The Richmond Virginian. (Richmond, Va.) 1910-1920, 1911-08-05
SCHWAb'S BRAIN
FORMED TRUST
United States Steel Came in
to Existence by Him and
Morgan
DOES HIS BEST TO
SHIELD MR.. CARNEGIE
Laird" Could Have Sold His
Property to Better Ad-
vantage Few Months
After Sale

NEW YORK, August 4.--Charies
n. schwab. proclaimed himself to-
day as the father of the United
State Stee, Corporation. 1t was IN
his fertile Train that the giant COM
Tine had t.'ih and it was the finan-
sial genius oi J. Pierponi Morgan
that gave y sustenance.
This vas tcld by Mr.. Scnwab &c
TIE c. rressionai committee that In
investigating the great trust. He de-
ciared at the beginning OF his abb
eorbingiy interesting narrative that
what he would say would be the
first time he had ever told the story
OF the genesis of the corporation.
That ii was not a trust, he pro-
tested with an earnestness bordering
on eloauence. Although now at the
head of the combines most powerful
rival. the Bethlehem Steel Company.
he had not one word OF criticism or
complaint 10 make against 1t.
MIR. Schwabs attitude was agrees
Give. his manner was frank. and at
times he turned upon his inquisitors
and shot questions at them. For
example. when Judge Bartlett. OF
Georgia, MS insisting on knowing
why. II the cost of steel production
in the United States was no greater
than that In foreign countries. Ger
many could land its steel at Pitts
burg cheaper than the domestic pro-
duct could be transported from Pitts
burg to New York, he turned sharply
on his auestioner and inquired:
Il wish You would please solve
that problem for me, Judge Bart
lett"
II can't snapped back the Geor-
gian.
Would Meet Cuts.
IF Germany or other foreign coun-
tries should invade this market with
cut prices. would you meet the cuts?"
Judge Bartlett then asked.
Undoubtedly we sll would quick
~ responded Mr.. schwah
Mr.. Schwab's version of the break
between Andrew Carnegie and H. c.
Frick was listened to with keener
interest than any other part OF his
narrative. He was set To talking
about that subject when Chairman
Stanley asked him to verify papers
in the famous suit brought by F'rick
against the Carnegie Steel Company
short time before that company
was sold to the trust and OF the
companys answer made in the name
of Mr., Schwab as its president.
Carnegie. 1t was developed. had
bound his young partners with an
fron-clad agreement whereby II one
OF them retired he was to receive
only his proportion Of the book value
of the properly. When Frtck rettr-
ed he claimed that the actual value
was two hundred and fifty million.
and he brought a suit based upon
this valuation. The answer 10 the
suit stuck TO the sesenty-fivs mill
lion valuation.
Prick lost the suit, Then he and
Schwah got together and compro-
mtsed the whole thing by agreeing
upon valuation of three hundred
and twenty million. On this basis
sFriek Was paid In the stock az = the
new company formed with that capt.
talization. Within about year the
Carnegie Steel Company was sold
to the steel trust company for fiye
hundred and twenU millions.
Prick and Moore lose Million
Frick and Judge w. H. Moore i'm
mediately preceding the final transac-
ton, both OF whom are now directors
OF the trust. had agreed with Mr..
Carnegie To buy the company for
$4,000 900, To seal the bargain.
they had put up a bonus of $1,000
coo. The time expired before they
could finance the enterprise and they
forfeited to Carnegie their million.
In telling about these incidents to-
day Mr.. Schwab let drop the remark
that "other parties were negotiating
for its purchase just before the Steel
Corporation bought tt
Although Representative BeaH, or
Texas, tried earnestly to get from the
witness the names of the other par
ties" Mr.. Schwab would not give them
declaring that it was a personal mat
ter.
II know that within a week after
the transaction had been closed Mr..
Carnegie was very sorry he had sold
the company to the Steel Corpora
tion," volunteered Mr.. Scnwao
Il am glad to tell the full story.
for the first time. of what l know of
the formation OF the United States
Steel Corporation said Mr.. Schwab.
Tells the Story.
II don't want to claim credit for
the idea. although / lad been think
ing OF II for months before / heard
2 suggestion about II from anybody
else.
I'm the fall Of 1899 J. Edward Sim
mons and Charles Stewart Smith gave
me q dinner at the Union League
Club here in New York. At that ain
ner Mr.. J. p. Morgan sat on my right
and Mr.. simmons on my left. Seventy
or eighty other prominent New York
financiers were present. among them
T.. III. Hartman and Levi p Morton.
l made q npeech. In which / explained
my IDEALS Oh tH0 great advantages that
would result from merging all the
larger steel and iron plants OF the
country into one big concern. point
ed out that instead OF the many man
ufacing establishments turning out
virtually the same products that the
ones best equipped or best located for
q particular line OF products should
be devoted to those special lines
have one mill make one thing and
another mill make another. The econ
omies to be effected by this method
would soon show increased earnings
for the stockholders OF each company.
! argued.
II had not the limitation Of pro-
duction or control OF prices In mind
1t all. Had / included that feature
I would have been advocating the or
gAnixation of real trust. which IL
(Continusd on second Page.)