Rensselaer Journal, Volume 12, Number 19, Rensselaer, Jasper County, 16 October 1902 — MORGAN FORCES PACKERS TO YIELD [ARTICLE]

MORGAN FORCES PACKERS TO YIELD

Threatens to Raise Ocean Rates on Products of Meat Plants. EXACTS A FEE OF $10,000,000 Forces the Western Combine to His Terms for Underwriting the Bonds of the Proposed Merger in Packing* House Produots. “Unless I am given the underwriting of the bonds to complete the con* solldation of the packing-houses, I will ruin your dressed-beef and provision trade In Europe by raising steamship and railroad rates 10 cents a hundred and lowering the rates on live stock 10 cents a hundred. 1 made this statement to you, gentlemen, the day after I returned from Europe several weeks ago, and I repeat It to-day. It Is my ultimatum.” This statement, practically In these words, made by J. Pierpont Morgan to representatives of the Chicago packing-houses, forced an agreement between the “financial king” and the heads of the mightiest Industry of the west. The underwriting of the bonds was turned over to J. P. Morgan & Co. The packing-house consolidation therefore Is now a fact Morgan's fee Is $10,000,000. To Buy Plants. The $90,000,000, which will be the amount left after Morgan receives his fee for raising $100,000,000, is the sum found necessary by the packers to perfect the new corporation which will control the meat business of the world. The greater part of the money will be used by the new corporation to purchase the various plants not already bought, and the balance will be employed as working capital. Since the Federal government began proceedings in Chicago against the alleged beef trust the packers have realized that a technical trust was out of the question. With a Federal Injunction standing against them they dared not enter into the usual sort of consolidation or merger. With due regard for the Sherman anti-trust law and the governmental action against trusts they a long time ago abandoned the Idea of the merger. They agreed, after the Federal injunction was issued against them, that if the concerns were united it must be done by outright purchase. By agreement the three great companies, Swift’s, Armour’s and Morris’, set out to absorb by purchase the smaller packing-houses over the country. Strike a Snag. It was not found difficult to do this. The three companies had sufficient capital to consummate the deals they had agreed among themselves to make. But when it came to bringing together the three separate companies there was not capital enough in the hands of any one or any two ot them to effect the deal. At that juncture the packers began studying means of securing sufficient money. It was agreed that only through a heavy bond issue could this be done. The amount needed to consummate the transaction was nearly $100,000,000. The bond issue will net the packers approximately $90,000,000. This money will be used by one of the concerns to buy out the other two. All three have already absorbed a large number of the subsidiary concerns throughout the country. This was the only plan upon which the packers could agree as being entirely legal. A consolidation of this kind, they claim, is in no sense of the word a “trust,” and such a company would not stand jeopardized by antitrust statutes.