New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-12-23
.SCHWAB'S SIDE OF THE CASE.
STILL WILLING TO GIVE UP SHIPBUILDING SECURI
TIES FOR BETHLEHEM SHARES.
Says He and j P Morgan Co. Bued Non and Dresse Ship
yards ProspectusH Connection cih Shipbuidng Compang

Charles NJ. schwab's side of the case in the
litigation following the failure of the United
States Shipbuilding Company was told yesterday
in an answer which was filed by w. D. Guthrie,
of his counsel with United States Commissioner
Shields. For many weeks Mr.. Schwab has been
anxious to go iE(o the witness chair at the
hearing before the special examiner in the suit
for a permanent receiver of the shipbuilding
company but Samuel Untermyer, of counsel for
the bondholders bringing the suit, has kept him
out, and has continued to call witnesses whose
testimony has been a continued attack upon
Mr.. Schwab
Under the plan of the Sheldon Syndicate for
reorganizng the shipbuilding company. a suit
brought by the New-York Security and
Trust Company to foreclose the mortgage given
10 secure the $1OO00OOO bonds held by Mr.
Schwab. James Smith jr., the temporary re-
oet=er, filed a cross bill. and the answer Of Mr.
Schwah that filed yesterday is his answer
TO the cross bill In his answer Mr.. Schwab de
MES that he was promoter of the shpbudng
company; that he acted in any manner with
John w. Young in the sale of the Bethlehem
Steel Companys stock TO the shipbuilding COM
pany; that he aided in any manner in placing
false valuations on the properties acquired by
the company, or that ne aided in wrecking the
shipbuilding company by Withholding from it
was entitled
Mr.. schwab denies that he conspired with
anybody to obtain control of the shipbuiding
company by having the cOmpany's charter
amended so as to give to the holder of mort
gage bonds voting power equal TO that
joyed by the holder of an equal share Of stock
He also denies that he had voting power equal
TO that of a majority of the bonds and stock.
and he denies that he acted with the Sheldon
committee or helped TO bring the foreclosure
suit for fraudulent purpose.
Then Mr.. Schwab proceeds to tell his connec-
tion with the shipbuilding company through his
sale to it of the Bethlehem company. He says
he made a contract with Robert P Linderman
of Bethlehem. Penn. on May 81. 1901. for the
purchase of the three hundred thousand shares
of the Bethlehem stock at "a He says he made
the contract individually, believing he was get
ting the stock cheap, and that the contract Of
fared an opportunity for great profit He COM
municated the fact to J. p. Morgan & Co, syn
dicate managers in connection with the organi-
zation Of the United States Steel Corporation.
he then being president of the steel corpora ton
Mr. Schwab's answer then continues in part:
stated to them s that was ,gt wiling to turn Ger
the conTaCt 70 tue 1HitsG otatsS S,eel CQrpoid-
ii would be advantageous thing for such cor
ana me that they, as syndicate managers, should
take the contract with authority them TO
transfer such stock Of the Bethlehem Steel Com
pany the United States Steel Corporation at
cost If they fit to do, but IL il were dis
posed OF to other parties. that it should not be
sold without my consent and that ] should be
entitled the greater part Of any profit I'm view
Of the fact that I had personally made the pur-
chase and assumed the initial risk. Thereupon l
assigned said contract of purchase TO said syndi-
cate gers by instrument dated June 15. 1901
and thereafter in cooperation with Messrs. J. p
Morgan & Co. suggested changes in the manage
ment and manufacturing and business methods Of
the Bethlehem Steel Company. and improved re-
suits began 10 he shown and the profits TO increase
FIRST SHIPBU44..IING CONNECTION.
The first transaction I personally had in any
States Shipbuding Company Monday
June q 1902, when Lewis Nixon and Daniel Ie-
rov Dresser called MY Office in the city OF
New-York and solicited me to become under
writer OF an issue of S90J0J0 face value, of the
first mortgage bonds Of the United States Ship
building Company. winch bonds they stated were
about 10 be offered for subscription to the public
Prior 10 that time ] had never. directly or indi-
rectly been connected with any plan or scheme FOR
plants and had never directly or indirectly. been
an underwater OF the securities OF such a comoi-
nation or IN any way interested therein. The said
Nixon ard Dresser stated TO that the Trust
CoTnpanv Of the Republic. or which Mr.. Dresser
Wa president had undertaken the promotion Of
the United States Shipbuilding Company, and had
secured over IS OO000 Of underwriting In this
try and abroad, and they then submitted to me a
prospectus. dated April ~, 1902
that the properties were Of great value that they