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Show H f WE WERE CLOSE TO DISASTER. H That .the country was on the verge of a financial disaster un- H iqualed in the history of this country, when, in the fall of 1907, H he banks issued scrip, was mado plain by Judge Gary-'oC the "Steel H Trust," when, on Friday, in explaining how the "Steel Trust" pur- Hj ihased stock in the Tennessee Coal & Iron company in order to save M 'everal of the largest "banks in New York City from the panic break- M irs and complete wreck, jtf r. Gary said : "About October 23, 1907, Uv. Morgan asked me to come, to his M )ank and told me that Grant J". Schley, managing director of the m Tennessee company, was in need of money to use at the bank the H lirm of .Moore & Sehle3r. Hi "I think I saw Mr. Schley then, but the business finally re- m jultcd in my accommodating Mr. Schley with a loan of $1 200 000 m ar value of United States Steel second bonds. M "It was an accommodation to Schley at his very urgent request, m md because he said it was absolutely necessary to protect him from H financial trouble. That loan, you sec, was taking Tennessee Coal m k Iron on the basis of GO." H About November 2, 1907, amid the financial panic, the matter H lame up again. HI Mr. "Gary referred to the possibility then of suspension of many M fcmkR and iailure of many persons. He told of the conference with H Air. Morgan. 'Louis Cass Ledyard, counsel for Col. Oliver Payne of m .he syndicate that purchased the controlling interest in the Tennes- H lee company. H , r'- G,aP' f id Mr' Led.var(1 told him Moore & Schley were M largely indebted to Mr. Payne and had many of his securities Thcv m Deposited as securities on their indebtedness of $30,000,000 ' man v m shares of the Tennessee Coal & Iron stock with many banks m "The banks had called these loans," said Mr. Gary, "and were insisting: that Moore & Schley take up the Tennessee Coal & Iron stock. It was not salable. "It was reported that Moore & Schley had pledged $G,000.000 of this stock in the various banks. , Mr. Jjcdyard said there was no possible wny to prevent the failure of" Moore & Schley, unless wc purchased this stock: and he believed the failure of Moore & Schley would mean Ihc failure of main' banks. "Mr. Morgan said to me, 'f don't know whether the United States Steel Corporation can afford l purchase this stock or not. You know best as to that. If the JJnitcd States Steel Corporation or some one else does not furnish relief, no man can say what the effect will bo on the financial situation throughout the country. The situation ' is' extremely- crit'ien'lVj Tf; you cans seeyour way-clear to buy it. I have no doubt such jvi ionr will relieve the situation. I will turn Mr. Ledyard' over to you, to sec' what 'youtcan'do.'1'J' "I said I would not consider taking any action, without going to Washington and talking the matter over with the president or the department of justice. " 'Have they any right,' asked Mr. Morgan, 'to say whether the United States Steel Corporation shall buy this company or not?' "Tsaid. 'Xo, but there is a financial crisis. The purpose of buying buy-ing this stock isto overcome the tendency toward a panic; and if the president or the department of justice should find out that such action was being taken and should enjoin us on the ground that the acquisition or holding of the stock created a monopoly, what wo had done would make the financial situation much worse than it is now.' "Mr. Morgan said this was forcible reasoning." Mr. Gary said Mr. Friek agreed with him that the stock was not worth more than 65. Tot until Mr. Morgan told him what he thought about the panic did Mr. Frick give any encouragement to the plan. The finance committee of the.. Steel corporation was summoned sum-moned to the Morgan library. "Mr. Frick." according to Mr. Gary, "offered a resolution proposing that we offer lo loan Mr. Schley $5,000,000 or $6,000,000 in cash, taking the Tennessee Coal & Iron securities as collateral If that offer failed lo supply Mr. Schley's wants, it was proposed then to buy the slock on the basis of 90, payable in Steel Corporation Corpor-ation stock. "Mr. Ledyard said that would not do at all; that several persons per-sons offered to loan $1,000,000 each to Mr. Schley, so that his total resources would amount to $8,000,000 or $0,000,000. but he could not possibly get through with that. Mr. Frick and myself then conferred with Mr. Schley and tried to get him to take the loan ; wo did not want the stock." Mr. Gary said Schley told Frick he must sell the stock lo keep him from bankruptcy; that, unless he was mistaken, an assignment already had been drawn up for Moore & Schley for their creditors. "After the agreement to buy the stock at 100, the finance committee com-mittee of the Steel company met and discussed putting the deal up to President Roosevelt." ' Mr. Gary said that at 10 o'clock. Sunday night. Nov. 4, he called up the secretary of the president from Xew York to arrange a conference. He and Mr. Frick departed that night, traveling on a special train and hurried to the White House ahead of the appointed appoint-ed hour, as "Mr. Morgan had told us that the conditions were so critical he would like to hear the result of our conference at the earliest possible moment." "After hearing our story." continued Mr. Gar "the President said he would like to consult with the department of justice. Mr. Bonaparte was out of town and the President called Secretary Root into his office. The President asked me again to state the case. I did and, as the result ot that interview, 1 immediately wired to Aew York." "Did the President ask Secretary Root's opinion as to the legality legal-ity of the transaction?" asked Mr. Littleton. "lie did," said Mr. Gary, "and there was no disagreement between be-tween any of us." |