Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1911-07-01
MUCH WATER IN THE STOCK
Capital of 81, ,4O2, ,Ooo, 900 Represented
Property Worth $e,s20,o0o.
CONTROL OF /ORE PROPERTIES
Corporation Now Owns Seventy Per
Cent of Lake Deposits.
INDEPENDENT OUTPUT GROWS
ing Control OF Ores It's share of
Business Dropped to About
Fifty Per Cent.

WASHINGTON. June 81. restriction of
competition is declared TO have been the
prime object OF the organizers OF the
United States Steel corporation, which was
capitalized at y, 10000. 90 and had tangible
property worth only $sSS .OOO the cor
poration having concentrated it's efforts to
secure ore properties now owns rs per cent
Of the lake ores, upon which the present
steel industry is based. These are some OF
the conclusions reached in the long ex-
peSted report OF Commissioner OF Cor
porations Herbert Knox Smith on the steel
industry. part one of which was submitted
TO the president today.
Discussing in detail how 1.-The impending
siruggIe of the giant was sverted. al
most over night, by the formation OF the
ef&at combination of combinations, taking
II 250 subsidiary companies, controlling 60
p$f cent of the total crude and finished
stv@ production of the country, the report
sa
"Vntil 1888 the bulk OF the business was
disfibuted among very considerable num-
Der pf concerns. There was sharp compe-
tiont modified by frequent pools of greater
or less duration and effectiveness"
First Era Of Combinations.
Then came an era OF great combinations,
the report continues. with capitalizations
ranging from 1900 to 500 OO0 mer-
gers OF many small companies which in
stead OF eliminating competition, threat
ened to bring price cutting on a larger
scale than ever before. In 1s99-19OO there
were three great companies, the Carnegie
company Federal Steel and National Steel,
dominating the production of crude and
semi-finished products, and six concerns,
the American Steel and Wire. American
Nf.. N la. III.
Sheet Steel National Tube and American
Bridge. controlling the lighter finished
products.
This was the period when the struggle
OF the giants was impending and when
the formation OF the United States Stee
corporation was conceived and brought
about All nine OF the companies named
were combined. and later the Union Btee
company. the Clarion Steel company, and
In 1907. the Tennessee Coal. Iron and Rail
road company we're taken over. The pro
noting syndicate putting the deal through
neted ss25OO.OOo In cash.
Profita Are Enormous.
During the ten years of It's operation, th'
report says. the steer trust has paid aver
age annual profits of p. per cent on tn,
honey invested. In this connection atten
IN is called to the fact that a consider
ole part of the investment Is In unde
,eloped or unworked properties. showing
that dividends from paying properties mus
siDe much larger than the average would in
dictate. Insisting upon computing froflt
upon tangible property value basis, th
report says that the steel corporation Il
defining Its book valuation undoubtedl!
would claim that there was a merge
value" As to this the commissioner says
1T is probably true that the various prop
critics acquired by the steel corporation
taken together with the organization o
the company ais a going concern. do hav
value in excess of the sum of their value
as separate entities. The coordination
and integration made possible by the com
bnation OF such properties under a singl
control undoubtedly tend to reduce costs
either through economies or through re
moving the necessary OF paying profits I
others.
Further, insofar as the concentration o
the industry under control OF a single con
cern gives to II a monopolistic power owe
prices and production, this may result In q
increase in it's earning power. and conss
quently In an increase in its value as
going concern. This involves, however, 4
reduction Of actual or potential comp&