The Washington times., 1902-08-28
Grounds of Defense in
Hodge Stock Conver-
sion Suit.
CURTISS ONE OF PLAINTIFFS
Denial That Fifteen o. More of the Di-
rectors of the Trust Are Members OF
Syndicate Through Which Stock Was
to Be Converted.

TRENTON. y. J.. Aug. 27.-The an
swer of The United States steel Corpora
tion was today made public in the court
of chancory to the amended bill OF com
plant of J. Aspinwan Hodge. Bernard
Smith and William II. Cur;!ss to restrain
the proposed conversion OF S2Ou. .ocO. eco :
per cent preferred stock into S2GG, Gee, ,t0G
> per cent second mortgage bonds.
The answer denies that the books Of
the corporation show Curtiss tc be the
owaerof any stock of tho concern. Smith.
it is averred, did not own any stock of
record until June "A. 1902 after the plan
of conversion had been adopted and that
the stock now recorded 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
his stock was not voted either by himself
or by proxy
Members of Syndicate.
1t 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. 1t is admitted that some of
the directors are members OF the syn
dicate, but that this fact was communi-
Gated to every stockholGcr in the cir
cular CT April Il, 1902, in the following
words:
To further the success CT the plan
tngrp has hpgu FORMED in
Guiding some directors who viii receive
fcur-iifths OF the I per cent commission
TO be paid under the contract With }. 2.
p Morgan < Co.. 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 ana favored The con
version plan because they believed i;
would he advantageous to them as
stockholdera
II IS denied that any stockholders had
been offered special terms in connection
WITH converting their preferred stock
into bonds in orde- to secure their al
firmatiyc votes for the plan. 1t is de-
MED that the 500 100000 of additional
capital it was proposed to obtain was
IeeGcd for purposes that were charge
able to the earnings Of the company.
Line OF Argument.
The answer then takes up the line OF
argument made in the affidavit OF
Gecvge W. Perkins, chairman of the
fnance committee, fled last week, in
which Mir Perkins claimed that this ad
Gitional $5o,cOOoCo was needed TO pay
Tor improvements and 10 give the com
rany 4 larger surplus. to permit it IN
do a cash business, and be protected
against money strinGency in the event
Of 4 business depression.
The answer says the earnings OF the
corporation for the year ending March
81, 1902, were Sill .5G2. .o54: for the month
OF April. 1862, $12.a2G. 7G5; May, $13. .129
3a1; June. 81. 2.22c .262: July. estimated.
sli,9o0,0o0 or at the rate of $50. 0C0
. year
An inventory is filed to show that the
ccmpany's property is worth sI.4oG, 0C0,
Gee, cr more than the combined par value
of the preferred ard common stock. Il
Is stated, also, that the company's sur
plus Is now So, ,G0o Gee
The answer c1T hGzizcs the point
raised by Mr. Perkins to the effect that
the conversion rian would reduce the
fed charges Of She company and be
advantageous TO all stockholders, both
p-e.cTrcG ard common.