It is of course questionable whether the promoter, either from the economic or equitable point of view, is entitled to so large a share of the common stock as here awarded, namely, twelve per cent, more exactly 12.54636 per cent. That question, however, is one between the promoter and the promoted interests and does not necessarily affect the relative shares allotted to the several companies involved. In this case the twelve per cent rule was followed because the promoters thus receive approximately the same proportion as they were awarded in the Morgan plan. If thirty per cent had been allotted to the promoter, as was the custom at that time, he would have received $178,524,000 of the common stock instead of the amount assigned, and the difference, somewhat over $100,000,000, would have been subtracted from the other interests in the same proportions as that already allotted. It should further be noted that five per cent first collateral trust gold bonds may be substituted for seven per cent preferred stock either partially or as a general plan without disturbing the established scheme or the method of distributing the common stock.

The Moore plan of distributing securities in forming a consolidation was used in the promotion of the American Tin Plate Company. Since for its application in the present case the market value only of the assets of the several companies is required, the results may claim to be fairly accurate. Here the promoter is allotted 35.71 per cent of the common stock, that being the relative amount that he received in the case of the promotion of the American Tin Plate Company. This would amount to $395,663,000 par value in common stock out of a total of $1,107,858,000. This amount at $32.17 per share would have yielded the sum of $127,291,950 in cash provided the promoter had sold out at the time, on prevailing market conditions. The plan worked out in detail is given in the table at the top of page 296.

It is evident that the adoption of a particular plan determines the relative share that each of the several companies is allotted in the new consolidation. Before an accurate comparison can be made, however, it is necessary to find a common unit of

value for the several companies and by means of this unit reduce the securities to a common denominator and then compare the results. It is of course quite impossible to do this with scientific precision, but by the use of certain information that is available it is practicable to reach an approximation of some value for our purposes. It was the evident intention of those responsible for preparing the plan actually adopted to make the conditions of issue and the relative quantities of securities provided for of such an amount that the bonds and preferred stocks would each be worth par while the common stocks were to be worth one-half of par.

As a matter of fact this assumption has been fairly well sustained by the market, although at times both the preferred and common have been far below the value set upon them by the promoters. Applying this principle to the securities as distributed by the Morgan plan, that is, rating the bonds and preferred stock at par and the common at one-half of par, the results are as indicated in the first table on page 297.

'Three ciphers (000) omitted.

2 Circular of March 9, 1901, issued to the stockholders and bondholders of the Carnegie Company, stating the terms of exchange of securities and the disposition of fractional shares. Bridge's History of the Carnegie Steel Company, p. 363.

This plan thus places a total value of $1,008,613,000 upon the consolidated company, and this fact must be borne in mind in applying the general principle involved to the other cases. the Moore method, the total par value of the preferred stock

1 Three ciphers (000) omitted.

In

was fixed at $712,193,000. The common stock would then represent a value of $356,418,000 or $32 plus, per share. The details of this plan are presented in the second table on page 297.

In the scientific plan proposed in a previous section of this article the value of the tangible assets limits the face value of the preferred stock to $595,079,000, and consequently the common stock would be worth almost eighty dollars per share, the combined value of the total issue of preferred and common stocks being the same in each case. The following table shows the distribution of values under the method described:

In the above tables the values have been given in totals. It may now be worth while to reduce the individual assets and earnings to percentages of the total assets and earnings and compare these percentages with the relative share of securities obtained by each of the companies in the actual allotment of securities as well as in the hypothetical distributions above presented. The relative shares in percentages are as follows:

'Three ciphers (000) omitted.

It is thus evident that under the Morgan plan the securities were distributed to the various interests, neither on the basis of assets, nor of earnings nor on a combination of the two factors. There is indeed a marked similarity between the market value of each company and the assumed value of the securities as above presented. The scientific plan on the other hand would have distributed the securities much more nearly in proportion to the respective earning power of the twelve companies.

IV

Any investigation of the methods actually employed by the promoters and bankers in effecting the consolidations of the period beginning in 1898 and ending abruptly in 1901 ought, it must be admitted, to embrace a study of all of the more important ones and, in addition, all of the various types. Such an investigation is at the present time obviously impossible, because of the fact that the details of these consolidations have thus far been kept secret. Indeed, without the efficient work of the Bureau of Corporations in its study of the steel industry, such a study as that presented in this article could not have been made.