Evening journal., 1916-07-07


change for the powder company
stock, the witness, under cross-exam-
ination, said Il was possible that the
same offer may have been made TO
eleven other members Of the dupont
Company The witness admitted the
offer was made one month after the
directors had refused TO purchase the
stock from p. S. DUPONT on March TO-.
at $500 a share.
The witness was asked if he did not
state that he thought the stock Sc
cured by the Securities Company
should be distributed among the
younger members OF the DUPONT fam
lily.
'1 cannot remember" the witness
replied
The witness also stated that he told
the board Of directors that the stock
in his opinion was not worth 5000 a
share, only as a borrowing PROPOSE
ton
Not Worth 5000. With Risk.
Reading from a typewritten copy.
purporting 70 be a copy of transac-
tions before the board OF directors.
the witness was asked II he did not
say at the directors meeting.
81 do not think the stock is worth
5000, taking the risk and all"
Eyes"
In answer to cross-examination the
witness admitted that at this particu-
lar directors meeting, March 10, he
had stated that by the purchasers bor-
rowing this $S500,OO0, from Morgan
and Company, that company could
probably force payment from the
treasury by some financial scheme,
and get control OF the company. N
notes we're not paid.
The witness stated he considered
the purchase Of the stock, in the way
Il was done, unfair to the company
because he did not think p S. DUPONT
had the money TO buy IT.. In continu-
ing his testimony. as to why he
thought the proposition unfair. the
witness said some arrangement was
made with r c dupont. TO get his
stock, without the directors knowing
anything about II
Explains "Unfairness."
O. You have said TO p. s. DUPONT
that his purchase OF the stock was
unfair to the company, have you notY
A. said his financing Of the pur-
chase was.
Q. VIII you tell the court in what
respect il was unfair to the company?
A. Because did not believe that
he had the money TO buy it.
Q. For that reason you thought Il
was unfair to the company, and was
Il not in that connection that the
.unfairness appeared to your mind,
with respect to Morgan & Company
probably getting control OF the con-
pany through the failure TO pay
these notes?
A. OF course. I did not think that
was at all probability. hut 7 thought
that the blocking OF the stock in his
control was what gave the stock it's
collateral value.
O. Please explain what you mean
by saying the term "unfairness" ap-
piled to the manner in which he had
financed the purchase. What do you
mean by that?
A. He secretly made some arrange
ment with Coleman DUPONT 10 get his
stock That arr"~orr''~-'. ,~~-
directors we're told about He was
an officer. The treasurer of the COM
pany was cO-uperd..D. r..
was instrumental in placing larg
deposits at different banks in New
York. Even II those same banks were
not the ones which helped finance the
company, and 7 am not raising that
question, the very expectation that
there would be those deposits gave
him power to which in my opinion
he should have used for the company
and not for himself
Q. How did YOU understand that
he had used II for himself and not for
the company in the matter Of the
power that he had?
A. To borrow something like sS.-
500 600.
@. Did you understand the plan
by which he had financed the pur-
chase of tins stock?
A. do not know that understood
all the details Of the plan
@ How much Of IL did you under
stand?
A. 7 understood that he had form
ed a corporation and that that cor
!
amount Of money in cash, somethine
Z like SS,500.0O0; that II had entered
into other obligations. the nature Of
which did not understand. for
another large sum OF money: that that
corporation controlled a very largs
block OF the dupont Company's stock
and that therefore II was a compact
body which could do pretty much as
II pleased with the company. In other
words. Il seemed 10 me to be an in
strument by which the DUPONT Com
Dany was hound hand and foot to be
delivered 20 anybody who might come
into possession Of the Securities Com
pany's assets In case there was any
trouble about paying the notes.
Q. That was the fear you had with
respect TO the transaction?
A. II was not fear ] did not think
that would ever happen, any more than
when ! go 10 a bank and borrow
money expect that the collateral
will be sold. ! never expect that
but II was the nature OF the trans
action that was calling attention
TO- not the fear II would happen.
Q. Then you did not consider the
collateral with Morva~ g. Company
was in any danger. did your
A. Not with the working control
OF the company practically back Of IT,
i Q. How was the working control
OF the company practically back Of
A. very large block Of the stock
was in the Securities Co,,non,,