The Savannah morning news., 1903-12-23
SCHWAB MAKES ANSWER.
His Denials of UnsavOry Allegations
Against Him.

| Against Him.
New York, Dec. 22.-Charles M.
Schwab to-day filed his answer to the
cross bill of the United States Ship
building Company and James Smith,
Jr., its receiver, in the United States
| Circuit Court for the Southern district
| of New York. The case is that of the
| company and it's receiver against the
New York Security and Trust Com
pany and Mr.. Schwab.
| Admitting certain of the fundamental
| facts which have heretofore been es-
| tablished, Mr.. Schwab takes up the
| various allegations and charges of the
| cross bill He says:
| Il deny that I ever was or became
| one of the promoters of the shipbuild-
| ing company, or that l and a num-
| Der of persons associated with me ac-
| quired the capital stock of the Bethle~
| hem Steel Company, as averred in the
| cross BILL
Emphatic denial is made that he
| ever conceived any scheme of trans
| ferring to the shipbuilding company
| the stock of the above company at an
| excessive rate or upon conditions per-
hitting him or his associates to con-
| troll the shipbuilding company. Con-
| tinuing, Mr.. Schwab says:
II deny that with any purpose of ac-
| COlllpllSHlIlS SUCH lHleUI anu purpose
| or otherwise, l or any associates of
mine represented to the shipbuilding
| company that the said shares of stock
were worth the sum of 100000, 000."
Mr.. Schwab denies that he ever made
any false representations regarding the
| Bethlehem Steel Company.
Says He Is Not Liable.
Mr.. Schwab says the shipbuilding
| company is not entitled to enforce any
| alleged indebtedness against him. He
| AYERS that neither he nor his associates
! conspired with the dummy directors
! of the shipbuilding company to have
inserted in the mortgage to the Secu-
| rity and Trust Company and in the
charter of the shipbuilding company
| provisions which would give him or
| them absolute control of the shipbuild-
| ing and steel companies, with the
| power to so manipulate the corpora
tions as to cause default in the pay
ment of interest, thereby defrauding
| creditors. stockholders bnd bond
holders of the shipbuilding company.
! Mr.. Schwab says that he and his as
| sociates had nothing to do with the
| Withholding by the Bethlehem Com
| pany of the dividend payments on the
| 100000 shares of its stock owned by
the shipbuilding company for the pur-
pose of wrecking the latter concern.
The defendant continues:
81 deny that l or the Security and
Trust Company or the directors of the
shipbuilding company or of the steel
company, or any associates of mine,
or of the Reorganization Committee,
or any of them, acted fraudulently or
in bad faith in the premises or for the
purpose of destroying and wrecking
the property of the shipbuilding COM
pany in the interest of myself or any
associates of mine, and l deny that
this suit is brought at the instance of
the Reorganization Committee and
myself or any associates of mine for
the purpose of carrying out any
wrongful and fraudulent plan or
scheme or of profiting by
taking advantage of the al
legged defaults occasioned by any
wrongful or fraudulent acts, to the in
jury of the shipbuilding company or
the bona fide creditors, bondholders or
stockholders of the shipbuilding COM
pany."
"Did Nothing Wrong"
After specifically denying any and
every charge of fraudulent and unlaw
full ombination, conspiracy or wrongful
act in his connection with the affair of
the Bethlehem Steel and United States
Shipbuilding Companies, Mr.. SchWab
details the history of his relations with
the two concerns. After making a con-
tract for the purchase of the entire
capital stock of the Bethlehem Com
pany, Lewis Nixon and d. Leroy
Dresser asked him to underwrlte So
100000 first mortgage bonds of the
United States Shipbuilding Company
On this line he continues:
"Nixon and Dresser informed me that
the properties were of great value, that
they had been appraised by competent
appraisers, that the profits had been
confirmed by public accountants, and
that in their opinion, after careful in
yestigation, the figures mentioned IN
the prospectus were safe and conserVa-
tive"
Tn view of this Schwab took the un-
writing "upon the same terms as other
underwriters" providing that the new
company give preference to the steel
CORPORATION in the purchase OF ma
terials.
scbvab Offers to Give Back.
On Tune 16, 1902, Messrs. Nixon and
Dresser told Mr.. Schwab they wished
to acquire the Bethlehem steel COM
nanv in order to transfer 1t to the ship
building company, making payments
therefor in bonds and stock OF the new
connanv. They offered $10,00O,0O0 each
90 bonds. preferred and common gem
eral stock. This deal concluded, Mr..
ccbwa his illness followed, and he was
absent from the United States until
March II. 1908. Upon his return ne
found the shipbuilding company IN
financial difficulties and learned for the
first time that many of the representa-
tions in the prospectus of the shipbuild-
ing company were false. When reor-
ganization was proposed. Mr.. schwao
said he desired to take back the Betn-
Iehem stock. returning to the shipbulld-
ing company the bonds and stock he
had received. Mr. Schwab ADDS;
was then and have ever since peen,
and / am now able and willing, to
return all securities received by me or
bv Messrs. Morgan & Co and TO re-
scind the whole transaction, and
hereby tender the same for that pur-
pose" s
MIR. Schwab concludes: LAS TO the
charges in the cross bill that acted
i'm collision with the Reorganization
COMMITTEES OF the shipbuilding COM
pany in an attempt 70 force the in
solvency Of said company and 70 wreck
IL. I aver that such charges are not
only false and malicious, but were