New-York tribune., 1903-11-07
IT'S CAPITAL BORROWFD.
THE PROSPECTUS FALSE.
AEuoR Makes Damaging admissions
-4bout Shipbuilding Com pany.


Lewis Nixon'e redirect examination was con-
fnUed throughout yesterdays short session or
the hearing before the special examiner IN the
suit for 8 permanent receiver OF the United
States Shipbuilding Company with the apparent
object OF proving that the company was en-
tirely in the control OF Charles NJ. Schwab from
the start that the company never had any work
'ng capital except what Mr.. Nixon and the
Trust Company Of the Republic had borrowed
for il. and that the prospectus which was issued
70 attract subscriptions for the conlPanys Sc
rrrities contained many false statements sam
vel Cntermyer. counsel for the bondholoers
bringing the suit conducted the examination In
The law Office OF his firm in a manner which
provoked almost constant objections and inter
1uptions by w. d Guthrie counsel for the COM
pany and for Mr.. Schwah. and led 70 some
Hrangles. which seemed 10 bring 70 light the
real purposes Of the tactics OF the opposing law
sers
Mr. Schwsb and his attorney. Max Pam, sat
near Mr.. Guthrie. usual betraying the keen
rst interest IN the efforts to drag from MI
c1ixon admissions in support Of the contentious
81 the plaintiffs in the suit They were late,
with Mr.. Guthrie. IN getting to the hearing yes
terday afternoon, and Mr.. Nixon had been wait
;ng uneasily in the witness chair for nearly
quarter Of an hour before Mr.. Unternyer re-
suspended it on Thursday. His first question
called from Mr.. Guthrie an objection. on the
ground that the subject had not been treated in
the cross-examination, and the same objection,
with variations, was repeated for many Of the
questions that followed.
From the time you and Mr.. Dresser made
IN a-rangement in June 1902. for the purchase
~ the Bethlehem plant VINO had charge Of the
proceedings" asked Mr Cntermyer.
Mi. Pam the witness replied.
From that time, who the dominant
factor?"
"Nr. Schwab"
Q-who prepared the documents you signed? A
Those relating 10 the Bethlehem company were
re3Sred 4, by ~ F & @ soae % thS 1een g1eers were
Q.-WeTe you esked 10 sign many documents?
o.1Tie- mortgage o. the. United States ship
building Company 70 the Mercantile Trust Com
Il ssfore oHs sienRg t$ AT cIanced at H.
Q-Mhen you signed the in2r'gage, 0,, aia :, you you
red the various properties Of the shipbuilding
and took its contents for. rranted.
o.-The mortgage 10 the New-Gork Security and
was q prepared? A-The substance OF it by MI
cL-Did you read 81 carefully before you signed
s.? Al glanced through II as aid the otner
you BY Mr.. Pam 20 sign? Al did.
SIGNED BEFORE NE WAS A DIRECTOR.
AIr. Uutermyer next tried 20 draw from Mr..
Nixon some explanation OF his selection as the
person 10 sign the mortgages and other binding
financial documents OF the shipbuilding company
as the company's vice-pTesident. although Mr..
Nixon was not director OF the company until
about month later. Mr.. Nixon declared that
rhe reason never was explained TO him. lie said
he did not suppose at the time the documents
we're signed by him as vice-president that lie
vas 90 be the president Of the company. He
thought be was TO remain vice-president and
attend 90 the technical business Of building
ships, while some other man would be president
and look after the financial affairs of the com
pany. Mr. Untermyer persisted in wanting 10
know why, when the issue Of securities of the
company had been authorized by the young
dummy directors" one Of them who the
president had not been allowed "a sign the doc
uments-
Was it ever explained to you" he asked.
why the president Of the company. instead Of
YOU a Hice-president, did not sign such docu-
nnents2"
4 never asked was Mr.. NIxon's reply.
''On August II, 1902. when the vendors re-
ceived payment for their plants turned over
20 the shipbuilding company, had you seen the
efer OF John X. YOungg"
~ saw something OF Il in the minutes, but
do not remember whether saw a copy OF the
offer by that time"
Mr. Nixon admitted that he signed proxies TO
he used at stockholders meetings without ask
ing what 10 be voted on at such meetings.
lie said he never attended a stockholders meet
ing in New-Jersey. but he under the i'm
preston that he attended one stockholders meet
ing al the Office OF Alexander & Green, although
be was not certain whether that meeting had
not been directors meeting.
Are you able 10 say that August IL, 1902.
you had any certificates % etock?" asked Mr..
Cntermyer.
4 certainly had some in my hands" Mr.. Nixon
replied. Everything was made out in my name,
one certificate for preferred stock and one for
common stock. then Endorsed the two certii-
Gates and handed them back. They were spI-
up snd divided among the vendors"
This transaction. Mr. Nixon said, was closed
in the Office Of the Trust Company Of the Re
public. al No. Il wnIam-st. When he LEFT that
Office that afternoon he had for himself certi1-
Gates for $500 shares Of preferred stock and
$500 shares OF common stock less the amount
OF stock be had turned over to Samuel L. Moore
g. Sons. All the rest Of the stock, after being
issued TO him and Endorsed back in blank, had
been turned over 10 the different vendors. ex-
oept the surplus. which vas left with the Trust
Company Of the Republic He also had d check
Tor the money that paid 70 him.
An interruption by Charles c. Deming Of
Alexander d Green, stirred Mr. Cuterrnyer 10
seemingly angry comment at this point. II
s-l,rlz." he said. winling al Mr.. Deming that
argument II this case might be reserved for the
court Counsel for the company. while contend
ins that the company vas sovent az the time il
went into the hands Of the receiver, has been
trying TO prove In the cToss-examination Of Mr.
NIXON that the company was insolvent. We are
81