Pullman herald. [volume] (Pullman, W.T. [Wash.]) 1888-1989, 1903-11-07
SH|PBU|LD|AG TRUST A FRAUD
SENSATIONAL CHARGES ARE
MADE BY RECEIVER SMITH.
chas. M .schwab Gets a Roast-com-
pany Said to Be Swindle-Bethle.
hem Company a Heavy Loser
Stock over Valued-DlvideL
Withheld to Wreck Company.

WITHHELD 10 WRECK company.
New York.-Sensational allegations
of wilful misstatements, Justification,
swindling and fraud in the organiza-
ton and f1oatation of the United States
Shipbuilding company; of attempts to
mislead and deceive the investing pub
lie by erroneous prospective statement
and for a deliberate plan to wreck the
company by withholding the earnings
of the Bethlehem Steel company, are
contained in the report of Receiver
James Smith, Jr., of the United States
Shipbuilding company, made public.
The report concludes with the recon-
mer dation that suit be brought against
all persons who received stock of the
company without paying full value
therefor, including the promoters of
the concern, the vendors of the con-
stituent plants and Charles M.
Schwab, to recover from them such
amounts as necessary to pay the debts
of the company in full. Receiver
Smith also recommends the sale of
the Crescent shipyard plant in New
Jersey and the Harlan & Holdings
worth plant at Wilmington, Del, sub
sidiary plants now in operation, to
avoid further loss by depreciation and
the enforcement of receivershIp for
the Bethlehem Steel company to in
sure the payment of dividends on the
Bethlehem stock held by the United
States Shipbuilding company.
In the words of the report, the or
ganization of the company is character
lied as an artistic swindle." Receiver
Smith states that the value of the
plants, their earnings and working
capital given in alleged reports of ex-
pert accountants, vary so much from
the actual figures" as to impel the be-
lief that the figures were wilfully mis-
stated" that it is extremely doubtful
If such accountants reports were SUBJ
mitted at the organization of the COM
pany that the organization was effect
ed by dummy stockholders, directors
and officers; the staten ents in the
prospectus issued on June IA were in
correct; that for property worth $12,-
1,516 the shiDbuilding company paid
in stocks and bonds as7,sS 900; the b q
"the- ac JGaaaAees Shipbuilding company in
acquiring these companies deliberate
ly gave away many millions dollars in
the stock and bonds of their company"
C'wholesale plumber" the receiver
terms it) to a few persons. and that so
far as the Bethlehem Steel company
is concerned, 'its earnings have been
withheld in a deliberate attempt 70
wreck the United States Shipbuilding
company"
In connection with these purchases
of the stock of the Union Ironwol ks C
San Francisco, Henry T. Scott ard Try
ing M. Scott were to agree to enter
into contract with the shipbuilding
company not to compete with it in it's
business and not to employ their CAPT
tai or to personally engage in any
shipyarding or building business for
the period of 10 years.
The action of the Bethlehem com
pany in withholding earrings of up.
ward Ct $2,00O,Ooo annually was. says
the receiver, with the apparent pur-
pose of bringing about the destruction
of the shipbullding company"
Creditors Frauded.
That the execution of the $40, 0OO,-
600 mortgage and bond by the Bethle-
hem company to secure Mr.. Schwab at
the time of the consolidation is a fraud
upon the creditors of the Bethlehem
company and otherwise void because
of Schwab's control of the directors,
the receiver says he is advised.
The report concludes with discus
sion of the condition of the constituent
companies under the receivership
showing that the receiver had possess
sion of all but the Bath and Union
plants, bit claiming that so long as the
present board of directors of the Beth.
lehem company is retained, no benefit
We accrue to the receivership from
y company. The receiver is con-
{ ed that the present interests in
rol are wholly hostile to the snip
ing company, are endeavoring to
thmvent legal proceedings and that
eharate receivership is necessary.
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