The Savannah morning news., 1902-07-16
A TALE OF MILLIONS
STEEL TRUSTS ANSWER TO SUIT
FOR INJUNCTION.
SCHWAB ESTIMATES VALUES.
SAYS TRUSTS PROPERTIES ARE
WORTH $780, POI 900.

Steel Corporations Earnings Are Mt
Rate of $140,0OO,O00 Year.
Schwnb Says His Estimates Are
Moderate and Swears to Their
Truth-Ne Reason Why Preferred
Stock should Not BE Retired-J. p.
Morgan n Co. to Get $10,OOO,OOU
for Their Part in the DeaI-No In
jury VIII Result to Any of the
COmpIninnnts-Profi Could BE
Reduced rs Per Cent. and StiII Pay
Interest on Bonds.
Newark. N. j., July 15.-The answer
of the United States Steel Corpora
ton to the suit brought by ]. Aspin-
wall Hodge, William H. Curtiss and
Bernard Smith, who asked for an in
junction to prevent the company from
carrying out it's bond conversion plan,
was filed to-day before Vice Chancellor
Emery. The case was put over until
July %. The answer was sworn to
by Charles M. Schwab as president.
The assets of the properties of the
subsidiary companies, it is stated, in
clude 400 producing mills of the value
of $500. 100000; seventy-five blast fur
naces of the value of $4S 100000; iron
and Bessemer ore properties of the
value of 500, 900, 900; coal and coke
properties of the value of $100. 900, 900;
natural gas fields of the value of $780,
100000; cash in bank to the amount
of $66 900, 900, and over $SO,O00,0 900 of ma
terial in process of manufacture.
A Billion and IA Half.
The total value of the company's
property including cash and cash as
sets is placed at 81, 400, 100000 by Mr..
Schwab. in an affidavit which IFS part
of the corporations reply. The COM
| pany's earnings are stated to be at the
rate of more than $140 900 a year.
| A saving of $50 1000, coo a year is credited
| to the ore properties and 1t is esti-
mated that the ownership of transport
| tation facilities saves the company $10,-
| 100000 annually. The earnings of the
coal and coke properties are stated to
| be more than $1,000000 a month.
These statements as to values and
earnings were presented to disprove
! charge by the plaintiffs that Mr.
| Schwab, the president, and Mr.. Trim
BILE the secretary, made a false GER
| tifcate when they certified that in
their judgment the properties We're
| worth at least the par value of the
| preferred stock after deducting all in
| debtedness.
The corporation declares it has no
| knowledge that Hodge is the owner of
100 shares of its preferred stock, but
admits that in August. 1901, one hum
| dred shares of preferred stock was
! transferred to his name on the COM
! pany's books. 1t is denied that Will
liam H. Curtiss is the owner of any of
| the company's stock and it is declared
| that Bernard Smith is the holder of 200
| transferred to him on June 26 1902.
Ten Millions for Morgan.
The conversion plan was agreed upon
| at a stockholders meeting on May 49,
| The answer admits that the CONVEX
| sion plan includes a payment of &c.,
| 100000 to j. p. Morgan & Co. 1t de-
| MES that any of the acts contem-
plated will work fraud or injury to
| the compliments, but says that on
the contrary such acts when consum-
mated will be greatly to the benefit of
the corporation and of every stock
holder.
The answer says that some of the
directors are members of the syndi-
cate formed by j. p. Morgan & CO.,
to float bonds, and that that fact was
communicated to stockholders in a
circular dated April II, 1902 1t is fur
Their declared that the directors so in
terested constitute a minority of the
board of directors; that they were in
dividua'iy at the time of the forma-
ton Of such syndicate and now are
owners and holders of large amounts
of the stock of the defendant corpora
ton, and that they became parties to
said syndicate and assumed their pro-
portion of the liability thereof in or
der to assure the success of the plan of
purchasing and retiring the prefer
red stock, as they believed such
plan to be of great value to the de-
PENDANT corporation and its stockhold-
ers.
Values of Trust Properties.
Mr.. Schwab's answer contains the
following statement of the value of
the corporations property, which esti-
mate he says he regards as below its
real value:
Iron and Bessemer ore properties,
$500, 100000; plants, mills, fixtures, ma
chinery, equipment, tools and real es-
tate, $780, 900; coal and coke fields
(S7,589 acres), $100.000,000; transporta-
ton properties, including railroads, l ,467
miles. terminals. docks, ships G12),
equipment (23,185 cars and 428 locomo-
tives) etc, $4,000 900; blast furnaces.
$4S, 900 900; natural gas fields, $40 000,-
900; limestone properties. 100000;
cash and cash assets as of June l. 1902,
$14S 291, 600; total, 81, 400, 291 900
Mr.. Schwab calls attention
to the valuation of $32O,0O0,0OO
placed on the Carnegie properties as "A
result of the Frick litigation.
The present fixed charges of the
United States Steel Corporation are
PER cent per annum on 1903, 757 900 of
bonds, and an annual sinking fund of
100000, making an annual charge of
S1S,227, $50 add when the proposed is
sue of second mortgage bonds is out
standing, namely, $250,000,0 600 at per
cent, together with an annual sinking
fund of 100000, the total fixed
charges of the United States Steel Cor
pcration for interest and bond sinking
funds will be $31, 737, $50.
THE profits of the United States
Steel Corporation" the affidavit con-
tinues, could be reduced more than IS
per cent, and there would still be am
pie funds to pay the interest and
sinking funds upon the first and second
mortgage bonds"