Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1903-12-23
That He Owns Most Of the
ShipbuiIding Co.
And Denies That It Is Anybody's Bust
ness but His Own.
Files Answer to the Cross Bill in New
=. York Court.

receiver IN the 1 iliteu States SiSthe
court for the southern district of New
York The case is that of the COM
pany and its receiver against the New
York Security and Trust Co. and Mr..
Schwab.
After admitting certain of the fun
damental facts which have heretofore
been established, Mr.. Schwab takes
up the various allegations and charges
of the cross-bill. He says:
Il deny that 1 ever was or ever be-
came one of the promoters of the Ship
building Co., or that / and, Il number
of persons associated with me to ac-
quire the capital stock of the Bethle-
hem Steel Co. as averred in said cross
bill.
Il admit that the property of said
bethlehem Steel Co. was on the 12tn
day of August, 1902, encountered by
first mortgage executed by the Beth
lehcm Iron Co.. the predecessor IN title
of said Steel Co.. to secure bonds ag-
gregating $1,351 ,000, bearing interest
ut the rate of per cent, and Il pur-
chase money mortgage executed by
said Steel Co. to secure the payment
of S7,500,000 bearing interest at the
rate of 6 per cent"
Emphatic denial is made that he ever
conceived any scheme of transferring
to the Shipbuilding Co. the stock OF
the above company a, any excessive
rate or upon conditions permitting him
or his associates to control the Ship
building Co. or to absorb for his bene-
fit "all CT its property and assets, to
the injury Of it's creditors and of its
bona fide bondholders and stockhold-
ers, or otherwise. Il deny that with
any purpose of accomplishing such IN
tent and purpose. or otherwise. | or
any associates of mine represented to
the Shipbuilding Co that the said
shares OF stock were worth the sum of
$50, 000, 600, that the said Steel Co. had
during the fiscal year ending July 81.
1902. made net profit in its operations
amounting TO the sum Of $1,44i ,20S.o3.
that its surplus assets on July 81, 1902,
amounted to $4,113, 000.46.'
Mr.. SchWab denies that he ever made
any false representations regarding
tho Bethlehem Steel CO., and denies
that his stock on July 81, 1902, was ROY
worth to exceed $1.500.G00. He be-
lieves that the net earnings of the
Shipbuiidine 90. for the u months
ending July 81, 1902, exceeded $1,000
900 and that The surplus current assets
exceeded $500 900. Mr.. SchWab re-
undated any connection with John w.
Young ard says he never caused the
latter to propose to the ShipnuildnG
directors TO transfer 100000 shares OF
the bethlehem stock, $l0.0o0,00 each
of bonds, preferred and common stocks
Of the Shipbuilding Co.
He says:
Il admit that l am the owner ana
holder of upwards of $9,000.000 of the
S100G0,DG0 Of the bonds and upwards
of S.. 0G60c0 of The $10.0G0. 600 OF the pre-
ferrcd stock, ana upwards OF $1,000 COO
OF The 100000 600 of the common sock
OF the Shipbuilding Co.. issued for the
stocks Of the Stceel Co. but / deny
that any associates Of mine are the
owners OF the remainder OF the prefer
red and common stocks: issued for the
stock OF the Bethlehem Steel Co, ex-
cept that | sold and transferred some
of the bonds and stocks to third par
tics"
MI 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 coneide"a-
ton.
The defendant AYERS that il the first
mort gage bonds be declared null and
void or be repudia led as obligations Of
the ShipbuiIdia2 Co, the assets Of the
company including the shares of the
Steel Co, will greatly exceed the total
amount OF it's remaining dcbts and OBJ
legations and will be ample, not only to
cav the bonds secured by the MOI t.
sage of the New York Security and
Trust Co, but al other claims Whatso-
ever, besides Il substantial dividend
ur0n the stocks of said Shipbuilding
CO..
Mr. Schwab says the Shipbuilding
CO. is not entitled to enforce the alleS-
ed Indebtedness against it.
He AYERS that neither he nor his as
sociates conspired with the Dummy
directors of the Shipbuilding Co." to
have inserted in the mortgage to the
Security and Trust Co. and in the
charter of the ShipbuildinS Co., pro-
visions which would give him or theln
absolute control of the ShipbuildinS
and the Steel Cos, with the power to
so manipulate the corporations as to
cause default in the payment of in
terest, thereby defrauding. creditors,
stockholders and bondholders of the
Shipbuilding Co.
Mr.. Schwab admits that according &c
the terms of the mortgage to the Sc
culity and Trust Co, as trustees. The
latter should assign the proper persons
n sufficient number of shares held by
the trustees to qualify sach persons
TO act as directors or in any official
relation to the Stool Co. He also ad-
lnits that the trustees at an elections
for directors of the Steel Co. shoulo
vote for four persons designated by
the Shipbuildiog Co. and three per
sons designated by the holders OF Z
majority OF the bonds issued under The
mortgage to the Security and Trus
CO.
RdveveS. Mr.. Schwab denies that thu
amendment. to the Shipbuilding Co.'S
chatter gave hinr or his associates ;
voting power equivalent to $30,000,00
out of total OF S5o,Oo9,o coo.
Mr.. Schwab says that he and his as
SociateS had nothing to do with tn.