The free lance. (Fredericksburg, Va.) 1885-1926, 1903-12-29
SCHWAB FILES ANSWER
Denies That He or His Associates
Tried to Wreck Shipbuilding Co.
HE EXPLAINS BETHLEHEM DEAL
Did Not consplre With Dummy" Di'
rectors Of Ship Company to Secure
Control Of Both Concerns - Repu.

dlates Connection With John Young
New York. Dec. 23.-Charles NJ.
Schwab filed his answer to the cross
bill of the United States Shipbuilding
Company and James Smith, Jr, It's
receiver. in the United States Circuit
Court for the southern district of New
York. The case is that OF the company
and its receiver against the New York
Security and Trust Company and Mr..
Schwab.
After admitting certain of the funda-
mental facts which have heretofore
been established. Mr. Schwab takes up
the various allegations and charges of
the cross bill. lie says: Il deny that
| ever was or became one OF the pro-
moters Of the shipbuilding company or
that l and number OF persons asso-
ciated with me acquired the capital
stock Of the Bethlehem Steel Company.
as averred in said cross bill.
Emphatic denial is made that he
ever conceived any scheme of trans
ferring to the shipbuilding company
the stock of the Bethlehem Steel Com
pany at an excessive rate or upon con-
ditions permitting him OF his associ-
ates TO control the shipbuilding COM
pany or TO absorb for his benefit all
OF its property and assets. to the in
jury Of its creditors and Of its bona iide
bondholders and stockholders or other
wise"
Continuing Mr.. Schwab says II
deny that with any purpose of accom-
plishing such intent and purpose or
otherwise ] or any associates OF mine
represented 10 the shipbuilding COM
pany that the said shares Of stock were
worth the sum of $50. 600. 900; that the
said steel company had during the
fiscal year ending July 81. 1902. made
net profit in its operations amount
ing TO the sum of s144l.20S that its
said surplus assets on July 81, 1902
amounted 70 S4.11S.00O" Mr. Schwab
denies that he ever made any false rep
reservations regarding the Bethlehem
Steel Company and denies that mis-
stock on July 81. 1902, was not worth
To exceed S7,500,o0o.
Mr.. Schwab repudiates any connec-
ton with John w. Young and says
he never caused the latter TO propose
to the shipbuilding directors TO trans
fer 100000 shares Of Bethlehem stock.
$4,000 600 each OF bonds. preferred
and common stock OF the shipbuildins
company.
Mr.. Schwab is Of the belief that the
stocks received in exchange for the
steel stock did not exceed the value Of
the steel stock He denies that the
bonds were issued without considera-
ton.
He AYERS that neither he nor his as
sociates conspired with the dummy
directors Of the shipbuilding COM
pany'' to have inserted in the mort
gage 70 the Security and Trust Com
pany and in the charter Of the Ship
building Company provisions which
would give him OF them absolute con-
troll Of the shipbuildlng and steel COM
panies. with the power to so manipu-
late the corporations as to cause de-
fault in the payment of the interest
thereby defrauding creditors, stock
holders and bOndhOlGers OF the ship
building company.
Mr.. Schwab says that he and his as
sociates had nothing to do with the
Withholding by the Bethlehem com
pany Of the dividend payments on the
100000 shares of its stock owned by
the shipbuilding company for the pur-
pose Of wrecking the latter concern.
He asserts that on the other hand
although often requested so to do.
the steel company has refused to de-
clare such dividend The defendant
continues:
Il deny that ! OF the Security and
Trust Company, or the directors of
the shipbuilding company. or of the
steel company. or any associates OF
mine. acted fraudulantly or in bad
faith In the premises or for the pur-
pose Of destroying and wrecking the
property of the shipbuilding company.
in the interests Of myself or any asso-
ciates OF mine. and / deny that this
suit Is brought at the instance OF the
reorganization committee and myself
or any associates Of mine for the pur-
pose OF carrying out the aforesaid or
any other wrongful and fraudulent
plan and scheme. or of profiting and
taking advantage from the alleged de-
faults occasioned by any wrongful or
fraudulent acts. 10 the injury OF the
sbipbuilding company, or the bonafde
creditors, bondhOlders or stockholders
Of the shipbuilding company"
After specifically denying any and
every charge Of fraud, unlawful com
bination, conspiracy or wrongful act
in his connection with the affairs OF
the Bethlehem Steel and United States
Shipbuilding companies, Mr. Schwab
details the history OF his relations
with the two concerns. He says that
upon his return to the United States
on March IL, 1903, he found the ship
building company in financial Difficult
ties and learned for the first time that
many OF the representations in the
prospectus of the shipbuilding plants
we're false. He also found that more
capital was needed for the shipbuild'
ing company, as well as for the Beth
lehem company. the money for the lat
ter TO 20 for betterments.
Mr.. Schwab adds. 81 was then and |
have ever since been and am now able |
and willing TO return all the securities |
received by me or by Messrs. Morgan
q Co., and 10 rescind the whole trans
action. and | hereby tender the same |
for that purpose"
A piece Of flannel dampened with
Pain Balm and bound |
on the affected parts, is better than |