The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-10-22
MZOf on SHlpYAaD DEAL.
MS PLANT SOLD TO THE TRUST
WITHOUT APPRAISAL,
Except That Made by Young. Sole Promoter
says He Protested Against Spending
Money on Bethlehem Works When
II Meant ImpairinE the Surplus

II Meant ImpairinE the Surplus.
Lewis Nixon. former president OF the
United States Shipbuilding Company. went
on the stand Yesterday in the inquiry in
skuted by the complaining bondholders
and told the story Of the formation OF the
company and Of the acquisition of the Beth
lebem Steel Company from Charles NJ.
Schwab.
Charles NJ Schwab, who is under subpoena
10 testify, and Max Pam, who ia also to he
witness, were among those present Mt the
hearing. which took place in Samuel Inter
MYERS office. Before calling Mr.. Nixon,
Mr.. untermyer called Charles J. Canda
formerly president of the Canda Manu-
featuring Company OF Carteret. N. j. Mr..
randa said that he got for the sale Of his
concern to the Shipbuilding company
100000 cash. $4,000 in first mort ga &c
bonds and $4,000 in preferred and com
mon stock. The plant at that time, he ad-
mitted. was making a few experimental AL
,omobiles and had about forty men at work.
It had never shown any earnings.
What relation had your plant to the CON-
s,rlcton Of ships7" asked Mr.. Untermyer.
The witness said that the plant was avail
able" for the construction Of ships and
that it had made few launch engines.
Mr.. Nixon. who gave his present occupa-
ton as a naval architect. was then called.
He told OF prior scheme to organize a
shpyard combine that was suggested in
laO or 1901 in Andrew Freedman's Office
and said that options had then been Sc
TohN I>ao sc
too, but it fell through.
Mr. Nixon said he had known Mr.. Schwab
ever since the latter came to New York
but that there was no suggestion OF putting
the Bethlehem company into the first COM
bination. Nixon said he first knew that
the project had been revived when John W.
Young called him up on the telephone.
He then told of the meeting Of Schwab.
Dresser and himself at the Lawyers Club,
in June. 1902. when Schwab offered to turn
over the Bethlehem plant. He said that
he understood from Sch~ab that the earn
ngs Of the plant for year past had been
$500 600 over all fixed charges. Mr.. Nixon
corroborated Mr.. Dressers testimony as to
Mr. Schwab's saying that he must cable
to Mr.. Morgan before determining how
much stock he should demand for the plant
in addition to the $40 900 900 of bonds at 90.
Mr.. untermyer then asked the witness II
he knew why he had afterward been made
a party along with MIR. Dresser in purchas-
ink the company's stock from j. p. Morgan
4 Co. as managers Of the U, s. Steel syndi
cate Nixon said he didn't know why. but
that he knew how valuable the plant was
and wanted to help along the acquisition Of
it He said he was acquiring for the ship
ward company and that there was no per-
sonal profit in the transaction.
Referring to the check which Dresser
twore Schwab had given them to pay j. P.
asked if Mr.. Schwab had signedit.
Il didn't have it in my hand long enough
10 see" said Mr.. Nixon. who said he didn't
know the amount OF IL, either, nor to whom
It was handed at the meeting in Morgan Il
Co. s office.
The check, which was for 37,14l, 7sl, was
produced. II was drawn on the New York
Security and Trust Company by Mr. Wren,
Mr.. Schwab's secretary, acting under his
power Of attorney. 1t was payable to Dres-
ser and Nixon. and was Endorsed by them to
J, P morgan h Co.. by whom also it was
Endorsed. ...,'-.- =.
Was there any counsel there to protect
the tn interests M Of the shipbYilding company,
that Mr.. Dresser and himself we're the only
ones representing the company, that the
Bethlehem stock was brought in valise and
hat he had looked at a few certificates,
but hadn't counted them.
Mr.. Nixon, in reply to other questions as to
Mr. Schwabs profits. disclosed that the lat
Bethlehem deal, had received as a bonus
100000 bonds and $780, 900 in preferred and
common stock. This was in addition to the
regular bonus Of rs per cent. that the other
underwriters got. Nixon. said that Schwab
had demanded that he should get some Of
tho profits in the underwriting and that he
wanted to give some to Mr.. Gates, who was
give this extra bonus out Of the promotion
expenses. and Nixon gave Schwab memo
randum to this effect.
q Did you ever see, the reports Of the
accountants on the plant? A. Mr. Young
employed the accountants. ! saw only the
published accounts.
. % you know why the options were
made out to you as trustee? A. .didn I
know about it until saw number Of blank
.hecks n one case | learned 1t was because
Mr. Young. The checks were made out to
mo. and ! bad n schedule showing how they
wnro TO b" paid.
. How were the amounts arrived at2 A.
Mr. Young did that Some of them were
clt mp in separate checks for convenience
! think. Mr.. Young pledged each vendor to
s'"T''N, hH' WnaJ am saying heTe N iOrceu
from me-.
Mr. Nixon could only recall the total
amount raid, which was about $1,000, 900.
He said he had burned up Young's schedule
because Young had told him that the
amounts must never be known.
Mr. Untermyer got the Trust Company
Il the Republic to produce the checks.
There were twenty altogether which went
IN the seven vendors. Only fifteen were
produced Yesterday.
Mr. Nixon. at the request OF Mr.. INTER
mver, identified his signature on check
n, s2,75o,OO0 to j. 4 W. Seligman Co.
persons az trustees and bore many indorse-
ments They did not disclose the ven
dors, except indirectly Mr.. Nixon swore
then that he had no information Of the
debts Of the concerns.
Il did not prepare the financial scheme
he said II made no bargains with any
one
Mr.. Nixon said he received for his concern
ne Crescent shipyards, 100000 cash.
sss1 .0O0 in bonds and S2S0,0OO in stock,
that he got 500 ,OOO cash in addition to paw
Tor his promise to work for the shipyard
combine for five years and not to engage
IN competition he received $4,000 more
IN stock. His plants had $3.50 900 In debts.
He said he offered them as going con-
Germs and wouldn't take any less. He
admitted that he subsequently asoertained
mat the reports of Young's accountants
a. to these plants were incorrect.
g Anybody make an appraisal Of your
p'snf Ior the Shpbuildng company? A. No.
~ Then these purchases were made with
opt any certiicstion OF past profits or ap,;
nraIsal ~ the plants, A. Young appraised
mem He was the sole, promoter.