The expansion of the steel industry in the South is further limited by the fact that it is an agricultural, not an industrial, section. A steel mill does not, in the main, make products to be sold direct to the ultimate consumer. Its output must be manufactured by other companies into machinery, locomotives, and a thousand and one other things. Its customers are other industries, and there are comparatively few industries in the South. Thus it would seem that the formation of a great southern steel merger or the expansion of the Tennessee company to a size sufficiently large to cause apprehension to the “Steel Trust” was a very remote contingency.
It might not be out of place here to point to the significance of the fact that the Republic Iron & Steel Co., which owns important tracts of ore and coal lands in the South just as conveniently situated to its furnaces as are the Tennessee’s holdings, has not made marked use of the supposed advantages which it obtained from its southern properties. The company’s expansion since 1907, under John A. Topping’s able management, has been great, but it has been almost entirely in the North.
These things, the conditions that surrounded and influenced steel making in Alabama, were well known in the steel trade. Therefore it was hardly to be wondered at that when Ledyard, through Morgan, suggested to the directors of the Steel Corporation that the controlling interest in the Tennessee company should be purchased by its bigger and richer rival, the proposal was not enthusiastically received. The deal, for any other reason than the saving of the financial situation, was opposed by both Gary and Frick. The latter, in particular, seemed to think that almost any other course was to be preferred to an absorption of the Tennessee company, and it was he who suggested that a loan of $5,000,000 be proffered Moore & Schley to save them from bankruptcy. But the members of the firm rejected this offer.
It was not a time for delays, for dickering. The financial situation was a seething volcano which might erupt at any minute. From Friday, November 1st, when Ledyard first presented the matter to the banker, meetings of the Steel Corporation’s finance committee and conferences between Gary and Frick and representatives of Moore & Schley were held almost continuously until Sunday, November 3rd, on which date the Steel Corporation management finally yielded to the insistence of the brokers and agreed to purchase the controlling stock of the Tennessee Coal, Iron & Railroad Co. at par, or $100 a share, about twice the value that had been set on the stock by Gary in his earlier talks with Ledyard.