New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1904-01-30
WHY EXCHANGE ACTED.
STEEL FOUNDRIES CASE.
Statement by Stock List Committee
Chajrnan-An Unofficial Version.


grounds en- which the governing committee OF
the Stock Exchange on Wednesday took the IN
usual course Of striking from the list OF secrri-
tics traded in on the Exchange the common ana
preferred stocks OF the American Steel Fouhdries
Company. was issued last night by W. ID. Gran
berry. chairman of the stock list committee on
the recommendation of which body the govern
ssg committee took fits action
nv attention has been called to statements
made by Mr. Patterson. secretary and treasurer
OF he American Steel Foundrtes Company N
regard to conditions pertaining to the strlhhs
az :he stocks of that company from the hsI;
have been asked as TO the correctness or MI
Pafterson's statement as published II Mr. rat
isrson's statements published are 10 be CON
strued as meaning that the officers or the conn
r,anv did not know that an inquiry was in prog
ress in regard to overstatement or SopoVO
in the current assets of the company such state
rnent is incorrect
Mr.. Patterson had full knowledge that such
inquiry was in progress, because he ana the
president and general counsel OF .ne GO lci,
were examined before the committee on STOCK
list in November last and also about two weeks
ago The stock was listed on November 20
1902, the strength Of the representation
then made by the officers of the company 10 the
committee. Very shortly after such listing
namely. in January or February, lSO3. question
was made by Of the directors OF the
American Steel Foundries Company as TO the
validity OF the claim Of 100000 represented
on the companys books as being still due from
the vendors. Final action in regard thereto was
taken by the directors in May, 1908, cancelIlng
alleged
the same time the directors adopted resolu,
ton directing that the Stock Exchange should
be notified OF the error and Of the correction.
The attention of the Stock Exchange was not
In any wav called to this alleged error or 70 its
correction, until six months later, namely, No
vember. 1908, when the American Steel Foun-
dries Company made application for listing an
additional $4,000 of its capital stock.
The inquiry Of the committee on stock list mas
been In progress for more than two months' AS
q result the committee also learned that the bal
ance sheets submitted TO the committee on stock
list as OF July 81 1902. ana September 30. 1902.
and printed IN the stock list circular. were not
those originally prepared by the accountants,
but that, acting under special instructions. the
accountants aid specially revise such origina!
statements, both in regard to current assets and
current liabilities for the purpose OF presentation
70 Che committee stock list in support of the
original application for listing American Steel
Foundries stock.
Il was learned yesterday afternoon, before
Mr.. Granbery's intention TO make his statement
was known, that statement to the companys
stockholders regarding the $4,000 item was be-
ing prepared by the management of the Steel
Foundries and would be made public after the
meeting OF the board OF directors to be held
next Tuesday. President Joseph E. Schwab was
in the city yesterday but declined TO say any
thing about the striking of his companys stocks
from the exchange trading list. In answer to
q question, he said that there had been no
designations from the board of directors.
the steel foundries complication obtained
yesterday afternoon: Jones, Caesar & Co, the
accountants, asked by Max Pam, general
counsel of the projected American Steel FOun-
dries Company. to draw up a balance sheet
which should show the condition of the concerns
combined 10 form the Steel FOundries Company
This balance sheet was prepared and was trans
united Mr.. Pam who soon afterward went to
Chicago. TO which city he makes frequent bust
ness trips. Mr.. Pam wrote the accountants from
1ss,rr
should be included an additional $500 O00 of
capital, which coming from the vendors
syndicate, and asked the firm prepare a bal
snce sheet IN which that amount should De IN
.luded On Mr.. Pams return 10 NewYOrk q.
>. May OF Jones, Caesar & Co, took
II him the new balance sheet, which
in rluced the SJO0O0O making the total current
ass cts 81. 166. 100 - Mr.. May returned TO his
ofiite. understanding that Mr. Pam had in
strurted him 10 prepare another balance sheet
containing an additional $4,000. A second
balan sheet, drawn in accordance with these
instrut tons. as understood by Mr.. May, was
cordinty prepared by Jones. Cesar 81 Co. and
sent TO Mr. Pam. accompanied by a letter IN
which he firm called TO his attention the fact
snat the assets OF the company were now
81 Cts 100 ~. This balance sheet was approved
by the executive committee and the board of
directors, and some time later JONES' Caesar &
CO. were asked to open a set of books for the
company, on its beginning business In the
ledger they had the vendors syndicate account
which was debited with 100000 Ohe two
100000 items referred to-. The accountants
were subsequently asked 10 prepare monthly
~.
did so. The first statement was made in August
1902, and the second in September. On Septem-
Der / the vendors' syndicate account stood
debited with S720OO0. the sum of S2S0000 hav-
ing been paid in; and in September an addi-
tional S22O,OOO was paid in, or 100000 in all.
From the monthly statements and the books
Jones, Caesar & Co. made up balance sheet for
presentation TO the Stock Exchange, and certi-
fed it.
In February, 1903, according to the story Pres
ident ]. Z. Schwab sent word to Jones Caesar
& Co. that error had been discovered, and
that the vendors syndicate had really been
liable for only SJ00O00 instead of 81 100000.
This statement was verified, on inspection of the
contract with the vendors syndicate. President
Schwab decided 10 take no action until the re-
turn from Europe of his brother Charles ".
Schwab. In May, 1903. on the latter's
held, at which the 100000 was charged
OF from the vendors syndicate and debited
20 the account of goodwill The July statement
and the succeeding monthly statements were
correct. In November Mr. Pam sent for rep
resentatives Of Jones' Cesar & Co. and asked
them TO go before the stock list committee as
the Steel Foundries Company desired 10 have
listed an additional 100000 of the common
stock. issued in payment for the $500 900 stock
Of the American Steel Bolster Company Mr..
Pam explained TO the committee the mistake
which had been made, The committee, however.
made further inquiry with the result known.
Jones' Cesar Co. IL is understood were
exonerated by the committee.
On the curb market yesterday there were sold
159 shares OF Steel Foundries preferred stock
at 81 TO 31A and % shares of the common at
rs. The preferred close 81 bid. 40 asked, and
the 2lb hid : asked