The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-12-18

SCHWAb'S CONTROL OF
SHIPbUILOING CONCERN
Charles Steele, a Morgan Partner,
Testifes How 1t Was Brought
to Pass "for Running a Risk"
PRIOR SALE AGREEMENT
Attorney for the Corporation Re-
fuses to Disclose His Clients
Business.
PRIOR SALE AGREEMENT

NEW YORK, Dec. 1.-THE hearing on
the application to make permanent the re-
ownership of the United States Shipbuilding
Company was resumed here to-day. Charles
Steele, a member of the firm Of j. p. Nor
gan & Co., being on the witness stand for
a short examination as to the connection of
that firm with the promotion of the Ship
building company and the sale to il of the
Bethlehem steel plant. Counsel Untermyer,
of the suing bondholders, questioned Mr..
Steele about the purchase and sale Of the
Bethlehem plant by ]. p. Morgan & Co. as
syndicate managers for the United States
Steel Corporation, and the agreements be-
tween c. NJ. Schwab and Robert p. Under
man, OF the Bethlehem plant, and j. Z.
Morgan * Co. for the purchase of the Beth
lehem plant in 1901 were produced and adj
mitted In evidence.
Mr.. Steele testified that the purchase of
the Bethlehem plant by j. Pierpont Nor
gan & Co., as syndicate managers, was ar
ranged by Mr.. Schwab and Morgan & Co.
in June, 1901. Mr.. Schwab assigning to the
steel syndicate a contract which he had for
the purchase of a control of the Bethlehem
stock The circumstances and details of
the purchase of the Bethlehem stock by
Morgan q CO: were gone into at great
length, Mr.. Steele testifying that he had
accepted Mr.. Schwab's opinion of the value
OF the plant and had taken the contract for
the purchase of the stock at the price
SCHNdD Ndu dSreeu 10 pay the original
owners. the understanding being that
Schwab should share any profits at the re-
sale of the plant. The Shipbuilding consol-
idation was not a prospective purchaser
OF the Bethlehem plant when Morgan e. Co.
bought the Bethlehem stock, Mr.. Steele
testified, and was first so considered in
them the project of a sale of Bethlehem
TO Messrs. Nixon and Dresser for the ship
yards concern.
On June IL Mr.. Schwab told him that the
Shipbuilding company desired the plant and
made an offer on behalf of Nixon and
Dresser. The following day, after consulta-
ton with George w. Perkins, and a casual
examination of the shipyards prospectus,
Mr.. Steele notified Mr.. Schwab that the
offer would be accepted. Mr.. Nixon and
Dresser were to pay for the stock the origi-
dition to 100000 of the Shipbuilding COM
pany securities.
Mr.. Schwab at, the time Informed Mr..
Steele that he (Schwab) was to receive &c.,
100000 In ~Shipbuilding bonds and the same
amount of each kind of Shipbuilding stock.
Mr.. Steele said that at the time he con-
sidered the shipyard proposition a good one
and its stock a good investment, expect
ing the common stock to earn dividends
from the start, and for that reason he be-
lieved that the 5000, 900 in stock embraced
in the purchase price was an adequate re-
turn, interest and profits, on the Morgan
investment Of 81, 246, 900 for the year.
AT this point a recess was taken after
which Mr.. Steele continued his testimony.
Mr.. Untermyer asked what reason there
was that Mr.. Schwab owning no Bethlehem
stock at the time, should receive $3O. 900. 600
in Shipbuilding bonds and stock at the
time OF its sale. to which Mr.. Steele re-
piled that il was in consideration of the
risk Mr.. Schwab assumed in making the
contract for the purchase of the Bethlehem
stock, which was Immediately assigned to
Morgan x Co. Mr.. Schwab had not told
him that these securities would give him a
control of the Shipbuilding company.
Coming to the Harris-Gates agreement,
which provided for the sale of the Morgan
and Schwab stock before all other ship
building stock. Mr.. Steele said that he knew
of ii all the time, having seen a copy of il
and discussed 1t with Charles Gates. OF
Harris. Gates & Co., but not with Mr..
| Schwab. Mr.. Steele had previously been
informed by Schwab or Pam that there
was an arrangement for the sale of the
Schwab stock first, and had declined tC
have the Morgan stock included. Sub
sequently Mr.. Gates left with him a copy OF
the agreement covering both the Morgan
and Schwab stock, to which Mr.. Steele,
after consulting Mr.. Perkins, informally ac-
ceded.
When Mr.. Steele had left the witness
chair Mr.. Guthrie had an entry made on the
record of his objection to the publicity
brought about by the method of conducting
the examination.
I'VE will concede on the record" said Mr..
Untermyer, that Mr.. Guthrie objects to
the publication of anything that we may
bring out here"
Charles Alexander, of Alexander & Green
the law firm concerned In the promotion OF
the Shipbuilding Company, succeeded him
He formally refused to produce the cable
dispatches which were the subject of sc
much dispute last week during Mr.. Perk.
mss examination Mr.. Untermyer put 9
long series of questions about correspond
ence and papers in the case. but Mr.. Alex
ander declined to make answer in mos,
cases, on the ground that the ommunica
tons were privileged as between attorney