New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-10-06
SCHWAB UNDER FIRE.
Continued from first page.

The mortgage provided that the shipbufIdinx
company should pay g per cent on the capital
stock of the Steel company. and also supply l.
with a working capital OF S4O1OO00 or pay an
amount sufficient to bring the working capital
up TO that SUM. By these provisions Nr.
Schwab and his associates we're enabled 70 elect
the directors for 1903 both for the Steel company
and the ShipbuiIding company. It is also al
legged that the plan TO provide the Steel com
pany with working capital Of 100000 was
10 prevent the So 10000 IL actually had from
being turned over to the shipbuildins company
as dividends on the shares purchased from Mr.
Schwab.
The business Of the Steel company for the year
ending April 30 1903. was very prosperous. & IS
said. being at least $2.J1SOC0 and Il should have
had after paying fixed charges. surplus Of az
least SfJGOOO1 which should have been turned
over to the bodybuilding company It Is charged
that Mr. Schwab caused the Shipbuilding COM
pany to default in its interest. forcing it's IN
soivency. wrecking il. and thus enabling Nr
Schwab and his associates TO acquire its assets
In conclusion it is said that the mortgage Is
not hen on the shipbundins company OF Mr.
Smith as receiver. as the laws regulating mort
cages on chattels were not complied with IN the
various States wherein in the ShiDbuildins con-
pany owns property.
In the answer to the suit Of the Aerca1tiis
Trust Company. the allegations are made that
the companies and plants merged into the Ship
building company were under the control %
Lewis Nixon Henry T.. Scott John 5. Hyde. E.
W. Hyde Charles r. Hanscom. L " Scott
Charles ]. Canda and Horace W. Cause. who
represented TO the directors OF the shipbuildins
company that their properties were worth SAL
100000 and were in an exceedingly prosperous
condition. having orders that showed prohc
Of at least 100000
IL is said that John W. Young secured the
transfers OF these properties 70 the shtpbuilding
company on the payment OF 100000 OF its
bonds for which the Mercantile Trust Company
was trustee; S1j.OOO.OO0 OF it's common and S10.-
100000 Of its preferred stock. The answer al
Ieges that the real value OF these merged
properties at no time exceeded 100000. and
that the profits IN sight did not exceed ST.
100000
The promoters. il further alleged. selected
irresponsible persons as directors who acted IN
der the direction OF the promoters and lIr
Schwab and the latter'S associates. The pro
rnOterS at the present time. it is said. own az
least S1O,O1O,OOO OF the bonds and 100000 %
OF the shipbUilding company. for which there
was no real consideration given The stock paid
to the promoters. il is alleged. full pay
menr for the properties transferred. and the
same allegations as those concerning Mr.
Sclwab's transfer Of the Bethlehem property
are repeated In the second complaint. In both
the court is asked TO dismiss the complaints "a
there is no real ground in Law for the action.
a personal representative Of Mr. Schwab said
last night that Mr.. Schwab's position was fully
set forth in statement by him, published IN
The Tribune OF June IA last