New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-12-18
STEELE MISLED GATES.
MORGAN STOCK KEPT OUT.
Alerander WithhoIds Messages at
ShpbuiLding Hearing.

company 70 D. r. morgan q GO. IN 1871 ana the
sale OF the stock TO the United States Shipbuild-
ing Company about a year later were told in
considerable detail yesterday by Charles Steele
member Of ]. P. Morgan & Co. as a witness
al the shipbrilding hearing before Mr.. oliphant
the special examiner in the suit for permanent
receiver. 1t was developed by Mr.. Steeles testi-
nony that he acted for his firm in the negotia-
tons for the purchase OF the Bethlehem stock
in 1901 and for its sale in 1902.
While admitting that almost his entire in
formation as 20 the value Of the Bethlehem
stock and Of the shipbuEdng securities came
from Charles NJ. Schwab. Mr.. Steele declared
that he thought the Bethlehem stock had been
bought cheap in 1901. and that when J. P. Nor
gan & Co. accepted 100000 Of shipbuilding
stock as a bonus. in addition to S7,250ooo in
cash. for the Bethlehem stock in 1902 he
thought the shipbuilding stock was Of great
value, and believed the common stock would pay
dividends right away. Mr.. Steele said that ].
p Morgan & Co took contract for the pur-
chase Of the Bethlehem stock of the hands Of
Mr.. schwsb in 1901, acting as managers Of the
steel syndicate, because il was desired 70 have
the Bethlehem plant transferred TO some COM
biuation apart from the United States Steel
Corporation, where il would be good customer
az the steel corporation. Taking all the risks Of
loss IN the disposal Of the Bethlehem stock. the
20 MI Schwab fair share of any profit that
might arise in its sale.
Then. when the Bethlehem stock sold to
the shipbuilding company, Mr. Steele knew
that Mr.. Schwab was to receive 100000 in
bonds and S2ooo000o in stock Of the ship
building company Mr.. Schwab putting up the
s., 10000 IN cash, which went TO J. P Morgan
g. Co. as syndicate managers. Mr.. Steele ad-
mitted that he also knew of the Harris, Gates e.
Co. agreement. by which the stock allotted 10
7. p. Morgan & Co. and to Mr.. ScEwab was to
have preference in sale when the stock was
placed on the market. hut he declared that he
had not taken advantage Of the agreement and
had not committed ]. P. Morgan & Co. to it in
writing.
LAWYERS ARE MORE PEACEABLE.
The hearing in the shpbuilding case was
transferred yesterday to the rooms Of the Board
OF Trade and Transportation. at No 203 Broad
way because Samuel Untermyer, of counsel for
the bondholders bringing the receivership suit,
old not want 20 be reminded too often that he
was in his own Office when he got into disputes
with w. D. Guthrie. of counsel for the ship
building company. II was expected that the
two lawyers would indulge in more violent per-
sonal alterations in the new place for the hear
ing. but they managed TO get along yesterday
without calling each other hard names
When Mr.. Steele appeared at the hearing he
was accompanied by Francis Lynde Stetson as
legal adviser. Charles NJ schwab present
with his attorney Max Pam. and John w
Young the promoter OF the shipbuilding COM
pany, was an interested listener to testimony
as usual. Mr. Steele when he was sworn, said
he had been member Of the Arm of J. P Nor
gan & Co. since prior to 1901. and formerly he
wss Mr.. Guthrie's law partner. He went 10 the
examination room wrapped in q heavy, fur lined
overcoat, and he seemed TO be troubled with
hoarseness and cough. At the beginning OF
his story about the purchase Of the Bethlehem
stock IN 1901 he mentioned a contract which
J. p. Morgan & Co. made with Mr.. Schwab, and
when that document produced by Mr. Guth-
RE II was found TO have attached TO it two
agreements which Mr.. Schwab had made with
r P. Landerman. former president OF the Beth
leheTn Steel Company. for the purchase Of the
stock
Mr.. Uptermyer and his associate, Henry Wolf
man, read the contract and agreements over
with great care They failed to find in them any
mention OF share ot profits to go to Mr.
Schwab. and Mr.. Guthrie produced letter
which had been given TO Mr.. Schwab by J. P
Morgan & Co. The contract was dated June IS
1901. and the letter had the date OF August %
1901 The letter an acknowledgment that
there had been verbal agreement by the man
ayers Of the steel syndicate to give to Mr.
Schwab such share OF the possible profits arising
out of the sale OF the Bethlehem stock as J. P
Morgan Co. though TO be fair.
SAYS scHwAB SUGGESTED LETTER.
At whose suggestion Mr.. Untermyer asked
was the letter written
I think Mr.. schwab suggested it," was the
reply.
o-was Mr. schweb the. president Of the steel
cooperation at that Time? Ale was
Q-Dld he make the contract for the purchase
q The bethlehem stock without the knowledge OF
ne steel syndicate? A--Tes that a venture
Q-Frorn whom did you FIRST learn that Mr.
Atom Mr. schwab himself As / recoilect' he
came 70 my Office bout Msv ! 1901 and told ma
mar he had met Mr. Linderman, then president
and .olno that the stock for sale He SAID he
had bought II: and he SAID 10 me: II viii bring
have the disposition of Tie stock il thew want
it We talked the matter over. and the result
was thst ar; schw3o assigned his contract to
o---Did you tell him the steel corporal ton was to
get ne stock? No, as recollect. The steel
ssoF rps! n, az not want IL That was Mr..
o.-wasnt it the idea 10 90 away with a COM
psttors Alt was lot. no, sir
WANTED A GOOD CUSTOMER
Q-Bld you think il would be az advantage 10
Put the Bethlehem company into the hands ~
some one vino would not be a competitor? A1No
ne customer Of the United States Steel CorpoTa-
non Ne oid not regard the Bethlehem as a com
plate the price OF which VAS fxed bv th5 go on
ment and distributed to different plants maj coi,Id
o-Area't you aware that the Bethlehem, oor,-
Pang was A competitor OF the Carnegie comnanv
81 ,Es mixing OF amor plate? A-No l didn't
o-You didn't know that Congress had be., 4,