Smyrna times., 1911-07-05
HARD BLOW TO
... . STEEL TRUST
Report Says Its Prime Object
is to Kill Competition.
CONTROLS Is PER CENT. OF ORE
Commissioner of Corporations Also
Declares Much Water Has Been
Eliminated From Company.

'a'SS MuSn water 1aS Been
Eliminated From Company.
Herbert Knox Smith, commissioner
of corporations, sweeps aside the rea-
sons advanced by officers of the United
States Steel corporation for it's crea-
ton and holds that it was called into
being primarily for the purpose of re-
stricting or preventing competition.
In his long heralded report on the
so-called steel trust the commissioner
charges further than the opportunity
for reaping a huge promoters profit
was another consideration that led to
the launching of this giant corpora
tion.
Commissioner Smith finds after an
investigation that has extended over
several years that the steel corpora
tion when it was organized in 1901
was heavily Overcapitalized"
The entire issue of $5O8,00O,00O of
the common stock, the commissioner
declares, had no physical property
back of it, and from One-fifth to two
ffths of the preferred stock was like
wise 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 in so far as what
may be termed merger value may 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 beer
squeezed out through additional in
vestments, made partly from earn
ings. The excess of capitalization ovel
investment at the end of last year, as
figured by Commissioner Smith, was
$2S1,051,222, as compared with $720,
646,S17 of water" in 1901.
The report is unsparing in its. con
demnation of the commission paid t.
the syndicate which underworld the
United States Steel corporation. Thii
syndicate, he charges, got s62, 900
of which one-fifth, $12. 100000, went Il
]. P. Morgan & Co. as syndicate man
ayers.
Ihe commissioner makes the start
ling statement that at least $15O,000
900 of the steel corporations stock
including $4O,OOO,00O of the preferre
stock, in 1901 went directly or ind
rectly for promotion or underwritin
services. The enormous amount il
cludes, of course, the old commission
allowed promoters of earlier combina
tions which were finally embrace
within the United States Steel col
poation.
During the ten years of it's opera
tion, the report says, the steel trus
has paid average annual profits of !
per cent on the money invested.
The bureau of corporations repol
clearly indicates that if there is tro,
Bile ahead for United States Steel b
cause of the Sherman antitrust la
complications, it is likely to be on tn
score of the corporations control {
ore deposits and transportation facil
ties leading from the ore fields.
The commissioner charges that tn
steel corporation controls Is per Gel
Of the lake ores" on which the pre-
ent steel industry of the country
based, and that this advantage is m
terially enhanced by the corporation
grip upon the railroad situation. +
looks askance at the Great Northel
ore lease, apparently viewing it as
move to prevent independent operato
from reaching this supply.
AS regards the production of ste'
the commissioner finds that the rel
tive proportion of the business co
trolled by the trust has been gra
ually diminishing since its organic
tion. The corporation, according to Il
governments figures, now contro
only little more than so per cent
the crude and finished steel prodr
tion, as against 60 per cent in 1901.
I,dicfnoanfa In wfra irnuirV