The daily morning journal and courier., 1902-08-28
STEEL TRUSTS ANSWER.
GROUNDS OF DEFENCE IN HODGE
 SToOK-CONVERSION SUIT.

CurtIss, One Of the PIatntifrs, Held Net to be a stoekhoIder-DenIaI That Fifteen or More of the Directors Of the Trust Are Members of Ihe Syndicate Through Which the Stock Was to be Conyerted-Why the Conversion Plan Was Favored by ihe Directors.
 Trenton, N. J., Aug. 27.-The answer of the United States Steel corporatOn was to-day made public in the court of chancery to the amended bill of com- plaint of J. Aspinwal Hodge. Bernard Smith and William H. Curtiss to re- strain the proposed conversion of $2OO,- 100000 per cent. preferred stock into $200, ,000, 900 per cent. second mortgage bonds. The answer denies that the books of the corporation show Curtiss to be the owner of any stock of the con- cern. Smith, it is averred, did not own any stock of record until June 24, 1902, after the plan of conversion had been adopted, and that the stock now record ed in Smiths name was voted in favor of the plan. Hodge, it is admitted, owns 100 shares of stock. but it is alleged that he was not present at the stockholders meeting when the plan was submitted and that bis stock was not voted enher by himself or by proxy.
 It is denied that fifteen or more of the directors of the Steel corporation are members of the syndicate through which the preferred stock was to be converted into bonds. It is admitted that some of the directors are members of the syndicate, but that this fact was communicated to every stockholder in the circular of April 1T, 1902, in the fol- lowing words:
 ''To further the success of the plan there has been formed syndicate in- cluding some directors who will receive four-fifths of the per cent. commits sion to be paid under the contract with J. P. Morgan & O., mentioned in the notice of stockholders meeting"
 The answer says that the directors in the syndicate are a minority in the board of directors, but that they are large stockholders and favored the con- version plan because they believed 1t would be advantageous to them as stockholders. It is denied that any stockholders had been offered special terms in connection with converting their preferred stock into bonds in or der to secure their affirmative votes for the plan. It is denied that the S50,0O0- 900 of additional capital it was proposed to obtain was needed for purposes that were chargeable to the earnings of the company.
 The answer then takes up the line of argument made in the affidavit of George W. Perkins, chairman of the finance committee, filed last week, in which MT. Perkins claimed that this additional $50,00o, ,000 was needed to pay for improvements and to give the com pany larger surplus to permit it to do a cash business and be protected against money stringency in the event of a business depression The answer says that the earnings of the corpora lion for the year ending March 31, 1902 were s111,5O3 ,054; for the month of April 1902. s12,92o, ,766: May, $t3120,39O; June s12220362; July, estimated, Sll,SoOoOo or at the rate of s15O00o,00O year. An inventory is filed to show that the com pany's property Is worth $1,40O,0 ,0OO,0 900 or more than the combined par value ot the preferred and common stock. It i' stated also that the company's surplus is now $65000,0oo.
 The answer emphasizes the poin raised by MT. Perkins to the effect tha the conversion plan would reduce thu fixed charges of the company and b' advantageous to all stockholders, botl preferred and common.