The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-10-15
TESTIMONY BEFORE REFEREE
SCHwAB ACCUSED OF WITHHOLDING
BETHLEHEM COMPANY PROFITS,
Thus Embarrassing the ShipbuiIding
Concern and Forcing 1t Into the
Hands of a Receiver.

OF the BondholderS' protective Association
was resumed to-day and was productive
of fresh developments that will claim the
attention of the financial world and those
who follow it's fortunes.
1t developed that yesterday d. Leroy
Dresser, late president of the Trust Com
pany of the Republic, who last week di-
vulged much of the inner history of the
formation of the combination, made an
EFFORT to communicate with Charles NJ.
Schwab with a view to obtaining some con-
cessions as to the Bethlehem steel works
that would render easier the scheme for
rehabilitating the partly wrecked concern.
The message Of Mr.. Dresser was delivered
to Mr.. Schwab by Mr.. Harris, of the brok-
erage house of Harris. Gates & Co., which
marketed part of the shipbuilding stock,
but Mr.. Schwab declined to see Mr.. Dres-
ser.
w. d. Guthrie, counsel for Mr.. Schwab,
brought the facts of the incident out at the
hearing in series of questions directed
to Mr.. Dresser. His aim was to show
that Mr.. Dresser had sought to plead with
Mr.. Scnwab and had threatened to make
certain disclosures when recalled to the
stand that would reflect upon Mr.. Schwab.
Mr.. Dresser denied that he had gone TO
for he had no additional information to d.
vulge, but had sought to approach him, in
the hope that something might be done to
save the shipbuilding company. Dresser
asserted that the shipbuilding company
had been wrecked because Mr.. Schwab had
withheld the profits of the Bethlehem COM
pany. This declaration he twice spiritedly
repeated, when at the end of the
cross-examination by Mr.. Guthrie, he
was given an opportunity to explain.
DUMMY DIRECTORS.
Mr.. Untermyer, in behalf of the bond
holders, produced two of the resident di-
rectors obtained in New Jersey, formally
to carry on the affairs of the shipbuilding
company, but only finished his examina-
ton of one of them. He claimed that they
were merely dummy directors, who voted
upon questions involving millions of dollars
of the securities of the company without
other information or INJURY than the orders
Of the lawyers of the corporation.
George p. Daley, one of the New Jersey
directors, could not tell where the Bath
iron works is located and could not tell
who paid for the single share of stock
placed in his name that he might qualify
as director.
There was produced and offered as evil
dence a memorandum said to have been
prepared by Colonel McCook and given by
him to Mr.. Dresser. 1t contained the
figures upon which the Trust Company of
of the shipbuilding company, and while it's
purpose was not explained it is expected
that it will cut an important figure at a
later stage of the proceedings. 1t is said
that besides the division of stock detailed
last week by Mr.. Dresser, there was an
additional division of money. The memoir
andum shows an allowance for expenses
of 100000 cash, $500, 900 in bonds, $500 900 in
preferred stock and 100000 in common
stock.
When Mr.. Dresser took the stand, to-
day. Mr.. Guthrie first questioned him as
to the reports he had received or seen on
the value of the plants included in the
shipbuilding combination. Mr.. Dresser said
he had seen the reports of Alexander and
Green and Riddle and Common, the &C.
countants, but denied that he had ever
seen report on the plants made by Admit
raj Bowles. of the United States navy.
From the time the prospectus was first
prepared until the transaction was finally
consummated, had there been anything
suggested to you that affected the sound
81 suspected nothing until I came back
from Europe" he said. Trouble occurred
during January and February. and 1 be.
lieve it was due to the control by Mr.
Schwab of the Bethlehem company"
The witness then explained that he had
appealed to Mr.. Pam for assistance from
the Bethlehem company. and said that
terms of the several shipbuilding proper
ties and the Bethlehem company were
sufficient. Mr.. Dresser said that all the
of the company came from either Riddle Oh
Common or Colonel McCook.
The witness said he had not talked to Mr.
Schwab about taking part in the under.
writing. Mr.. Nixon did that. he said, and
brought him Mr.. Schwab's subscription OF
100000 Mr.. Schwab later paid the full
said there were a series of assessments
and that he believed Mr.. Schwab paid in
full.
SCHwAB PAID IN FULL.
The witness was then led over the circum
stances attending the call which he ant
Mr. Nixon made at the Office of Mr.. Schwat
on June IA, 1902. He testified that Mr.
Schwab had showed his reports of tn,
operations and earnings of the Bethlehem
company. Mr.. Schwab said it would carr
s., 10000 a year. the witness said, land as
matter of fact it did,"
Asked If 100000 was not the prophec,
| the witness said: Mr.. Guthrie, / do no
wish to overstate the amount two million
| would have satisfied us that it was a gooC
purchase" The witness swore that HI
| had not received any surplus cash or first
| mortgage bonds as a promoter.
when L was in Paris" said he, 80
received some stock in the company from
| 145O shares of the Trust Company of TIN
| Republic. which was worth $780, 600, but tina
| had been pretty well wiped out. Mr.
/ of each kind of stock and l sold it fc
] 100000"
| The witness denied knowledge of the ex
! istence of 100000 worth of first-mortgag
bonds which Mr.. Guthrie said had neithe
| gone to the vendors, the underwriters no
| the subscribers. The witness said he neve
/ knew of any such surplus.
TRIED TO REACH SCHwAB.
1t then developed that Mr.. Dresser ha,
endeavored yesterday to get into communi
cation with Mr.. Schwab and the testi
| mony upon the point brought from tn
witness the declaration that the shi
building company had been wrecke
| through the withholding of the Bethlehem
profits. The effort of the witness to reacl
! Schwab had been made through Charlie
Harris of the brokerage firm of Harris
! Gates & Co. and was brought out b.
/ Dresser had sought to plead with Schwa
/ and had held over him the threat of ex
| posture Of other facts in connection with tn
/ shipbuilding failure. Mr.. Guthrie intro
4 duced the sensational incident and testi
mony by dropping his questions as to tn
stock Mr.. Dresser Dad received and say
| ing:
! day
| answered the witness.
"Did you pay two visits yesterday to tn
| office OF Mr.. Charles Harris?"
II did," said the witness
did you not seek private interview
| with Mr.. Schwab." asked Mr.. Guthrie
II certainly did not" said the witness
and then in response TO a series OF ques