The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1903-11-03
SENSATIONAL CHARGES
WiIIfuI Measurements and
False Evidence Given.
FRAUD WAS ALSO USED
FIotation of Stock Was Not
Honestly Carried Out

New York, Nov, 2-Ie the report of
James Smith, Jr-, receiver Of the United
States Shfpbuilding company, issued to-
day. some sensational allegations are
made 1t is charged that Willful mis-
statements and Justification were made
in the organization of the company. 1t is
further alleged that in the Rotation Of
the company and in attempts to mislead
and deceive the public fraud was used.
a deliberate plan was made to wreck
the company, it is charged in the report,
by Withholding the earnings Of the
Bethlehem Steel company.
The report concludes with the recon-
mendatiOn that suit be brought against all
persons who received stock of the COM
pany without paying full value therefor,
including the promoters of the consolida
ton. the vendors of the constituent plants
and Charles NJ Schwab. to recover from
them such an amount as is necessary to
pay the debts of the company IN full. Re
ceiver Smith also recommends the sale Of
the Crescent shipyard plant in New Jer-
at Wilmington, Del, subsidiary plants not
now in operation. 10 avoid further loss by
depreciation, and the enforcement of a re
Ownership for the Bethlehem Steel com
pany TO insure the payment of dividends
in the Bethlehem stock held by the United
States Shipbuilding company.
In the words of the report the organ
igation of the company is characterized
as an artistic swindle." Receiver Smith
stating that the value of the plants their
earnings and working capital given in
alleged thorough reports of expert &C
countants, vary so much from actual fig
ures as to impe the belief that the fig
ures were wiifully misstated;" that it IS
extremely doubtful If such accountants
reports were submitted at the organ.za-
ton of the company; that the organiza-
ton was effected by "dummp| stock
holders directors and officers; that state
ments in the prospectus issued on June
IA, 1902 were incorrect; that for property
worth So, ,516 the shipbuilding COM
pany paid in stocks and bonds So, 997 600;
that THE accomm odating officers and di-
rectors of the United States Shipbuilding
company in acquiring these companies de-
liberia tely gave away many million dollars
in the stocks and bonds o fthe company
Wholesale plumber" the receiver terms
it, to a few persons, and that. so far
IS the Bethlehem Steel company is con-
cerned, Its earnings have been withheld
in a deliberate attempt to wreck the
United States Shipbuilding company
The report deals fully with the name
of Charles NJ. Schwab and the nature
of the Bethlehem transaction, says MI
Smith. is such as ito justify him CMr.
Schwab) in saying that he did not sell
the Bethlehem Steel company, but took
over the United States Shipbuilding com
pany, the directors of that company Civ
ing him 80 million dollars in stock and
bonds for taking If off their hands
In his recommendations Mr.. Smith says:
First-That in order to avoid deprecia
ton by disuse and because and because of
the existence of controversies as to the
validity of the incumbrance upon the
premises. the Crescent shipyard be sold
clear and free for al such membranes
as soon as the work now in contemplation
is completed
Second-That similar action be taken
with reference to the plant of the Har-