New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-03-28
NEW STEEL BOND ISSUE
roruoration Sells S30,5OO,O 900
TO J. P. Morgan & Co.
INTEREST OVER 5 PER CENT
statement Explains Decision to
FINANCE Capital Expenditures
in That Way.

81 United states Steel Corporation an
,od Yesterday that il had sold $O.5Oo-
-, honds TO J. p. Morgan & Co. with the
80, NJ raising funds for meeting the cost
'e.orious improvements already authorized
If increasing the working capital.
O.. Tho wear ended December 81 the Steel
,roorstion reported earnings of Sl0iSO5, 400
Lost sln o5l7Ji in 1910. and surplus net
,.,one Of 1865 494, after payment Of divi-
- IN the preferred and common stocks
,.rparing with $36772,3S2 for the preceding
r,.r In 1910 however, appropriations out
- the surplus net income were made OF
r,eno 90 on account of expenditures made
,r authorized appropriations for new prop
..,v plsuts and construction and other
n,rnoses. $1,000, go for account of new con-
s,rnction A. the city Of Gary and 100000
lar reserve fund TO cover advanced mining
royalties.
No appropriations for the objects covered
+, This 100000 totalin 1910 could be made
r,t of the slender surplus net income OF
tf and therefore it was decided TO finance
rortain capital expenditures by the issu-
pnce Of bonds The announcement Of the
sale Of $4,000 bonds was made by the
steel Corporation in tho following state
uent;
As authorized bv the unanimous vote of
the members Of the BOARD Of directors. not
including any member of tho firm herein.
after mentioned. The United states Steel
Corporate has sold 20 Nessrs }. =. Nor
ran 4. Co S}uS01.OOp bonds on a basis of 81
per cent rate OF interest The amount will
Include 100000 secured on the Indiana
stesl COMPANY plant at Gary. Ind. $1,000
IN Z a l.OT n,
Ohio and $3.50 400 debertures Of Illinois
steel COMPANY. being part Of an Issue here
tofore authorized
Wants Cash o. Hand Kept Up,
As there must be expended during the
year about $4,000 n0n for extensions Of prop-
t-yies generally. heretofore authorized and
ss about ST, 900 90 additional working capl-
tsl Is needed in consequence Of the In
creased business Of the companies. parucu
lsrly in the ore department. II has been
thought advisable 10 secure the sum named
nv the sale OF bonds. ign order 10 keep the
amount Of cash or hand up 70 the sum
shown At the beginning Of the calendar
wear.
I'm view Of the fact that very large sums
have heretofore been appropriated from ner
earnings for caDital expenditures. II mas
been decided 10 finance some Of tho capita
EXPENDITURES sS above stated
There had been expended At Gary NJ -
Of which nearly the entire amount repre-
sented appropriations by the United states
steel Corporation and its subsidiaries The
principal plant located there is that Of the
tsaiaaa steel Companv, on which $1,000.
tro OF the new bonds are secured on the
4 oraln' Steel Company plant ~ Lorain.
upon which 100000 of the ned bonds
are secured, constituting first mortgage
upon the property, there has been eXpend-
Cd about 50, 10000 The $4,000 deben-
lures Of the Illinois Steel Company are
part Of an authorized issue Of SooCo,ooo ~
PER cents, maturing In 1870. If which SO
c0oTO wee sold last July TO syndicate
headed by ! = Morgan & Co, the pro
ceeds being used 10 reimburse the Steel
Corporation for advances. OF this issue
there were reserved for exchange for per
cent debenturcs maturing m April, 1919
$4,000, and for exchange for notes held
ny the Steel Corporation. S5,714"o0 leaving
$4,000 reserved for % per cent Of the &C
ltrfai cost Of additions and betterments 70
THE Illinois steel COMPANY properties
after January !, 1911"
Enormous Appropriations.
Prom its organization until the end Vt
1911 the Steel Corporation has eXpenoed
for new construction $40 49, 266 practically
all out Of earnings. and in the same period
the deductions for depreciation and sink
iSF funds have aggregated about $3o0o"'v'"
and for ordinary repairs 100000. IN
view 81 these enormous appropriations the
msnaeement is understood to feel that "
is fully justified in capltalizing some OF
the expenditure in q period of business de-
preston. rather than reduce disbursements
20 shareholders.
The Steel Corporation in 1911 issued about
s7a 400 600 new bonds and retired about go
poc4 the bonded, debenture and mort
gage debt at the end OF 1911 being S25.sl"-
50 larger than on December II, 1910 ADD
Ing the 100000 now sold, the total IN
crease in the last fifteen months has been
E4A7,s4o From the organization ot the
Steel Corporation until the end Of 1911
there have been 81. 5s@ e57 bonds and mort
gsges paid and retired with moneys from
depreciation funds and surplus income and
S2s14 pa bonds purchased and retired with
sinking funds from earnings
The announcement OF the bond sale
caused decline In the prices Of Stel com
mon and preferred shares and had de-
.treeo3ro g,n ,ar.r tr tho General market III