The Savannah morning news., 1902-08-24
SWORE FOR REWARD
LANCASTER'S AFFIDAvITS IN
STEEL TRUST LITIGATION.
GOVERNED BY IMPRESSIONS
BUT CONTROLLED ALSO BY
THOUGHT OF COMPENSATION.

pIainant, j. AspinwaII Hodges,
said to Be Acting for Others-Lan-
caster Located Through Efforts to
Find Peter POwer-MOrgan q Co.'s
s1O,OOO,OOO Fee.
Trenton, N. J., Aug. ga supple
mental affidavit in behalf of the Unit
ed States Steel Corporation was filed
in the Court of Chancery to-day in
the suit brought against that concern
by J. Aspinwall Hodge to restrain the
conversion of 5000, 600 per cent.
preferred stock into 5000, OOO,O 900 per
cent. bonds.
One of the affidavits is by George w.
Perkins of the firm of ]. P. Morgan
& Co. and chairman of the Steel Cor
poration's Finance Committee. Mr..
Perkins goes at length into explana-
tons as to the reasons that prompted
the committee to recommend the bond
conversion plan and the payment of
$4,000, 900 commission to ]. P. Morgan
& Co.
An affidavit by Joseph E. Corrigan
of the law firm of Guthrie, Cravath
& Henderson tells of a statement
made to Mr.. Guthrie in his
presence by James Lancaster, who
gave testimony for Hodge to the eff
feet that the entire plant of the United
States Steel Corporation was not worth
more than $500, 100000. Mr.. Corrigan
says Lancaster admitted that when
he made the affidavit he did not know
it was to be used in any suit, and that
he was governed only by his impress
sions, as he understood that the affi-
davit was to be used only in an advis-
ory way in the matter of stock invest
ment.
Was to Get $3.50 "a Week.
Corrigan goes on to swear that Lam
caster stated to him and Mr.. Guthrie
that he found out a few days after
making the affidavit that the affidavit
was being used in the Steel Corporation
suit, and that he protested to David
Lamar, who got him to make the affi-
davit. Lamar then, according to Mr..
Lancasters statement, agreed to pay
Lancaster $3.50 a week and $4,000 when
the suit was settled. Mr.. Lancaster
then made a second affidavit and got
$500.
Subsequently he got into a row with
Mr.. Lamar about his compensation,
and finally got $500, making a total of
$1,000, he having received $500 for his
first affidavit.
According to Corrigan, Lancaster
mad many meetings at the office of
Abram 1. Hlkus of the firm of James,
Scheu & Elkus, and Lancaster told
Corrigan in Elkus office that they ex-
pected to make big money out of the
suit. Hodge, the complainant in the
suit, according to Lancaster, told the
latter that he (Hodge) was acting for
others and that Lancaster need not to
look to him for any money for his SER
vices. Corrigan states that he learned
of Lancaster through his efforts to To-
cate Peter Power in the Northern Sc
curities Company suit, Power having
been at one time employed by Lancas-
ter.
Reason for MOrSan's Fee.
Mr.. Perkins ssA his affidavit stated
that the financial committee of the
United States Corporation realized the
necessity of having more cash capital
to protect itself against money strin-
gencies, and the conversion plan was
decided upon because it would reduce
the fixed charges $1,500,000 yearly. The
commission of $10,000000 to J. p Nor
gan & Co. was agreed upon because
of the risk that that firm would be
Obliged to take in going into the mar
ket to purchase $80,00O,0 900 of preferred
stock of the corporation and the adj
acts were part of the agreement be-
tween the corporation and j. P. Nor
gan & Co.
Perkins, in his affidavit said that
shortly after the organization of the
United States Steel Corporation, an
investigation as to the extent, condi-
ton, capacity and needs of it's several
properties was begun by the Execu-
tive and Finance Committees, and that
after a years close attention to these
problems, the Executive Committee
brought to the attention of the Finance
committee the advisability of provid-
ing about $40,000000 of cash to be used
IN improving and extending the vari-
Gus plants of the subsidiary companies.
Inc members of both committees be-
came convinced that the expenditure
OF this new money would increase
S me net profits not less than
F1V'oo0,0 900 year.
Difficult to Raise Funds.
The problem of raising the funds,
continued Mr.. Perkins. presented Sc
rious difficulties The finance commit
Zee determined that the corporation
cou!d not take the risk involved by
6odhing the sum required from the $780,
OOo'Oo0 surplus, and that the funds
would nave to be raised or provided
elther by the issue and sale of prefer
PONDS. 1t was finally determined that
ne most economical and advantageous
d pl@H was to create and issue $3.50, 000,-
vuV lace value of second mortgage
polos and use the bonds or their pro-
ceeus' hrst in procuring the necessary
cash requirements, and secondly, in
purchasing and retiring 5000, OOO,0 900 par
edlue OF the outstanding per cent.
cumulative preferred stock.
Details of rTa Plan
MI. Perkins then gave in detail the
01LsdIllzatlon of the syndicate to carry
oush the plan, the syndicate agree
5IS TO purchase and lodge with ]. 2.
NtoIs gan d Co, 100000 900 of preferred
STOCK, not to be sold for swear and
81 nasl further agreeing to exchange
an OF this or only 10 ner cent of II
for Tue option of the steel corporation,
ooi second mortgage bonds and
bo,lJl acslns to take second mortgage
Doiius from the steel corporation at
p"i III exchange for $40 900, 900 in cash.
syndicate Got Four Per Cent.
FOR this the Steel Corporation was
~ aIioW the syndicate 4 per cent. COM
mission on all the bonds it took in
Noudhge for stock, and per cent
commission on all the bonds il took
az par Tor cash; so that if the transac-
uon stood in the end in that form.
l@'' II $4,000, 900 of bonds were issued
LOT stock and $4,000, 900 of bonds were
Issueq Tor cash. the Steel Corporation
"uuld nave paid to the syndicate
peI cent. on S100, 900, 000 or 81, 600, 900:
Il a Il L.