The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-12-23
EVERY CHARGE is DENIED
BY CHARLES N. SCHWAB
Cross Bill in the Shipbuilding Com
pany Case Filed by the Steel
Magnate.
LAWYERS ARE WROTH
Alleged Contempt of Court in Pub
fishing Letters and Messages
That Were Secret.

NEW YORK, Dec. 22.-Charles NJ Schwab
to-day filed his answer to the cross bill of
the United States Shipbuilding Company
and James Smith. jr its receiver. in the
United States Circuit Court for the South
ern District of New York. The case is that
of the company and its receiver against the
New York Security and Trust Company and
Mr. Schwab
After admitting certain of the fundamen-
tai facts which have heretofore been estab-
lished. Mr.. Schwab takes up the various
| allegations and charges a cross bill. He
says: 81 deny that L ever was became
one of the promoters of the Shipbuilding
Company, or that and number of persons
associated with me acquired the capital
stock of the Bethlehem Steel Company, as
averred in said cross bill. 1 admit that the
property of said Bethlehem Steel Company
was on the 18th day of August, 1902, encum-
bered by a first mortgage. executed by the
Bethlehem Iron Company, the predecessor
in title of said steel company, to secure
bonds aggregating 81 ,351 600, bearing inter-
est at the rate of per cent per annum,
and a purchase money mortgage executed
by said steel company TO secure the payment
of SI,5OO,0O0, bearing interest at the rate or
per cent. per annum."
Emphatic denial is made that he ever con-
ceived any scheme of transferring to the
shipbuilding company the stock of the above
company at an eXcessvxe rate or upon con-
ditions permitting him or his associates to
control the shipbuilding company to alb
sorb for his benefit ''all of its property and
assets, to the injury of its creditors and Of
it's bona fde bondholders and stockholders,
or otherwise"
Continuing, Mr.. Schwab says: At deny
that with any purpose of accomplishing
such intent and purpose or otherwise, L or
any associates of mine represented to the
Shipbuilding company that the said shares
of stock were worth the sum of $50, 700,
that the said steel company had, during
the fiscal year ending July 81, 1902. made
net profit in its operations amounting to
the sum of 81, IA, 20S that Its said surplus
assets on July 81. 1902 amounted to s4,119,-
Co.,
Mr.. Schwab denies that he ever made any
false representations regarding the Bethle-
hem Steel Company and denies that his
, stock on July 81 1902, was not worth to ex-
coed 81 5000. He believes that the net
earnings of the ,Shipbuilding company for
the twelve months ending July 81, 1902, ex-
ceeded $l,000,0O0. and that the surplus cur
rent assets exceeded $S,5OOOo0.
Mr.. Schwab repudiates any connection
with John w. Young and says he never
caused the latter to propose TO the Ship
building directors to transfer 100000 shares
of Bethlehem stock, $40, 900 each of bonds,
preferred and common stock of the Ship
am the owner and holder of upward of
100000 of the 900 of the bonds and
upward or $y,UO,UDO or the $lOOO,UOO OF the
preferred and upward of 100000 of the &c.
100000 OF the common stock or the ship
building company, issued for the stock OF
the steel company, but 1 deny that any
associates of mine are the owners OF the
remainder of the preferred and common
stock so issued for the stock OF the Bethle-
hem Steel Company. except that sold and
transferred some Of said bonds and stocks
to third parties
Mr.. Schwab is of the belief that the
stocks received In exchange for the steel
stock did not exceed the value of the steel
stock. He denies that the bonds were is
sued without consideration.
After specifically denying any and every
charge of unlawful combination, conspir-
acy or wrongful act in his connection with
the affairs of the Bethlehem Steel and
United Shipbuilding Companies, Mr.
Schwab details the history Of his relations
with the two concerns. He says that after
| making a contract for the purchase of the
entire capital stock of the Bethlehem Com
pany, he communicated with j. Pierpont
Morgan & Company, stating that he was
willing to turn over the contract to the
United States Steel Corporation, without
any profit whatever" Morgan & Co.
| managers, with authority to turn it over to
| the steel corporation. If however. the Nor
gan firm disposed of 1t to other parties, MI:
Schwab was to receive the greater part of
the profit. He says that on June 8, 1907,
Messrs Lewis Nixon and d. Leroy Dresser
asked him to underwrite 100000 first
| mortgage bonds of the United States Ship
| building Company. Prior TO that he had
| no connection with any such combination
| Mr. Schwab closes his defense by denying
every charge of fraud, misdoing, unlawful
| combination and confederacy, and 'humbly
| prays to be hence dismissed with his reas-
| enable costs and charges In this behalf
| most wrongfully sustained"