New-York tribune., 1903-06-14
SCHWAB AND NIXON REPLY.
THEIR 4NSWERS TO THE SUIT AGAINST THE
UNITED STl1TES SHIPBUILDING COMPANY.
c p5t rrJertoks TO Shoe That Received Did Not
Com pensate Him for Bethlehem Stock
PREFERS BETHLEHEM.
Dir. Schzcab Nay Take Steps to Get
Back the Steel Stock.


Charles NJ. Schwab, president of the United
States Steel Corporation, and Lewis NlXon pres
ident of the United States Shipbuilding COM
pany issued long statements last evening III
reply to the allegations contained in the papers
filed by Roland r. Conl6lin and others at lreh-
ton on Thursday. Those papers, as outlined in
FRIDAYS Tribune asked for an injunction
against the continuance of the business by the
directors and for the appointment of receiver
on the alleged grounds OF insolvency, fraud in
the organization of the corporation, and mis-
manag of its affairs. Judge kirkpatrick
granted a restraining order against the corpora
ton its directors and officers which prevents
them from disposing of any of the assets OF the
company and from preferring any creditors
He also granted an order returnable to-mor-
row at Trenton to show cause why receiver
for the company should not be appointed
Mr.. Schwab gives a detailed account or the
negotiations with himself for the acquisition of
the Bethlehem Steel Company for the shipbuiid-
ing company, and of his part in financing the
combina tion ending his statement as follows;
IF the first mortgage bondholders syrnpathize
with the complaints in this suit, shall with
draw from the reorganization and seek the re-
covery Of the Bethlehem Steel Company stock
1t was learned from good sources yesterday
that in the answer of the United States Ship
building Company to the application by certain
of the security holders for the appointment of a
receiver the attorneys for the company III
deny:
First-That there is a necessity for a receiver
provided the reorganization plan is carried
through before July 1.
Second-That there was any secret pact or
agreement between Charles NJ. Schwah and the
United States Shipbuilding Company as to the
requirement of the Bethlehem Steel Company
by the shipbuilding company.
1t is also understood that general denial
of all the charges will be made, except those
based on the statements of A. c. Gary, treas
urer of the company, to the reorganization com
raittee wherein it is shown that 81, 3S1. 900 of
the working capital diverted to aid SUD-
sidiary companies whose true condition was not
given at the time of reorganization. The snip
building company will urge the fairness OF the
plan of reorganization and the necessity for
permitting the work to go forward.
MIR. Schwab's statement follows:
My attention has been called to the statements
and allegations contained in the Oh! ned py 6On5
lin and others against the United States Shpoullu m
ing Company in NewJersey reestng ing on my f0o Of
the shipbuilding company desle' WI w10pI eciin5
with the matter in refutaton of allegations con-
taed in in the bill of complaint th Of the ship
building company when Messrs. Nixon ana
take a financial interest in the enterprise by be
coming of the subscribers to the underwriting
had several visits from them the subject. in
various ' Companies going into the consolidationi
their earning capacity and financial resource:
told them | had desire to invest in that enter
prise but that was always anxious. by personal
5a e e laeS to faT56sF
felt sure that the shpyard wf fdn in
all ts steel reqnirements, / would make sub
scription. and | accordingly became subscriber
In i-T making % my subscription I acted like every
other subscriber upon such faciS ana Nntbine
was said about the Bethlehem Steel Company t or
therein until long sg6seriptlGn Was m made tbs
president of the Trust Company Of the Repubnc;
ao tnow if they could secure the control Of the
Bethlehem Steel Company for their shiPbuilding 81 % b1
6Gis 62iiding company had been published broadcast
the financial icTbed aT Tfs or and The
securities formally offered to the puDhc through
the press.
WITH ]. P MORGAN & co.
told them that the control and disposition OF the
Bethlehem stee! Company wa was ta %nn and ar ascertain
called Morgan &C CO.. ond and Sf S6t4T Wns to
con eG ss 6sg @ 6e stock Of the
Steel Company, provided payment therefor would
0 "aans comm"nicaed Nixon and ID Dresser Dresser
then the to Know Sf Il would Wiling assist
them in securing the funds as thsy mao n,n9Tv Go
fiie entered into negotiations with them looking to
my furnishing the necessary cash requttL ptt
lehem Steel Company pr0pSerey ern5r 5 eapaty and
f6e large amount Of earnings aggregating over
$500 600 which had been accqr9uanng stncs S bcb L,
had not been withdrawn therefrom and which prop
erly enhanced the investment therein 10 thdt @
the stock of the Bethlehem Steel Company ya11 ana
furnish the money necessary 10 ane an o6ns;deTa t
therefSe ton sreof to J. sboHd have the ene
cumulations since hrst oougf d $40 oD GO in each
kind of fully paid stock
WHAT MORGAN & co. DEMANDED.
Tbereupon took up the matter with Morgan &
Co. who insisted that they must have IN adal5loH t
the cash invested % per cent OF eafh k1nr ed Cd
1 would be willing TO have MessLS. ~ NLN1h In ail P
Dresser deduct from me @ sf1e me- so that Morgan
& Co. might receive it as additional payment lor
Nv direct financial interest in this transaction:
including the cash advanced tor the FOL or
The stock Sf ths and Baeem9ated earnings
in the company. aggregated over SS.gHQV hs,das
my subscription OF sS5O,OoO to the two first mort
Morgan & Co. had acquired the Bethlehem Steel
Company for the original steel corporation syn
dcate. and just before the winding up OF tHe syn &
80 zoo coo of each kind stock which they had re-
ceived.
AS SECURITY FOR THE UNDERTAKING.
When had closed these negotiations called in
my counsel and stated the arrangements and sald
f f easr @ m Nixon sas ad thar to
a bond and mortgage which was 70 give me tt tte
transaction and ali legal requirements in connec-
ton with the transfer OF the properties and issue
subject to the approval of my counsel
At that time Il was discussed and decided tnat nat
fact that the bonds issued to me were to have vot-
~ a0ita al oft