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of their members had independently tried to get the business or to get in with whoever would get the business. (Mr. Prosser here said that this was not correct, that their group was intact and had had recent meetings.) I further told Mr. Prosser that we had discussed among the partners the question of whether we could not, in some way, offer them a share in the business, but Mr. Prosser immediately said that while that was very nice of us he could not consider that.

Mr. Schiff came in to the room at about this time and most of what was said above was repeated on both sides—Mr. Prosser emphasizing what a blow it would be to his Trust Company to lose this business and Mr. Schiff emphasizing how we had made every effort to be sure that we were not competing with them. I stated that while we never competed for business, we of course could not take the position that if a corporation came to us and told us they were free that we would not deal with them. Mr. Prosser then stated that he now understood our position and wished to say that he felt that they had no grievance against is; that what Mr. Campbell had said was exactly correct, but that Mr. Campbell had evidently remained under the impression that they would not pay higher now than they had suggested many months ago and that he felt that if he sold under 99 he should have come back to them. Mr. Schiff said to Mr. Prosser just before he left, "Think the matter over overnight and perhaps you can make some suggestion tomorrow which will be satisfactory all around."

Immediately after the conference I repeated the substance of it to Mr. Morris, the Vice President of the Youngstown Company, who was at the time still in our office. He assured me that outside of any conversations Mr. Camp bell may have had with Mr. Prosser they had had no negotiations and certainly that no work had been done in endeavoring to work out a plan or a mortgage. This morning, after consultation among the partners, I telephoned to Mr. Morris that while we would, of course, prefer to do the business alone, we did not wish to do anything to embarrass Mr. Campbell in any way and if Mr. Campbell desired us to do so we would be willing to offer one-half of the business to the Bankers Trust Company. Mr. Morris, without leaving the telephone, said that he had repeated to Mr. Campbell the substance of what I had told him about Mr. Prosser's visit, and that Mr. Campbell was very much incensed about Mr. Prosser's coming to see us with any such statement and that the only way Mr. Prosser knew about the price was that Mr. Campbell had yesterday telephoned to Mr. Prosser informing him that he had closed with us at 98, possibly speaking to him about the Trusteeship.

[Handwritten Initials] JJH JJHMC

EXHIBIT S-183A 11/18/27

On the morning of Monday, November 21st, I called on Mr. Prosser together with Mr. Morris. It was first arranged that the Bankers Trust Company would acrept Trusteeship of the new mortgage and then Mr. Morris left and I told Jr. Prosser that we were going ahead with the offer promptly and offered to him, for his group, a one-half interest in name, subject to the usual management charge, or a one-third silent interest. He immediately replied that he did not see how he could accept but he appreciated our offer, and that he would consult the group and let us have an answer promptly. Shortly thereafter he telephoned to me asking me for the prices at which we expected to syndicate and sell the bonds, which gave him and a little later he telephoned again to say that it had been decided that they could not participate as a group.

After this Mr. McEldowner of the Union Trust of Pittsburgh telephoned to say that if we would make him the same offer as we had made Mr. Prosser for a $10,000,000 participation in the business they would like to take it and we later in the day arranged with him to give him a participaton of $7,500,000.

We suggested to the National City Company (Mr. Davis) that they participate silently in response to which invitation Mr. Hugh Baker later telephoned to Geirge Bovenizer that they felt that under the circumstances they could not accept the participation and they greatly regretted that they had to give up the pportunity of making a nice profit. We offered a participation also to the Guaranty Company (Mr. Harrison) and Mr. Stanley telephoned to me that they didn't feel that they could go along. We offered the Continental and Commerrial ('o. of Chicago a participation through their New York representative but they also felt that they could not accept it.

[Handirritten Initials] JJH

EXHIBIT S-183B 11/23/27 [Rubber stamp :) Kuhn, Loeb & Co.- Nov. 24, 1927--Filing Department.

FRIDAY, NOVEMBER 18TH. Re: Youngstown.

At about 5:00 o'clock P. M. today Mr. James A. Campbell called me on the telephone and said about as follows:

"In reference to the message through Mr. Morris, I want to tell you exactly what happened with the Bankers Trust Company. They came to us first sereral months ago and said that there was a good opportunity for us to sell a 5% bond to refund our other indebtedness and bid 941. This did not interest me. A couple of months later they came again and said that the bond market was better and that they could pay 9514, and then a month or so afterwards bid 9.7. Then I got sore and read the riot act to them, and I hoped that they would respond. That they did not do. This man Freeman had been in and said he thought he could get 99 or par from responsible people, but we paid no attention to him; then when the Bankers Trust Company did not respond we listened to Freeman. Then again talked with Tilney and again read the riot act. Several weeks elapsed and we heard nothing from them, and I felt that they had had every opportunity. We then went in to see you, and you told us you wanted us to fix the type of bond first and from then we felt hitched to you until the matter had been decided. Last Tuesday afternoon, after the meeting of the Advisory Committee with you, I ran into Seward Prosser and told him the whole story except price. He only said he was disappointed. I told him we hoped to make him Trustee. I also told him that you had suggested taking them along in the business, to which he replied that if it was good for part it was good for all. Then yesterday, after we had decided the matter among ourselves and notified you that we would sell you 50-Year Bonds, he insisted that we give him the bonds at the same price. I refused saying my word is better than my bond. I called up Dalton, who agreed with me and who called up Prosser and told him so. A Vice President of the Guaranty Trust Company said that we (Youngstown) did not know how to sell bonds, that we should have offered the bonds at 9716, or 98, but I felt that they should have done the best they could for us and not try to buy them as cheaply as they could. I would rather resign than break my word. There was no question with the Board of Directors; it was unanimous.

About their participating, that is up to you. They had their day in court. We would, of course, be pleased if you did so, as we are not angry with them. They are good friends, and there are a lot of influential people connected with the Company-Morgans and others—but that matter is entirely up to you."

[Handuritten Initials:) JJH. JJH: MC.


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[ Memorandum dated September 4, 1936, prepared by F. R. Denton, of Mellon Securities Corp.

Inserted in Mellon Securities Corp. pink sheet book. From the files of Mellon Securities Corp.]


NOVEMBER 9, 1948 Distribution:



NY (Ilegible)


$55,000,000 3,4% Consolidated Mortgage—1966 Yesterday CLA and FRD had another meeting with Kuhn, Loeb & Company and Edward B. Smith in regard to this situation; and after considerable discussion, the following memoranılum was agreed to by all present :

"In all future business the three houses shall participate equally in respect of any purchase and/or underwriting or banking groups and in any management

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fees to be charged other banking or securities houses. Negotiations for future business will be carried on with the company by one house representing the group and in consultation and agreement with the group. Syndication and allotment of purchase and/or underwriting or banking participations are to be handled by one house in the name of the group and in consultation and agreement with the group. Unless and until the Company specitically requests a change, the negotiating house shall be Kuhn, Loeb & Co., the syndicating house, Edward B. Smith & Co., and the order of appearance in advertising Kuhn, Loeb & Co., Edward B. Smith & Co., and Mellon Securities Corporation, all on one line.

“Should the ('ompany request such a change, it is agreed that the three underwriting houses are to be free to take such action as they wish, and are not in any way bound to participate in the new business should the suggested new set-up he unacceptable to any of the three underwriters.”

F. R. DENTON. 9/4/36. FRD: jch. (Hand uritten notation : ) Mellon Securities Synd. Book.


(Jemorandum dated August 27. 1936, prepared by Burnett Walker of Edward B. Smith

& Co. From the files of Smith, Barney & Co.)


NOVEMBER 9, 1948

[Rubber Stamp:) Edward B. Smith & Co.--New York-Buying Department.


AUGUST 27, 1936.


Kuhn, Loeb & Co. and we have agreed with Mellon Securities Corporation that the interests of all three in any future Bethlehem Steel Corporation financing are to be identical, Mellon Securities Corporation to appear in third position, and that after the presently contemplated issue of Series E Bonds any management fee charged by Kuhn, Loeb & Co. and ourselves is to be divided three ways. Kuhn, Loeb & Co, and ourselves are to continue to manage any future financing upon the same basis as our present arrangement, viz Kuhn, Loeb & Co. are to handle buying negotiations with the Company in consultation with us, and we are to handle the selling and syndication of a security in consultation with Kuhn, Loeb & Co. We, of course, would keep Mellon Securities generally informed of developments on account of their importance and in order to have the benefit of their views.

The Company is not committed to the group but as between the three houses this is the arrangement so long as the three houses are of their present calibre and capable of doing what is required in the business.


EXHIBIT S-186 (Letter dated July 2, 1935, signed by E. B. Greene, of Cleveland Cliffs Iron Co. Sept to and received by V. A. Tompkins, of Bankers Trust Co. From the files of Bankers Trust, Co. (T. N. E. Č. Exhibit No. 1835)]




Clereland, Ohio, July 2, 1935 Wm. G. Mather, Chairman of Board E. G. Greene, President A. C. Brown, Vice President S. L. Mather, Vice President V. P. Geffine, Vice President and Secretary C. G. Heer, Treasurer E. H. Jaynes, Assistant Secretary Mr. B. TOMPKINS, Vice President, Bankers Trust Co.,

New York City. DEAR TOMMY: Your letter of the 28th ult. is received. You have formed a strong underwriting group of firms with which I am sure our company would be glad to be associated.

I note also that this group is willing to buy the issue of 15-year sinking fund bonds regardless of the fact that the Republic-Corrigan McKinney merger may be still unsettled at the time the bonds are offered. This also is satisfactory.

I am disappointed, however, in the last paragraph on the first page in which you state the terms upon which the bonds will be handled. Your statement is, of course, a wide departure from our contract, but even considering it as an offer to substitute a new plan, it is not satisfactory. Under our present understanding, the price of the bonds is set at par for a 3% bond, less 1% commission, but the usual clause that if market conditions change to a marked degree, the price is to be adjusted to a figure which is satisfactory to both parties. According to your letter of June 28 you reserve the right to buy the bonds at the best price which in the opinion of the group can be obtained at the time the issue is ready to go to the market. In other words, this would give us no part in determining the price at which the bonds are to be bought. If we are to depart from the contract provision that you are to take the bonds at par less 1% commission, it seems to me our arrangement should at least provide that the price at which the bonds will be bought will be mutually satisfactory.

Also the sentence in which you say that we can depend upon it that the public price will be fair to our company “and the syndicate spread equally fair" is open to the further objection that this clause apparently reserves to the group the sole right to determine what is fair in respect to these matters and would give us no voice in agreeing upon the syndicate spread. I think in respect to both of these vital matters, if they are to be left open to be determined in the future, it must be at prices and upon terms which are mutually satisfcatory to the parties.

I appreciate, as stated in your letter, that an arrangement with this group gives us the benefit of a connection with banking houses that have important affiliations with the steel industry and that this would be useful and valuable to our company, and we would like to have the arrangement made in such man. ner that it would be acceptable. I am sure you will appreciate the importance of the two points to which I have called your attention. Perhaps the statement of them in the manner expressed in your letter was unintentional and what you really have in mind is that the price at which the bonds will be sold and the amount of the syndicate spread are matters to be mutually agreed upon at the time when the bonds are offered for sale.

I should like to hear from you as to both of these matters at your early convenience. Sincerely yours;

(Handwritten) E. B. GREENE, President. EBG JS.

[Copy of letter dated December 6, 1935, signed by E. B. Greene, of Cleveland-Cliffs Iron

Co., sent to and received by Lehman Bros., Field, Glore & Co., Hayden, Stone & Co., and Kuhn, Loeb & Co.]



GUTMAN--APRIL 15, 1919



Clereland, Ohio, December 6, 1935. LEHMAN BROTHERS, FIELD, GLORE & Co., HAYDEN, STONE & Co., Krus, LOEB & Co.,

New York City. DEAR Sirs: Referring to the agreement dated December 4, 1935, between this company and yourselves and certain associates under which you severally agree as therein provided to purchase $16,700,000 principal amount of First Mortgage Sinking Fund 44% Bonds of this Company, the Board of Directors has authorizrd me to advise you as follows:

We recognize that you will have a continuing interest, for the protection of bondholders, in seeing that the Company has a satisfactory management, and, accordingly, desire to confirm the assurances given you during the course of the negotiations to the effect that, so long as any of the Bonds remain outstand. ing, the Company will, in case Mr. William G. Mather, Chairman of the Board of Directors of Mr. E. B. Greene, President of the Company, shall cease to hold such offices or cease to exercise their duties by reason of death or other cause, tcnsult with you regarding the choice of a successor to either or both of such offirers, to the end that any such successor shall be satisfactory to three or more underwriters named in the above-mentioned agreement, who have agreed to purchase not less than 50% of the aggregate principal amount of bonds. Yours truly,

The CiEVELAND-Cliffs IRON COMPANY, By E. B. GREENE, President.


FINANCIAL HISTORY OF 16 STEEL COMPANIES (Prepared for the House Subcommittee on Study of Monopoly Power by the United

States Securities and Exchange Commission, Washington, D. C.) The following report has been compiled by the Securities and Exchange Commission as a brief summary of such finanical history as to which there is jublic information available. The financial information relating to the years following 1934 has been obtained insofar as possible from the records and files of the Commission, which information is generally publicly available. Information not obtained from Commission files has been obtained from the various commercial periodicals and services which are also available to the public.

Most of the basic financing of the major steel companies took place prior to the establishment of the Securities and Exchange Commission in 1934. Many of the financial transactions involved in the early histories of the major steel companies were private, and there is little information in such instances in Pecords available to the Commission. This report, therefore, includes only a brief review of the financial histories of 16 of the country's steel producers which own their own blast furnace facilities.


United States Steel was incorporated in 1901 to take over numerous properties and smaller companies. Its formation involved the combination of approximately 12 steel companies which were themselves made up of combinations of approximately 200 small companies.

In the formation of United States Steel it appears that, as was the practice at the time, preferred stock was issued up to the full appraised value of all the assets including large amounts of intangibles. As of its incorporation date, l'nited States Steel had outstanding 5,102,057 shares of 7 per cent preferred stock (par $100) and 5,082,274 shares of common stock (par $100). A syndicate managed by J. P. Morgan & Co. in 1901 received 619,987 shares of the preferred

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