Evening star. [volume] (Washington, D.C.) 1854-1972, 1904-01-07
SCHWAB ON THE STAND
Testifes in the Shipbuilding
Trust Case.
SALE OF BETHLEHEM
WITNESS DECLINES TO ANSWER
MANY QUESTIONS.
Saws He Now Owns Nearly All the
Bonds of the Shipbuilding
Company.

NEW YORK, January 7.-Charles M
echwab ex-president of the United states
Steel Corporation, took the stand today IN
the hearing to make permanent the recelV-
ership over the United States Shipbuildlng
Company to tell of his connection with the
sale of the Bethlehem Steel Company TO
the shipyards concern
Counsel Untermyer, for the complainant
Bondholders' Protective Association, imIne-
diately began the examination OF the VIII
ness.
Mr. Schwab gave his age as forty-ohe'
and said he had at present no occupation
having ceased to be president of the United
States Steel Corporation. He had no COIL
nection executive or advisory, with the
Bethlehem Steel Company at this time, ne
said though he had IAN enormous pecuni-
ary interest in that company. He severed
his connection with the management OF
the company on account of his going abroad
in 1902
His whole life, he said, had been connect
ed with the steel industry.
You are considered the leading expert
in that line, are you not?" was asked.
'I do not take that honor to myself he
answered.
As to Period of Imitation.
Has there not been period Of Imitation
In the steel business during the last five
years?''
There has been period Of good de-
mand."
But am asking about lnfaton OF val
ues Of properties.
$50 far as properties with which I am
connected are concerned, there has been
none except SO far as is due to q period OF
general prosperity
The crest of the wave of prosperity In the
steel industry, he said. was coincident with
the formation of the steel corporation, hut
the demand, he said, had not fallen off ma
terially until within the last few months.
Mr.. Schwab said he was not defendant
in the present suit. but that he had re-
tained counsel personally. Mr.. Guthrie Is
my personal counsel in this and all
other litigation, he said.
Mr.. Schwab stated that he bought the
Bethlehem property shortly after the sale
of the Carnegie properties TO the steel cor
porauon. Mr.. Untermyer asked II the sale
of the steel properties to the corporation at
that time had any effect upon the values
Of steel properties, but. under the advice of
Mr.. Guthrie, Mr.. Schwab declined to an
swer that question or to make any state
ment regarding alleged imitation in value OF
the Bethlehem plant.
Mr. Sehwab testified that at that time the
Bethlehem plant was in competition with
subsidiary plants of the United States Steel
Corporation in the manufacture of armor,
but in no other respect, the bulk of Beth
lehem business consisting OF the manu-
facture of armor plate, pro1ect.les guns and
gun fOrgings and compressed fOrgingS. He
did not regard the values paid In securities
for the constituent plants of the steel cor
poration as at ali inflated
Refuses to Answer Question.
During q series of objections over ques-
tion about the amount of steel stocks still
held by Mr.. Schwab. Mr.. Untermyer stated
that his intention in asking this line of
questions was to show that the prices paid
for the constituent plants of the steel cor
poration had q great effect in initiating the
prices asked for other similar plants, and
that if it were shown that Mr.. Schwab had
parted with much of his stock it would indi-
cate imitation During the colloquy Mr..
Guthrie protested against this line of in
quiry as an outrage and asked the examiner
to suspend the examination until the mat
Ter could be certified to the court.
Mr.. Schwab, against Mr.. Guthre's advice,
said that he had, since the formation of the
steel corporation, sold a considerable
amount of steel securities, but that an eX-
animation of his accounts would show that
most of the sales were of bonds, and that
despite his sale of some of the stock, he be-
leved himself to be the largest owner OF
steel stock. He declined to state the amount
OF steel stock and bonds he now had and
had sold, declaring that ne did not intend
to permit such an investigation of his pri-
vate business by Mr.. Untermyer. The wit
ness accepted Mr.. Guthries advice not to
answer in regard to long series of ques-
tions along this line.
AS bearing upon his knowledge of steel
properties In 1901 and 1902 Mr.. Schwab
was asked If he had not been interested in
the organization of the American Steel
Foundries Association and other steel prop
critics and consultations, but he declined to
answer, except to state that he not in
tereSted, except as an underwater in the
foundries association, and to say that he
could form no opinion as to whether the
values OF steel plants were inflated at the
time.
Bethlehem Case Brought Up.
Mr.. Untermyer then turned his attention
to the Bethlehem plant and Mr.. Schwab's
connection Herewith, which, the witness
said, had existed since the formation of the
company.
Mr.. Schwab understood, he testified, that
before he obtained the option under which
bethlehem was transferred to j. p. Nor
gan & Co. in 1901 a prior option had existed
expiring only a few days before his was
secured, the first option calling for a price
OF $3.50 per share and his for s2i per
share
Jonn w. Gates, the witness testified had
assumed half Of his (Schwab's) subscrip-
tion to the first mortgage bonds of the
United States Shipbuiding Company, other
wise Mr.. Schwab still retained his original
holdings of the shipbuiIding bonds. Mr.
Schwab was asked about a statement given
to the press in his name Immediately after
this suit was begun. the statement repelling
the charge of fraud, and expressing con-
uuSHCc III lLs oueiuOn reorganization plan,
this line Of questioning developing a heated
three-cornered colloquy between Messrs
Schwab. Untermyer and Guthrie in which
tempers were apparently strained nearly
TO the breaking point. In this statement 1t
was said that Mr. Schwab had deposited his
holding of $3.50 000 worth OF first mort ga ge
bonds OF the shipbuilding company under
the Sheldon agreement
Statement Was Inaccurate.
Mr.. schwab admitted that the statement
was Inaccurate. because he did not hold
that amount Of bonds. but he claimed that
the inaccuracy was due to the preparation
Of the statement by Max Pam, his per-
sonal counsel, and that the fact that his
entire holding of bonds was deposited under
the reorganization pan would inspire pub
lie confidence In the plan. without regard
to the fact that his holdings were mis-
takenly overstatsd-