The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-10-22
But c. VI. Schwab's Influence Was
Too Great and the Concern
Was Wrecked.
HOW THE MONEY WAS SPENT
NEARLY S3,OOO,O00 USED ON THE
BETHLEHEM STEEL PLANT.
Large Sums Paid to Ncssrs. Pam and
Schvvab - President Nfxon-s
Testimony.

NEW YORK. Oct. 2.-Lewis Nixon who
from naval constructor became builder of
NTarships and president of the United States
Shlpbuilding Company, was the principal
witness to-day at the continuation of the
hearing before Examiner Henry II. Oil
plant into the affairs of the defunct cor
poration named. He did not finish his
cital, but in the three hours that he was on
the stand he went over much of the history
OF the corporation and the acts of the men
prominent in it's history. He confirmed the
claim Of the hondholders that Max Pam,
counsel for Charles NJ. Schwab, had sug-
gested a number of directors for the ship
building combination, and said that the
proposed expenditure of $2S02.000 for i'm
provements at the Bethlehem steel works
had been approved by the directors over his
protest and warning that the action might
In the end leave the main corporation with
out funds and wreck it. Mr.. Nixon swore
that after this expenditure was approved
he made several attempts to secure a meet
ing of the directors, and that Mr.. Schwab
had finally told him that he had instructed
the directors TO remain away from a meet
ing.
An effort was made to show that the direc-
tors elected at the suggestion of Mr.. Pam
had not been stockholders, but, like the
young men of the corporation trust COM
pany OF New Jersey who served in the early
days OF the combination, had been given
shares enough to qualify, but Mr.. Nixon had
10 personal knowledge of the transaction
Mr.. Nixon testified that, by action of the
directors in December last, Mr.. Pam was
given a salary of $4,000 a year, which was
dated back to the preceding September. He
also testified that, besides his bonus as an
underwater he h
lehem property. Mr.. Schwab received a
share of the promotion money, part OF which
be gave TO Charles Gates, of the brokerage
firm of Harris, Gates K Co.
Samuel UntermeyeT, for the bondholders,
endeavored 10 prove by the witness that
during the negotiations for the purchase
of the constituent plants no one looked
after the interests of the shipbuilding COM
pany, but that the figures and reports of
cepted. Mr.. Nixon said that no independent
appraisement or investigation had been
made and disclaimed all personal RESPONSE
bility for the negotiations and financial
part of the combination plan.
MISLEADING STATEMENT
1t was brought out in the testimony of
Mr.. Nixon that misleading statements as
to the personnel of the directorate had been
made in the prospectus issued in June
1902. and that Young had taken the options
in his name. According to Mr.. Nixon,
secrecy was observed in paying the vendors
only because Promoter Young did not want
them to know what was being paid for each
plant There has been much mystery over
the cutting of the checks given to the
vendors and 1t Is possible that the ex-
PLANTATION of Mr.. Nixon will clear it away.
Charles Canda was the only other wit
ness OF the day, taking the stand before
Nixon was called. Charles NJ. Schwab and
Max Pam attended the hearing to-day.
They came to be sworn. but remained in
terested listeners to all the testimony.
They will testify later in the week.
Mr.. Canda testified that the company
which bore his name and which was taken
over by the ship building company had a
plant at Carteret. N. j., designed for the
construction of car wheels. At the time
the option on 1t was given it was engaged,
he said, in an experimental way, making
some motor vehicles. He said thirty or
forty men were employed at the time and
that he thought one hundred more ma
chimes had been made. The witness pro-
duced copy of the option. The agree
ment for the sale of the plant for S,1OO.-
COO was made with j. w. Young, but the
option was given TO Mr.. Nixon The wit
ness said the plant did no ship building
but the site and buildings could be used for
certain Of the combinations work. The
Canda Company received 100000 in cash,
$4,000 in bonds, 5000 in preferred stock
and 100000 In common stock and paid no
commission to anyone. The witness said
the Canda Company has never shown any
earnings. Under cross-examination the wit
ness testified that the Canda Company had
seventy-five stockholders. The $4,000 re-
ceived in cash was used to pay certain in
debtedness- The sum was paid in three
checks. At this point James 3. Dill, coun-
sci for the Trust Company of the Republic
introduced the checks. One was for $780,
$1,000 These checks were made payable to
Lewis Nixon, Endorsed by him and then
handed TO Mr.. Canda.
MR. NIXON'S TESTIMONY.
Lewis Nixon succeeded Mr.. Canda on the
stand He told OF his resignation from
the Cramp Shipbuilding Company and the
leasing of the Crescent shipyard from the
Moores in 1894. He held the latter until it
was turned over to the ship building COM
bine. He held the old Crescent yard under
lease. but he had at the same time bought
and built a new plant. He purchased all
of the interest finally and turned it over to
the ship building company. The witness
then told of the first attempts to con-
solidate the shipyards In 1901 Andrew
freedman was the man who first proposed
the ccmbina ton, he said. and through him
the witness met j. w. Young. The COM
ranies in the first proposal were the Union
Iron works, Bath iron works. Hyde Wind
less Company Crescent shipyards, Newport
News the Canda Company, 5. l. Moore *
Sons and the Reaches
THE witness said the first plan Of con-
soIidation was handled by II. w. Poore &
Co, but was brought out on a bad day and
failed. The witness could not remember
az tha Mercantile Trust Company had been
interested in the flrst plan.
The witness said he knew c. M. Schwab,
having met him four years ago They met
frequently IN a social way and Schwab told
him of the purchase by him or the Bethle-
hem company. Mr.. Schwab had. at the
rsouest OF the witness, acted as an under
vrfter at the first effort OF consultation.
There was no proposal that the Bethlehem
oompany be taken into the first comoina-
ton -. 49,,
versations the witness had had with Mr..
schvah az 10 the use or the Betnienenl
oomnanv in a ship building combination ID
1901 and 1902, but the witness couio not re-
call particular conversations
Mr. Nixon said he had talked the matter
over very generally; everybody did ne saia.
The first proposal that the be.nIehenl
comnany be purchased by the United STATES
shin building Company was made In june
CONFERRED WITH SCHWAB.
The witness then told of the meeting
NJ the LAWYERS Club In June, 1907. aiFeady
detailed by ID. Leroy Dresser. The witness
ard Mr. Dresser were lunching and Mr..
schwab came in Mr. Schwab Introduces
the subject of the purchase OF Betnienen
- S~tt,x.,ed a general conversation.