The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-10-24
SHELDON PLAN BEST NIXON.
ADMITS THAT 1T MIGHT HAVE
SAVED THE SHIPYARD co.

SAVED THE SHIPYARD co.
Testines That, Even with the MOO 900
a, From the Bethlehem Plant. the Inter
est on the Bonds Could Not Have
Reen Paid-Hls Plea for Publicity
Lewis Nixon admitted on cross-examina-
ton yesterday his belief that the plan OF
the Sheldon committee for the reorganiza-
ton OF the United States Shipbuilding
Company would have saved the company
from bankruptcy last spring. The COM
planning bondholders who are seeking to
make the temporary receivership perman-
ent assert that the plan was part OF a
scheme to wreck the company in the inter-
ssts Of Charles M. Schwab and others.
Mr.. Nixon admitted also that, even had
the earnings Of the Bethlehem plant been
turned In, they would have been wiped out
by the company's obligations by Aug. /
and that the company would then have
been on the verge of bankruptcy. with its
bonds of no value. Rather than let the
public deal in it's securities any longer
Mr., Nixon even wrote to Mr.. Schwab
advising that It's real condition be published
q was tho plan Of the committee.
Mr.. Nixon. who had been called by the
complaining bondholders. was cross-e1-
aminsd by William d. Guthrie. counsel for
tho company. Mr.. Schwab was present
It ths bearing. with Max Pam. Mr., Nixon
began his testimony by identifying the
underwriting agreements signed by Mr..
sohwab and some Of the compliments in
tho suit a. being the same. 1t was shown
that Henry T. Scott OF the Union Iron
Works, had subscribed for $3.50 900 and
Z. W. Hyde of the Bath Iron Works for
$50 900.
Going back to the appraisals made by
Admiral Bowles and Mr.. Nixon at the time
tho prior scheme was talked about when a
plants, Mr.. Guthrie brought out that this
included tho Newport News Company.
which did not 60 into the combination,
but did not Include the two other concerns
shat afterwafd went In. Mr.. Nixon said
that tho Canda company was deemed
desirable as q central plant for equipments
at first, but that later on he opposed it's
purchase. He ceased his opposition, he
said, because much Of the underwriting
was based on il and to have objected longer
would have invalidated this.
Mr.. Guthrie asked the witness II he knew
10 what the allotment OF SEQ 900 cash. $50, 600
bonds and $50, 600 Of each kind Of stock
from the promoters profits to Alexander
4 Green related? Mr.. Nixon said that
John w. Young, the promoter, had told
him II was for counsel fees.
y had nothing to do with it. but Young
told; me he was anxious to compensate
them for helping him ever since zee; the scheme
was rss talked Of mi st10 %hs sald bs signed
with Dresser the notes for A,0OO,OOO be
believed that he had ample security in the
form of Shipbuilding securities. MIR. Dres-
ser, he said, told him that the Trust Com.
pany OF the Republic would relieve him OF
the responsibility afterwa,d. ,
about the Bethlehem company before it's
acquisition, said that he had inspected 1t
several times, and added:
IT was one Of the great establishments
OF It's kind in the world. 1t was OF value
to the company because We wanted to DO
able to bid for completed battleshps.
That is something no other country in the
world can do. Building, arming and armor-
ing battleshlp would give US standing
throughout the world that no other country
has. We wanted to show to the world
we could do that
Il also knew, !" he added, that the earn
and as there would have to be practically
q reor ganization Of some Of the other com.
panies, hoped that these earnings would
help In the combination.
Q. Isn't It a fact that In the year after It's
acquisition the earnings Increased $1,000 600
S Soss t Ii t Xsar before In the n''sh00
&. Isn't Il a fact that the earnings Of the
Bethlehem plant at the close OF the first year
IN inclined to think so.
@. In your opinion as an expert. VII theEe
be an increase OF these net earnings! A. In
the present condition OF naval construction
I should say there would.
Mr.. Guthrie asked MIR. Nixon to tell what
the condition OF the industry In the United
States at the time the company was
formed was, as compared with previous
yesrs. Mr. Nixon replied that with the
exception Of the Lake regions, where it was
the country was -languishing.
This" said he, -is due to two things
First, because the Government had ap-.
propriated an enormous amount Tor naval
construction, practically doubling the
number OF ships. We have not, got here
the amount OF labor they have abroad and
hence the cost Of labor was raised. Pros
perity also raised the cost of materials.
Then the labor organizations began an
agitation for shorter hours, which we were
forced to concede. This has decreased
the output and made the general expenses
greater. The increase to-day in the cost
of ships for these reasons Is enormous.
To show that the witnesses Crescent
works had not been purchased at an ex-
oessive price, Mr.. Guthrie brought out
that Mr.. Nixon had refused a cash offer OF
u 0O0, $50 for them at the time the ship
building project was first preached.
Mr.. Guthrie then had Mr.. Nixon identity
three letters he wrote to Mr.. Schwab in
May last. In one Of these he said that
the credit Of the company had been i'm
paired by the talk on the street and asked
Mr.. Schwab II something could not be
letter Nixon asked Schwab to confer with
Mr.. Sheldon and "do something at the
earliest possible moment Mr.. Guthrie
asked him what it meant,
"The first OF July, when the interest was
due, was looming up said Mr.. Nixon.
who also admitted that he had talked early
In the spring with Mr.. Schwab about getting
more capital as being absolutely necessary.
mr.. Nixon, isn't it a fact" said Mr.
Guthrie that, as business man, reflection
convinced YOU that it would be wise to
recommend this 1.-THE Sheldorl plan2'
Il saw no other way" replied Mr.. Nixon.
O, Isn't it q fact that II the g.. 900 600 pro-
vided under this plan had been furnished
you would have been able to rehabilitate the
company? A. think SO.
@. Weren't you convinced that II would
be to the best interests Of those who held
i D,spsS s bass aaa the plants on the
o. And II receiver had not been appointed
all plants would now be in successful opera
ttonl A. On condition that the money was