The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-11-25
FIVE MILLIONS OF WATER
HOW EXTRA STOCK OF THE BETH
LEHEM COMPANY WAS DIVIDED.
Letters Read at the Hearing-Mr.
SchSvab's Part i'm the Business, and
Mr.. HOadley's Explanation.

was resumed mere to-day. During the
course of his redirect examination of
Lewis Nixon, president of the ship-building
| company, Mr. Untermyer, counsel for the
compliments, brought out from Mr.. Nixon
| the statement that of the $o000,000 addi-
tional stock issued when the company was
reorganized to take in the Bethlehem COM
| pany, 81 100000 went to Max Pam, Mr..
| Schwab's counsel, and 100000 each to Mr..
| Nixon, Mr.. Dresser and the Trust Com
| pany of the Republic, leaving 100000, the
| disposition of which he did not know. He
| did not know whether Mr.. Schwab obtained
| it. 1t was also brought out that at the
time the Sheldon reorganization plan was
under consideration Mr. Schwab offered to
| purchase 100000 bonds with the accom-
panying bonus Of 5000 shares common and
| %, 600 shares common stock issued to Mr..
| Nixon for $4,000, while the market value
was far less than this, Mr.. Untermyer max
! ing the direct charges that this was in
| the nature of a bride to induce Mr.. Nixon
| to agree to the Sheldon plan of reorganiza-
ton instead of the plan for an assessment
| of stock, which he had previously advo-
| Gated.
The offer was shown in two letters from
| &c, 1903, copies of which were introduced
in evidence. Mr.. Hoadley, it was testified
had conducted the negotiations with Mr..
] Schwab when Mr.. Nixon was endeavoring
to pursuade Schwab to accede to the as
sessment plan, and had, after the proposal,
urged Nixon to accede to the Sheldon plan.
| Mr.. Nixon said that at Hoadley's request
he had done so. 81 think the testimony to-
4 I,oc
settlement" said Mr.. Untermyer during the
| recess.
| SCHWAB TO HOADLEY.
| The first letter from Mr.. Schwab to Mr..
Hoadley follows:
Dear Sir-Providing the United States
| ship-bulding reorganization is perfected,
| hereby guarantee to take and pay for
| 100000 of first mortgage bonds of the
| United States Ship-building Company, $500
| shares of preferred and rs, 600 shares of COM
mon stock for the sum of $4,000 plus in
| terest on said bonds on or before Dec. /.
| 1903. Said bonds and stocks to be depos-
| tied with Messrs. Mcintyre and Marshall,
| "a Broadway, New York, and to be ex-
changed for securities of the reorganized
| company, as designed by agreement issued
| by the reorganization company"
The second letter sent by Mr.. Schwab to
| Hoadley, reads:
| Shipbuilding Company reorganization is
| perfected 1 hereby guarantee to pay to your
| order $4,000, amount OF payment which
| has been made to the Sheldon syndicate
on subscription of 500, 600. made by Lewis
| Nixon. 1 also agree to have said SUBJ
scription placed to my account and guar
| antee to have complete release issued to
| said Nixon by said Sheldon syndicate"
| Mr.. Nixon testified TO writing to Mr..
Schwab later. These letters were not read.
but were admitted part of the record.
One, under date of Sept. 4, reads
Dear Mr.. Schwab-I beg to inclose here
with a letter received this day from the
/ United States Shipbuilding Company Sc
curities managers making another call on
| the subscribers to this agreement as you
| agreed you would assume this particular
however. 1 do not ask that you should i as.
| sumo the $4,000 already paid, but simply
| the remaining subscriptions, and then d.
by the total cash paid in proportion to the
! accounts paid.
Mr.. Schwab, under date of Sept. 10, replied
my Dear Mr.. Nixon-I beg to ac-
| knowledge the receipt of your letter of
Sept. 4. My agreement was that upon the
W Mou dHanee Se an 9f
| of any calls the syndicate managers might
take the proportion of the new securities
| represented thereby. AT that time it was
contemplated that with the cooperation of
| all interests, the plan would be speedily
| carried through. L never intended or agreed
| TO increase my interests in the syndicate
| or in the properties except on the proposed
| plan of reorganization being successfully
| consummated In the meantime in view
of the opposition existing, l see no reason
| why / should modify the agreement 1
| made.
THE AGREEMENT OF JULY 2.
| The agreement of July 2, 1903 between
Nixon, Dresser and Schwab, providing that
/ Schwab should loan to Nixon and Dresser
| S!,246S1 to purchase the Bethlehem stock
| from ]. p. Morgan e. Co.. as syndicate man.
| ayers in return for which Schwab was to
| receive SIS 10000 in stock and $4,000 900 in
| bonds, was introduced in evidence this aft
| ernoon, Mr.. Nixon testifying that he had
| always understood that Schwab, and not
Morgan & Co.. owned the Bethlehem stock.
Receipts from Schwab, per attorney and j.
p Morgan & Co.. acknowledging the deiv-
| cry on Aug. II of 5000 and $1,000 shares
| of preferred stock and the same amount of
| common, respectively, We're introduced IN
| evidence, as was the Trust Company Of the
| Republic check for $4,000 in favor of Har-
| ris, Gates & Co., 10 provide working capital
| for the company, and a copy of the men,
| orandum of commitments, showing the ar
| rangements for the division of the Ship
building securities allotted as profits to the
Trust Company OF the Republic, Promoter
| John w. Young and others.
A resolution of the Shipbuilding directors
adopted in January stated that legal steps
| should be taken to recover Shipbuilding
securities to the maunot of 600 I'm bonds
| and s.. 600 900 stock from the trust company
| for the rightful owner, the Shipbuilding
| Company, was read, but Mr.. Nixon could
| not say that any legal action had ever
| been undertaken in connection Herewith.
LETTER FROM HOADLEY.
| At the conclusion of the session Mr.. Nixon
gave out for publication a letter dated
| Philadelphia, Nov. 13. which he had re-
| Gently received from Mr.. Hoadley in answer
| to Mr.. Nixons requests for copies of the
| correspondence between Schwab and Hoad-
ley.
| Dear Safeguarding my understanding
| with Mr.. Charles NJ. Schwab as to plan of
| reorganization proposed for the shipbuild-
ing company at the time you came for me
| in distress, 1 have to say that inasmuch
| as / am, at the present time, Ill, 1t will
| be impossible for me 10 give you or Mr..
| Schwab any assistance in untangling this
| unfortunate affair. / have sent out copies
of the correspondence between Mr.. Schwab
| and myself. which took place at the time
| L was endeavoring to arrive at an ami
cable understanding with him. as to
whether he would pay his assessment on
| the controlling exchange OF stock, he told
me he held. You understand that all OF
| my propositions to Mr.. Schwab were based
| on the condition that Mr.. Schwab would
| take charge of the financial operations of
the deal. and even now, II you could dis
| entangle this matter and allow your stock
holders To go with the reorganization by
| paying a small assessment / would have
| my associates join you and furnish the