities for his
steel interests which he had formerly
offered for $160,000,O00 cash.
Mr.. Gates also told the committee
OF the taking over the Tennessee Coal
X Iron Company by the United States
steel corporation In the panic of 1907,
a deal In which he was Interested as Il
stockholdcr Of the Tennessee com
pany.
This, he said, was forced transac-
tion carried out by MIR. Morgan and
other financial leaders to save the
Trust Company OF America, threat
ened In the financial upheaval because
II had loaned too much money on
stock of the Tennessee company.
Plans made by MI. Carnegie In S99
and 1900 TO circle his steel interests
with a railroad of his own and to COM
pete with the National Tube company.
organized by Mr.. Morgan, by the erec-
tion of tube works at Ashtabula, o.,
We're factors that led 20 the birth of
th. steel combine.
Mr. Gates revealed how Mr.. Nor
gan. alarmed by Mr.. Carnegle's plans,
had sought the advice OF himself and
James j. Hill, how Charles M. Schwab,
who. he said. was the only man who
had influence with Mr. Carnegie. was
called in to suggest way to stop
Carnegie" and how the pioneer steel
king was curbod though greatly to his
financial gain.
He explained that the steel business
WIS threatened with several demoral-
izing forces whom Carnegie's plans ne
came known and that Mr.. Morgan aud
Clherr became alarmed fearing that
Carnegie would denoralize both rail-
road in erests and steel prices.
This was the situation as described
bv Mr.. Gates, himself a director In the
Republic Iron & Steel company when
Mr. Morgan sent word to him through
james T. Hill, seeking a conference
t, ceterinine what could be done. Mr.,
Gates said he told Morgan that Chat les
NJ Schwab was The one man who could
Influence Mr.. Car legle. out OF thA.
came an all-night conference at MIR.
Morgan's New York home, the out
come of which was the United states
steel corporation.
John ID. Rockefeller's name came up
I'm the hearing when Mr.. Gates was de-
scribing Mr.. Carnegle's desires TO
branch out after the organization of
the National Tube company.
John d. Rockefeller" he said,
"once started steel mill and threat
ened to put us out Of business. That
did not last long. A deal was mado
whereby Rockefeller's steel interests
we're bought out al forty cents on the
dollar"
Mr.. Gates answered with eandor
nearly every question put to him by
Representative Stanley, the chairman,
and members of the committee but
stirred them somewhat when he de-
clined to say what he thought was the
value of the common stock of the steel
corporation.
After he had described the obliga.
tions of the steel trust and told OF the
bonds Of the concern taken over, the
first mortgage bonds paid to Carnegie,
and bonds 20 cover purchase mortgages
and prior liens. Chairman Stanley ask
cd him.
What Is the tangible property be-
mon and preferred stock?"
"Oh, anywhere from $500, 900, 600 To
81. 900. 600. 600" Mr.. Gates replied.
DO you believe there Is any tangi-
Bile value for the common stock you
hold?" was the next question.
"'rhat decline to answer" said Mr.
Gates
Mr.. Gates was asked many hypo-
thetlcal questions relating TO tho
power OF the steel corporation TO die
tate prices and to command busi-
ness.
Asked IL he. as an independent
manufactures of tin plate, selling be-
low the trust" price should receive
suggestion from the trust" thut
the price of his ore and transporta-
ton might he advanced, would he nt-
tach weight 10 the suggestion, he
said
81 would consider II a bluff. There
* no law Of equity In the land You
can't give one man one freight rate
and different rate to another. If I've
got the cash ! can buy ore as cheap
" as anyone else. such threat
would not deter me a particle. | don't
believe tho steel corporation makes
any such threats. II they did no one
would pay any attention to them"
Representative McGillcuddy asked
Mr.. Gates what was the benefit OF the
holding company, the United States
steel corporation. and he said the big
financial men behind Il exerted a
great Influence In injecting stability