The semi-weekly messenger., 1903-10-09
u. S. SHIPBUILDING co.
INTERESTING STATEMENTS IN con
NECTION WITH ITS FORMATION.

Mr. Leroy Dresser on the stand in
Legal Procecdings-He Tells OF the
Original Plans ana Agreements.
Hearing Postponed Till October
18th.
New York, October 7.-One Of the
most interesting statements il connec-
ton with the formation of the ill-fated
United States Shipbuilding company
told by D. Leroy Dresser, in legal pro-
ceedings today, was that after a pool
OF 100000 preferred and go. 900 common
stock had been placed in the hands Of
Harris, Gates & Co, it was agreed that
none of this stock should be marketed
until 2500p preferred and 25,OO0 COM
mon, owned by ]. P. Morgan & Co..
and 1900 of each kind, owned by c. NJ,
Schwab. had first been sold.
Mr.. Dresser told also of his original
agreement. as president of the Trust
Company of the Republic, to obtain the
underwriting of 100000 of United
States Shipbuilding Company stock;
how this was increased to 4,750 900 by
the failure Of the French subscribers
TO pay up; how Mr.. Schwab came TO
offer his Bethlehem works to the Ship
building company and how J. P. Nor
gan & Co., then came into the transac-
ton.
Mr.. Dresser, who took the stand a.
the opening Of the hearing, testified that
he had 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 representations.
The Mercantile Trust Company, lie
was told by Colonel McCook, secured
the rest Of the underwriting, principally
in France. The Trust Company of tie
Republic Mr.. Dresser said, had framed
the prospectus of June 1902, offering the
bonds to the public, the Trust company
taking the information contained in il
from the firm of Alexander and Green,
counsel, and Riddell and Common, ac-
countants, without investigating any OF
the statements made by them.
The purchase of the Bethlehem Steel
Works for the Shipbuilding Company
was then discussed, Mr.. Dresser stating
that the overtures for the sale of the
Steel Company had been made by Chas.
NJ. Schwab, who said he owned nearly
all the stock of the Bethlehem Steel
Company and that, because of its armor
making capacity, he believed the COM
pany would do better with the ship
building, than with the United States
Steel Corporation. Mr.. Schwab, a.
cording to Mr.. Dresser said he wanted
$9,000,000 cash for his stock and SUBJ
mitted reports which showed that it
cost him more than s7,0OO,OO0 and was
earning 81. 600 a year.
I'VE told him we could not trade on
a cash basis said Mr.. Dresser, DE
cause we had no cash and he said he
would take s1O.OOoOO0 in bonds, at nine
ty for the $4,000, ,0OO' This was agreed
to, the arrangement also providing that
he was to receive with the bonds a
stock bonus of s9,O0O,0O0 each Of the
common and preferred stock f the
United States Shipbuilding Company,
Mr.. Schwab stating that 81 0OO, 900 of the
stock was to go to j. P. Morgan & Co.
For the stock Of the Bethlehem Com
pany, Mr.. Dresser said there was really
given 100000. 600 in bonds, S9,0OO00O in
common stock and SO, 100000 in preferred.
There was some talk of pooling the
stock of the Shipbuilding Company he
said, Mr.. SchWab insisting that all the
stock he held until his and Mr.. Morgan 5
had been put on the market
After recess, Mr.. Dresser said Mr..
Schwab told him he believed the Snip
building Company had q great future
and that he would be willing to put
$4,000, 900 more cash into the business il
necessary. Mr. Dresser said he believed
until after the purchase of the Bethle-
hem stock was made that Mr.. SchWaD
owned all the stock. Mr.. Schwao he
said, obtained control of the shipyaris
company by getting men on the board
friendly to the Schwab interests and
getting rid of those opposed to his in
tereSts.
Mr.. Dresser said he had heard tha:
an important envelope, containing mat
ter needed in this suit has been missed
from the files Of the Trust Company
of the Republic, but declared he hal
nothing to do with the abstraction OF
these papers.
On cross examination, witness said he
understood that he was given authority
to borrow $4,000 on the credit of the
Trust Company Of the Republic and that
he had not been advised that it was
criminal offense nor did he know Il
Stocks and bonds of the Shipbuilding
Company, he believed, were accepted a:
security for the loans he made to pu1
the deal through. The 81 100000 borrow
ed from the banks had been deposited
by Mr. Perkins of J. P. Morgan & Co.
was credited to the Shipbuilding Com
pany.
At the request of counsel for tht
Shipbuilding Company, the hearing wa:
postponed TO October 18th.
Newark, \. j.. October T. supreme
Court Commissioner John A. Miller
handed down a decision refusing L
ic- q