Document BRKyBOowwxaz091gQ9ejjbdEm

Annual Report of The President of THE NATIONAL LEAD TRUST February 5th, 1890 0000-NLI-000017809 Annual Report The Deed, of Agreement under which the Trustees are operating requires that at the annual meeting oertain statements of the condition of the Association shall be made to the shareholders. For reasons stated at the last annual meeting no such report was made, and in de fault of this I now summarize the operations of the Trust from its organization in October first, 1887, to the first of January, 1890. Prior to October first, 1887, the Companies whose stocks were then associated in the National Lead Trust, with but few exceptions, had materially impaired their capital by reason of the fierce competition in which their interests had been engaged. Their union was one of simple self-defense, but was so imperfect in its character that the end sought for was not obtained, and the impairment of capital of these organizations con tinued through the year 1888, so that the aggregate los ses of the Companies, a majority of whose stocks were held in The Trust from the period of its formation until January first, 1889, amounted to $262,600.75. An effort had been made on the part of the Compa nies engaged in a similar character of business to find some relief from the violent and injurious competition which had in great measure rendered the large capital involved valueless, and was bringing continued disaster and injury to the trade. This culminated in a quite imperfeot organization known as the American Corroders* Association, which ameliorated the condition to some ex tent, but gave no adequate return for the capital and labor invested in this very large business. The original Trustees, therefore, continued their efforts to place the business on a basis of intelligent oo-operation, by associating the large corroders of white lead with The Trust, and in May, 1889, commenced to secure this desirable result, which has been in very large measure adcomplished by practically uniting the white lead business of the United States. The Trustees now hold a majority of the stock of thirty-one different companies. Included in these -1 0000-NLI-000017810 properties are three large smelters and one of the most I complete refineries in the country for the production and refining of pig lead. We have also three linseed oil mills, one of which is second largest in the country, by which we are able to not only supply all of our own requirements, but produce a large and profitable surplus. The rest of the Companies are for the manufacture of white lead and oxides in all of their different forms, and also lead pipe and sheet lead. The amount manufactured and sold by the organizat ions during the year 1889 wa3 77,010 tons. We have, how ever, a capacity for the manufacture of 97,000 tons. And under favorable conditions it is expected that this entire capacity oan bs eventually employed. As hereto fore 3tatod, the Companies whose 3took3 are associated in The Trust made losses up to the first of January 1889. In the first six months of that year the twenty Companies 1 whose stocks were then held by the Trustees, notwithstand*j ing the imperfect terms cf their association, realized a profit of 309,848.92. j jDuring the last six months of 1889 all the Companies mads a net profit of 792,173.04. This, too, notwith standing that a more rigid char&oter of inventory accord-: ing to the report of Auditor Davl3on, diminished the actual profit made by more than $52,000. ! The profit realized by the important factory and oil mill of Armstrong A McKelvy, whose stock was not received until late in December, is not included, and two other large factories, tfiz: The Maryland and Davis Chambers Co., were in association only during the months of November and December. In June 1889 it was found that our Smelting Com panies requiring to purchase vast amounts of bullion and lead and silver ores, were laboring under the necessity of borrowing large sums from the banks at high rates of interest. This will be appreciated when I state that the value of the products of this branch of industry for the year 1889 amounted to 7,537,956.54. I j i t i It was thought advisable to increase the capital of i our Smelters which has been done to the extent of plac ing with them a cash capital in addition to what they had, of Nine Hundred Thousand Dollars, which makes them amply 3trong for all of their necessities, and has effeoted a large saving in their interest charges. Besides 0000-NLI-000017811 $bis amount, we have paid out in cash in the acquireent of some of the properties mentioned 3227,200.59. i! ' ! j It is fair to say that all of the Companies in the Association, and especially those which oame into the ' organisation after July 1st, were seriously handicapped in realizing the profits they were fairly entitled to, by the fact~of carrying large contracts nsde prior to i their association, and pending the fierce conflict in which they were engaged, which in many oases resulted in actual loss. It is confidently expected that all the ] Companies will be able to secure very zauuh better results 4 ! in the ooming year than they have heretofore bad, not by oaterial increase in prices, but simply by a steady j| maintenance of their trade without the fear of losses ji that oome through trade being taken by competitors at I reduced prices> and by economies that are being steadily j ; introduced. It is certainly expected, too, by the consolidation j of management of the Companies where they are authorized j to do so by law, will result in very great economy in the j direction of manufacture of our material and in its dis- ! tribution. The savings in freight alone by intelligent ;i ; distribution from the various factories, will be an item ;i ! of great magnitude, and when it is taken into considerat ion that a factory of five thousand tons capacity can secure a very handsome profit by selling at exactly what it costs a thousand or fifteen hundred tons factory to manufacture at, it will be readily seen that such con solidations as may be properly affected will work great- j ly to the advantage of the associated interests. In this connection it is proper to say that the Trustees of this Trust believe they are engaged in a per fectly legal and proper enterprise, and it is their pur pose in all cases to invoke the aid of . the lacs of the States in which the Companies whose stocks are held in the Association are operating, in the firm belief that the doctrine of intelligent co-operation through a Trust organization, sill finally meet the favor and protection of the Government of each of the States and of the United States. About it there is no mystery, and will he no greater secrecy than is found in all of the partnership or corporate organizations of the country. To this end, and that the shareholders may thoroughly understand the hole principles of the organization* the Trustees have very properly caused the Deed of Agreement which binds *11 shareholders, to be printed for distribution among -3 - 0000-NLI-000017812 and have directed that this report, which practir jly exhibits the course of action of the Trustees jj0e the organizations to this time, 3hall he spread ^ore you. The amount of actual cash assets held by the diffcrent Companies over and above all thsir liabilities 'ter paying for all of the plant i3 5,594,189.29. ,3 i3 not at present a s well distributed as could be sired, that i3 to say, some Companies have an excess capital while others whose capital had been impaired e still under the necessity of having financial assist* oe. Effort is now being made to successfully correct 9ge inequalities ana prevent payment of interest un does sarily. It is thought by the Trustees that it is of parant importance to make each one of the interests in 'iooiation with us strong and able to carry themselves thout the necessity of borrowing. It is confidently eoted that before the expiration of this year this \l have been done, and that thereafter dividends can commenced and continuously paid to the shareholders, it is hoped, if no untoward circumstances arise and Tru3tee3 are aided by the shareholders as hereinser stated, that thi3 may be commenced within the weeding six months. 5 Thi3 brings us to the consideration of the present jltalization of The Trust. The aggregate valuation the properties brought into this frust amounts to . ; ',361,900. included in which is a reasonable valuation 1 brands, goodwill and earning oapaoity. On these luatlons certificates have been issued on the basis of for one, which makes the present capitalization of Trust 89,447,600, for which certificates are out- .ndLing. In my Judgement it was improvident to expand the ?italization of the Companies to so great an extent. ' The lead business usually increases each year from Tt to twenty per cent. It, of course, has limitations * -It is not to be expected that within any reasonable Jth of time the property can be made to increase to i an enormous extent as will Justify the belief that ^dlue anything like equal to the present capitalizat- par oan be reached. t ] 1 ' It is very readily peraeived by the course of adprofits resulting from intelligent co-operation -4- 0000-NLI-000017813 that on the ba9i3 of thirty millions of dollars the properties aggregated in The Trust would be on a very reasonable basis. It is believed if these properties were aggregated in the hands of a few individuals or in a corporation of limited holders that they would not part with them on that basis. The present very large capital ization overshadows the real values, and the enormous amount of property that has been aggregated together in praotical co-operation, and is certainly misleading. It i3 believed by the Trustees that if the outstand ing certificates were surrendered on the basis of secur ing one consolidated certificate for three shares, thus practically reducing the capitalization to one-third of what it i3 at present, that the shares would not only rapidly appreciate to par, but that they could be tho roughly recommended as a safe investment on that basi3. They have, therefore, caused to be perfected a plan for voluntary relinquishment of the certificates at present held, to be merged into a consolidated certific ate, one of the ne.v certificates representing three of the old. I feel confident that after a oarsful investigation of %he matter, all of the certificate holders will per ceive that this is a wi3e and just plan to be adopted. Ho one accustomed to the consideration of fair equival ents in value but will readily see that there is but little inducement to endeavor to bring the present cap italization to anything like car value; but with the cap italization reduced by two-thirds, we can hope by reason able ability in management and honest administration to secure favorable and satisfactory results. With the capitalization reduced to the sum I have ; mentioned, I believe that the judgement of the Trustees, i expressed after careful examination, that these certif- icatss will be worth par and a fair dividend paid on , that sum, is certain of accomplishment. And I, theref fore, very earnestly recommend that the plan suggested by the Trustees for consolidating ths certificates be adopted. Respectfully, W. P. Thompson,, President. -5- 0000-NLI-000017814 The following resolution, relating to the reduction of the capitalization, was adopted by the Certificateholders at the Annual Meeting February 5th, 1899: RESOLVED:-That the Trustees of The National Lead Trust be directed to take such proceedings a3 they deem advisable and practicable to reduce the total capital represented by all the Certificates of the said Trust by tso-thirds of the amount thereof, provided that said reduction can be accomplished without affecting the relative interests of the holders of said Certificates in the Trust Estate, or their rights under the original Trust Agreement. 1 0000-NLI-000017815