Evening journal., 1911-06-06
NEW NEWS OF YESTERDAY
The Carnegie Remark That
Cost Its Hearers a Fortune
By ~HollAnd."
By @HOIIAnd."


In what has passed into history by
the name of the rich mans panic of
19O2--a silent panic, in which the
market value Of securities of all kinds
greatly depreciated-th common
stock Of the United States Steel Cor
poration was quoted as low as nine
dollars and a fraction a share
Many persons we're of the opinion
that quotation for this stock would
drop so low that at last it would be
practically nothing. Others wondered
whether there might not be an oppor-
tunity for some gain, If this stock was
bought outright at nine plus. Among
those who we're thus persuaded were
two brothers, men of large wealth,
but who had not been conspicuously
associated with the securities market.
The older of the brothers said to the
other: Don't you think IL would be an
even chance II we were to buy out
right now block of, say ten thousand
shares of this common stock, that in
the course of a few months, or a year
or two, there would come a reaction
which might considerably appreciate
the market price of this stock?"
. Il have been thinking of that very
thing" replied the younger brother
81 think We can afford to risk a hun
dred thousand dollars. With that
amount of money, we can buy about
ten thousand shares of the stock"
you know" said the older brother,
that John S. Kennedy is a very good
friend OF ours, and that he was never
given us any unwise counsel; so / sug-
gest that, before we buy the stock, we
talk with him"
So the brothers sought out John S.
Kennedy, the canny New York banker
OF Scotch nativity who had backed
James j. Hill in his early railroad en-
terprises in the northwest thereby
making a colossal fortune, most Of
which he left to charity at his death
In 1909, and after a brief conversation
with him saw that he was inclined to
recommend the purchase of a consid-
cradle block of steel common insisting
however, that, If it were bought, il
should be paid for in full and not
bought on a margin.
But" said Mr.. Kennedy, before
you do anything, wait until / see Mr..
Carnegie, and get his opinion about
the transaction"
A day or two later, the brothers met
Mr.. Kennedy by request
well, / saw Mr.. Carnegie; we are
good friends and always have been"
reported the shrewd old fnancier. 81
asked him If he thought there would
be any real danger of loss if a consid-
cradle block of steel common stock
were bought outright at the prevailing
quotations Mr.. Carnegie hesitated for
few moments, and at last he told me
that he had made it rule never to
give any advice to anyone respecting
the purchase or sale of stocks dealt in
on the Stock Exchange. That, he said,
was the only safe iule he could fol-
low. But added Mr.. Carnegie, 4 will
tell you this have bonds, aggregating
about $500 100000, secured by the
properties of the steel company; and
the way things are now going, it some
times occurs to me that l may pos
! sibly be Obliged to foreclose upon
! those bonds"
"Now, it seems tome" continued Mr..
Kennedy, that ifl Mr.. Carnegie thinks
that he may possibly be compelled to
/ foreclose the mortgage by which his
! bonds are secured, It would be the
wiser part not to buy any of the COM
mon stock of this company"
Acting upon this advice, the brothers
did not make the purchase. But when,
some years later, the market price of
this stock reached 80, and they realiz-
ed that they could have sold the block
Of stock they were going to buy at a
profit OF 100000, they were tempted
to ask Mr. Kennedy If he thought Au-
drew Carnegie was still wondering
whether he might not have to fore
close the mortgage which secured his
United States Steel Corporation bonds
Copyright. 1911, by E. J. Edwards All
rights reserved)