Watertown leader. [volume] (Watertown, Jefferson County, Wis.) 1909-1911, 1911-06-02
STEEL TRUST BORN
To CURB CARNEGIE
John w. Gates Gives Some In
side History.
BARES FORMING OF TRUST
Organized Because Morgan Feared
Iron Master Would Invade Rail-
road Field and to, Throt-
tie Competition.

Washington. - John w. Gates,
the industrial millionaire, who not
SO long ago was a farmer boy at
st. Charles, ILL.,, told the Stanley COM
mittee of the house of representatives
what he knows about high finance and
in the steel business.
Present at the birth of the greatest
steel manufacturing concern in the
world, he described how 1t was the
natural outcome Of what he described
as the refusal Of Andrew Carnegie to
be bound by the "gentlemen's agree
ments" that marked the early days of
open competition in the steel business.
He told also of millions lost and
created almost in a breath; how the
Carnegie mills, appraised at $160,0OO,-
900, were recognized as worth $780,
100000 almost within the time re-
CURED to make the transfer to the cor
poration; the grim clash in the forma-
tive days when John D. Rockefeller
was dissuaded from joining in the
formation of the corporation and the
manner in which others were pre-
vented from engaging in the steel
trade.
Relating how Carnegie had been
forced to abandon plans for extending
his steel business, Mr.. Gates frankly
admitted that the gigantic industrial
combination was formed to throttle
competition, and he surprised the COM
mittee with the further information
that when John D. Rockefeller had
sought to enter the steel business a
deal had been put through by which
the Standard Oil magnate was forced
to sell out for 40 cents on the dollar.
Characterizing Mr. Carnegie as "a
bull in a china shop" Mr.. Gates told
OF midnight conference between
himself, Charles NJ Schwab and j.
PlerpOnt Morgan, at which the steel
corporation was conceived, and how
it resulted in Carnegie getting $780,
100000 in the corporations securities
for his steel interests, which he pre-
viously had offered for $16O,000,000 in
cash.
Mr.. Gates also told the committee
of the taking over Of the Tennessee
Coal and Iron company by the United
States Steel corporations during the
panic of 1907, deal in which he was
interested as a stockholder of the
Tennessee company. This, he de-
clared, was a forced transaction car
ried out by Mr.. Morgan and other
io1 10 70
Trust Company of America, threatened
in the financial upheaval, because it
had loaned too much money on stock
of the Tennessee Goa, and Iron COM
pany.
Plans made by Mr.. Carnegie in 1899
and 1900 to circle his steel interests
with railroad of his own and to COM
pete with the National Tube company
just organized by Mr. Morgan by the
erection of tube works at Ashtabula,
o., were the factors that led to the
birth of the steel combine The story
of the negotiations which led up to
the combination, now the subject of
congressional inquiry. was entertain
tngly told by Mr.. Gates.
He revealed how Mr.. Morgan,
alarmed by Mr. Carnegie's plans, had
sought the advice of himself and
James j. Hill; how Charles M.
Schwab, who he laid was the only
man who had influence with Mr.. Car
negie, was called Ia to suggest way
to "stop Carnegie" and how the
pioneer steel king of the country was
curbed in his purpose, though greatly
to his financial gain.
He explained that the steel bust
ness was threatened with several
demoralizing forces when Carnegie's
plans became known and that Mr..
Morgan and others became alarmed,
fearing Carnegie would demoralize
both railroad interests and steel
prices.
This was the situation as described
by Mr. Gates, himself a director at
present in the Republic Iron and Steel
company, when Mr.. Morgan sent word
to him through James J. Hill seeking
conference to determine what could
be done. Mr. Gates said he told Nor
gan that Charles NJ Schwab was the
one man who could influence Mr.. Car.
negie. Out of that came an all-night
conference at MR. Morgan's New York
home, the outco6le of which was the
United States Steel corporation.
John D. Rockefeller's name came I'D
in the hearing when Mr.. Gates was de-
ScrihiUQ Mr. CarDopia's dociro RI
branch out after the organization of
the National Tube company