The Savannah morning news., 1903-11-02
ARTISTIC SWINDLE
RECEIVERS VIEW OF THE
IN" suIPBUILDING COMPANY.
BY CHEATING AND BY FRAUD
yEpORTs THAT THE BIG
SCHEME WAS FLoATED.

n Schyvnb Bears the Brunt
~ the Caustic Report of the He-
,.r who Says Schwab Might
s He Had Acquired the Ship
nui,ding Company Instead OF SELL
,no the bethlehem Plant-Suits
Are recommended
Nav York Nov. Sensational allie
..,,re Of misstatement classifying and
t.,rd in the organization and fiota-
+io, Of the United States Shipbuilding
,-,,rnanv. of attempts to mislead and
dsceive the investing public by err
.,,ors PROSPECTUS statements and of
q deliberate plan to wreck the company
nv Withholding the earnings of the
Bethlehem Steel Company are contain
Cd in the report of Receiver James
Smith. Jr., of the United States Ship
building Company, made public here
to-day.
The report concludes with the recon-
mendation that suit be brought against
all persons who received stock of the
company without paying full value
therefor. including the promoters of
the consolidation, the vendors of the
constituent plants and Charles NJ.
schwab to recover from them such
amount as is necessary to pay the debts
of the company in full.
To Sell Subsidiary Plants.
Receiver Smith also recommends the
sale of the Crescent shipyard plant in
New Jersey and the Harlem & Hol-
lingsworth plant at Wilmington, Del,
subsidiary plants now in partial opera
ton, to avoid further loss by deprecia-
ton, and the enforcement of a receiv-
ership for the Bethlehem stock held by
the United States Shipbuilding Com
pany.
In the words of the report, the or
ganization of the company is charac-
terized as an artistic swindle,'' Re
ceiver Smith stating that the value Of
ing capital, given in alleged thorough
reports of expert accountants, vary so
much from actual figures 'as to impel
the belief that the figures were will
fully misstated;" that it is extremely
doubtful if such accountants reports
We're submitted at the organization of
the company; that the organization
was effected by dummy" stockholders,
directors and officers: that statements
in the prospectus issued on June IA,
1902, were incorrect: that for property
worth $12,441,5 16, the shipbuilding COM
pany paid in stock and bonds 1884,
OO; that the accommodating directors
Of the United States Shipbuilding
Company, in acquiring these compa-
MES deliberately gave away many mill
hons of dollars in the stock and bonds
OF their company" Wholesale plum
DER the receiver terms it, to a few
persons and that, so far as the Beth
Rhem Steel Company is concerned, it's
earnings have been withheld in de-
Hoerate attempt to wreck the United
Doesn't Shield Schwab.
The reports deal fully with the name
OF Charles NJ. Schwab, and the nature
OF the Bethlehem transaction, says Mr..
smith is such as Ito justify him" (Mr.
Sch"ab) in saying that he did not sell
me Bethlehem Steel Company, but took
over the United States ShipbuIding
company, the directors of that COM
pany giving him $SO,OOO,OOO in stock
ana bonds for taking it off their hands.
subsidiaries Were Broke"
he report deals at length with sepa-
iate phases of the shipbuilding corpora
io"S existence and the terms on which
t tng various plants or corporations were
soNeu over by the United States Ship
building Company. The receiver shows
''. IN many instances it was agreed
~ 'e'"lIl Tor terms of years officers In
(ohstltuent companies, and scores
i,"'Hy the agreement with the Beth
eHem Steel Company.
sb M me reason for the failure of the
sa,, ppulidlng companies, the report
The real reason why the earnings
W. below the anticipated profits was
be ause previous alleged earnings had
nsured upon a percentage of COM
in soH OF contracts. which percentage
nI many instances was erroneous"
u apepars," he continues. that
WI Nn me exception of the United Iron
tons ms the subsidiary companies, taken
csglher, had absolutely no working
bipi.!ldl' but on the contrary their i1a-
s,r SUES exceeded their resources in the
co,i OF S2S4,719." The following was the
tir' oitlon of these companies at the
Oh their purchase:
C,Hclt-Bath Iron Works, $351S:
assent n5 tent Ship Yards, $4O3,592; Harlan
g. e Hollingsworth. $73,413; S. T. Moore
s SonS Company, 5000: total, $4S5, 1853.
nav, pius-Eastern Shipbuilding Com
stoaE, Sl,39l; Hyde Windlass Company
N9e'fo5; total, S190.S44.
Nel dehcit, being excess of liabilities
', 7r assets, 1924, 1898.
Lad Cnlon Iron Works, 1t was found,
working capital of $1,123,15O.
really Needed Assistance.
va AS the principal part of the alleged
corsSIhg capital above mentioned was
conri dea TO the Union Iron Works, he
mai. WIZ appear that so far as the re-
tsla companies are concerned when
bpm5 u over by the United States Ship
no c-aISS- company they not only had
bpt ",orhlhg capital, taken collectively
clai we're in immediate need of finan-
IA al, assistance.
pears rom the foregoing facts It APP
tboss 20 nave been the intention of
ana leeponsible for the statements