The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1903-10-08
HOW SCHWAB WORKS.
Much Light Thrown on the
Steel Magnate's MethOds.rT

New York Oct. S.-After a pool of
100000 preferred and Il million common
stock had been placed in the hands of
Harris, Gates & Co, in connection with
the formation of the United States Ship
building company it was agreed that
none of this stock should be marketed
until $4,000 preferred and $4,000 common,
owned by J. P. Morgan & Co, and 49,
600 of each kind owned by C. NJ. Schwab
had first been sold, according to the
statements of D. Leroy Dresser in legal
proceedings. Mr.. Dresser told also of his
original agreement as president of the
Trust Company of the Republic, to OBJ
tain the underwriting of 3 million of
United States Shipbuilding company
stock; how this was increased to four
and three-quarter millions by the fail
ure of the French subscribers to pay
up; how Mr.. SchWab came to offer his
Bethlehem works to the shipbuilding
company and how J. p Morgan & Co.
then came into the transaction.
Mr.. Dresser, who took the stand at
the opening of the hearing testified that
he was president of the Trust company
of the Republic from it's organization,
March 81 1902, until March 4, 1903. He
told of the visit to him in April, 1900, of
John j. AIcCook. who told him he came
from John w. Young and the Mercan-
tile Trust company, and asked the
Trust Company of the Republic to UNI
-deFwrite, 8 million dollars of the stock
of the United States Shipbuilding COM
pany, showing Mr. Dresser the under
writing agreement which said that 3
million dollars had been taken in Lon
don and million dollars in France.
The trust company authorized him to
get the underwriting, which he did. La
ter he increased the underwriting to 4s4
million dollars at the request of the pro-
motors because they said London failed
to take the , million dollars it had
promised to take.
Mr.. Dresser said he rad no written
statement as to the values of the plants
in the company when he undertook the
underwriting, but that Lewis Nixon
and John w. Young had made oral rep
resentationS Mr.. Dresser identified
copy of the prospectus and it was adj
mitted in evidence. He said all the un-
derwriting secured by the Trust Com
pany of the Republic was secured fof
the Mercantile Trust company. The re-
sponseS to the advertisement for sub
scriptions was poor. he said, not more
than 100000 of the bonds being applied
for in America. The purchase OF the
Bethlehem steel works for the shipDuild-
ing company was then discussed, Mi.
Dresser stating that the oveftureS for
the sale of the steel company had been
made by Charles NJ. SchWab, who said
he owned nearly all of the stock of the
cause of its armor making capacity, be-
lieved that the company would do bet
ter with the shipbuilding than with the
United States Steel corporation.
Mr.. Schwab, according to Mr. Dresser
said he wanted 9 million dollars cash for
his stock and submitted reports which
showed that it cost him more than
million dollars and was earning $1,450,-
900 year. we told him we could not
trade on any such basis" said Mr. Dres-
ser, because we had no cash, and ne
said he would take 10 million dollars in
bonds at 90 for the 8 million dollars
This was agreed to. the arrangement
also providing that he was to receive
with the bonds stock bonus of mil
lion dollars each of the common and
preferred stock of the United States
Shipbuilding company, Schwab stating
that million dollars of the stock was
to go to J. p. Morgan & Co.
When the contract was presented for
signature it was found to call for the
purchase by Messrs. Dresser and Nixon
personally of 299,S70 shares of the Beth
lehem company's stock from ]. P. Nor
gan & Co. for $7,246,S71 cash, 21a mil
lion dollars in common stock of the
United States Shipbuilding company
and an equal amount Of the preferred
Mr.. Dresser said he objected to obli-
eating himself personally, but Mr.
Schwab explained that the deal would
have to be carried out that way and