In this connection it is related that shortly after the corporation had been formed the old Iron Master and Morgan met on a steamship on their way to Europe, and Carnegie in the course of conversation intimated that he considered he had driven a shrewd bargain with the corporation interests. To which the banker is said to have replied: “I would have paid another hundred million if you had asked it.” The story, the accuracy of which cannot be vouched for, concludes that Carnegie never forgave himself for his too-modest demands.
The general consensus of opinion is that the Corporation’s bonds and preferred stock were both amply protected by assets at the time of its organization but that the junior stock had nothing behind it but “blue sky.” Admitting the justice of this claim, which has never been denied and probably cannot be, this state of things no longer exists. Whatever water once permeated the capital of the Steel Corporation has been squeezed out. Year by year the directors have voted large sums out of earnings for the erection of new plants, the extension of old ones, until approximately $900,000,000 has been expended in this manner, this providing adequate--more than adequate--protection for the common stock and putting the Corporation beyond reach of criticism to-day on the charge of over-capitalization.
Not long ago Judge Gary, testifying at Washington before a Senate committee, asserted that the Corporation’s properties then--October, 1919--were actually worth $2,200,000,000 in round figures, or well over $700,000,000 more than its entire funded and stock capital. He asserted they could not be replaced for that sum. And other steel men declare his statement is justified.
When the Corporation began its existence the plants of its subsidiary companies, as we have seen, had a capacity of more than 9,000,000 tons of steel ingots, while its furnace capacity was only 7,740,000 tons. It was compelled to purchase a large proportion of its pig iron requirements in the open market. To-day its plants are capable, if worked at full, of producing 22,350,000 tons of steel ingots and its pig iron capacity is 18,400,000 tons. Practically all this gain in production has been attained by “plowing” profits back into additions and improvements with the object of putting actual plant value behind every dollar of stock issued.