The sun., 1912-07-19
ATTACK 7. c. ANDI. DEAL
IN STANLEY REPORT
Majority Finding DenOunces
Absorption Of Tennessee by
the Trust.
ROOSEVELT Is CRITICISED
Schley Transaction Declared
Part Of Plot Under Cover
Of 1907 Panic.

on the United States Steel Corporation
the Stanley investigating committee re-
Views In detail the absorption BY the
Steel Trust OF the Tennessee Coal and
Iron Company in the panic of 1907 and
criticises the action of Mr.. Roosevelt In
granting immunity to the corporation.
The House probably will receive the re-
port early next week.
III the Steel Corporation could have
absorbed the Tennessee Coal and Iron
Company without q semblance Of injury
TO the steel industry or without the vio-
lation Of existing law the report will
say, 1T would not have been necessary
for Judge Gary and Mr.. Frick. on IA spe-
clal car rigged up at midnight. to make
tina; hurried trip TO Washington or to
confer with the President before break.
fast.
III the merger was in violation OF the
law 1t Is equally clear that the Presi-
dent had no right To condone or en-
courage this violation or to prevent
the Attorney-Gencral from performing
his duties. even though the prosperity
of "A dozen bankers in New York had
depended upon II. much less the fate
Of a single stock broker whose reckless.
II not rcprehensible. transactions had
involved him In financial disaster
About sixty pages are devoted to the
manner in which the corporation alb
sorbed its rival. The superiority Of
Tennessee rails over the old Bessemer
rails of the trusts own manufacture
IL esta blishcd. and 1t is shown that the
production of Bessemer Is on the de-
cline. being 2,S63.06S tons less In 1910
than In 1906
The purchase by r. II. Hartman of
900 tons OF rails from the Tennessee
Company n few months before the panic
of 1907 Is cited To the effect that II
brought the steel company to reaiiza-
tion that II had a strong competitor In
the steel rail field.
The Stanley report says that the
peril To the Tennessee Coal and Iron
Company was not open competition in
the mar;iets. but secret operations in
the stock Exchange. II explains how
the holders Of the Tennessee Coal and
Iron stock entered into an agreement
to sell this stock only on certain condi-
Schley and Hanna.
''In 1907" says the report. the syndi-
cate manager. Grant H. Schl"y. became
seriously involved, and. in order to Sc
cure a loan from various banks in New
York, agRregat!ng about s3S,000, 900. he
hypothecated large blocks Of this stock
From the day the three directors OF
the Steel Corporation discovered
Col Ii -
the stock his troubles multiplied and
the only ray Of hope ever held out to
this broker on the verge of bankruptcy
was the release to the Steel Corpora
tion OF his control OF the stock Of the
Tennessee Coal and Iron Company"
The report describes how, without
any money changing hands the bonds
OF the Tennessee Coal and Iron Com
pany. aggregating $34.64s.9776l. were
transferred to the United States Steel
Corporation after negotiations in which
J. +. Morgan. Lewis Cass Ledyard, II.
c. Frick. Judge Gary and George w.
Perkins represented the Steel Corpora
tion.
II quotes in detail from the evidence
relating to the visit Of Gary and Frick
to the White House to obtain the con-
sent Of President Roosevelt TO this
ira nsaction.
If Col. Roosevelt believed" says the
report. that the property was pur-
chased at loss to the Steel Corpora
ton. 1t could only have been due to an
absolute lack OF any accurate informa-
tion with reference to the extent Of
the value OF the Tennessee Coal and
Iron Companys holdings.
"The President seems to- have re-
garded the Steel Corporation simply In
the light Of a manufacturer OF finished
materials and never to have considered
the extent Of Its holdings OF raw mate
rial or the effect of that holding upon
the steel industry.
ut Is surprising that the Steel Cor
porations rapid and extended control
over natural resources had up to this
time entirely escaped the attention OF
the President. Any investigation OF this
companys affairs. however casual.
would have revealed II.
"As to the contention that the Presi.
dent and the Steel Corporation pre-
vented a general Industrial 'smashup.' II
is stoutly maintained by Col. Roosevelt
and by Judge Gary that the advantage
in the 'sweetening' OF Grant B. Schley's
obligations-that Is. the substitution Of
Steel bonds for Tennessee Coal and Iron
stock In about S6,0o0.000 or $7,000,o00
out OF $3S, 100000 Of loans-prevented the
most disastrous panic OF recent times.
THAT Col. Roosevelt distinctly heard
ominous rumblings In Wall Street at
the time ne consented to this remark
able merger cannot be doubted. In the
light Of subsequent events II IL equally
certain that II was receding and not
an approaching financial cataclysm
which disturbed him.
"Up until the time OF this Interview
the Steel Corporation owed Its success
and Its permanency to the power and
the skill of the financlers who had
created and the iron masters who had
directed It's operation.
"Since that time Its dominance has
been due In no small measure to the
sudden, III considered and arbitrary fiat
of the chief Executive. The President y
refusal tn interfere was an absolute
warrant Ia proceed"
Two and possibly three reports on the
activities Of the corporation win be made
To the House by members Of the com
mission.
There is a strong probability that the
Republican members OF the committee
VIII Xet together on . report