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# SAYS FEAR CAUSES
# BUSINESS TO HALT
Mr. Perkins Declares Industry Will Not Proceed As
Long As There Is Uncertainty About
Laws.
(Continued from First Page.)
tee, and Judge Bartlett asked why Mr.
Ferkins did not go into those details in
testifying before the Senate Judiciary
Committee three years ago.
Mr. Perkins said that Inquiry was so
brief, and confined se closely to the Ten-
nessee affair, that these other matters
were not developed.
"My question is," said Judge Bartlett,
"whether you did not confine your tes-
timony to the statement that an asso-
ciation of individuals was involved?"
Here the judge read from the record of
the old Senate hearing to bear out his
view. This brought in a statement from
former President Roosevelt that he had
been told that one firm held a major-
ity of the Tennessee stock. Mr. Perkins
told the Judiciary Committee that a
partnership held these stocks.
"And everybody knows that meant
Moore & Schley?" asked Judge Bartlett.
"Yes, sir," said Mr. Perkins.
"Now, I want to know if at that time
you did not confine the crisis to a single
firm?"
"I did not wish to name Moore &
Schley," said Mr. Perkins. "We were
just cleaning up the ends of the panic
and conditions were still delicate."
"Oh, I thought the panic was ended
when the Tennessee stock was taken
up and the steel bonds substituted."
"Yes, but when one has had pneu-
monia he doesn't expose himself to a
draft for some time," explained Mr.
Perkins. with a smile. He added that
taking over the Tennessee stock had no
relation, directly, to the Trust Company
of America.
"On the Saturday when the Moore &
Schley matter was under discussion, the
Trust Company of America, out of
funds, had decided not to open again.
These failures together would have pre-
cipitated a grave condition.
"The arrangement was that if the
Steel Company would take the Tennes-
see stock the banks would relieve the
Lincoln Trust Company and the Trust
Company of America. So there were
really two trades in one.
"Was there any statement or infor-
mation conveyed to Gary and Frick,
before they went to see President
Roosevelt, that Moore & Schley had
a majority of the Tennessee stock?"
"I don't know, and at the time I
didn't care whether they had a major-
ity. I knew there was a condition to
be corrected. I don't know whether at
that time I knew they held a majority.
I was head over heels in that panic
and it took all we could do to control
it."
Denies Charge.
"What do you say to the statement
that the panic was started to get rid
of certain undesirable bankers, and
that you gentlemen later were unable
to manage it?"
"I say," replied Mr. Perkins indig-
nantly, rising and hammering the table,
"that there is not a scintilla of truth
in it. You might as well charge that
a syndicate arranged to have Mrs.
O'Leary's cow kick over the lantern
that burned Chicago. There had been
an unhealthy business condition grow-
ing up for some time. Practices and
methods, disapproved by the invest-
ing public, had been responsible for
this.
"Isn't it true that these trust com-
panies charged with going beyond the
legitimate confines of good business,
were the first that failed?"
"Yes, sir."
"So that their failures helped precipi-
tate the panic?"
"Yes."
"Now, I see you have brought your-
self to agree with Judge Gary about
methods of dealing with great corpora-
tions," suggested Judge Bartlett, taking
up Mr. Perkins' Houghton, Mich., ad-
dress.
"I agree that something needs to be
done in the matter of our relations to
great industries. We are out of step
and harmony with Germany and with
the best thoughts of the times. I do
not agree to the extent of Government
price fixing, but would go so far rather
than go on as we are going.
"We have reached a point where the
Executive of our Government is pro-
ceeding to dissolve the Standard Oil
Company. That should be a danger
signal.
"The Government has spent years
learning all about that company. But,
instead of learning whether it has been
of use and value as a producer, as a
good employer, as a servant of public
interest the Government is proceeding
to break it into thirty-three parts. I
say that is a menace to all business.
I would not have the Standard Oil Com-
pany broken up until we knew whether
it was a good and useful concern."
Campaign Contributions.
Mr. Perkins' personal contributions to
political campaign funds were held by
the committee to be outside its concern.
He was asked if he had made any per-
sonal contributions in expectation of
being reimbursed, and replied that he
had not.
As to the Steel Corporation's contri-
butions, Mr. Lindabury said he knew
of one contribution of $10.000 made in
1904, but he could not tell whether it
was to a national or a State fund. He
would, however, get all the papers in
the matter for the committee.
Chairman Stanley, referring to the
relations between the International
Harvester Company and the Steel Cor-
poration, dropped the broad intimation
that he had reason to believe these re-
lations would shortly be taken up and
considered by the Department of Jus-
tice. In view of that fact, he did not
deem it necessary for the committee
to devote itself to extensive inquiry in
that direction.
This statement by the chairman led
to vigorous protests by both Mr. Lin-
dabury, attorney representing the Steel
Corporation, and Mr. Perkins.
There was some inquiry into the at-
titude of the Morgan interests toward
Oakleigh Thorne's Trust Company of
America during the panic of 1907, based
on the apparent belief of Representa-
tive Beall that hostility toward the
Thorne Company actuated some of the
financial powers in the effort to put
that concern in a bad light. Mr. Per-
kins explained that Mr. Thorne had
come to the Morgan people, greatly
alarmed over conditions, and, after fu-
tile efforts to induce some of the trust
companies to co-operate in mutual pro-
tection, Secretary of the Treasury Cor-
telyou agreed to deposit $10,000,000 of
Government cash where it could be
placed at the disposal of the Thorne
Company to tide it over.
The Steel Corporation's financial plan
for converting $200,000,000 of preferred
stock into second-mortgage bonds, was
explained in detail by Mr. Perkins. A
syndicate was formed to convert, not
$200,000,000, but $80,000,000. The preferred
stock for conversion was to be deposit-
ed with Morgan & Co., and either 40
per cent or the entire amount of it was
subject to be exchanged for the second
mortgage bonds.
Cash In Exchange for Bonds.
The syndicate, in addition to making
this exchange, was to provide $20,000,000
cash in exchange for that amount of
the second mortgage bonds. The com-
mission was to be paid by the Steel
Corporation, 4 per cent commission on
bonds taken for cash and also on those
taken in exchange for the preferre
stock. The Steel Corporation reserved
the right to allow every preferred
stockholder to subscribe for these bonds
to the extent of 40 per cent of his
preferred holdings.
The money, thus raised for additional
working capital, could, of course, have
been raised by stoppage of dividends
for the necessary period, but the cor-
poration did not consider that procedure
a fair one to the stockholders.
As a result of the appeal by the
Stanley committee to President Taft,
the latter has agreed that the commit-
tee may consult certain of the data
gathered by the Bureau of Corporations.
This will be confined to materials whose
usė would violate no confidences which
were imposed when the data were se-
cured from the corporations involved.
"I fully believe you, Mr. Perkins,
when you say that, but I'd like to know
how such things can take place with-
out the knowledge of the directors of
the Steel Corporation? To the Steel
Corporation directors in October, 1907,
Judge Gary made a statement that ex-
ecutives of the subsidiary corporations
were in frequent conferences, and that
the Steel Corporation was advised of
these matters; finance affairs of the
subsidiaries were referred to the finance
committee of the Steel Corporation."
Mr. Gardner showed that this co-op-
eration was very close, and asked:
"This seems to indicate, in connection
with the pleas of guilty in the recent
cases, that there is a very serious cog
loose somewhere. Assuming that the
plate agreement existed and that the
wire agreement existed, how do you ex-
plain that you and other high officials
of the Steel Company knew nothing of
it?"
"Oh, the working of human nature.
A father has four sons. He instructs
them in a line of conduct and assumes
that they obey. He learns later that
they have been, under pressure of con-
ditions surrounding them, violating his
instructions."
Representative Young pointed out that
the plate association continued three
years after the Steel Corporation was
organized. The Carnegie Company had
been a party to the association, and
continued such. Mr. Schwab had been
president of the Carnegie and became
president of the Steel Corporation.
"How could Mr. Schwab as president of
the Steel Corporation have failed to
know about it," persisted Mr. Young.
All New to Him.
Mr. Ferkins replied that all these mat-
ters were as new to him as to the com-
mittee members. He had not the infor-
mation from which to answer.
"Take the four sons in your illustra-
tion." pursued Mr. Gardner. "Why
should the four sons violate the father's
instructions, and take all the risks in-
volved in that course, when the profit
must all accrue, not to the sors, but to
the father for whom they worked?"
Mr. Perkins replied that this raised
the very question which the Steel Cor-
poration people had at many times dis-
cussed.
"If the laws could be understood to
certainty, and would allow," he said,
"we would have had a single operating
company long ago. Then we could have
given orders, not advice, to subsidiary
executives."
Mr. Perkins paid a high tribute to the
skill, energy, and ability of the men
managing these concerns subsidiary to
the Steel Corporation.
"Mr. Carnegie," he said, "never
stated a truer thing than that his
organization was worth more than
his mills."
Turning to finance, Mr. Gardner
wanted to know what could be done
to stop panic. "Do you approve
the Aldrich currency plan?" he asked.
"O, that would take two or three
days," laughed Mr. Perkins, the com-
mittee joining.
"But surely we should have a plan
by which banks could associate to-
gether in co-operation to protect fin-
ancial conditions. Further, you cer-
tainly ought to be able to give us a
law that would prevent banks all over
the country depositing their money
in New York during the slack sea-
son of summer, and then drawing it
all out again and leaving us with
close money and high rates at the
time when the country most needs
cheap and easy funds."
THREE SPECIALS
