Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1903-10-08
FRAUD CHARGED
In United States Shipbui|ding
Co.'S. Management.
BondhoIders' Protective Committee
Probing Into the Business.
MIR. Dresser Tells Of Some Of the FL
nancial Deals.

| ->CN yin, oCl. i.--llcdl HIS III Liz
action of Roland r. Conklin and others
Of the bcndholders protective commit
tee against the United States Ship
Building Co., was resumed today, be-
fore Henry ID. Oliphant, special United
States examiner. The hearing opened,
Monday. when the counsel in the mat
ter entered their appearance and d.
Leroy Dresser was sworn as the first
witness
The compliments who are stock
holders and owners of a portion of the
first mortgage bonds of the United
States Shipbuilding Co. charge fraud
land Encouragement on the part of the
officers and directors of the company
THE matter involved are part of the
Icndeavor to make final the appoint
Iment of Il receiver and to secure sup
Elementary testimony from the organ
Iizers Of the United States Shipbuilding
leo.
4 Mr.. Dresser, who took the stand at
i the opening of the hearing testified
THAT he was president of the Trust
JCompany of the Republic from its Or
Iganization, March 81, 1902 until March
a. 1908. He told of the visit to him in
April a., 1902, of John j. McCook who
told him he came from John w. Young
lane the Mercantile Trust Co. and ask
led thefTrust Company of the Republic
Ito underwrite $1,000 900 of the stock of
Jthc United States ShipbuIding Co..
Showing Mr.. Dresser the underwriting
laGrecment which said that $3,000,000
had been taken in London, and S3,000
loco in France. The company authorized
him to get the underwriting, which he
Ibid. Later he increased the under
writing to $4.750,00O, at the request of
the promoters, because they said Lon
don failed to take the 100000 it prom
ised to take.
The Mercantile Trust Co. he was told
by Col. McCook, secured the rest CT the
underwriting principally in France
The purchase of the Bethlehem Steel
Works for the Shipbuilding Co. was
then discussed Mr.. Dresser stating
that the overtures for the sale of the
Charles NJ. Schwab, who said he owned
nearly all the stock of the Bethlehem
Co.. and that because of it's armor
making capacity, he believed the COM
|. rany would do better with the Ship
building co. than with the United
States Steel Corporation.
4 Mr.. SchWab, according to Mr.. Dress
or. said he wanted 100000 cash or
his stock and submitted reports which
showed that it cost him more than 81,
| 900, 900 ana was earning $1450,000 d
| year.
we told HON we could not trade on
! Il cash basis" said Mr.. Dresser, DE
cause we had no cash and he said he
| would take $10.oOO,0OO in bonds at 90
| for the $4,000. 600"
Il This Mas agreed to. the arrangement
also providing that he was to receive
! with the bonds Il stock bonus of $1,000
900 each of the common and of the pre-
ferred stock of the United State Ship
building Co. Mr.. Schwab stating that
50 900, 900 of the stock was to go to j.
p. Morgan & Go.
The deal was conSummated. Aug. IL.
1907 Mr. Schwab giving his personal
!. check which was endorsed over to ]. T.
Morgan & Co. For the stock Of the Beth
lehcm Company, Mr.. Dresser said there
was really given 600 in bonds, 50
000. 900 in common stock and $9,00o,9o0 in
preferred. There was some talk of pooling
the stock of the shipbulding company
he said. Mr.. SchWab insisting that all
the stock be held until his and Mr. Nor
gan's had been put on the market.
II A paragraph was read from the agree
ment referring to the authority to sell
1000 shares of the common and u like
3, amount of the preferred stock and Mr..
Dresser said he understood 100000 shares
{ of the common and 100000 shares OF the
/, preferred stock of the Shipbuiding com
pany were poled with Harris, Gates 4
Co.
> When the French underwriting money
, did not materiaize Mr.; Dresser appealed
t to MIR Pam, counsel for Mr.. Schwab,
| stating that unless s., 5W,0n0 We're forth
| coming to make good the French under
/ writing the Bethlehem deal could not go
N through At Mr.. PANS suggestion they
e called on c. w. Perkins Of ]. p. Nor
= gan e Co. who agreed to deposit the
!. necessary amount in various institutions,
though not as "A loan to the promoters
They pledged the security of the French
. underwriters and Lexis Nixon, and he
8 gave the notes.
l. Mr. Dresser said he had no idea until
after the purchase of the Bethlehem stock
: was made that Mr.. Schwab owned all the
81 stock. Mr. Dresser says only $27,00o was
ever received from the French under
writer's out of the $i,250,Wo he had beer
assured would be forthcoming. II tho
Il French underwriters har fulfilled their oh
t legations there would have been no trou-
: BILE.
of the ship yards company by getting
men on the board friendly to the Schwat
interests and getting rid of those oppos
ed to his interests.
, ness said Mr.. Pam asked the Trust Com
pany of the Republic to lend the company
some money. Mr.. Dresser said his com
panl had gone far enough and Mr.. Pan
| retorted that if the Trust Company o
the Republic could not help the Shipbuild
ing Co. out the company would transfeI
. its accounts to some company that could
Il suggested to Mr.. PAM. Mr.. Dresse
: continued. that the Bethlehem co.
q which was making money. should help tn
Shipbuilding Company out. The only mon
= ey the Bethlehem Co. ever advanced wa
$.50.o00 to pay certain interest due t.
l. Charles NJ Schwab.'
:, Mir. Dresser said he had heard that al
n important envelope containing matte
needed in this suit has beer missed IRON
Republic, but declared he had nothing t
do with the abstraction. of the papers
In closing witness said he understood
: that he was given authority to borroy
81 O0ooOo on the credit of the Trust Com
pany OF the Republic. and that ne had no
t been advised that it was a crHmhai OF
fence, nor did he know 1t.