The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1902-08-28
STEEL TRUSTS ANSWER
REPLY TO THE SUIT BROUGHT TO
RESTRAIN CONVERSION OF BONDS.
Earnings Are at the Rate of S15O,OOO,-
600 a Year-S5O,OOO 900 Needed
for improvements.

TRENTON, n. j., Aug. 27.-The United
States Steel Corporation to-day filed in the
Court of Chancery an answer to the
amend I'd bill of complaint of ]. Aspinwall
Hodge, Bernard Smith and William Fl.
Curtis TO restrain the proposed conversion
of 500 100000 per cent. preferred stock
into $2OO.00O.OOO per cent. second mortgage
bonds. The answer denies that the books
of the corporation show Curtis to be the
owner of any stock Of the 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,
il is admitted. owns 1O0 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 of by proxy. 1t
is denied that fifteen or more of the di-
rectors of the Steel Corporation are mem
bers of the syndicate through whom the
preferred stock was TO be converted into
bonds. 1t 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
II, 1902. in the following words: ITO further
the success of the plan, there has been
formed a syndicate including some direc-
tors who will receive four-ffths Of the 4
per cent. commission to be paid under the
contract with j. p. Morgan e Co.. men,
toned in the notice Of stockholders meet
ing"
The answer says the directors i'm the
syndicate are a minority in the board of
directors. but that they are large stock
holders and favored the conversion plan
because they believed il would be advan-
tageous TO them as stockholders. 1t is de-
MED that any stockholders had been offered
special terms in connection with convert
ing their preferred stock into bonds in
order TO secure their affirmative votes for
the plan. Ii is denied that the $50 600 900
TO obtain was needed for purposes that
were chargeable 10 the earnings of the
company.
The answer then takes up the line of
arguments made in the affidavit George
w. Perkins, chairman of the finance com
mittee, filed last week, in which Mr. Per-
kfns claimed that this additional $50 600 OfO
was needed 10 pay for improvements and
to give the company a larger surplus TO
permit IL 10 do cash business and be pro-
tected against a money Stringencv i'm the
event of a business depression The an
swer says the earnings of the corporation
for the year ending March 81 1902 were
Sill Cos. O54. for the month of April 1902
81. 80. 100 May. $l3I2O.390; June. $12 220 362:
July estimated Sll. 0.00O, or at the rate OF
Sl50000010 a year. An inventory is filed
TO show that the cOmpanys property is
worth 81. 10000 more than the combined
par value OF the preferred and common
stock. IL Is stated also that the company
surplus is now S65.00O,0OO The answer
emphasizes the point raised by Mr. Per-
kins to the effect that the conversion plan
would reduce the fixed charges OF the com
pany and be advantageous 10 all stock
holders. both preferred and common.