Evening journal., 1903-06-24
RECEIVERSHIP
IS PROBABLE
Schwab May Be Compelled
to Tell His Part in Ship
yard Case
ANSWER OF THE DEFENDANTS
Their Senior Counsel Compares the
Jersey Proceedings With the Dreyfus
Trial, in Franoo--Judge Gives lndi-
cation Of His Course.

Trial in Franoe--Judse Gives Indi-
cation Of His Course.
New York. June a.
Three salient features marked The
second days hearing of the application
for the appointment OF q rccci-cr for the
United States Shiphuilding Company
at Judge Kirkpatricls chambers. IN tho
Federal Building at Newark ycster-
day
These were the threat that Mr.
Schwab might be compelled to detail
his part in the manipulation of the af-
fairs of the Bethlehem steel plant and
the United states Shipbuilding Conc
pany; the severe arraignment of Mr.
Schwab by counsel FOR the complains
ing first mortgage bondhoders (whose
first lien would be wiped out II the pro-
posed reorganization plan We're made
eiiectivc). in which the man who got
$50. 600 of securities out Of the
merger was compared TO the wreckers
of the old sixth National Bank OF this
city who were sent to prison for crimi-
nal acts, and the remarks of Judge
/ Kirkpatrick before the arguments real
! ly began yesterday. in which he seemed
To Indicate that the appointment Of
receiver was inevitable.
For the defendants, the officers OF
the United states Shipbuilding Com-
pany, their senior counsel Charles l..
lCorbin. interjected just one Illuminating
remark when he compared this pro-
ceeding to the Dreyfus trial, and said
the complainants came into court say
ing, "Jaccusc" and then expected the
nj
More Trouble Predicted.
The intimation that more trouble
was On store for Mr.. Schwab came In
Mr.. Untermyer's argument He was de-
claring that the complaining first mort
gage bondholders when they invested
never knew they We're dealing with the
master OF Bethlehem. They heard OF
that transaction later
1.-THE Shipbuilding company when it
bought the Bethlehem works paid $780,
100000" said MIR. Untermyer. Those
$50 10000 were pretty well secured. but
they were Illegally secured. MIR. Schwab
not only took the stock of the Bethle-
hem company as security for his $10,
600. O0O but he did thing that is still
to be explained. and for which he may
bc called TO account He had the Beth
for 10000 600 What consideration did
the Shipbundmg company get for that
mortgage? Under what law could such
deal be made? Since when does a cor
poration which gets no benefit from
such transaction make mortgage to
one perpn for the amount Of that
stock?
There Is only one case similar TO
this in audacity that / can recall In
picturesqueness this equals the trans
actions OF the old Sixth National Bank.
whore the banks officers bought and
sold their stock and borrowed the
money from the bank TO do It,"
The opening remarks of Judge Kirk
patrick were regarded as fun of signin-
canoe The lawyers FOR the Rcorganiza-
ton Committee and the officers Of the
company wanted to nut i'm supplement
] tary anidavits showing that 100000
more stock mad been deposited with
them
1t doesn't make much difference
about Mr. sheldon, observed the
Judge. "ne represents a lot Of bond-
holders who are willing to give up their
bonds. As / understand IT, these frst
mortgage bondholders cannot he wiped
out without due process OF law. IL does
not make any difference If six
out OF ten or nine out OF
! ten want to give up their bonds. they
. can't take away the others unless there
, is "a foreclosure. or default or some due
. process or law. The reorganization
scheme cannot DE carried ont without
their consent. there must be some for
feiture or failure 90 pay interest due
Z ON the Dart of this company first. While
. / nice for
j his scheme to go through. he cannot force
b these men who won't deposit their se-
curitios with him"
one remark of the Judges which was
not relished was made when he OBJ
served. during the course of Mr.. Inter
\ myers arraignmcnt Of Mr.. Schwab. an
i auusion to the inception of the
A scheme. "He means you, AR. Deming.
III "Oh. yes; Mr.. Deming has sins
Y enough to answer for In the Inception
i of this company" remarked Mr.. Inter
myer.
Mr.. Utermyer's Charges.
/ eve are not hasing our contentious
Il upon any disputed facts at all'' said Mr
Il trntcrmyor al the outset, "but upon th'
II confessions that the company is hopeless
ii lv insolvcnt and that this Is an attempt q
wreck it further. First. under the New
II Jersey statute. we ask for a receiver upoi
a the fact of the company's Insolvency an'
IN l,that It will not be able to resume Its oper
"a atious. Second, and independent Of tina
s statute. we assert that under the rqies o
st the United States court we are entitled e
IN such relief. Third, we declare that IL thi
y. corporation is not insolvent this plan o
s. reorganization is a scheme TO wreck it
..IN
p ask for a restraining order
an "Wc thlnk we are performing the yer.
~ highes; public duty in exposing this fraud
rh;. ,.,r,,.r,- has bocn a fraud and