The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1903-11-25
Sensational testimony in
ShipbuiIding Case.
LETTERS OF SCHWOB READ
U 1terwayer in His Examination of Lewis Nike,
Brings Out Volume of New Infor-
maion About The Methods
Pursued.
(By the Associated Press.)

New York, Nov. 24.-1eStlmony OF a
sensational nature was introduced at the
United States Shipbuilding hearing, which
was resumed here today. During the
course of his redirect examination of
Lewis Nixon, President of the Shipbuild
ing Company, Mr.. Untermyer, counsel for
the compliments, brought out from Nixon
the ctatement that of the 5000 900 ai-
ditional stock issued when the company
was recognized to take in the Bethlehem
Company, $1,000 900 went to Max Pam.
Mr.. Schwab's counsel and 81 200, 600 each
to Mr.. Nixon Mr.. Dresser and the Trust
Company of the Republic leaving $1,000,
000 the disposition of which he did not
know. He did not know whether Mr..
Schwab obtainedit 1t was also brought
out that at the time the Sheldon re-or-
ganlzation plan was under consideration,
Mr.. Schwab offered to purchase 800, 900
bonds, with the accompanying bonus of
$4,000 shares, common and $4,000 shares,
preferred stock. issued TO Mr.. Nixon for
$50 900, while the market value was far
less than this. Mr.. Untermyer making the
direct charge that this was in the nature
of a bride to induce Mr. Nixon to agree
to the Sheldon plan of reorganization in
stead of the pla nfor an assessment OF
stock which he had previously advocated.
The offer was shown in two letters of Mr..
Sehwab to Joseph II. Hoadley, dated May
26th 1903, copies of which were introduced
ivn evidence. MIR. Hoadley. it was testified
had conducted the negotiations with Mr..
Schwab, when Mr.. Nixon was endeavoring
to pursuade Schwab to accede to the as
II, - Il Il
urged Nixc2 e accede to the Sheldon
plan. Nixon said that at Hoadleys re-
guest he had done so.
The letters are as follows:
Providing the United States Shipbuild-
ing reorganization is perfected. l hereby
guarantee to take and pay for 500 900 of
first mortgage bonds of the United States
Shipbuilding Company, 25.eD0 shares of
preferred and $4,000 shares of common
stock for the sum of 100000, plus interest
on said bonds, on or before December 1,
1908 Said bonds and stocks to be de-
posted with Messrs Mcintyre and Mar
shall, "A Broadway, New York. and to be
exchanged for securities of the reorganit
zed company, as designated by agreement
issued by the Reorganization committee.
(Signed) &C. NJ. SCHWAB"
Providing the United States Shipbuild-
ing Company reorganization is perfected,
hereby guarantee to pay to your order
$4,000, amount Of payment which has
been made to the Sheldon syndicate on a
subscription of $4,000 made by Lewis
Nixon. l also agree to have said sub
scrlption placed to my account and guar
antee TO have complete release issued
to said Nixon by said Sheldon syndicate.
Charles NJ SchWab"
After the date of these letters, did or
did not Mr.. Hoadley get you to accept
this plan?' asked Mr.. Untermyer
Mr.. Nixon explained in answer that Mr..
HoadLey advised him to consent to the
Sheldon recognition because Mr. Schwab
bad refused to accept the assessment plan
and that he (Mr. Nixon had thereupon
written a letter recommending the Sheldon
plan
"As to my deriving any profit from the
transaction, that is nonsense" said Mr..
Nixon. The transaction concerned others
and l prefer that they should tell it."
Mr.. Nixon then testified to writing to
Mr.. Schwab later and obtaining from him
a letter confrmatory of the proposal in
the letter Of May 20, to Mr. Hoadley. Mr..
Schwab's letter stated that the proposal
was contingent upon the success of the
Sheldon reorganization plan and Mr.
Nixon said that he then let the matter
drop.
Witness said in reference to the Sheldon
plan, that he felt greatly irritated,' be-
cause he, though president of the ship
yards company, had not been consulted,
and reiterated his statement at the pre-
Vious hearing, that his only knowledge of
the reorganization plan had come from
conversations with Mr. Pam
The agreement of July ., 1908 between
Nixon, Dresser and Schwab, providing that
Mr.. Schwabs old loan, to Nixon and
Dresser 81, 246,S 81 to purchase the Bethle-
hem stock from J. p. Morgan Z Company.
as syndicate managers, in return for which
Schwab was to receive $4,000, 900 in stock
and S10,00O,000 in bonds, was introduced in
evidence, Mr. Nixon testifying that he
had always understood that Schwab and
not Morgan and Company, owned the
Bethlehem stock.
Il think the testimony today shows
clearly that there has been no settlement"
said Mr. Untermyer during the recess.
t the conclusion of the session Mr. Nix
on gave out for publication letter he had
recently received from Mr.. Hoadley, in an
swer to Nixon's request for copies of the
between Schwab and
Hoadley.