New-York tribune., 1903-06-12
SAY SCHWAB MADE S21,OOO,000
RECETTERSHIP ASKED FOR UNITED STATES SHIP
BUILDING COMPANY.
Charged h Unloading Crescent Company at Exaggerated
Prce-Erporters Sue South african Steamship Lines
S4F SCHW4B CONTROLS.
BondhoLders 4Iege He Would
Freeze Them Out.

L TCC-E Il HtM ouJ-
Henry Wollman yesterday fled papers in
the United States Circuit Court, at Trenton.
\. J. in a suit against the United States Ship
building Company. asking for an injunction
against the continuance of the business by the
directors. and for the appointment of re-
Ceiver on the grounds Of insolvency, fraud in
The organization OF the corporation and mis-
management of its affairs. The complainants
are Roland r Conklin. Max Nathan, Jacob ".
Mack and James D. Mcguire, first mortgage
bondholders. and the owners Of preferred and
common stock, who are represented by Gug-
genheimer. Cntermyer & Marshall: r. V
Lindahury. of Newark: Henry Wollman and
Samuel Unteruyer.
Judge Kirkpatrick granted restraining oroer
against the corporation. its directors and OIL
GERS. which prevents them from disposing Of any
Of the assets OF the company and from preferring
a7v creditors. He also granted an order. re-
+urna Die at Trenton next Monday. 10 show cause
why received for the company should not be
appointed.
The bill Of complaint charges that Lewis Nixon
conceived a plan for combining the shipbulio-
ing plants for the purpose of selling the Crescent
shipbuilding Company, II which he was IN
-sreEred At an exaggerated price. and OF hav-
ing the aew company issue large amount OF
securities. TO be unloaded on the public at ex-
o-l,iran1 urices Il is further charged that
Of he SIC 100000 Of bonds Of the company about
100000 were sold on representations as 10
assets. debts and earnings wnich We're false
and that the earnings were grossly exaggerated
and have been so admitted. The bill alleges
that II was z part Of the original plan Of Nixon
70 have Charles NJ Schwab buy the Bethlehem
Steel Works and put II into the new company
II an unconscionable profit. II is charged that
schwab paid not exceeding 100000 for the
of 2
100000 then on the property. and that he put
the steel works into the shipbuiding company
a about S40ooOO0O in bonds and stocks. which
was about So. 100000 more than he paid for
them although he held the property only one
year
SAY sCHWAB CONTROLS IT
Il is further asserted that the shipbuildng
company is now controlled by SchWab and that
the plan Of reorganization Is solely in his IN
-erest. the purpose being 10 wipe out the hrst
mortgage bondholders and 10 enable Schwao
u secure the entire property under his mort
cages. Fv this plan, It is declared. Schwab will
receive back all he sold TO the shipbuilding
company. and get all its properties and assets
besides. The cornplainants say that suits should
f F-a1;el1t gairst the original promoters OF the
rvrnparv and TO cancel the transaction with
Schwab. and that the property should be taken
ont Of the hands of the present directors ana
--era7 in the hands of the court so that the
rights Of the security holders will be enforced
Henry Wollman said regarding the suit
We want s 70 g 8 his bis a2Toaes gT0PsT oT aud 6 70 uf PUT
the hands Of the court 01I L evelsLdt Pc ge+
rs -~opertT ~ rom the first mortgage bondholders
Whorn IL belongs We shaL nght ne ~ ~ The
F3ef6IeheT1 Steel Works on the ship6unding com
-note-s and directors Of the shpbuilding company
viii called 70 explain as soon as q k =
Is sTT E9fe0 So %esgSte 5Ge Il & taf Is transaction be
'ieve 1t viii be set aside
BONDS HAVE A VOTING POWER
Tals Is the situation after the first mortgage
sells MS equity in the Bethlehem Steel Works So TO
a. s. e eoPsny eP & 9r sPgo s9T Cotn0I ano Of the
shipbuiIding company. but 10 make assurance
doubIy he has the charter of the company
drawn 50 that the directors can give MS bonds a
cage bonds, which they DO. and in that way ne gets
additional voting power equivalent 10 100000 OF
Mr. schwab's 100000 of bonds are also secured
ty q mortgageson his own plant OF course. If his
rany contracted 10 pay him for it. he has perfect
security his mortgage on that fo his bonds. but
apparently he does not think He proposes not
only 70 take mortgage on eVeryt thing he sold TO
the ship5uildine PLANTS. but t. wipe out the first
take a first mortgage in his own favor on them
ferred stock. which Is 70 be ned up in the hands
- I Co. 5et-ey1 Years or which there .sil
10 no obligation to pay dividend. the stock beirg
DDr-CLIIIlafiFe.
AlfhouEh tho earnings Of the Bethlehem company
were reported TO be enormous ten slh lhooliaing
connoanT proper has no. had q cent OF income
rom 81 since the time Of its reorganization but on
ne orber hand the Bethlehem company mas called
1.non the sl1ipbuiding company for large sums OF
money.
sCHwAB TO LEND t2oooe0
The reason that is advanced why the first mort
KaRe should be cancelled and Mr. Schwab receive
2 Arsf mortgage al the property 10 secure tIle
Obligation him for the purchase Of tn Betn-
lehera property. is that he is going 20 loan the
company 10000. 10 be paid in tour instruments
six months apart
The solution Of this question Is very simple Let
NJ Schwsb take back his Res5llehem plant. and
lei The shipbuilding bond holders. under new mar
sg@r9z-,f keep and operate their plants which
free and clear
Mr. Schwab last night attended q dinner given
By SOME of his friends in Pennsylvania He
could not be reached
Tise Nav Line is exclusively pleasure travel
route n is . specialist IN the business OF giving
People a good tine.-Adfl