New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-11-02
SCHWAB FORCED FAILURE.
Continued from first psge0

No steps seem 70 nave been taken by any one with
States shipbunding Company The directors who
purported to FOR the company were the tools Of
,,snes aEsTeestine 81 ssa es7 sa seem TO have been
SpoSeE SaG me comes 1Ro yege piaeed
wholly at the mercy 81 the vendors and promoters
FEEDING THE STOCK MARKET
Coming to the time when the promoters and
real organizers of the shipbuiding company
were ready TO place on the market the millions
Of securities which dummies had authorized
the report Of the receiver says.
The United states shipbuilding Company was
1s02 On December "a 1902 with a view TO inducing
The New-Hork Stock Exchange TO list I1eo,1tir
s6s 10000 statement was made % such eN-
Srer 81 fSe United states shiP6uilding COMPANY
This statement recites that the eaTnin85s l
subsidiary companies, exclusive 81 me - 40
Steel Company. Tor the year ended June 50 "a -
ret earnings OF The Bethlehem steel company for
twelve months ended July 81. 1872 amonnIe9 20 en-
-roy-err his statement which was clearly erroneos
and which upon a proper examination. would have
been shown 10 be SO. an alelauon appears IN this
statement Of far more serious import, ,,-rzs ~
rhe United States ShipbUildinE C'rlrany a.o . II
ended Novein6er 81 le2 amounted TO the sun 81
Z1ss0Z OF TINS amount nc H., a-Is5 M
- jhat time $50 e S. and the portion sar9eSss a Sy
6ne 7eIrleaeIi Sl5ei en-. - = r net b;t IN
7he case OF the Bethlehem Steel company no 800 f~
snoe vas MADE theren for depreciation Sae Tor
rhermore such earnings CONSTITUTED no r9S ~
ayeraglng The annual proht as t5e ls'eI ''P-'
In The case Of The tinted states shipnuilding
-.--' 49, - i,-,,,,. .t,C-+e iyo,,r receiver
believes that officials TIRE United states snip
reports were being made TO Them by the constt.u-
s56foiors i 50 WORDING the statement 10 the stock
Exchange 70 inlpel the inference that 5ne earn
sings Of The United states ShipbGlding COMPANY
purpose q meeting the accrued interest and s-Ih
shat quarter for during the very tim" Thin WHICH
lv tire subsidiary companies and which the state
raent trters were available for the payment a. al
rad been compelled - advance in cash 70 the con-
sutuent companies nc sum OF So ~ ~ 80, c.
r1ritiss was rranfed by he Tew-Yo-l Stock Ex-
change on January. g. 1908 httle over toIT
ISSUED - DE public enhod2inE a pssn Lor Inc
COMPANY upoa a basis that would enable IL 10
exist
The receiver says the reorganization plan vas
IN the basis Of q new valuation Of the plants,
20 per cent less than the original and adds.
II Other evidence than rho figures above set forth
rs seben 70 @s,abr nj ere Stocks and bonds Of
rhe United states Shiphuding COMPANY without
81 reSres n!zation which practically states that the
ny g unable 355 b6 70 p3y y i1'g ,Ts 81 s9
amount S.ss7199 less than the capital stock Of The
connection with the purchase Of the properties. 70
rsv nothing Of the bond issues Of s240oeH
scHwAB's PART N THE FAILURE.
Mr Smith then takes I'd the causes Of the
ssilure OF the shipbunding company. laying a
large measure Of blame upon Charles II
Sohwab. as fellows
s.s,s & { esSss 81 failure q +hf Lnitsd
- -~a5-- non v-C5 it se iir3ressilIe :, -55slf
no 1rnrf
tateo, Il not directly brought about. by the tact
ehipbuildlng Company officers mad 70 deal with
peoPie wac. e"Atie lnoI2-gllE unoerstaaolrg N.
intrlcacles 4 hlgne- Tnanoe seemed 70 have
es.c47s1 -e5-!f--S,-5s g. Sc5;1.oa 'z,Taess
,.r-T rIl TSe-li---- r---e~--- -ss hen 5sai+ vrb
81 trS-.gb n bs5 baen r1Irlhesad nv the T-rifed
STATES SEipbuilCirg COMPANY but an examination
0f Tie transaction VIII show that = vas otherwise
r-i--le mo aeree1 price for the Bethlehem com
~ .ve- e Charles ". Scnwab an additional amount
,5 s.-e ne s6rS}ss o 95e95Iso Ss ss ms
a@e1r u stock would not Re Sufficient TO give
- II =, laf &c SO m a 6+ b6 feo mo- 10
7fsion thst such bonds should have voting power
As che total issue o. stock Of The United stateS
shi2 a compaay was but s.S 900 oee the $50
$50 Fo ~ gGr bi s ss[n &c that b "a @
.- nc Bethiehen steel ComPsn2' but took over the
- tst oo:nPany gi,iag him sso.ooooco IN stock and
IN ms 6eal ltr schvab parted with nothing. In
he sale OF me ortcr constituent companies tho
stock. was transferred 10 the United States Ship
building Company by the necessary deeds hills of
Sem 81 sSrb 7o--itte5 II 70 fe Even Sl 6 oir
SIS capital stock. and t7is he did in such manner
9s TO place y beyond control u tho Shipr-llClnE
States Ship5uildirg COMPANY had controlled this
stock. it would have been able 70 reach the earn
1ngs II the bethlehem Steel Company through
friendly board u directors but IN the Neo00H
mortgage IL was provided that the trustee should
designate three n such directors. and the United
States Shfpbuildfug Company should designate four
= conn led he r~ State i'm
building Company. by reason of his aforesaid
1ority Of stock and the trustee Of his
Eeleouon the Lnited states s-lTlli -a!rg Company
mas absolutely At The mercy ~ Mr.. SchWah-
His advisers. however. in evident fear that some
Thing had been overlooked caused the United States
EhirbuiiduE COMPANY 10 execute contract where
sn ir agreed and guaranteed that so long anv
part OF the s00a0 90 issue 90 bonds above referred
70 should bo outstanding and unpaid the Bethle-
nuIs1andinG capital STOCK ~ INC rate OF not less
shan per cent per snngm. and for the purpose Of
7nak1rg such payments t1e eUpbullQing company
agreed That tho bethlehem company should earn.
over and above its operating expenses and fixed
charges Guclud-g interest its bonds nd faYesD
znd and aooye the working capital Of s. 900
snnual dividend disbursements. and. in the event
- the failure 81 the bethlehem company earning
cent. then the tinted states ShipbuiidinE Company
70 pay 10 Tho bethlehem company. Dc
mand. sum sufficient 10 make such annual divi-
cend oiscursene1ts.
a RUINOUS AGREEMENT.
piv the BeiEleheHl company with al such order.
contracts, work and earning capacity should he
Dividends above mentioned. Was ever s,ch auosber
1green1cnt 30 apparently harmless. yet ruinOus.
simply agreement 20 the effect that sufficient
earning were not made BY the Bethlehem 20 pay