New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-05-28
GATES ON HIGH FINANCE
Continued from first page.

ard 1900 10 circle his steel interests WIN
"a railroad of his own and to conpe'e
with tho National Tube Company just
organized by Mr.. Morgan, by the ere
ton Of tube works at Ashtabula' o''',
were the factors that led to the bir'' VI
the Steel Corporation. The story Oh '"'
negotiations which led up to the con"
bination now the subject OF inquiry was
cntertainingly told by Mr.. Gates.
He said Mr.. Morgan, alarmed by MI
Carnegie's plans, had sought the au''.e
Of himself and James J. Hill; no"
Charles NJ. Schwab, who, he SAID was
the only man who had influence WIZ"
Mr.. Carnegie. was called in to suggest
way to stop Carnegie" and now ''o
rionoer steel king OF the country was
curbed in his purpose. though greatly "
his financial gain. He explained tha'
the steel business was threatened WIZ
several demoralizing forces when 'a'
nepie's plans became known ana tna'
Morgan and others became aiarHe"'
fearing that Carnegie would demoraii~e
18th railroad interests and steel prices
This was the situation as descrioeu y!
Mr. Gatek. himself a director at preseh'
in the Republic Iron and steel Compan''
uban Mr.. Morgan sent word 10 MIN
through James ]. Hill seeking a CONFER
ence to determine what could ne uohe'
Mr. Gates said he told Morgan tha'
Charles NJ. Schwab was the one man
who could influence Mr.. Carnegie. Out
~ that came an all night conference al
Mr. Morgan's New York home, the OUT
come of which was the United states
Steel Corporation.
Rockefeller Sold at 40 Cents on Dollar
John ID. Rockefeller's name came up
in the hearing when Mr.. Gates was ue-
scribing Mr.. Carnegie's desire to prahch
ont after the organization OF the Nd
tional Tube Company.
"John ID. Rockefeller" he said, once
started a steel mill and threatened W
mt us out Of business. That didn't ias'
long A deal was made whereby Rookie
fCllprS steer interests N'i'
at 40 cents on the dollar
Mr. Gates answered with candor near
" every question put to him by Repre-
sentative Stanley and other members OK
the committee. but stirred them some
what when he declined to state what ne
thought was the value Of the common
stock Of the Steel Corporation. After ne
had described the obligations ~ the COR
poration and told Of the bonds OF the
concerns taken over. the first mortgage
bonds paid to Carnegie and bonds 10
cover purchase mortgages and prior
liens. Chairman Stanley asked him:
What is the tangible property behind
these bonds and behind the common and
preferred stock"
"Oh. anywhere from SJOO0,O0O to
81 900, 100000" Mr. Gates replied.
Silent on Value Of Steel Common.
DO you believe there Is any tangible
value In the common stock you hold?' was
the next question.
That / decline to answer" said Mr..
Gates
Mr. Gates was asked II he. as an indie
pendent manufacturer of tinplate, selling
below the trust price. should receive a
suggestion from the trust" that the price
Of his ore and transportation might be ad-
vanced. would he attach weight 10 the sug
sestion.
Il would consider II bluff" he said.
There is a law Of equity in the land.
You can't give one man one freight rate
and different rate to another. II I've got
the cash | can buy ore as cheaply as any
one else Such a threat wouldn't deter me
particle. ! don't believe the Steel Cor
Loration makes any such threats. II they
did no one would pay any attention 10
them"
Repre- sentative McGillicuddy asked Mr..
Gates what was the benefit CT the holding
company. the United States Steel Corpora
ton. and he declared that the big financial
men behind it exerted a great influence in
injecting stability into the steel market.
one result Of 1t was TO convert a lot Of
doubtful assets into cash by broadening
the market for corporation shares.
Prick and Moore Lost 100000.
Mr. Gates told how W. H. Moore and
II. c. Frick lost 81 900, 900 to Andrew Car
ncgie in 1897 through the forfeiture Of an
option on the Carnegie steel works.
The price Of finished steel he said, be
cane badly demoraiZed in 1896 or 1897.
Mr.. Frick and Judge W. H. Moore con-
ceived the idea of securing an option from
Mr. Carnegie for his steel plant They got
the option. and paid $1,000, 900 for it, Soon
afterward decentralization of the business
became 50 great that they could not put the
deal through The price | think. was
$50 OOO. OOO. They had to forfeit that OPP
ton. and they were not particularly
pleased Pretty soon the Federal steel
Company was formed with the consolda-
ton Of the Lorraine Steel Companr, the
Minnesota Iron Company. the Illinois Steel
Company. and the Elgin. Joliet e. Eastern
Railroad In 1899 or 1900 J. Pierpont
Morgan organized the National Tube Com
pany and was making money Mr. Carne-
gie then took it into his head to build a
railroad from Lake Erie around his plants
and also 10 erect "A tube works at Ashta.
bula. ohio. Mr. Morgan heard Of H. anu
consulted with James j. Hill. Of the Great
Northern Railroad. Mr. Morgan expressed
fears that If Carnegie went into the rail.
road business he would demorallze the rail-
road situation as ne had the steel business,
and If he built tube mill he would de-
moralize steel prices
After considerable talk Mr. Hill sug-
gested TO Mr. Morgan that he talk to me
about It. | went to see Mr. Morgan, who
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