The Butler County press. [volume] (Hamilton, Ohio) 1900-1946, 1936-06-05
TheCherry
- Where with eur
Tree .,st1. =, !. a..s.:, .s.:t
about many things, Sometimes pre-
fsundly, sometimes Aippantly,
Sometimes recklessly.

Wall Street still at times remem-
bers old Danl Drew He was almost
as typical of the Streets as was its
first famous resident, Captain Kidd.
Before he became broker, Dan'l
was cattle buyer. He bought steers
from the farmers, collected small
herd, and drove it to market. In this
drive, he always played a trick that
has given its name to a common fin
ancial performance. He fed his cattle
salt and let them drink their fill be-
fore driving them on the scales. wat
cred stock" was merely statement
Of fact with old Danl Drew; till he
came to Wall Street, and watered 9TH
er kinds of stock.
His example was contagious. Wat
Iered stock pervades American busi-
/ ness today.
There are few important corpor-
ations in this country whose "securi-
| ties" are not considerably larger than
| its actual investment. And every
dollar of watered stock is an added
incentive to keep up prices.
The biggest single stock watering
job in American history was the form
alton of the Steel Trust.
The United States Steel Corpor-
alton was capitalized at $l,402, ,000,-
900.
The United States commissions of
Corporations could find tangible as
sets of only $676,000,O00. The rest
was water. There was not a dollar
of actual investment behind the COM
mon stock of the corporation, which
in the first year of its existence sold
at from $22 to $55 a share. There
was only fraction Of real investment
behind the preferred stock.
And every dollar of that watered
stock was an added incentive to main
tain the II hour working day, and the
day working week, and to fight the
unions as Steel has done from that
hour to this.
j. P. Morgan, the elder, organized
the Steel Trust. 1t was the biggest
single job of stock watering that he
ever did; but he kept up the prac
tice to the end. With the aid of
Charles S. Mellen, Morgan got con-
troll of the New Haven Railroad when
it was solvent, well-paying line;
and loaded it with subsidiaries and
watered its securities until it went
into bankruptcy.
Stock watering has become Nor
gan habit. The House of Morgan
was paid for its 'labors" in forming
the United Corporation by securities
which at one time were worth $685.
100000 on the market.
The electric utility industry is wat
er logged, and that fictitious capital
helps to keep the domestic rates for
electric current more than twice as
high as those of Ontario. The Fed
eral Trade Commission has told that
story at full length. Here is a char
acteristic excerpt:
Question: What was the total con-
sideration that the Barstow compan-
les were to receive for their General
Gas & Electric interests?
Answer:::: $50,000,000.
Question: How does this compare
with certain values put on the prop
critics of these companies by them
selves?
Answer: The larger value of the
securities acquired as reflected by the
books of the companies themselves
was $314,61488.
Question: So the excess paid would
be approximately s49,683,30O odd?
Answer: That.is correct.
Old Danl Drew long since has gone
to his reward; and if there is any
truth in old time theology, that re.
ward will make him bawl for water
more loudly than his cattle ever did
But the watered stock remains.