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to supply $10,000,000, if needed. It was to receive $6,000,000 in preferred shares, of which Kuhn, Loeb & Co., as bankers, were to receive $1,000,000. The syndicate was never called upon to pay much cash, and Union Pacific shares are now selling at around 102 and 103. ' The syndicate which underwrote the reorganization of the Erie Rail- road received $15,000,000 in new prior lien 4 per cent. bonds, and con- tracted to furnish up to $14,000,000 in cash to the new company. In addition, the firm of J. P. Morgan & Co., as depositaries of the old securi- ties which were to be exchanged for the new, were to receive $500,000 in cash as compensation. Last October the Mexican National Railroad's affairs were readjusted. The syndicate which carried the scheme through bought for $12,967,000 cash the following securieties, to which are added their present quotations: Prior lien 4% per cent. bonds, $9,221,000 (par value), present quotation 10234; first consolidated 4s, $3,595,312 par value, quotation 81%, and pre- ferred stock, $2,400,000 par value, present quotation 41. In reorganizations the underwriting syndicates always assume respon- sibility for assessments not met by shareholders. This was a prominent feature of the Atchison reorganization plan which was made public on June 21, 1894. The reorganization committee, in a circular to the stock- holders outlining the plan of rehabilitation, said: 'Syndicates may be formed on reasonable and usual terms to furnish the money needed in case of foreclosure to pay the non-assessments, pay bondholders their shares of the proceeds of the sale, and such syndicates by such payments and to the extent thereof shall be entitled to and shall represent and suc- ceed to all the rights that the bondholders receiving such payments would oS been entitled to if they had assented to this plan and deposited their bonds." The assessments on the common stock of the Atchison amounted to $10,000,000 when the company was reorganized, and a syndicate was organized in London and this country to supply the cash. This syndicate was to guarantee the exchange and flotation of the following securities: $129,000,000 general mortgage bonds, $87,000,000 second mortgage bonds, $12,000,000 prior lien bonds, and $102,000,000 of common stock. Just what sum was cleared by the syndicate in this reorganization was never an- nounced, but the immense responsibility assumed justifies the statement that the profit was very large, $10,000,000 or $12,000,000 being regarded as a conservative estimate. This matter of guaranteeing assessments was a very important one also in the reorganization of the Richmond i& West Point Terminal Co.-- one of J. P. Morgan's great accomplishments. In the Richmond Terminal Co.--which was a holding company, interested in the Richmond and Danville, East Tennessee, Virginia & Georgia, and other railroad properties in the south--were such interests as Gen. Samuel Thomas, Calvin S. Brice, Patrick (Calhoun, John H. Inman, and Alfred Sully. In the general crash of the 1893 panic period this company went to pieces, and J. P. Morgan & 'Co. reorganized the properties into the present prosperous Southern Railroad Co. The commission of the syndicate which floated the securities of this new company was in stock at that time valued at $7 a share, but is now selling at $39. It is supposed that the syndicate sold its holdings at about $25--thus bringing into its coffers a very comfortable number of millions of dollars upon its guarantee of some $10,000,000 or $15,000,000 of cash. MORGAN'S FIRST GREAT ACHIEVEMENT. The first great achievement of J. P. Morgan was his first reorganiza- tion of the Reading railroad. It had been controlled for years by Frank- lin Gowen, who had done many spectacular things, such as floating the very elusive '"'deferred income bond.' There was a contest between the Gowen interests and Drexel, Morgan & Co., which resulted in a readjust- ment of the company's affairs. Mr. Morgan is conceded in Wall street to have made very large commissions by this deal. The road was turned over to Austin Corbin, and very large net earnings were reported. A. A. McLeod attempted to combine the coal and carrying industries on the Reading lines, and the property went to smash. Following the panic of 1893, Mr. Morgan again reorganized the road, reaping large commissions once again. The first of the large industrial companies to be reorganized was the sugar trust. Its reorganization was forced by the fact that its charter under the laws of the state of New York had not been legally drawn, and it was forced to take refuge in New Jersey. The cordage trust was the first of the big industrials to be really reorganized after the modern fashion. Its troubles furnished one of the most picturesque incidents of the panic of 1893. Mr. Morgan was called into consultation in this readjustment, but the company has had two reorganizations since its' first disintegration. a In the formation of many large combinations, the underwriting agree- ment is private, and only the managers appear as financing the deal. In the Northern Securities combination, for example, no syndicate managers appeared at all. Control of the stocks to be consolidated was already secured, and that any consolidation was to be effected was ostensibly not one of the purposes of the company's formation. Shares of the Northern Pacific and Great Northern railroads were deposited directly with the Northern Securities Co., without the intervention of bankers, and J. P. Morgan & Co. themselves secured the transfer of some $78,000,000 of Northern Pacific stock from the Union Pacific interests to the Northern Securities Co. without one dollar of commission. Such was the testimony of Mr. Morgan before the United States commission in the Peter Power hearing. Often a combination is brought about by inside interests en- tirely, bankers appearing merely as depositaries. This was the method used in the organization of the glucose trust, of (Corn Products Co. The Capitalization was $80,000,000, but no underwriting syndicate appeared to guarantee the flotation of the securities. All of this was done by "inside Interests,' who, of course, received a large commission. a : To catalogue the profits which have been made by underwriting syndi- cates in Wall street in recent years would be to make a list of all the im- portant reorganizations and combinations which have been effected, record the amount of money guaranteed by the underwriting syndicates, and take 20 per cent. of the total sum. These syndicates have amounted to very much more within the last three years than ever before because of the custom which had grown up of not calling for more than a small per- centage of the total. Previous to 1898 the total subscription was usually called for, but up to that year the $200,000,000 corporation was almost an MARINE REVIEW. oe entire stranger. The profits to be derived from underwriting have grown to such an extent that many banks of considerable reputation in Wall street rely almost entirely upon such profits for their incomes, letting the conventional banking business entirely alone. Sometimes the profits are not received in cash, but in bonds or stocks, and they have to be disposed of. This explains many sudden offerings of securities in the market. If all the members of the syndicate receiving profit in such manner as this were to attempt to realize their cash values in the market there would be a general slaughter. It becomes necessary, therefore, to employ the skilled market operator. A well-known operator has been confessedly marketing the holdings of the steel underwriters for the year past, but the market so far has not responded as it had been hoped would be the case. It is a very much simpler matter when syndicates undertake to guar- antee the flotation of the single issue of bonds or stocks, such as the issue of $30,000,000 of Atchison debentures several months ago and of $10,000,- 000 of stock of the American Telephone & Telegraph Co. a few weeks later. Such issues are turned over to syndicates, because the recom- mendation of certain bankers to the public of the gilt-edged quality of a security is worth to the corporation issuing the security very much more than the 2% or greater per cent. paid as commission for the underwriting commitment. As such issues by strong corporations are ordinarily so easy to float, the commissions paid are compensatingly small. Following the custom understood to have been inaugurated by J. P. Morgan & Co., houses which form syndicates and act as managers now usually subtract a fifth of the net profits as compensation for their special services. A recent heavy bond issue by a very large system of railroads was made on a 5 per cent. basis to the railroad, with the payment in ad- dition to the bankers of a flat $750,000, the bankers deciding on the selling price to the public, which, in this instance, allowed a commission of | per 'cent, A well-known corporation lawyer in Wall street was asked if the tre- mendous profits made by underwriting syndicates were not, in effect, abnormal tributes levied upon the public, if a return to the old system of direct subscription to the corporations themselves might not be quite as good in the end. To this question the lawyer replied: 'These syndicates are absolutely necessary. Without them the great corporations with tre- mendous capitalizations could not be organized. When such enterprises are launched, it is absolutely necessary to have money to guarantee that they shall be started without embarrassment. The money must be had at once. The syndicate supplies it, and sells the securities as there appears to be a demand in the market for them. If the corporation had to wait for such demand, it might never get on its feet at all." TERMINAL IMPROVEMENTS ON LAKE SUPERIOR. Duluth, Minn., May 7.--The large dredge outfit of the estate of C. S. Barker of West Superior has been sold to the new Lake Superior Dredg- ing & Contracting Co. of Duluth. The Barker plant includes seven dredges, five tugs and attendant scows. The Lake Superior Dredging & Contracting Co. was organized to take over the E. T. Williams plant, consisting of four modern dredges, tugs and scows, and now controls all the dredge apparatus at the head of the lakes excepting the three large and modern machines of the Duluth Dredge & Dock Co. The chief work of the large company for the next two or three years will consist of the government harbor contract at Duluth-Superior, on which the Barker and Williams plants have been engaged the past four seasons. The Barker dredges are also doing work on the west side of Rice's point, Duluth, for the Northern Pacific road. Aside from this there is little work in sight at the head of the lakes. One of the three machines of the other company is working at Port Arthur for the Canadian government and will probably 'be employed there for a long time. The other two, including the great dredge Napoleon, will be employed in the Sault river this year on government work. There is a probability of considerable private work at the head of Lake Superior in 1903 and later; in fact much will have to be done to keep pace with probable requirements of commerce. At Port Arthur and Fort William, Ont., the government, the Cana- dian Pacific and the Canadian Northern will have a great deal of work along the harbor front for a long time. The Canadian Pacific is to add 3,000,000 bushels to its grain storage capacity on the Kaministiquia river at Fort William, and contracts for the work have been given to C. F. Haglin of Minneapolis. The road will also build a concrete storage, in eight tanks of 62,500 bushels each, in connection with the wheat cleaning and drying elevator at Port Arthur. All this wili give a capacity at the two points, for the Canadian Pacific, amounting to 9,000,000 bushels. The Canadian Northern road has erected at Port Arthur an elevator of 1,500,- 000 bushels capacity and began shipping therefrom the past week. It will add to this during the coming season 2,000,000 bushels storage, so that all told there is in sight for the Canadian head of the lakes 12,500,000 bushels grain storage. If the wheat area of the Canadian northwest grows, as is fully expected, this will be increased materially in a very few years. All this and other plans of the Canadian Northern for Port Arthur will require immense terminal, harbor and dredging improvements along the water front. A deputation representing the steel ship builders of Canada inter- viewed the premier at Ottawa this week and asked for a bonus of $4 per ton on steel vessels built in Canada, such bonus to be computed on the total gross registered tonnage. They also asked that foreign-built ships be not allowed to register in Canada and that no coasting privileges be allowed to foreign vessels in 'Canadian waters which are not extended to Canadian vessels in foreign waters; that the present subsidy of 2 per cent. allowed on the cost of constructing dry docks be increased to 3 per cent. ' The delegation consisted of Messrs. Thomas and John Long, Colling- wood; F. P. Polson, R. Bertram and A. 'Angstrom, Toronto; George Robertson, St. John, N. B., and George Crowe, Halifax. The Kelley-Spear Co., Bath, Me., launched last week the tug John G. Chandler for the Commercial Towboat Co. of Boston. The tug is 102 ft. in length, 20 ft. in width and 11 ft. 4 in. deep. Moran Bros. Co., Seattle, Wash., will lay the keel of the battleship Nebraska on July 4. :