New-York tribune., 1922-09-29
accompany
Steel Merger
Plan Dropped
Impossible to Finance the
Combine in Face of Oppo-
sition of u. S. Trade Com
mission, 1t Is Announced
Conference With Bankers
Believed Until a Few Days
Ago That the Obstacles
L ou II d Be Overcome

The North American Steel Corpora
lion, which was intended to represent
3 merger of the Republic Iron and
Steel Company, the Midvale Steel and
Ordnance Company and the Inland
Steel Company, has died on the rocks
OF the Federal Trade Commission.
Up until a few days ago the sponsors
OF the proposed combine believed that
the obstacles to the consunmation OF
their plans could be overcome. but at
the conclusion of a long conference
yesterday at the offices of Kuhn, Loeb
& Co, the bankers who had agreed to
handle the financing, q final decision
was reached to forego the consolida-
tion.
was made later at the Offices of Thomas
L. Chadbourne, who has acted as the
chief legal adviser in the negotiations,
which began early last summer. Mr..
Uhadbournes gave out formal state
n1ent signed by w. f. Corey, chairman
OF the Midvale company; John A. Top
ping, chairman of the Republic. and L.
Z. Block. chairman of the Inland con-
cern. The statement. which stressed
the impossibility of financing the mer-
ger in the face OF opposition from the
\ ~ASAaA 9idGe AOulUl lSS3OI, SalU.
Impossible to Proceed
"At a meeting held to-day the entire
situation arising from the action of the
Federal Trade Commission was re-
viewed and the conclusion was reached
that under existing circumstances it is
not possible to proceed with the pro-
posed merger of the Midvale Steel and
Ordnance Company, the Inland Steel
Corapany and the Republic Iron and
Steel Company.
While all of the eminent counsel
who have been consulted agree that the
proposed merger would be legal in
klvery respect, and while its consum-
nation would not have restrained but
have intensified competition, the final
determination OF the questions involved
would delay the carrying out of the
plan to such an extent that the parties
in interest do not deem it advisable to
proceed.
Pending such final determination
of the questions involved the financing
of the proposed merger would not be
possible, and it is not feasible to pro-
ceed with the merger without such
financing"
Under the original plan the three
company merger was to be capitalized
with SIC ,173 500 bonds, $50 331 ,475 pre-
ferred stock and 5000 ,612 shares of
common stock without par value.
Shortly after these details were de-
eided upon trading in the common
change on a when issued" basis. and
the Initial sales were around 500
share.
Under Lockwood Inquiry
These transactions took place at the
time CT the investigation of the Lock
wood housing committee, and Samuel
Untermyer, its counsel, was successtul
in having the shares withdrawn from
trading. Mr.. Untermyer IN his exam
ihation of sponsors Of the merger
brought out the fact that Kuhn, Loeb
& Co. were to receive $4,000 shares of
the common stock at $40 share for
their services as bankers for the plan.
Mr.. Chadbourne, it was further dis
closed, was to receive 25,500 shares at
the same figure for engineering the
legad end of the deal.
In it's formal complaint against the
consolidation the Federal Trade Com
mission called the merger an unfair
method of competition, although Attor-
ney General Daugherty previously had
advised the United States Senate that
the companies involved were not act
ing in violation Of the Sherman anti
trust law.
"The products Of each of the merg-
ing companies and their several sub
sidiaries," said the Trade Commissions s
complaint, "are in direct competition
one with another and are also in di-
rect competition with the products of
other corporations not affected by the
merger, but engaged in similar lines
Of inquiry.
would Lessen Competitions
"The gist of the complaint is that
The commission, after preliminary In
quiry conducted by it, has reason 20
believe that the merger or consolida-
ton of these three companies will
center the control of some thirty
five corporations, lessen competition
and restrain trade and tend to create
monopoly in iron and steel products in
interstate commerce., particularly in
tie states of Pennsylvania, Ohio, West
Virginia, Kentucky, Indiana, Michigan
2nd Illinois,"
Originally the plans for an indie
pendent steel merger included seven
companies-the three mentioned, the
Youngstown Sheet and Tube, Brier
Hill, Lackawanna and Steel and Tube.
This consolidation was disrupted by
the unexpected taking away of Lacka-
wanna by the Bethlehem Steel Corpo-
ration. This left six companies to com
bine, but the Youngstown Sheet and
Tube refused to go in, and finally the
Midvale, Republic and Inland deter
mined to form the merger known as
the North American Steel Corporation.
Stocks of the Republic and sMidvalc
companies, which are listed on the
Stock Exchange, have been noticeably
weak in recent market sessions, caus-
ing the rumors that the merger plan
would be abandoned to be circulated in
Wall Street. Sponsors of the plan de-
MED only on Tuesday that such was