New-York tribune., 1909-02-03
G. B. SCHLEY TESTIFIES
SAYS ASSOCIATION HAD
TO SELL IRON STOCK.
Syndicate Bought Tennessee Stock
scith Sole Idea Of Developing
the Property.
rFrom The Tribune Bureau.l

Thatcher, appeared before the Senate Committee
CT Judiciary to-day and testified fully and
frankly regarding the purchase OF the stock Of
the Tennessee Coal and Iron Company by an
association of men OF whom he and
whose names he gave to the committee. He
said that he and mis- associates had purchased
11SJOO shares OF stock constituting consider
ably more than controlling interest, with the
sole purpose Of developing the property and
making it paying concern
They sI,ent he said approximately S7OO0OO0
on the property Then came the panic. Many
of the investors had not paid for their stock in
full; others had hypothecated more or less Of it.
1t stood collateral for loans in many New
York banks. The banks began calling for pay
mant of the loans on Tennessee Coal and Iron
stock or the substitution Of approved securities.
The members OF the association. who were not
bound excepting by an agreement not to part
with their holdings for two. s;d subsequently,
three, years. had gone ahead too fast; they could
not we'll meet the demands Of the banks, and
although. they had purchased the stock at 10
they were compelled to part with it at par
This they did through Messrs. LeGyard, Gary
and Frick to the United States Steel Corpora
ton and. in the opinion of Mr.. Schiey, The deal
went far to stay the panic.
Repeated efforts the part OF Senators Kit
tredge. ,Culberson and Overman failed to shake
Mr Schley's story or to elicit from him any
support for the point they were apparently seek
ing to establish. namely that the ASSOCIATION
of which Mr.. Schley member was syn
dicate organized merely to speculate In the
stock OF the Tennessee company. and that the
President was made the victim Of a stock specu-
lating association
NAMES OF SYNDICATE MEMBERS-
The names Of those forming the association
were given by Mr.. Schley follows: .. II.
Payne. L. c. Hanna, G.. B. Schley, ]. B. Duke.
E ]. Berwind J. W. Gates, A n. Brady. G. A
Kessler and Oakleigh Thorne. who held 10000
shares each: E w. Oglebay H. S. Black F. D.
Stout and ]. A. Simpson. who held $3.50 shares
each C. W. French. 2,5OO; S. G. Cooper, 1900,
and J. A. Topping. 1000
Senator .Culberson asked the witness about
loans made on Tennessee Coal and Iron stock,
and Mr.. Schley said that mis- firm had borrowed
for himself and customers between s5,O0O.OOO
and Sc, 600 600. which outstanding on No
yernber l. 1907. and that the total outstanding
loans Of Moore & Schley on that date amount
ed to about sSs0OO,OO0. 1t was shown that
considerable amount OF Moore & schiey's loans
were with the so-called Morgan banks. Il was
positively asserted by the witness that every
demand made upon his Arm for the payment OF
the loans had been met promptly.
II was said by Mr. Schley that there were
about one hundred thousand shares OF Tennessee
coal and Iron stock tied UP in loans which they
had placed with other banks. and that when the
panic came on there was nobody buying or sell
ing this stock as so much of 1t was out Of the
market. In the development Of the panic" ne
continued "the banks declined to loan upon a
security where the market was apparently NOM
inal So would have continual calls. Please
take this Tennessee out of that loan,' etc. Now.
II became a very serious matter.
Senator Culberson wanted to know why the
United States Steel Corporation could not have
relieved the situation by simply taking care OF
that 100 900 shares OF stock, which was In loans.
He suggested that the Steel corporation might
have deposited steel bonds in lieu of the Ten
nessee stock for the $5000.00O or 36.OOOOO0 which
had been borrowed on the latter Mr. Schley
said such thing had never been considered
nor had he thought Of it before. He did not
think such a thing would be practicable. Con
cerning the suggestion Mr.. Schley said:
1T was natural to consider that when they
took it, they wanted the control. doubt II the
steel corporation would have wanted any IN
terest in the Tennessee Coal and Iron property.
leaving the control out Of their own hands am
speaking of the practicability of the sugges-
tlon"
Mr. SchIey was asked If the requirement Of
the Tennessee company's property by the Steel
Corporation added to the value of Steel securf-
ties and replied: Yes. surely"
Mr. Kittredge asked IL the contemplated i'm
movements when completed. would not enable
the Tennessee Coal and Iron Company to manu-
facture steel cheaper than any other steel COM
pany in the country and Mr.. Schley replied:
Yes, I believe that is so"
SAYS SITUATION WAS DANGEROUS.
II was brought out by Senator Overman that
nl the men making up the party which bought
the Tennessee cOmpanys stock were men on
great wealth and few OF them would have been
s,.ncialI,, embarrassed II the deal of the Steel
CORPORATION had not been accomplished Mr.
schley said that If loans that Moore Schley
had ON these stocks had been called by the banks
II could not be told what would have resulted.
.Was there any call these men?' asked
Mr. OyerrIan.
Mr.. e5chley replied that his firm acting as
agent for these men and that he had called on
rhen but they could not respond. He would
not say that there any danger to any par
ocular man in the party but he said the calls
,,pon Moore & Schley were made so persis-
eentIv that ut got 70 a dangerous point" The
rrassment he said extended to many others
outside the list of stockholders which he had
given. I'VE had right in front of u.s. he said.
"a fear and doubt
The witness then described his visit TO Lewis
r,ass Iedyard who mentioned by former
witnesses as being the man who first suggested
- ,erqer of the Tennessee Coal and Iron
c,,narx, and the United States Steel Corpora
ZION Mr.. Schley said Mr. Ledyard was not his
o++orns4 but was the friend of j. Pierpont Nor
can The proposition made TO Mr.. Ledyard was
~. he shp,,ld go to Mr.. Morgan and suggest
.hat tba steel corporation buy the stock Of the
tennessee Coal and Iron Company on tae basis
- rsr and cash Mr.. SchIey said Messrs Frick
and Gary called him and the deal developed
and was made known to the public In manner
af