The Democratic banner. (Mt. Vernon, Ohio) 1898-192?, 1911-07-04
STEEL STOCK is
WELL WATERED
Commissioner Smith Makes
lOng-ExpeCted Report.
TRUST FORMED To KILL RIVALS

1S~'a'Co OHuc'W'ttiU9 oyHu'Cdtc &c
cured $62, 800 900 Worth Of Stock,
Of Which s12,5o0o0o Went TO Nor.
gan and Associates-Also Finds
That S508, 900, 900 Of Common and
Small Portion Of Preferred Not
Backed by Tangible Assets.
Washington, July 1.-Commssioner
III Corporations Herbert Knox Smith
made public his long-heraldei report
on the United States Steel corpora
ton. In it he sweeps aside the rea-
sons advanced by officers of tae cor.
poration for its creation AMI holds
that it was called into being primar-
lily for the purpose OF restricting or
preventing competition.
Commissioner Smith finds after an
Investigation that has extended over
several years that the steel corpora
ton, when H. was organized in 1901,
was heavily overcapitalized"
The entire issue of S50S,000 900 OF
the common stock, the commissioner
declares, had no physical property
back Of 1t, and from one-fifth TO two
fifths of preferred stock was likewise
unprotected by tangible assets.
Even granting" says the commits.
sioner, that there may have been a
considerable value in the intangible
considerations, it is reasonably clear
that at least the entire issue Of COM
mon stock, except insofar as what
may be termed merger value uay be
considered, represented nothing but
water"
The commissioner finds that in the
years that have elapsed since the
steel corporation came into existence
considerable of the water" has been
squeezed through additional invest.
ments made partly from earnings.
The excess of capitalization never in
vested at the end of the last year, as
figured by Commissioner Smith, was
s2S1 81, ,222, as compared with $780,
846,8l7 of water in 1901
Water Squeezed Out.
AlO iOpO- 10 ilIb III lis tOD-
demnation of tne commission paid to
the syndicate which underwrote Unit
ed States Steel. This syndicate. he
charges, got $62,500,000, of which
one-fifth, $12,500,O00, went to J. p.
Morgan and syndicate managers. The
commissioner makes the startling
statement that at least $3.50 000, 900
OF the steel corporations stock. In.
cluding $40.000,000 OF the preferred
stock. in 1901 went directly or indi-
rectly for promotion or underwriting
services. The enormous amount in.
cludes of course the old commission
allowed promoters of earlier combi-
nations which were finally embraced
within the United States Steel corpo-
ration. The bureau of corporations
report clearly indicates that If there
is trouble ahead for United States
Steel because of the Sherman anti
trust law complications, 1t is likely
to be on the score OF the corpora.
tions control OF ore deposits and in
the transportation facilities leading
from the ore fields.
Controls Lake Ore Fields.
The commissioner charges that the
steel corporation controls rs per cent
of the lake ores. on which the pres
ent steel industry of the country is
based, and that this advantage is
materially enhanced by the corpora.
tons grip upon the railroad situa.
tinnf n 1nnlxc aelg pt l1 "a
Northern ore lease apparently view.
ing II as a move to prevent indepen.
dent operators from reaching this
supply, AS regards the production of
| steel. the commissioner finds that the
relative proportion of the business
controlled by the trust has been
gradually diminishing since it1 organ.
iEation. The corporation, according
to his figures. controls a little more
than 80 per cent of the crude and fin.
ished steel production as against go
per cent in 1901.
The bureau of corporations fails
however, openly to characterize the
combine as monopoly, as 1t did the
tobacco trust and the Standard Oil
company. Obviously this is in the
corporations favor, so far as threat.
ening proceedings under the Sherman
ANTITRUST law are concerned. The re
port charges that the opportunity for
reaping huge promoters pr,ft was
another consideration that led to the
launching of this giant corporation.
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Lord Strathcons to Quit.
London. July l.-Sir Wilfred Lau
rtAr tho Nanadian nra,v.sar