valuation. Before the consolidation the factory would not have been considered good security for more than twenty thousand dollars. The question in such a case was whether the actual value of a property could be trebled in a day just because a group of financiers said so. The promoters argued that such inflation was justifiable. The value of the factory, they said, depended not upon what it represented in land and machinery and buildings, but upon its earning capacity. Consolidation was followed by economy of production. Salaries were saved, one executive doing the work that several had done before. Operating expenses were cut down. The principle at the bottom of the movement was that production could be carried on more cheaply on a large than on a small scale. This reasoning seemed to have a support more potent than the say-so of J. Pierpont Morgan, J. J. Hill, C. M. Schwab, and other "high financiers." Dividends "talked." In January, 1901, the dividend payments made to banks and trust companies in New York City amounted to $140,000,000, or ten millions more than during January, 1900. This was only a fraction of the earnings of capital, for thousands of firms and corporations paid earnings directly to stockholders and partners. The "Billion-Dollar Steel Trust" The year 1901 was the great year of the trust-makers. There was hardly a line of business that the activity of the promoter did not touch. The cattle raisers of the west "got together." The pineapple-growers of Florida consolidated their interests, as did the sugar-cane planters of other Southern States. In New England there was a consolidation of brickyards. The salmon fishing and canning industry fell into line. There was even a movement to secure control of the egg market. But the greater consolidations of the year were among better-known industries, such as the manufacturing of machinery, flour milling, locomotive manufacturing, etc. And the largest and most powerful combination of all was the United States Steel Corporation, or "Billion-Dollar Steel Trust," an unprecedented aggregation of capital. There had been more than one attempt to unite the steel and iron interests of the country. But when rumors arose in February, 1901, that the financial genius of J. Pierpont Morgan was to concentrate the ANDREW CARNEGIE 5 leading steel and iron companies in one great corporation it was hardly admitted that such a scheme could be really practicable. To carry out the plan it was necessary to find a common basis for a dozen huge companies and corporations-many of them already trusts in themselves— having an aggregate capital of at least seven hundred million dollars. There was the great Carnegie Company, with its ramifications throughout the country. Its capital was $160,000,000, fifty-four per cent of which belonged to Andrew Carnegie himself. Then there were the Federal Steel Company, with its capital of about one hundred million dollars; the American Steel and Wire Company, with ninety million dollars; the National Tube Company, with eighty million dollars; the National Steel Company, with fifty-nine million dollars; to say nothing of the American Bridge Company, the American Tin Plate Company, the American Sheet-Steel Company, the American Steel Hoop Company. What plan could be devised to bring these great companies together? Where was the man to be found whose abilities would be equal to the executive control? Mr. Carnegie's energy in competition was probably the cause of the consolidation. So formidable had he become that his rivals were kept on tenterhooks all the time. When at last he made plans to build a tube factory to rival the National Tube Company, in which J. Pierpont Morgan and his associates were interested, the desire to eliminate him as a factor in the steel trade became strong enough for the conception. of the "trust.” I Who was this Andrew Carnegie? His parents had brought him to this country from Scotland when he was but a lad of eleven. A towheaded youngster he was, but full of vim and grit. He worked as “bobbin boy" in a cotton factory at first, and within a year was promoted to running an engine. When he was only fourteen his father. died, and young Andrew, now a messenger boy for a telegraph company, took up the family burden-he had a mother and a younger brother and before long was proud to secure the position of telegraph operator at the princely salary of twenty-five dollars a month. He had learned telegraphy at odd moments. It was not long before he became an operator on the Pennsylvania Railroad, and then a train despatcher, and then superintendent of the Pennsylvania's Western Division. An opportunity to borrow a little money and invest it in the first two trial sleeping-cars made gave him his start as a small capitalist. During the Civil War he did yeoman service in charge of the Union military railroads and telegraph lines. After the war he began to build iron bridges. The new idea of making railroad rails of steel next caught his attention and launched him fairly on his career as an ironmaster. By 1888 he had seven great plants, all on the outskirts of Pittsburg, and these he welded together into a compact and effective organization. He succeeded in everything he undertook. Nor did this Scottish "bobbin boy" neglect the less material ideals of life. He wrote books. His philanthropy was broad. He entered with zest into social life and outdoor sports. He not only exemplified the doctrine of a broad-gauged success; he also preached it-in many public addresses. This was the man whose very strength, whose deftness in business strategy, drove his rivals to buy him out. They did buy him out, and at the age of sixty-four he retired from active business, one of the richest men in the world. With his retirement the United States Steel Corporation began operations, on April 1, 1901. The new corporation was made up of a number of constituent companies, united under a general policy which was dictated by a carefully selected board. Capital stock was issued to the amount of $1,100,000,000. This, with the bonded indebtedness of $304,000,000, brought the total of securities issued by the corporation to $1,404, 000,000. When the work of organization was begun it was considered doubtful whether enough money could be found to carry out the plan. But an "underwriting syndicate" was formed, with J. Pierpont Morgan at the head, and the syndicate was pledged to take enough of the stock and bonds to guarantee the success of the promoters' work. This meant that the syndicate agreed to assume for its own members at least two hundred million dollars of the corporation's securities, if a market were not found elsewhere; and it was the largest obligation of the kind that had ever been undertaken. Wealthy men all over the country were eager to join the syndicate, for it gave the chance of large profits without actual payments. Confidence in Mr. Morgan's skill in unloading shares on the public made |