Increased its working capital from $138,110,545 to $569,988,259, or 313 per cent.;
Its iron-ore holdings, estimated at 700,000,000 tons in 1901, are now placed at 1,600,000,000 tons.
A better grasp of the Corporation’s expansion between 1901 and the beginning of 1920 is obtained by comparing capacity at the date of incorporation with what has been added since:
| 1901 | ADDED SINCE | |||
| Pig iron | 7,440,000 | tons | 10,960,000 | tons |
| Steel ingots | 9,425,000 | ” | 12,925,000 | ” |
| Finished steel | 7,719,000 | ” | 8,481,000 | ” |
| Cement | 500,000 | bbls. | 13,000,000 | bbls. |
| Benzol | ————— | 45,000,000 | gals. | |
| Railroad mileage owned | 2,007 | miles | 1,768 | miles |
| Railroad cars owned | 27,481 | 34,767 | ||
| Locomotives owned | 593 | 852 | ||
| Steamers, etc. | 112 | 259 | ||
| Iron ore deposits | 700,000,000 | tons | 900,000,000 | tons |
| Working capital | $138,110,545 | $431,877,714 | ||
As these figures show, additions since 1901 would constitute a new company larger in practically every respect than was the Steel Corporation at its birth. And this expansion has been achieved with little addition to the book value of the properties, which at the end of 1901 was carried at $1,437,494,863 and in 1919 at $1,573,661,547.
And, of course, there have been further additions during 1920. Complete figures for that year are not available at the time of writing but property account as of December 31st, is estimated at $1,620,140,000 and working capital at $595,952,000.
Nor has this expansion been accompanied by the addition of a single penny to stock capitalization. In fact, the amount of preferred stock has been reduced, as has the annual charge on earnings for bond interest and preferred stock dividends.
When formed the Steel Corporation had a total bonded debt, including funded indebtedness of subsidiaries, of $364,735,900, and its bond-interest charges were at the rate of $23,964,175. Its preferred stock was $510,281,100 with an annual dividend charge of $35,719,677, or a total of $59,683,852, which had to be deducted from earnings before there could be any distribution made on the junior security issue. At the end of 1919 total bonds of the Corporation itself and its subsidiaries amounted to $568,727,932. Interest charges thereon were $29,210,898. But preferred stock has been reduced to $360,281,100 and the dividend requirements thereon to $25,219,677, making total deductions from earnings before arriving at the balance available for distribution to common stockholders of $54,430,575, or $5,253,277 less than in 1901. This saving in interest on preferred dividend charges is equal to a little over a dollar a share on the common stock, which has remained at the same figure throughout the twenty years of the Corporation’s existence.
In discussing the investment value of Steel common, it is necessary to lay considerable emphasis on the actual tangible assets, at cost, behind the stock. Tangible investment is of particular importance because earning power is based largely on it, and on earning power depend dividends.
Although Judge Gary’s estimate of the worth of the Corporation’s properties is considered by experts very conservative, the writer proposes to disregard it for a moment and to discuss the value behind U. S. Steel stock on the most conservative basis—that of tangible assets in 1901 plus tangible additions since. Even on this basis, which is certainly a bed-rock computation, it will be seen that the assets behind “Little Steel” are considerably larger than its par value.