Richmond planet. [volume] (Richmond, Va.) 1883-1938, 1904-01-02
.SCHWAB FILES
ANSWER TO SUIT
Denies He Attempted to Wreck
Shipbuilding Company.
WAS NOT ONE OF PROMOTERS

| NEW 1OrK, Dec. Z3.-CharleS Nj.
| Schwab filed his answer to the cross
bill of the United States Shipbuilding
| Company and James Smith, Jr., it's
| receiver, 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
| / ever was or became one of the pro-
moters of the shipbuilding company or
that 1 and a number of persons asso-
| ciated with me acquired the capital
| stock of the Bethlehem Steel Company,
| as averred in said cross bill"
| Emphatic denial is made that he
ever conceived any scheme OF trans
| ferring to the shipbuilding company
the stock of the Bethlehem Steel Com
pany at an excessive rate or upon con-
ditions permitting him or his associ-
ates to control the shipbuilding COM
! pany or to absorb for his benefit "all
/
| Jury of its creditors and of its bona fde
bondholders and stockholders or other
| wise"
Continuing Mr.. Schwab says: CT
deny that with any purpose OF accom-
plishing such intent and purpose or
otherwise l or any associates of mine
represented to the shipbuilding COM
pany that the said shares of stock were
worth the sum of $4,000, 900; that the
said steel company had during the
fiscal year ending July 81, 1902, made
net profit in it's operations amount
ing to the sum of S1,441, POS; that its
said surplus assets on July 81, 1902
amounted to S4,11S,0 600" Mr.. Schwab
denies that he ever made any false rep
reservations regarding tho Bethlehem
Steel Company and denies that mis-
stock on July 81, 1902, was not worth
to exceed s7,50O.Oo0.
| Mr. Schwab is OF the belief that the
| stocks received in exchange ro- tho
steel stock did not exceed the v-'fH ~
the steel stock He denies t''"t to-
: bonds were issued without considci g.
ton.
He AYERS that neither he nor hts as
sociates conspired with the "dummy
directors of the shipbuiding COM
pany" to have inserted in the mort
gage to the Security and Trust Com
pany and in the charter of the Ship
building Company provisions which
would give him or them absolute con-
/ troll of the shipbuilding and steel COM
panies, with the power to so manipu-
late the corporations as TO cause de-
fault in the payment Of the interest
thereby defrauding creditors, stock
holders and bondholders OF the ship
building company.
Mr.. Schwab says that he and his as
sociates had nothing to do with thy
Withholding by the Bethlehem COM
| pany of the dividend payments on the
| 10000 shares of it's stock owned by
the shipbuilding company, for the pUr.
pose of wreckinS the latter concern
He asserts that on the other hand
although often requested so TO DO
the steel company has refused TO de.
clare such dividend" The defendan;
continues:
81 deny that / or the Security and
Trust Company, or the directors 81
the shipbuilding company. or OF tbs
steel company, or any associates oi
mine, acted fraudulantly or in bad
faith in the premises or for the pur-
pose of destroying and wrecking the
property Of the shipbuilding company
in the interests of myself or any asso-
ciates of mine. and / deny that this
suit is brought at the instance of the
reorganization committee and myself
or any associates of mine for the pur-
pose of carrying out the aforesaid or
any other wrongful and fraudulent
plan and scheme. or of prolting and
taking advantage from the alleged de-
faults occasioned by any wrongful or
fraudulent acts. to the injury of the
shipbuilding company, or the bonafide
creditors, bondholders or stockholders
of the shipbuilding company"
After specifically denying any and
every charge of fraud, unlawful COM
bination, conspiracy or wrongful act
in his connection with the affairs of
the Bethlehem Steel and United States
Shipbuilding companies, Mr.. Schwab
details the history of his relations
} with the two concerns. He says that
upon his return to the United States
on March II, 1908, he found the ship
building company in financial difficult
ties and learned for the first time that
many of the representations in the
prospectus of the shipbuilding plants
; were false. He also found that more
| capital was needed for the shipbuild-
ing company, as well as for the Beth
lehem company, the money for the lat
ter to go for betterments.
Mr.. Schwab adds: II was then and
have ever since been and am now able
and willing to return all the securities
received by me or by Messrs. Morgan
e Co., and to rescind the whole trans
action, and | hereby tender the same
for that purpose"
Held Court at A. NJ.
Norfolk, Va. Dec. 21 - To save
, Charles Bynum, a negro, from lynch
ing. Justice Morris, of Driver, Va, held
court at 3 a. m. by the light of the fire