United States. Congress. House. Committee on Inves.

United States Steel Corporation. Hearings before the Committee on Investigation of United States Steel Corporation. House of Representatives online

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a little to get the business. This is not done in the base price, but a
little inching under in extras and things of that sort.

March 27, 1911.
Sales to West Australian Government from Steel Products Co.

April 3, 1911.
Awarded Quebec Bridge contract and emergency dams involving
ton to twelve thousand tons.

STANDARD OIL CO., CONTRACT WITH.

Contract with Standard Oil Co. mentioned by Mr. Bope.

May 29, 1911.
Jones & Laughlin were compelled to put out an additional issue of
$10,000,000 more bonds, and they have iised the first issue of
$1.5,000,000, according to Mr. Bopo.

July 3, 1911.

j. b. & j. m. cornell account.

On motion of Mr. Blackburn, seconded by Mr. Bope, the following
resolution was unanimously adopted:

Whereas the J. B. & J. M. Cornell Co. is indehted to this company for materialg
sold and delivered in the sum of $50,880.64, secured by 80 bonds of said J. B. & J. M.
Cornell Co. of the par value of $1,000 each; and



UNITED STATES STEEL. OOEPOBATION. 4097

Whereas said company has entered into a certain agreement, dated April 24, 19H,
between the New York Trust Co., Sarah K. Cornell, the bondholders of J. B. & J. M.
Cornell Co., and certain creditors of the receivers of that company, having for its
purpose the reorganization of said J. B. & J. M. Cornell Co.; and

Whereas it is advisable that this company appoint an attorney in fact to do such
thiags as may be necessary for and on behaU of this company to carry out the terms
and provisions of said agreement: Now therefore be it

Resolved, That Frederick J. Home, vice president of the New York Trust Co., be,
and hereby is, appointed attorney in fact of this company for it and in its name —

(1) To assign to Cornell Construction Co., under the provisions of said agreement
dated April 24, 1911, all the right, title, and interest of this company in and to a certain
bid dated April 24, 1911, made by the bondholders of the J. B. & J. M. Cornell Co. to
the receivers of said company.

(2) To assign to said Cornell Construction Co., subject to the terms and conditions
of said bid, all the right, tifle, and interest of this company in and to said 80 bonds of
the J. B. & J. M. Cornell Co.

(3) To receive from said Cornell Construction Co. the shares of its capital stock to
which this company is entitled.

(4) To execute the voting trust agreement provided for in said agreement of April
24, 1911, and to transfer anoT deliver to the trustee thereunder said shares of stock and
to receive and transmit to this company the receipts therefor.

And the president is hereby authorized, for and m behalf of the company, to execute
a proper form of power of attorney to the said Frederick J. Home, authorizing him to
do and perform all things above mentioned.

ITALIAN GOVERNMENT.

Bids to Italian Government for armor plate provided for by
power of attorney to Mr. Balsinger.

July 10, 1911.
International Harvester Co. contract referred to.

July 24, 1911.
Mingo Coal Co. owned by Carnegie Co.

The minutes of the last meeting examiaed were those of July 31,
1911.



THE CAENEGIE CO.

(A New Jersey corporation.)

Minutes of Meetings of Stockholdees and Board of Directors
AS Extracted, from March 27, 1900, to March 25, 1903.

Note. — There were three Carnegie companies, as foUowfi:

1. Carnegie Steel Co. (a corporation of Pennsylvania), which waa chartered May
22, 1899, and succeeded the old limited partnership, and be^in business April 1, 1900,
which was an operating company, until leased to tiie Carnegie Steel Co. (a corporation
of New Jersey).

2. The Carnegie Co. (a corporation of New Jersey), which was chartered March 24,
1900, and began business April 1, 1900. This company held the stock of the Carnegie
Steel Co. — the Pennsylvania corporation — together with the stocks of various other
companies, and the stock of this company was purchased by the United Steel Corpora-
tion.

3. Carnegie Steel Co. (a corporation of New Jersey) was organized about March 26,
1903, by the merger of the Carnegie Co., National Steel Co., and American Steel Hoop
Co.

Carnegie Steel Co. (the Pennsylvania corporation) was leased under an operating
contract to the Camepe Steel Co. (the New Jersey corporation formed by the merger
of the Carnegie Co., National Steel Co., and American Steel Hoop Co.) on or about
December 26, 1905.

March 27, 1900.

First meeting of incorporators.

The following incorporators were present by proxy issued to John
S. Parker: Andrew Carnegie, 86,379 shares; George E. McCague, 442
shares; Charles W. Baker, 147 shares; Albert C. Case, 147 shares; and
various other stockholders by proxy issued to George W. Mark.

Resolved, That whereas Charles M. Schwab, Andrew M. Moreland, F. T. F. Love-
joy, and Gibson D. Packer, as a committee acting on behalf of the several owners
and holders thereof, have offered to sell and transfer or cause to be transferred to thia
company shares of capital stock of the following corporations: 500,000 shares of Carnegie
Steel Co., of Pennsylvania, being the entire capital stock of said company; 200,000
shares of H. C. Frick Coke Co., being the entire capital stock of said company; 6,000
shares of Carnegie Natural Gas Co., a corporation of the State of Pennsylvania,
being the entire capital stock of said company; 40,000 shares of Union BaUroad Co., of
Pennsylvania, being the entire capital stock of said company; 8,000 shares of Youghio-
gheny Northern Railway Co., being the entire capital stock of said company; 100
shares of the Slackwater Coimecting Railroad Co., being the entire capital stock of
said company; 100,010 shares of the common stock and 22,162 shares of the preferred
stock of the Pittsburgh, Bessemer & Lake Erie Railroad Co., of Pennsylvjinia, being
50.005 per cent of the entire capital stock of said company, plus 2,160 shares of the
preferred stock; 10,000 shares of Oliver Iron Mining Co., of Minnesota, being five-
sixths of the entire capital stock of said company; 4,000 shares of the Pewabic Co., of
Wisconsin, being one-half of the entire capital stock of said company; 416S shares of
the Pittsburgh Steamship Co., of West Virginia, being five-sixths of the entire capital
stock of said company; 1,000 shares of the Pittsburgh & Conneaut Dock Co., West Vir-
ginia, being the entire capital stock of said company; $45,000 of the capital stock of
the Pittsburgh Limestone Co. (Ltd.), a limited partnership of the State Of Pennsyl-
vania, being three-fourths of the entire capital stock of the said limited partnerehip;
20 shares of the Mingo Coal Co., a corporation of Pennsylvania, being the entire capitel
stock of said company; 1,000 shares of the Youghiogheny Water Co., Pennsylvania,
being the entire capital stock of said company; 3,000 shares of the Mount Pleasant
Water Co., of Pennsylvania, being the entire capital stock of said company; 5,000
shares of the Trotter Water Co., a corporation of the State of Pennsylvania, being the

4098



UNITED STATES STEEL COEPOEATION. 4099

entire capital stock of said company; $75,000 of the capital stock of the Union Supply
Co- (Ltd.), a limited partnership of Pennsylvania, being the entire capital stock of
said limited partnership, in consideration of the issue of stock of this company to the
amount of $160,000,000 par value and its 5 per cent bonds, secured by a collateral
deed of trust or mortgage upon all of the above-mentioned stocks, amounting in the
affiregate to $160,000,000; and

Whereas it appears to the stockholders that the above-mentioned property is neces-
sary for the businesss of this company and that the same is of the value of $320,000,000:

Resolved, That the board of directors of this company be, and they hereby, are author-
ized and directed to purchase said property^ for said price and to issue said stock and
bonds in payment thereof: Provided, That ia the judgment of the board of directors
the said property is of the value above stated; further

Resolved, That the board of directors- of this company be, and they are hereby, also
authorized and directed to accept said property in full payment of the subscriptions
of the incorporators, as set forth m the certificate of incorporation.

March 27, 1900.

First meeting of the board of directors.

The present directors had been elected: Henry Phipps, James
Gayley, William H. Singer, Andrew M. Moreland, James N. DIU,
George Lauder, Charles M. Schwab, Daniel M. Clemson, Thomas
Morrison, Thomas Lynch, Lawrence C. Phipps.

The following officers had been elected: C. M. Schwab, president;
Lawrence C. Phipps, vice president; Andrew M. Moreland, secretary;
William W. Blackburn, treasurer; James N. Dill, general counsel.

Kesolution that in the judgment of the board of directors the

Eroperty (in the list above set forth in the stockholders meeting of
[arch 27, 1900), is and will be for the Carnegie Co. for the purpose of
its business of the value and full par value of the stock of $160,000,000
and bonds $160,000,000 to be issued therefor, amounting in all to
$320,000,000.
Resolution that the proposition be accepted passed; and
Resolution that the stock and bonds to be issued therefor, the bonds
to bear interest of 5 per cent.

April 23, 1900.

historical interest only.

Board of directors' meeting.

The question of selling the Keystone Bridge Works to the American
Bridge Co. was considered.
M. L. C. Phipps. Nearly everyone present, I think, understands the

E reposition of selling the Keystone Bridge Works to the American
Iridge Co., as the matter has been up for quite a long time. The
board of directors of the Carnegie Steel Co. has approved of the selling
of the Keystone Bridge Works, and it is desired that this board con-
sider the matter also. I think it would be well to incorporate in our
minutes the proposition made by the promoter, Mr. Ladd, under date
of April 2, 1900, which is as follows, to wit:

Replying to your favor of the 30th ultimo would say that I think the assumption that
the bridge matter is now practically a go is warranted, provided of coxirse that the
various elements materialize on the lines respectively represented to Messrs. J. P.

It is proposed that the total authorized capitalization of the new company be
$70 000 000 the company to be incorporated under the laws of New Jersey, and its
capitalization divided into 800,000 shares of the par value of $100 each, of which
$35 000 000 shall be 7 per cent cumulative preferred stock (with preference as to
dividends and assets), and $35,000,000 shall be common stock, said stock being taken



4100 UNITED STATES STEEL COBPOEATION.

at the rate of one share of preferred stock and one-half share of common stock as the
equivalent of $100 in cash. Of the total authorized capital, only about $60,000,000
will be actually issued at the present time, i. e., $30,000,000 each of preferred and
common stock.

The $30,000,000 preferred stock issued shall represent the plant values as arrived at
by audit and appraisal, and $10,000,000 cash working capital. Of the $30,000,000
common stock, one-half, or $15,000,000 will go with the $30,000,000 of preferred and
the other half, or $15,000,000, wiU go to J. P. Morgan & Co. as commission, and which
they are to use for the purpose of forming their syndicate for themselves and to indem-
nify me for my efforts. The commission thus figures, as previously explained to you,
an amount of common stock which shall equal 25 per cent of the total capitalization
actually issued, but there is no commission whatever paid in preferred stock.

As previously arranged with you, and as represented by Mr. Morgan, the bridge
company has to take over the Keystone Bridge Works, plant and real estate, paying
therefor in lieu of cash $2,000,000 of its preferred stock, and $1,000,000 of its common
stock, the Carnegie Co. agreeing, in common with other manufacturers, to hold such
stock for a period of 18 months, and accepting during such period certificates of receipt
or deposit from J. P. Morgan & Co. or the Standard Trust Co. And the Carnegie Co.
is to be represented on the board of directors of the bridge company.

Simultaneously with the purchase of the Keystone plant, by the bridge company,
the Carnegie Co. and the bridge company are to execute an agreement for purchase
and sale of materials equaling an amount at least 51 per cent of the total amount of
such materials used by the bridge company, and the purchase of which materials the
bridge company is to enjoy from the Carnegie Co. at terms or rates more advantageous
than the terms or rates at which the Carnegie Co. would sell simUar materials to any
other customer.

The customer also agreed not to fabricate such materials, during the life of such
agreement, which is to be for the period of at least 10 years. Such agreement is to
further cover such points as may be deemed to accrue to the mutual advantage and
satisfaction of the Carnegie Co. and the bridge company.

Simultaneously with the sale of the Keystone plant to the bridge company and the
receipt by the Carnegie Co. therefor of the $2,000,000 preferred and the $1,000,000 com-
mon stock above mentioned, a properly drawn agreement for the purchase and sale
of $1,500,000 of such preferred and $750,000 of such common stock is to be executed
by and between the Carnegie Co. and Messrs. W. H. McCord, C. M. Jarvis, Frank
Conger, and J. G. Ladd. Such stock to be taken and paid for within 30 days from
the date the actual shares of stock are delivered to the Carnegie Co., i. e., within 30
days after the expiration of the time during which the Carnegie Co. held J. P. Morgan
& Co.'s certificates of deposit above referred to. The price to be for the said stock
by Messrs. McCord, Jarvis, and Ladd be the sum of $1,500,000 cash, such parties
depositing with the Carnegie Co., or other mutually agreed upon depository, as collateral
security for the performance of their agreement, the certificate of deposit representing
a total of $750,000 par value of the common stock, and a total of $675,000 of the pre-
ferred stock of the bridge company, such certificates being properly signed in blank.

I trust that the above recapitulation of the assets as generally arranged with you
will prove what you want at this time.

As the bridge matter must be consummated during this month, and preferably as
early in the month as possible, and the bankers will want the Carnegie Co. s agreement
and transfer of the Keystone's plant completed about the first thing that is done, I desire
to ask you to kindly secure such authorization as you may deem it necessary to secure,
at the earliest possible date. In this connection may I suggest that you simply secure
from yoiu- board of directors, whb also undoubtedly represent a sufficient amount of
stock necessary to confirm such action, when such confirmation is needed, full author-
ization to carry out and perfect the negotiations and agreements herein generally
described?

Trusting that you will kindly advise me how soon you can be ready to put these
matters into definite shape, I remain, etc.

There is really nothing to add to the above proposition. I think
that everyone understands it. Mr. Carnegie is favorable to selling
the bridge works on the basis of the proposition as read, and the board
of directors of the Carnegie Steel Co. have approved.

Mr. Lynch. I am lamiMar with the details of this matter to an
extent that I would exactly understand the effect of selling the
Keystone Bridge Works. I rather favor the company retaining this
department. If the matter has been carefully gone over by the other



UNITED STATES STEEL CORPOEATION. 4101

members of this board and the steel-company board has approved of
the sale and transfer of the property, then I would vote for it.

Mr. Schwab. The proposition has been considered very carefully.
Mr. Carnegie approves, also Mr. Henry Phipps. It is our opinion
that we are getting a very good price for Keystone, and the contract
which we are to make, giving us 50 per cent of the steel to be pur-
chased by the consolidated company, will prove to be a very beneficial
thing for us. If the bridge company does not take 75 per cent of the
bridge works in the United States, we are then privileged to build
a works of our own. If we continued in the bridge business we would
most certainly have to rebuild the Keystone.

On motion of Messrs. Lynch and Morrison, it was

Resolved, That the board of directors of this company approve of the action of the
board of directors of the Carnegie Steel Co. in agreeing to sell the Keystone Bridge
Works to the American Bridge Co., the consideration being $2,000,000 preferred stoqk
and $1,000,000 of the common stock of said bridge company, as more fully set forth in
the minutes of the meetings of the board of directors of the Carnegie Steel Co. held
April 9 and April 17, 1900, and any agreements between the Carnegie Steel Co. and the
American Bridge Co., the vote being unanimous.

Mr. L. C. Phipps presented the following resolution:

Resolved, That this company sell to the Carnegie Steel Co. 12,160 shares of the pre-
ferred stock of the Pittsburgh, Bessemer & Lake Erie Railroad Co. at the par value of
$50 per share, or $608,000, and purchase from the Carnegie Steel Co. 10,000 of the com-
mon stock of the Pittsburgh, Bessemer & Lake Erie Co. at $25, or $250,000.

Mr. L. C. Phipps. I would explain the idea of the exchange of these
securities. We have some very large credit balances in the Carnegie
Steel Co. in the accounts of Messrs. Andrew Carnegie, Henry Phipps,
George Lauder, and WiUiam H. Singer, which we would prefer to
pay at least partially' in securities rather than in cash, and the gentle-
men named have given their assent to this agreement. During the
month of April the Carnegie Steel Co. purchased 10,000 shares of the
common stock of the Pittsburgh, Bessemer & Lake Erie Railroad
Co. from Col. Samuel B. Dick, in a settlement made with him, and we
now think it is wise for this company to purchase these shares. This
company owns 22,162 shares of the preferred stock of the Pittsburgh,
Bessemer & Lake Erie Railroad Co., and it is intended to sell 12,160
shares to the Carnegie Steel Co., which last-named company will use
for the purpose of paying the credit partners of the Carnegie Steel Co.
(Ltd.), whose accounts were transferred March 31 to the Carnegie
Steel Co., as above outlined. This company owns, after above
exchange of stock, the control of the Bessemer road, as far as voting
power is concerned.

On motion the above resolution was unanimously adopted.

June 6, 1900.

Board of directors' meeting.

Mr. Gayley. Last week at an informal meeting we discussed the
matter of making a contract between the Federal Steel Co., the Car-
negie Co., and the Oliver & Snyder Steel Co. respecting the contract
for a freight rate on Duluth & Iron Range Railroad on ore from the
Vermillion Range. There are some very good reasons against the
making of a contract between the Oliver Iron Mining Co. and the
railroad company, and the suggestion has been made in order to
avoid the appearance of rebating freight that we make contract
between the two New Jersey companies, Carnegie and Federal, the



4102 UNITED STATES STEEL CORPORATION.

consideration being for the business that the Carnegie Co. controls and
has to give out and that the railroad company is desirous of securing.
We intend to define the Vermillion Range in the contract so that the
same wiU not cover territory in general or other acquisitions we may
make from time to time in other territories or localities. Objections
were had to the first draft of the contract at the meeting last week,
first, because it contained a clause guaranteeing the railroad company
600,000 tons of ore per year, and, secondly, on account of the term of
the contract being 20 years. Since the meeting last week we have
considered the matter very carefuUy and we are now convinced that
a long-time contract is the best for us, and we would propose that
instead of 10 years, as proposed last week, that we would negotiate
for 40-year term, there being no guarantee of tonnage; we give the
railroad protection at whatever it happens to be. The contract now
provides that we are to get as low a rate as any other company, and
if the rates are increased to others, the allowance to us is increased,
so that under the contract if rates were generally increased we would
be charged 60 cents at all times, unless a competitive road made a
lower rate, then we would pay on the same basis. We think that in
making a long-term contract that should we have any adjustments
to make with the company that they would be more likely to consider
what we might ask on account of the term of contract, rather thap
if it was for a short term, and they were looking toward its possible
ending or of our building a competitive road. We have in accordance
with our estimate at least ore enough in the Vermillion district for
a 20-year supply. The present general freight rate is 11. We have
had an arrangement with the railroad for some time to carry ore at
the rate of 60 cents, paying currently, however, $1 per ton, but we
have not been able to collect our money for the reason that there was
no fixed method of payment and the railroad fear,ed rebating. Judge
Gary thinks that if we make a contract as now proposed, they can
find a way to pay us the amount due us, which approximates 1200,000,
and make the further payments or rebates required. Mr. OHver and
myself are to take this matter up in New York next week, and we
would Hke to have authority to negotiate on the lines recited.
On motion of Messrs. Clemson and Lynch, it was

Resolved, That Mr. Henry W. Oliver and Mr. James Gayley are hereby authorized
and empowered to negotiate with the Federal Steel Co. to the end of making a contract
covering ore shipped from the Vermillion iron-ore ranges, which the contract advo-
cates and which is to be carried over the Duluth & Iron Range Railroad at a net rate
of 60 cents for the term of 40 years, this authority being given on the express under-
standing that when the contract is written completely that it is to come before the
board of directors of this company for approval before it is executed by the officers of
this company, the authority for its execution by the officers of this company to be
given by the board of directors; the vote being unanimous.

Mr. Schwab. I think it very important that this contract be
approved by the board before it is executed and delivered.
(Copy to A. C, Skibo, and H. P., London, June 8, 1900.)



united states steel coepoeation. 4103

July 9, 1900.
Board of directors' meeting.

KEBATING AGREEMENT FOR CARRYING OREGON VERMILLION RANGE.

This agreement made this 9th day of July, A. D. 1900, between the Carnegie Co.,
a corporation of the State of New Jersey, and the owner of five-sixths of the capital
stock of the Oliver Iron Mining Co., and the Oliver & Snyder Steel Co., a corporation
of the State of Pennsylvania, and the owner of one-sixth of the capital stock of said
Oliver Iron Mining Co., parties of the first part, and the Federal Steel Co., a corpora-
tion of the State of New Jersey, party of the second part, witnesseth:

Whereas the said Oliver Iron Mining Go. and the party of the first part are the owners
of or interested in certain mining property located on the Vermillion Range and in
St. Louis County, Minn., on the mam line of the Duluth & Iron Range Railroad
between Two Harbors and Tower, to wit:

The Pioneer mine, the Zenith mine, the Savoy mine, and the Sibley mine, and other
mining properties not herein named, and may become the owners of or interested in
other mining properties on the Vermilion Range and in St. Louis County, Minn.,
on the main line of the Duluth & Iron Range Railroad between Two Harbors and
Tower and are desirous of having all iron ore that may be mined from all such proper-
ties or any of them transported therefrom to Lake Superior, and are also desirous
that the party of the second part shall secure and guarantee to the parties of the first
part prompt and efficient carriage and delivery of such ore;

Now, therefore, in consideration of the premises and of»other valuable considerations
it is agreed by and between the parties hereto as follows:

First. The said parties of the first part hereby promise and agree to deliver to such
railroad or railroads connecting with the mining properties above referred to as may
be designated by the party of the second part, for transportation and delivery from
any and all such mining properties to a suitable shipping port, on Lake Superior, all



Online LibraryUnited States. Congress. House. Committee on InvesUnited States Steel Corporation. Hearings before the Committee on Investigation of United States Steel Corporation. House of Representatives → online text (page 103 of 181)