The free lance. (Fredericksburg, Va.) 1885-1926, 1911-08-08
Says He "OutIined" the
Steel Combine.
ADVISED CARNEGIE 70 !Sfll
Tells House Committee the Part He
PLAYED in the Formation Of
the United States Steel
Corporation.


dent. the members OF the Stanley com
mittee learned the inside history OF
the formation Of the United states
steel corporation. Mr. Schwab. as
president Of the Bethlehem Steel com
pany. Is now an independent.
The chairman asked Mr.. Schweb TO
tell the whole tale about Andrew Car
ncgie's desire 10 dispose OF his prop
erty. the preliminary conferences with
J. Pierpont Morgan. and his part IN
the plans which developed into the
formation of the United States Steel
corporation.
Il am very glad of the opportunity
Mr. Schwab began, "once and for all
definitely to tell the story about which
there have been so many misstate-
mcnts and so much misinformation.
In the fall Of 1899 J. Edward Simmons,
a prominent New York banker, and
Charles Stewart Smith rendered me
dinner at the University club. There
were present Mr.. Morgan. Mr.. Carne-
gle and seventy or eighty prominent
New York financlers. There made an
address. and chose as subject for my
remarks the future development OF
manufacturing steel In the United
States. explained the great advan-
taee 10 be gained by the organization
Of such corporation as United States
Steel There | outlined what became
later the Steel corporation.
Il gave my reasons in detail" Mr..
Schwab continued. Il showed, first,
how ! thought that. instead OF many
companies manufacturing the same
line Of goods, by organization many
companies could get together and man
ufacture different items. That would
result in great economy.
II showed, secondly, how by such an
oreanlzation there would be great
economy in distribution. In my pro-
posal there was no thought Of limita-
ton Of production or the maintenance
Of price. The possibility Of ninety
blast furnaces coming together in that
way In producing economy proved so
great that recently at the Brussels
conference. | advocated the idea OF all
independent manufacturers exchanging
their cost sheets for the ultimate ben
eft Of the steel industry"
Gould they do that without injury
10 each other?" asked Mr.. Stanley.
"Oh. yes. they can and do. ! propose
to extend the idea still further and
have companies exchange the cost OF
every item that goes into a ton OF pig
iron"
Suppose | asked you to furnish
this committee all your cost sheets,
would you be willing to do it?" Quite
so. and we do II"
Then is there no reason why the
United States Steel corporation should
hesitate TO submit it's cost sheets?' Il
think not. Since leaving the United
States Steel corporation have had ac-
cess TO most Of their cost Items"
Mr.. schwab said he did not do II
when he was president OF the United
States Steel corporation, because that
was not then business policy.
Advised Carnegie to Sell.
Mr.. schwab then resumed his tale OF
the organization Of the United States
steel corporation. Some time after
that dinner was at Plttsburg and re-
celyed a message from John w. Gates
asking me to meet ]. p. Morgan the
next day In Philadelphia. told him
would. went to Philadelphia and
there received word from Mr.. Gates
that Mr.. Morgan was sick came to
New York and saw Mr.. Morgan at his
home.
AS soon as | met Mr.. Morgan he
asked me to go over again In detail
the suggestion / made at the Univer-
sity club dinner. talked with him on
the subject for several hours, expand
ing my ideas Of forming the organiza-
tion of the steel manufacturers. Mr.
Morgan told me that he was convinced
OF the advantages of such an organiza
ton. and he asked me II | could get a
price from Mr.. Carnegie for his steel
plants. told him would see.
"I had not had the matter up with
Mr.. Carnegie. but about a week later
/ I spent the day with Mr.. Carnegie, and
when a favorable opportunity present
ed itself I told him what was in my
mind and that Mr.. Morgan had re-
ouested me to get a price for his steel
plant. | advised Mr.. Carnegie that In
view Of his advanced age and his phil
anthropic ideas of life, that he ought
to sell. told him thought that he
would be benefited by such sale. Mr..
Carnegie received the proposition with
a great deal of reluctance. but finally
he agreed to SELL II is my private
opinion that shortly afterward he very
much regretted II.
81 got price from Mr. Carnegie and
took 1t to Mr.. Morgan. Beyond being
consulted about details with reference
to the properties had nothing fur
ther to do with the organization OF
the United States Steel corporation
AT the time of the organization oil
the steel trust" Mr.. Stanley asked
did you oppose the idea Of restricting
rompetition?"
81 have said there was no such idea
in the steel organization" Mr.. Schwab
| rap1iod