The San Francisco call., 1903-12-18
DEAL WITH sCHWAB.
Morgan's Partner, Steele, Reveals De-
tails of Shipyards Combine.


tails of Shipyards Combine.
NEW YORK, Dec. 1.-THE hearing
on the application TO make permanent
the receivership Of the United States
Shipbuilding Company was resumed
to-day. Charles Steele, a member Of
the firm Of J. P. Morgan & Co, being
on the witness stand for a short ex-
animation as TO the connection Of that
firm with the promotion Of the ship
building company and the sale to it OF
the Bethlehem steel plant.
Uutermeyer asked what reason there
was that Schwab, owning no Beth
lehem stock at the time, should receive
$50 600 900 in shipbunding bonds and
stock at the time Of its settlement TO
which Steele replied that il was in con
sideration for the risk Schwab as
sumed in making the contract for the
purchase Of Bethlehem stock, which
was Immediately assigned to Morgan
& CO.
Steele said the purchase Of the Beth
lehem plant was made in order that
the steel corporation might be able TO
control the disposal Of the Bethlehem
plant. its permanent ownership being
considered disadvantageous to the
steel corporation, and the desire being
TO resell II TO owners favorable to the
steel company, though no special pur-
chaser was in view at this time. He
prOfessed ignorance Of the competi-
tive or nOn-competitive status of the
Bethlehem and Carnegie armor plants,
the latter Of which was owned by the
steel syndicate.
ACCEPTED SCHWAB'S FIGURES.
Steele testified that he accepted
SchWabs opinion Of the value of the
plant and taken the contract for the
purchase Of the stock at the price
Schwab had agreed to pay the original
owners. the understanding being that
Schwab should share any profits at the
resale Of the plant
Steele said that at the time he con-
sidered the shipyard proposition a good
one and its stock a good investment
expecting the common stock TO earn
dividends from the start, and for that
reason he believed that the $4,000. 900 in
stock embraced in the purchase price
was an adequate return for the interest
and profits on the Morgan investment
Of s7,246000 for the year. Schwab had
give him control Of the shipbuilding
company. Morgan & Co. had received
the s50O0,00 in stock, part OF the pur-
chase price, the stock being assigned in
blank.
Coming to the Harris, Gates &. Co
agreement, which provided for the sale
Of the Morgan and Schwab stock before
all other shipbuilding stock, Steele said
seen a copy Of it and discussed it with
Charles Gates Of Harris, Gates & Co,
but not with Schwab
MORGAN'S STOCK INCLUDED.
Steele had previously been informed
by some party TO the agreement Che
could not remember whether it was
Schwab or PAM that there was an ar
rangement for the sale Of the Schwab
stock. and had declined TO have the
Morgan stock included. Subsequently
Gates left with him a copy Of the
agreement, covering both the Morgan
and Schwab stock, to which Steele. aft
er consulting Perkins, had Informally
acceded. His firm. he said, was not a
formal party TO the agreement: had not
signed IL and had not taken advantage
OF it. The S5,000,000 in stock he said.
had remained in the Morgan vaults
until sold to Schwab He had not
thought Of the agreement after his con
Rersation with Gates until mention was
made Of il during the pending suit. The
agreement, he thought, was in the
nature Of an offer to include the Nor
gan stock in the early sale, if the firm
so desired. not a hard and fast con-
tract that the stock must be sold first.
Steele made an explanation Of the
statement issued by Morgan & Co. at
the time when mention was first made
Of this agreement in the suit. the state
ment denying that Morgan & Co. were
parties" 10 any such agreement.
Charles Gates replied at the time, in
sisting that there was an agreement
for the sale Of the Morgan stock and
Steele paid tribute to Gates good
faith" in issuing his statement.