Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1903-10-16
DUMMY DIRECTORS.
Mysteries of the ShipbuiIding
Co. Being Exposed.
Plans by Which Someone Played
Havoc With the Industries
Which Were InveiqIed into Joining the
Which Were Inveieied into Joining the
Combination.

ard. Horace Gould and Kenneth Nc
Laren, young men connected with the
CORPORATION Trust CO. of New Jersey
who acted either as incorporators or
directors of the Shipbuilding combina-
ton, We're called to the stand and eX-
amined at length as to the circum-
stances under which they served the
promoters OF the enterprise.
Frederick Seward, who had served
as a director, was questioned for three
hours, the inquiry covering his con-
nection with the company from the
time Alexander and Green asked him
TO serve as a director until he resigned
when the permanent officers We're
elected.
His stay on the stand was prolonged,
because he would not admit that he
was a mere dummy" acting under
the orders of the counsel of the COM
pany. He held that he had used his
independent Judgment in voting on the
many important questions determined
by the directorate when he, Louis Dali
ley and Harold Morgan of the Corpo-
ration Trust Co. were the three mem
bers of il.
odlHutI liltI iItSt I. toblloel lol tiiS
Eondholders questioned him at length
with the object of showing that he had
not paid for the share of stock that
he held. that he knew nothing of the
value of the properties acquired by the
| votes of himself and his associates, and
| that everything done by the directorate
was at the instance of counsel and the
mere formal carrying out of orders.
! Seward admitted that he did not know
| of the location of the plant nor the
| character of the business of the Harlan
! IiollingSWorth Co, Moore q Sons and
the Canda Co. and said that he was
under the impression that the Bethle-
! hem plant was located at Homestead.
Seward and the other temporary direc-
| tors acted upon the increase in the cap
| ital stock of the company from $1,000
| to $i5 900 900 voted for the issuance
of securities to The amount of $1l,000,-
| O0O and decided other matters of i'm
rortarce. and the testimony of today
| indicates an intention to attack the
| validity of all those transactions. 1t
| is claimed that the original directors
were simply dummies and that while
| the forms of the law We're closely fol-
| lowed at all of the meetings, none of
the directors was properly Il holder of
stock and that none of their acts was
of legal value.
! The hearing went over until next
| Wednesday, when Lewis Nixon will
take the stand. He was sworn at the
close of the hearing, today, but did not
give any testimony.
Frederick Seward. formerly one Of
the directors of the United States Ship
building CO.. and an employe of the
Corporation Trust Co., was recalled TO
the stand. He became a director of the
United States Shipbuildng Co, in 1902,
at the request of Mr.. DeminS Of Alex
cnGer & Green. The witness said he
had acted as an incorporation for from
80 to - companies while he was EN-
pl0yed by the Corporation Trust Co.
He had acted as director for 10 or Is of
the companies.
Mir. Untermeyer examined Seward at
length as to the circumstances attend
ing the issue to him of q temporary Ger
tihcate of stock upon which he qualified
as a director. The purpose of the eX-
tended showing as to the acts OF the
so-called "Dummy' directorate formed
in New Jersey when the shipbuilGing
company was first organized has not
yet been disclosed but it is said that
the bondholders or the receiver may
attack the legality of the acts OF the
first board. These acts include the in
crease in the capital stock and the aC-
uui:ement of the constituent companies.
The witness said he personally paid
nothing for his share of stock and he
did not know if anyone else had paid
for it. He understood however, that
the share of stock belonged to him. He
endorsed the share of stock in blank
and surrendered it to one OF the en-
ployes OF the Corporation Trust Com
pany, receiving no payment. He cid
not know what became of it.
In answer to Mr.. Untermeyer Seward
testified he understood a dummy" d
rector to be a temporary director and
Throughout the examination insisted on
referring to himself as Il temporary
Director
Witness said he had seen Mr.. Dcmina
of Alexander & Green several times While
acting as director hut could not recall
their conversations. He was given the
minutes of the first directors meeting lie
fore the meeting was held. The nlnuteG
were a resume of what was to be done.
They included all of the documents and
resolutions ready to he passed The pro
ceedinss were put through without
change.
The witness said that he and his, co-
directorate voted for acceptance of the
offer contained in the minutes. He ac-
copied the papers that were submitted
to him at the meeting because they came
from reliable sources. He lid not know
the location of many of the plants and
said he had placed no valuation ON tho
plants separately. He had. however
placed valuation on the whole group OF
Yards and Mr.. l'ntermeyer asked MIN
how he could value the whole if he had
not valued the plants. The witness said
he lad taken the report of the account
ants on the valuation.
MIR. Howard was continued on the stand
when the hearing went on in the after
noon, and MI. tntermeyer sought to SHOW
that he voted while a director simply
as he was told by the attorneys for tho
corporation and that he had possessed
no knowledge as to the value of the soy
eral properties which ne voted to pur-
chase. The witness would not admit tina,
he had blindly followed Instructions while
a director. and insisted that he had acted
as his own judgment dictated. accentian
the assurances of persons in whom he bad
faith when he voted to buy the pronarty
which the company acquired
When the witness passed to tho other
side for croSs-eNamlnation. Mr. Guthrie
handed him the minute books Of tho