The St. Louis Republic. [volume] (St. Louis, Mo.) 1888-1919, 1903-10-08
Bethlehem Works TnIoaded on
Combine for S10.000.O00 Bonds
and S1S.O0O.OOO Stock.
MARKET PRICE 100000.
ID. Leroy Dresser SAYS Part of the
Bonus Was Supposed TO Go
TO MOrgan-French Tn
derwriters Failed 10
Help.
REPTRLIC sPECIAL.

REPTBLIC SPECIAL
New York. Oct. 7.-One OF the most in
terestinE facts II connection with the
formation OF the Inflated United States
Shipbuilding Company told by d. Leroy
Dresser in legal proceedings to-day was
that J. p Morgan & CO. and Charles NJ
Schwab We're particularly eager To get
out from under"
So much so. that, after pool OF 5000
preferred and $4,000 shares OF common
stock had been placed in the hands OF
Harris. Gates & Co. It was agreed that
none Of this stock should be marketed
until 5000 preferred and 250OJ common
owned by J. P. Morgan & Co. and 75.ool
Of each kind owned by c. n. Schwab had
been first sold.
Mr.. Dresser told also OF his original
agreement, as president Of the Trust Com
pany OF the Republic 10 obtain the under
writing OF 100000 Of United States Ship
building Company stock: how this was in
creased to s4.T5oO00 by the failure OF the
French subscribers TO pay up: how Mr.
Schwab came TO offer his Bethlehem
works to the company; and how J. Z.
Morgan & Co. then came into the trans
saction.
He told. too. Of the curious agreements
made for the convenience Of g NJ
SChwab, the parties TO which seemed 10
have no direct interest in the transaction
ACCEPTED STATEMENTS.
The Trust Company Of the Republic, Air
Dresser said. had framed the prospectus
OF June. 1902 offering the bonds to the pub
lie, the trust company taking the informa-
tion contained in il from the firm Of Alex
ander Green. counsel, and Riddell & Com
mon, accountants, without investigating
any Of the statements made by them.
Mr.. Dresser Identified a copy Of the pros
pectus and IL vas admitted in evidence
de said all the underwriting secured by
the Trust Company Of the Republic was
secured for the Mercantile Trust Company.
The response 10 the advertisement for SUD
than $4,000 Of the bonds being applied
for in America.
The purchase Of the Bethlehem Steel
Works for the shipbuilding company was
then discussed. Mr.. Dresser stating that
the oVertures for the sale Of the steel com
pany had been made by Charles NJ.
Schwab. who said he owned nearly all OF
the stock OF the Bethlehem Steel Com
pany. and that. because OF its armor-
making capacity, he believed the company
would do better with the shIpbuilding con-
ceTn than with the United States Steel
Corporation.
Mr. Schwab. according to Mr.. Dresser.
said he wanted 10000 cash for his stock.
and submitted reports which showed that
IL cost him more than 100000 and was
earning $4,000 year.
BONDS IN PAYMENT
We told him we could not trade on any
such basis" said Mr.. Dresser. because
We had no cash. and he said he would take
100000 in bonds at 30 for the $4,000
This was agreed to. the arrangement
also providing that he was to receive with
hTrn ~ y UaaNF - oh
OF the common and preferred stock OF the
United states Shipbuilding Company.
Schwab stating that 500 900 of the stock
was TO 90 TO J. p. Morgan * Co.
When the contract was presented for
signature IL was found 10 call for the ulIr-
chase by MessIs. Dresser and Nixon. per
sonally, OF zs5.S50 shares OF the Bethlehem
Company's stock from J. p. Morgan & Co
for S.246.SI cash. 81 10000 in common
stock Of the United States ShipbuilGinE
company and an equal amount OF the pre-
ferred
Mr.: Dresser said he objected TO obligat-
Ing himself personally. but Mr. Schwab
explained that the deal would have 10 be
carried out that way. and that on the
Gay for payment he would provide the
cash to make the payment. Then Dresser
and Nixon were 10 hand the cash 10 Nor
gan N' Co. who would hand over the
bethlehem Company's stock mentioned in
the contract. The deal was consumnated
on August II. 1902. Mr.. Schwab giving his
personal check, which was indorsed over
10 ]. p. Morgan & Co. For the stock OF
the bethlehem Company. Mr.. Dresser
said, there was really given 100000 in
bonds. 10000 In common stock and
S9000.o0o in preferred.
WANTED TO SELL.
There was some talk OF pooling the stock
Of the shipbuilding company. he said Mr.
Schwab insisting that all the stock be
held until his and Mr.. Morgan's had been
put on the market
A paragraph was read from the agree
referring In aHHFh afr
5000 shares Of the common and a Ike
amount Of the preferred stock and AIr
Dresser said he understood g50OoO shares
II the common and 200000 shares OF the
preferred stock Of the shipbuilding COM
pany were pooled with Harris. Gates &
Co.
Mr.. Dresser said Mr.. Schwab told him
he believed the ShipbuildinE company had
4 great future. and that he would be will
ing TO put zeo0.@V more cash into the
business il necessary.
When the French underwriting money
did not mateTialize. Mr.. Dresser appealed
10 Mr. Pam. counsel for Mr.. Schwab. men
tioninE Mr. Schwab's promise and stating
that unless S2.500O00 were forthcoming 20
make good the French underwriting, the
Bethlehem deal could not go through. At
Mr.. PANS suggestion they called on q.
W. Perkins Of J. P. Morgan & Co, who
agreed to deposit the necessary amount in
various institutions. though not as a loan
10 the promoters. They thus obtained s.
10000. They pledged the security Of the
French underwriters and Lewis Nixon and
he gave the notes.
Mr.. Dresser said he believed until after
the purchase OF the Bethlehem stock was
made that Mr.. Schwab owned all the
stock. Dresser said only $500 was ever
received from the French underwriters out
OF the $4,000 he had been assured would
be forthcoming. X the French under
writers had fulfilled their obligations there
would have been no trouble.
Mr.. Schwab. he said. obtained control Of
the Shipyards Company by getting men
on the board friendly to the Schwab inter
1vna #NHanH ~ Of
his interests. II was Mr.. Pam. he said.
who reported that the shipbuilding COM
pany had made Sl.Iso.0oe in the first three
months Of its existence. and the earnings
were shown by the tressurer's report
Mr.. Pam had charge. Alr. Dresser said. OF
getting the corporation securities listed on
the Stock Exchange
No Room for the Zfrzar..