Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1903-11-02

was but $2O, Cos, 1914. instead of s36. OOO,-
900. and that upon such uncompleted
work a liberal estimate would have
placed the earnings at only a trifie over
s., 900, 0O0."
considering the value If the plants,
the report continues: 1T is evident that
the accommodating directors Of the Unit
ed states shipbuilding Co. in acquiring
tn eny p miR1ipn dellberately gave away
bonds of their company"
| BLOCKS OF the stock went to the vend-
ors OF the constituent plants and to the
| purchasers OF the bonds, as bonus, abso-
| lutely without benefit IN The company.
$50, 600 600 OF 1t admittedly went to Charles
| M. Sehwab in addition to the agreed price
fG iGoh ef fnr @h,+ When all had been pro
amounting to $l,5OO,OOO, was handed back
to the company ostensibly to supply 1t
with working capital
Inc receiver then declares that he is ad,
Nlsed that the vendors and promoters and
their associates in the transfer and con-
veyanco OF the various plants to the Unit
ed States Shipbuilding Co. bv the accept
an. or Siissa mo Of the capital stock OF
tie therefor became liable thereon to said
| corporation. by virtue Of the provisions
OF Section q of the New Jersey corpora
tion act, ana that the Shipbuilding CO
| can recover the amount of this indebted
ness from the holders of this stock.
In regard to the culpability of the
dummy directors of the United States
Shlppuli ia, 60, the receiver says: they
should be held accountable for their un.
lawful act. but that they were mere fig.
ureheads placed in this position in order
that , the schemes of others might be car
The debts of the constituent compa-
MES says the receiver, "aggregating s..
| o'49SI64, seem to have been purposeIy
Wlthheld. and the bonds and stock of tn,
Inlted states Shipbuilding Co were
| pIaced wholly at the mercy of the vendors
and promoters"
me failure was precipitated, says Mr.
smith s n II not directly brought about, b,
ton the United States Shipbuildng CO. Of
GERS had to deal with people who, while
thoroughly understanding the intricate:
OF hlgher flnance.' seemed to have over
looked the requirements of common fair
| ness
While the agreed price of Bethlehem
was $9OOO,OOO to be paid for by $4,000, 90
bonds at DO Charles M. Schwab, its own
er. the report says, secured from the di
| rectors of the company an additional $40.
100000 in stock and an agreement givin,
MS bonds voting power thereby gaining
control Of the company whose tota
stock was $45,000.000 In this deal, tn
receiver says, Mr.. Schwab parted will
nothing.
In April 1905" the receiver says, .il
spite or the fact that the ShipbuildinI
Co; would default interest on bonds. du
July l.. unless retrenchment was mad
| ana assistance was received from Bethie
hem, the executive committee of the Ship
building 60. approved a recommendation
Tor bettcrmentS of $2,082. 900 in Bethlehem
and the directors approved this action
over the protest of President Nixon Pres
1dent Nixon thereafter, the receiver be
leves made repeated efforts to secure tn
| cooperation of directors in compelling
the Bethlehem Co. to pay over some o
its. earnings to stave off the impendin
default but in vain.''
The action of the Bethlehem Co. il
| withholding earnings of upwards of S..
WW,NO annually was, says Receiver Smith
with the apparent purpose of bringing
about the destruction of the Shipbuildin
Co."
THAT the execution of the $4,000. 90
mortgage and bond of the Bethlehem &C
to secure Mr.. Schwab at the time of tn
consolidation was a fraud upon the cred
| 1torS of the Bethlehem Co. and otherwis
void because of Schwab's control of tn
directors, the receiver says. he is advised
The report concludes with a discussion
of the constituent companies under the re
ownership, showing that the receiver ha
| possession of all but the Bath and Ino
| plans, but claiming that so long as tn
present board of directors of the Bethle
| hem Co. is retained no benefit will &C
cruc to the receivership from the com
| pany. The receiver is convinced that tn
| present interests in control are who'll
hostile to the Shpbuilding Co., are ell
| deavoring to circumvent legal proceed
inGs and that separate receivership i
necessary.
On account of strikes, an exhauste
treasury, the fact that contracts had bee
| taken at Improbable figures, the receive
| deems it unwise to continue the operato
of the Crescent ShipyardS and advises ii
sale. The same recommendation as to tn
| Harlan & Holingsworth plant is made
| for much the same reasons.