New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-11-02

The report Of James Smith ir, receiver Of
the United States Shipbuilding Company, copies
OF which were delivered TO representatives Of
the newspapers yesterday, is a tidy document
Of about 10000 words. II was filed late on
Saturday night at The chambers Of Judge Kirk
patrick. in Newark. and it is addressed TO the
Circuit Court OF the United States for the Dis
trict Of NeT-Jersey. It contains history Of
the formation and failure OF the shipbuilding
company. declares in plain terms that there
was fraud the promotion Of the company.
LAYS at the door Of Charles NJ. Schwab the re-
responsibility for the company's failure and
makes the recommendations given above.
AS usual in such reports. Mr.. Smith recites at
the outset the facts about his appointment as
receiver and tells what he has done in the way
Of investigation since he took possession of tie
oonpany's properties. Then he goes into the
history Of the organization Of the company and
gives in full the offer Of John W Young, the
promoter which vas accepted by the three
young dummy directors at the beginning of
the company's existence, and upon which they
voted TO acquire the several shipyards, manu-
featuring plants and the Bethlehem Steel Com
pany and authorized the issue of many millions
Of securities. He says that the boy directors
acted on the statements Of the accountants en-
ployed by the promoter without knowledge Of
or investigation into. the merits of the proper
ties" and adds
comparison Of the figures alleged to have been
the offer of John W. Young. with the true figures
f5 to- the pnTehas Of
bsf s rs contained in the minutes were VII
fully misstated. L Is extremely doubtful whether ether
a of that time. the minutes recite
Mr. Smith says that the following facts ap
pear clearly from the later report Of the &C
countants;
the a9pRt Of sepTasts on rf ha9d on
he n,,ifes Of The board Of directors was So 594-
900 Is less than the amount therein stated
vvfsteVer proit was involved in these contracts
instead Of eighteen months as alleged IN the min
Ts the gr0ss on such sont Its: ips sffs
OF amounting 70 1880 Is me sst sr1fTrs CON-
eired in the report. would be about 100000; and
Ian pr on we Work in hsnd and in SIGHT Of the
constituent companies: exclusive OF the Bethlehem
more substantial basis than the widest conjecture
4 schedule is annexed TO the report. dealing
with actual cost Of work at the shipyards. and
the receiver SAYS II discloses a situation so
much at variance with the figures alleged to
have been relied upon by the board Of directors
as to lead TO the belief that the minutes of the
board Of directors in this respect must have
been wilfully falsiied."
FALSE STATEMENTS IN PROSPECTUS.
The receiver gives some facts and figures re-
garding the earnings Of the plants, and then
says Of the prospectus OF June a. 1902. which
issued TO the public with view TO in
ducing subscriptions for the bonds Of the United
States Ship5uilding Company;
Waving for the present all discussion as TO the
value OF the plants going concerns, a comparison
Of this prospectus with the facts discloses the 1o
lowing false and misleading statements; z
First-At the date o. this prospectus the Chiteo
States Shlpbuildlng -oTnPaGg- cad not peel IN
corporated.
Second-Its capital stock was never twenty mill
which amount subsequently increased 10 lolty-
five millions. -, - :,
Third-Six Of the ten persons mentioned az a.
rectors in the prospectus were not directors u inc
company and never have been - -
Fourth-The amount Of contracts on lazy ~ e1u
not exceed SOS 600 900 their value being S54ls
81 81 but Of this profit was aEalldole pnIy
on the uncom pleted portion OF the cohuacts MlSh
proft heretofore shown, VIII hot eASeeu si-V'of-
a6 % and viii take three years 70 earn -.
FTfth-These companies did not % A.itb
cspifaI OF more than $4,000; the hguTes OF the
scrolIntants show only a working capllal OF saZis-
7ss 81 This working capital, noHeVeI was almost
"bliterafed by subsequent adjustment as herein
before set forth. -. -. rroe,s -, ..-.-.-.
~ a. hand would be S5Ooo,e0 was Gndeniably
faIse II IN Is claimed that the pIoht was esti-
mated on the entire amount OF S'o.Ot'en' the an