Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1903-11-02
A GREAT STEAL!
Receiver Smith Reports on the
ShipbuiIding Trust.
Wi!fuI Misstatement, FaIsifcations,
SwindIIng and Fraud Alleged
In Organization and Attempts to De-
ceive the Public.

| New York, Nov. 1.-SenSational ale
cations of Wilful misstatement, falsif-
cation, swindling and fraud in the or
ganization and flotation of the United
States Shipbuilding Co., of attempts to
nislead and deceive the investing pub
| lie by erroneous prospectus statements
| and of a deliberate plan to wreck the
company by Withholding the earnings
| of the Bethlehem Steel Co. are con-
| tanned in the report of Receiver James
Smith Jr., of the United States Ship
building Co., made public here, today.
The report concludes with the recon-
mendation that suit be brought against
all persons who received stock of the
company without paying full value
therefor. including the promoters of
consolidation, the vendors of the con-
stituent plants and Charles M. Schwab,
to recover from them such amount as is
necessary to pay the debts of that COM
pany in full.
Receiver Smith also recommends the
sale of the Crescent Shpyard plant in
New Jersey, and the Harlan & Hol-
lingsWorth plant at Wilmington, Del,
subsidiary plants not now in operation,
and the enforcement of a receivership
for the Bethlehem Steel Co, to insure
the payment of dividends in the Beth
lehem stock by the United States Ship
building Co.
In the words of the report the organ
ization OF the company is characterized
as an artistic swindle," Receiver
Smith stating that the value of the
plants their earnings and working cap
ital given in alleged thorough reports Of
expert accountants vary so much from
actual figures or were "Wilfuliy mis-
stated that it is extremely doubtful ii
such accountants reports We're submit
ted at the organization Of the company;
that the organization was affected by
"DuInrny" stockholders and officers;
that statements in the prospectus is
sued on June IA, 1902, We're Incorrect:
that for property wirth St2,4H, SIG, the
s'hipbuilding 60. paid in stock and
bonds $G7 1891 900: that ''the accommoda-
ting directors Of the United States Ship
building Co., in acquiring these COM
panies deliberately gave away millions
Of dollars in the stock and bonds OF
their company.
"Whoesale PLUMBER" the receiver
terms it to 4 few persons and that, so
far as the bethlehem Steel Co. is con-
cerned with earnings have been with
held in a deliberate attempt to wreck
the United States Shipbuilding Co.
The report deals freely with the name
of Charles NJ. Schwab and the nature
of the Bethlehem transaction says Mr..
Smith is such cas- to Justify him (Mr.
S;chwab) in saying that he did not sell
the Bethlehem Steel Co. but took over
the United States Shipbuildng Co, the
directors of that company giving him
$50, 000G00 in stock and bonds for talk
ing it off their hands,
The rccommendati tons of the report in
full are as follows:
I. That in order to avoid dCprecia-
| ton by disuso and because Of the cxis-
tonca of controversies as to the valid
lity of the encumhranccs upon the
| promises, the Crescent shipyard be sold
free and clear Of all such encumbranccs
rs soon as the work now in contempla-
| tion is completed.
| 2. That similar action be taken with
| reference to the plant of the Harlan &
lIOllinGWorth Co, Wilmington. Del.
8. That as soon as the debts of the
company shall have been ascertained
| suit be instituted against all persons
who received the stock of this company
| without paying the full value therefor
to recover such amount as shall be nee
essary to pay said debts in full, under
Section II of an act of the Legislature
of the state of New Jersey, entitled
an Act Concernin" Corporations Ore
vision of 1896.
4. That suit he instituted against
Continued on page 81