The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1912-04-03

philosophy of modern business meth
DDS. In the first place, those who look
upon this issue of thirty million, five
hundred thousand dollars of bonds,
not with speculative, but with stu
dious eye, reason that the Z. S.
Steel corporations management is
made up of men who, a class, have
had no superiors in the business his
tory of the United States. These men
are believed to have demonstrated al
ready that they have sincerely at
heart the welfare of the great corpor-
ations which they manage. All of
them are beyond the reach of tempta-
ton to utilize what they know so as
to enhance their private fortunes. A
real esprit de corps characterizes not
only the mana cement. but almost eV
erybody who has employment with
the corporation. The business reputa-
lions of the men who direct the cor
poration are cherished by them. They
do not want to make any mistakes.
Or, if they have made any mistakes,
they are anxious to rectify them.
With this understanding of the man
agement in mind, it seems to be the
common opinion of fair minded men
that the management was persuaded
that it is for the best interest of the
corpOratiOn-for its stockh olders and
ultimately for the entire community
that instead of reaching into the
treasury of the company and taking
from it some portion of the earnings,
with. which to build new plants or to
make improvements in old ones, it is
the better part to borrow the money.
The stockholders of the steel corpora
ton have not complained because
something like four hundred millions
has been taken from the earnings and
expended in improvements, in har-
monizing the plants and in the estab-
lishment of new plants. Of course the
stockh olders have the property but
they do not have it in the form of cap
ita-lizatfOn. But is it entirely fair to
these stockholders to continue to do
this?
The Capacity of the Plants
Possibly with the exception of the
first year after the organization of
the United States Steel corporation, it
has not operated its plant to the full
capacity. Yet it has enlarged the
one instance at a cost of forty mil
lions-and has built a city at the low
er end of Lake Michigan at a cost of
seventy-five million dollars, every
penny of which was taken from earn
ings. This policy has unquestionably
resulted in sinking large amounts of
fixed capital which has not been en-
tire1y remunerative, since the plants
have not been operated to their ca
pacity.
In this policy. however. the United
States Steel corporation was not ex-
ceptional Some of the close students
of the conditions which prevailed
prior to the autumn of 1907 are con-
WINGED that a considerable factor in
causing the panic of 1907 and the
business decentralization which fol-
lowed was the OVereXpansion of the
plants of various industrial corpora
lions. 1t seemed at times as though
the phenomenal and unhealthy ex-
panSion which set in cOincident in
time with the promotion of the great
had impaired the judg-
ment of the managers of these corpor-
ations. They thought they were look
ing ahead. and were able to see in
creased demands for their products
which they could not meet unless they
enlarged their plants and made i'm
provements. These increased de-
mands, however, did not materialize.
and, notwithstanding the feverish and
activity of 1906. there
were large amounts of capital sunk
in the building of new plants.
The Renewed Prosperity.
This excessive investment of capt.
tai in greatly enlarged facilities which
were found to be unnecessary of itself
by those who have been care
fully watching the course of the Steel
corporation that its management may
have now for a year or more realized
that it had at last gone far enough
in charging it's facilities improving
it's plant and increasing it's capacity
while paying for these improvements
out of earnings.
Yet it is also surmised that the
of the Steel corporation
would not now have negotiated for