The Birmingham age-herald., 1911-05-28
John Gates Also Explains Absorption of the T.
 c. l. Company
HOUSE COMMITTEE
 BEGINS ITS PROBE
Admits Corporation Was Formed to Throttle Competition-Is All Due to Carnegie Acting Like
 Bull in China Shop

Washington, May 27-John w Gates gave to the House steel trust investi- gating committee today the history of the United States Steel corporation. Present at the birth of the greatest steel manufacturing concern in the world, he described how it was the natural outcome of what he described as the refusal of Andrew Carnegie to be bound by the "gentlemen's agreements" that marked the early days of open competition in the steel business.
 He told also of millions lost and ere ated almost in a breath, how the Carne- gie mills appraised at $16O,000000 were rec ognized as worth s320,000,00o almost with in the time required to make the transfer to the corporation; the grim clash in the formative days when John D. Rockefeller was dissuaded from joining in the crea- ton of the corporation and the manner in which others were prevented from engag- ing in the steel trade.
 Relating how Carnegie had been forced to abandon plans for extending his steel business, Mir. Gates aodmitted that the gigantic industrial combination was formed to throttle competition, and lie
 
 information that when John D. Rocke- feller had sought to enter the steel busi- ness a deal had been put through 5y which the Standard Oil magnate was forced to sell out for 40 cents on the dol lar.
 Characterizing Mr. Carnegie as bull in china shop" Mr. Gates told of midnight conference between himself, Charles M. Schwab and J. Pierpont Nor gan, at which the steel corporation was conceived and how it resulted in Carne- gie getting $32oO00,0OO in the corporations securities for his steel interests, which he previously had offered for s16o0oo,OOO in cash.
 Tennessee Company Deal
 MT. Gates also told the committee of the taking over of the Tennessee Coal and Iron company by the United States Steel corporation during the panic of 1907, deal in which he was interested stockholder of the Tennessee company. This, he declared, was forced transac- tien. carried out by MT Morgan and other financial leaders to have from ruin the Trust Company of America, theratened in the financial upheaval because 1t had loaned too much money on stock of the Tennessee Coal and Iron company.
 Plans made by Mir Carnegie in 1899 and 1900 to circle his steel interests with railroad of his own and to compete with the National Tube company, just organ ized by Mir. Morgan, by the erection of tube works at Ashtabula, Ohio., were the factors that led to the birth of the steer combine. The story of the negotiations which led up to the combination of the subject of congressional inquiry were en- tertainingly told by MT. Gates.
 He revealed how MT. Morgan, alarmed by MT. Carnegie'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 MT Carnegie, was called in to suggest a way to "stop Carnegie,' and how the pioneer steel king of the country was curbed in his purpose though greatly to his finan- cial gain. He explained that the steel business was threatened with several de- moralizing forces when Carnegie's plans became known and that MT. Morgan and others became alarmed, fearing Carnegie would demoralize both railroad interests and steel prices.
 This was the situation as described by MT. Gates, himself director at present m the RepuDnc Iron ana Steei cO1npduy, when MT. Morgan sent word to him through James J. Hill seeking a confer ence to determine what could be done. MT. Gates said he told Morgan that Charles M. Schwab was the one man who could influence MT. Carnegie. Out of that came an al-night conference at MT. Morgan's New York home the outcome of which was the United States Steel corporation. John D. Rockefeler's name came up In the hearing when MT. Gates was describ- ing MT Carnegies desire to branch out after the organization of the National Tube company.
 John D. Didn't Last Long
 "John D.. Rockefeller" he said, "once started a steel mill and threatened to put us out of business That didn't last long, A deal was made whereby RocSefeller's steel interests were bought out at 40 cents on the dollar
 Mr Gates answered with candor nearly every question put to him by Represen- tative Stanley the chairman, and other members of the committee, but stirred them somewhat when he decided to state what he thought was the value of the common stock of the Steel corporation After ne had descrzed the obligations of the steel trust and told of the bonds of 4aIx~ ftn trrf ,n-f