The Savannah morning news., 1903-11-02

vesting public and the present and
future creditors of the company"
Receiver Smith then quotes from the
prospectus issued to the public to in
duce subscriptions for bonds and con-
cIuoes that comparison of this pros
pectus, with the facts, discloses false
and misleading statements in the fol-
lowing regards:
First. At the date of this prospec-
tus the United States Shipbuilding
company had not been Incorporated.
Second. Its capital stock was never
$2O,OOO,000; originally it was SO, O0O
which amount was subsequently in
creased to Sac, 100000.
Third. Six of the ten persons men
toned as directors in the prospectus
were not directors of the company, and
never had been.
Fourth. The amount of contracts
on hand did not exceed $36, 000 900, but
OF this amount a profit was available
only on the uncompleted portion of the
contracts. which profit will not exceed
SlO1S,241.42 and will take three years to
earn.
Fifth. These companies did not have
a working capital of more than s.. 900. =
0OO; the figures of the accountants show
a working capital of only 1928, 79S. AS
Thls working capital, however, was
almost obliterated by subsequent ad-
justment.
Sixth. The statement that the
profts on contract work in hand would
be $4,000 was undeniably false. If
II is claimed that the profit was esti-
mated on the entire amount of $36, 900, =
OOO worth of contracts (Which was no.
true), the utmost profit that could be
looked for, according to the figures of
the accountants was SO, 500, 900.
A liberal estimate would have placed
the earnings at only a trifle over ST.
100000"
Gave Away $4,000, 900.
The report then gives the net book
value of the constituent companies on
July 81, 1902, according to accountants
statements from the books of the com
panles, as $12, AL ,516 for which the di-
rectors of the United States Shipbuild-
ing Company parted with $70,977 900 in
stock and bonds.
Viewing the acquisition of the
properties from the standpoint of the
surplus and plant values, as disclosed
by the books of the company" the re-
port reads, "the directors appear to
have made gift of upwards of $685.
100000 worth of stock and bonds of the
United States Shipbuilding Company
entrusted to their care"
Mr.. Smith writes, THAT Bethlehem
deliberately used up it's earnings in
making enormous purchases of mate
rial for its own benefit and in extern
slons, improvements and repairs, in
order apparently to keep its earnings
from the United States Shipbuilding
Company"
REFERRING to the millions of dollars
in the stocks and bonds, deliberately
given away" Mr.. Smith says:
Who participated in this wholesale
plumber? The testimony now being
taken in the proceedings will doubtless
disclose the names of all the partici-
pants. Certain it is that much of this
vast amount was taken by persons
and corporations who parted with lit
tie or no consideration therefor. Blocks
of stock went to the vendors Of the
constituent plants and to the pur-
chasers of the bonds, as bonus, abso-
lutely without benefit to the company;
$20,000000 Of it admittedly went to
Charles NJ. Schwab in addition to the
agreed price for Bethlehem. Some Of II
went to the promoters Of this artistic
swindle; and when all had been pro-
vided for, what was left of the bonds
amounting to $1,5OO000, was handed
back to the company, ostensibly to
supply it with working capital"
Beneficiaries Are Liable.
The receiver then declares that he is
advised that the vendors and promoters
and their associates in the transfer and
conveyance of the various plants to
the United States Shipbuilding Com
pany in the acceptance of $44, 997, 900 of
the capital stock of the shipbuilding
company without paying value there
for, became liable thereon to said cor
poration, and that the shipbuilding
company can recover the amount of
this indebtedness from the holders of
this stock.
The receiver charges that the proper
ties of the various constituent COM
panies were sold to the United States
Shipbuilding Company for an amount
which the vendors of such properties
knew to be far in excess of their value,
and that the plan to combine such
properties was conceived and consum-
mated by certain promoters with full
knowledge of it's injustice to the Unit
ed States Shipbuilding Company the
company being absolutely without in
telligent representation or protection in
the matter.
He declares persons interested in the
Bethlehem Company are antagonizing
efforts to rehabilitate the shipbuilding
company and urges suit against
Schwab and associates.