Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1903-10-24
scHWAB's DEFENCE
Continued from page -

eTstl CHdTdcleTlSIlcS VI tue bSliliohSih
plant. He said that it was one of the
greatest properties of the kind in the
country and that it was of great help
to the shipbuilding combination. Over
objections from Mr.. Untermeyer, Nix
on testified that during the first year
that Bethlehem was in the combination
it earned upwards of 100000. He be-
lieved it's earnings would increase, but
said any estimate by him in figures of
the expected increase would be sur
mise.
At the request of Mr.. Guthrie the wit
ness told of the adverse conditions in
the shipbuilding business that in the
last year or two had put many of the
shipyards in bankruptcy. He gave in
creased cost of labor and labor troubles
and increased cost of materials and
general yard expenses as the chief
causes of the trouble.
The witness testified that his talk
over the telephone with Mr.. Schwab.
when the latter said that he had advis-
ed the directors to refrain from attend
ing meetings, had occurred after the
plan of reorganization had been pub
lished. The witness identified letter
he had written to Charles Wetmore
giving some estimates and SWore that
before he wrote the letters he did not
know that there were errors in the books
of accounts of the combination and still
believed that the reports of the account
ants were correct.
Guthrie then produced three letters
written by Nixon to Schwab in May,
last, and made them the basis for a
defence of the reorganization plan and
the withholding of the Bethlehem pro-
fits. The first letter was written, May
Z, and referred to the meeting which
Schwab was to have with Mr.. Sheldon
of the reorganization committee. 1t i'm
pressed upon Schwab the necessity of
obtaining money and urged that meas
ures for the relief of the company be
speedy. The second letter, written a
day later drew attention to the rumors
as to the company. which Nixon said
would embarrass the concern with the
bankers who had loaned it money, and
suggested that some public statement
he made The third letter written, May
26. formally approved the plan of re-
organization and pledged the co-opera-
ton and support of the writer.
After some preliminary questions as
to the letter, Guthrie asked Nixon if the
81, 900 goo promised under the plan of
reorganization had been promptly fur
nished if he believed the company
could have met it's obligations and the
plan be continued in operation. Nixon
answered affirmatively and then Guth-
RE asked:
IF the receiver had not been appoint
cd. could all of these plants have been
kept in operation"
Untermeyer objected to the question.
saying that it had not been shown that
the money was forthcoming and that
the reorganization plan involved the
elimination of the bondholders.
"On condition the money was OBJ
tained,' answered Nixon. Il am salts
fled that the plants could have been
kept running
Guthrie then asked Nixon if he could
have kept the company and plants 60
ing if he got the 100000 from Bethle-
hem and despite the fact that the fixed
charges amounted to approximately
81, 700, 900. The witness answered grim
lv that he believed he could and that
he had been willing to make the try.
He wanted more working capital but
would have done the best he could.
Guthrie asked the witness what he
would have done with the 100000 if he
had got it and led him through Il cal
culation showing him how quickly it
would have been absorbed without ma
terially lettering the condition of the
company. He first deducted the $3.50.
600 paid by Bethlehem and then took
out the $685., 500 due on July l, in pay
ment of interest on the first mortgage
bonds and then showed that the inter-
est charge on Aug. 1 would have swal
lowed the balance.
Nixon explained that the attack on
the credit of the company was due to
rumors that it would not be able to
meet it's interest obligations. Creditors
were pressing and he said what he had
in mind was ITO utilize some of the
bonds in the treasury in borrowing
money.
do you think it would have been
honest to have paid the July interest
with all Of the past due and rapidly ac-
Grazing Indebtedness asked Mr.. Guth-
RE
Mr.. Nixon objected to the word "hon-
est ana Nftflitt 1t tIlStIlScu HIS pucSliult
to: DO YOU think there is an honest
difference of opinion as to the justice
of paying the interest charges and do
you not admit in your letters that to
continue business would precipitate i'm
mediate bankruptcies"
Il wanted money" said Mr.. Nixon
land was prepared to make almost any
sacrifice"
WAS it not a fact that the board of
directors thought that because of the
want of accord. the accumulation of
debts and the pressing need for money
the proper course was to publish to the
world that reorganization was neces-
sary in order that people would not lon
ger deal in securities on which interest
could not be paid on July 1?'
Most decidedly" said Mr.. Nixon. Il
did not want the people to continue
dealing in the securities"
Through an order granted. late today.
Charles NJ. Schwab was granted leave
10 intervene as complainant in the
acton recently commenced in the fed
eral courts by the New York Security
and Trust Co. against the United States