The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1903-12-23
SCHWAB'S DENIAL.
Says He Had No Part in Pro-
noting Shipbuilding Trust.

New York, Dec. 23.-The answer of
Charles NJ. Schwab to the cross bill of
the United States Shipbuilding company
and James Smith. Jr., it's receiver, has
been filed in the United States circuit
court for the southern district of New
York. The case is that of the company
and its receiver against the New York
Security and Trust company and Mr..
Schwab.
After admitting certain of the funda-
mental facts which have heretofore
been established, Mr.. SchWab takes up
the various allegations and charges of
the cross bill. He says:
II deny that l ever was or became one
of the promoters of the Shipbuilding
company, or that I and q number of
persons associated with me acquired
the capital stock of the Bethlehem Steel
company as averred in said cross bill.
Il admit that the property of said
Bethlehem Steel company was August
u, 1902, incumbered by a first mortgage
executed by the Bethlehem Iron COM
pany, the predecessor in title of said
steel company, to secure bonds aggre-
eating 81, 351 900, bearing interest at the
rate of per cent per annum, and q
purchase money mortgage executed by
said steel company to secure the pay
ment of 715 million dollars, bearing in
terest at the rate of per cent per an
num-
Emphatic denial is made that he ever
conceived any scheme of transferring
to the Shipbuilding company the stock
of the above company at an excessive
rate or upon conditions permitting him
or his associates to control the ship
building company or to absorb for his
benefit AL of it's property and assets,
to the injury of it's creditors and of its
bona fde bondholders and stockholders
or otherwise"
Continuing, Mr.. Schwab says:
Il deny that with any purpose of ac-
md NH
otherwise l or any associates of mine
represented to the shiDbuilding COM
pany that the said shares of stock were
worth the sum of 30 million dollars
that the said steel company had during
the fiscal year ending July 81. 1907,
made a net profit in its operations
amounting to the sum of 81, AL, 2OS, that
its said surplus assets on July 81, 1sOz.
amounted to 81, .O00."
Mr.. Schwab denies that he ever
made any false representations regard
lag the Bethlehem Steel company. and
denies that his stock July 81. 1902, was
not worth to exceed III million dollars.
He believed that the net earnings OF
the shiDbuilding company for the II
months ending July 81, 1902, exceeded
one million dollars and that the sur
plus current assets exceeded 49, mil
lion dollars.
Mr. Schwab reDudiates any connec-
ton with John w. Young and says he
never caused the latter to propose to
the shipbuilding directors to transfer
100000 shares of Bethlehem stock, Il
million each of bonds. preferred and
common stock of the shipbuilding COM
pany. He says:
I admit that I am the owner and
holder of upward of 8 million dollars
of the 10 million dollars of the bonds
and upward of million dollars of the
10 million dollars of the preferred and
upward Of . million dollars of the IL
million dollars of the common stock OF
the sh1pbuilding company, issued for
the stock OF the steel company, but
deny that any associates Of mine are
the owners of the remainder of the pre-
ferred and common stock so issued for
the stock Of the Bethlehem Steel COM
pany, except that 1 sold and trans
ferred some of said bonds and stocks
to third parties.
Mr.. Schwab is of the belief that the
stocks received in exchange for the
steel stock did not exceed the value OF
the steel stock. He denies that the
bonds were issued without considera-
ton.
The defendant AYERS that if the first
mortgage bonds be declared null and
void and be repudiated as obligations
of the shipbuilding company. the as
sets OF the company, including the
shares of the steel company, viii
greatly exceed the total amount OF
its remaining debts and obligations an6
will be ample, not only to pay the bonds
secured by the mortgage to the New
all other claims whatsoever, besides G
substantial dividend upon the stock Of
said shipbuilding company"
Mr.. Schwab says the shipbuilding
company is not entitled to enforce any
alleged indebtedness against him. Ht
AYERS that neither he nor his associate:
conspired with the dummy directors