New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-08-29
War Taxes Will
Fall Heavily on
Bethlehem Steel
Expensive Financing Made
Necessary by Excess Profits
and Other Levies

In making formal announcement yes
terday of the Bethlehem Steel Cor
poration's plan to raise approximately
S30,O00,000 new working capital through
the issuance of that amount of per
cent cumulative preferred stock,
Charles NJ. Schwab, chairman, stated
that the need for new money arose
from the entry of the United States
into the European war. A large part
of this years earnings, which it had
been intended to expend upon improve
ments, must now be used for the pay
ment of excess profits taxes and other
war levies, Mr.. Schwab said.
Orders already taken for this govern
ment, according to Mr.. Schwab, involve
an increase Of about sl5,000,00O in the
company's construction programme
adopted prior to the country's entrance
into the war. Total orders on the
books Of the corporation he declared
to be in excess of s30O,oOO,0o0, COM
pared with s193, 100000 at the begin
ming of 1917.
Book Value s195.
The book value Of the class B stock,
into which the new preferred Is con-
vertible at Sl15 a share, Mr.. Schwab
estimated at s195 a share, on the basis
Of plants at cost, less depreciation, less
one-half estimated profits taxes for the
current year, and also without allow
ance for good will or increased value
of ore and other holdings. Comment
irg on the plan for raising new working
capital through the issuance of pre-
ferred stock, he said:
early this year the Bethlehem Steel
Corporation made adequate provision
under the conditions which then ex-
listed for its financial requirements for
the years 1917 and 1918 by securing
Sl5,000,000 of new money through the
sale of its class B common stock at
par and by the sale Of s50,000,00 OF
two-year notes, of which approximately
S37 500, 900 will be elf-liqudating by
British Treasury notes of earlier ma
turity.
Effect Of War.
The entrance Of this country into the
European war has produced such alb
normal conditions that the corporation
is now confronted with the necessity
OF raising a very substantial amount
Of capital in order to continue its con-
struction programme and provide for
the requirements of the greatly in
creased business resulting from the
war.
THE directors have carefully con-
cidered the best means Of providing
the required additional capital. The
company's bankers advised against an
offering at the present time of obiga-
tions, whether in the form Of short
term notes or long term mortgage
bonds.
The books OF the corporation show
that as of July 81, 1917, after giving
effect to the proceeds of the proposed
issue of convertible preferred stock
there will be about s16O,O0o,OO0 of as
sets in excess Of all obligations to pro-
tect the s45,000,000 of preferred stock,
namely, the sl5,OO0,OO0 of present pre-
ferred stock and $50, 1000 Of the new
convertible preferred stock"
A special meeting of the Bethlehem
Steel Corporations stockholders has
been called for September II to ratify
the plan for issuing the new preferred
stock. Holders of the Class A and
Class B common stock may subscribe
on or before September % for an
amount of the new preferred equal to
one-half the par of their respective
holdings. The new stock will be cumu-
lative after October l.
Mr.. Schwab stated that he personally
intended to exercise all his subscription
rights and that he had been advised by
his associates in the management OF
like intention on their part.
Big Commission
Il was understood that the new pre-
ferred stock was underwritten on the
basis of commission Of 3 or 4 per
cent TO the underwriters, consisting of
the Guaranty Trust Company, the
Bankers Trust Company and j. & W.
Seligman e. Co. This means that the
sale of the stock will net the Bethlehem
Steel Corporation little more than
800 900 600