Evening journal., 1916-07-26

ars. and that is called total working
capital. He shows to what items il /
is applied, and how incongruous the
facts are with the effort at applica-
ton made by my learned adversary.
The next items are investments,
company stock, investments
Of securities. miscellaneous securl-
ties, and so forth. Those different
item amount to about fourteen mil
lion dollars, and the forty million
dollars under the first set of items,
these four items follow, then comes
the footing Of ffty-fOur million four
hundred and sixty-four thousand
eight hundred and eighty-four dollars
and one cent; that fifty-four million
dollars includes the forty million
dollars. and yet Mr. Johnson, in his
argument. says il is forty million dol
lars plus ffty-four million dollars.
Then the current liabilities are de-
Quoted from that. and it leaves forty
nine million dollars. Then the plant
and real estate is added to that, and
IL increases il to ninety-six million
dollars: then comes the deduction for
liabilities less contract advances,
funded debt reservation for depreci-
alton amortization. and so forth The
excess of assets, deducting these lat
ter items from the ninety-six million
gives fifty million seven hundred and
sixty-nine thousand six hundred and
eighty-three dollars and seventy-one
cents, from which as a liability, must
be deducted, preferred and common
stock. and when you deduct that, it
leaves the net amount on February
2S. five million three hundred and
three thousand five hundred and nine
ty-nine dollars
I ask, Your Honor what justifica-
ton there can be for a statement such
as I have read to you, from this copy
Of his printed argument. He would
have you believe that there were as
sets then applicable to the purchase
OF stock Of nearly one hundred mil
lion dollars. when it IS the fact that
when the liabilities that every book
keeper charges off are deducted and
/ the stock liability is accounted for
at par there is but five million dol
I lars Of assets, and yet he tells you
that at the time these men bought
this stock, at a price that was greatly
below its value; when the book value
of that stock at that time was verl
little over one hundred and twenty
five dollars a share. It is true thai
the company had prospects. but ever!
prospect was founded upon uncer'
tainty and every outlook was fille'
with doubt It required courage; ]
required union of action il required
the adventurous spirit that these
men had. and the skill and knowledg,
which they had, TO bring out Of tha
prospect the realization Of rich pro
fits profits which poured a stream o.
gold into the pockets Of these com
plainants It is not a case of wher
the men in power diverted things L
their own use, but they were work
ing for the success of the corpora
ton. II was the supreme ability o
this president and his associates tha
, brought out Of that condition it
wonderful success; their foresight il
the purchase of materials, their hand
, ling of the finances Of the company
the management of the business; tn
rapidity and skill with which neN
buildings, to manufacture powder
, were erected-it was like, as Nj
\ Johnson has referred TO. the rubbin
j of Aladdin's lamp-how in these fey
, months they had transformed thi
. company from one making a few mil
lions Of product into one manufactuI
{ ing hundreds Of millions.
! Now he runs over the balances
the same manner, but I think that tn
illustration which I have selected ful
! " justiies me in saying that tn
argument based on working capital
b which he refers TO bolster up his pc
4 sition falls. There is no workin
, capital set apart in the charter, an
{ misuse of the term in this pape
( cannot make it working capital; an
Z the cold facts, when you take an
- analyze the assets and the liabilitie
\ show that there was no working cal
= ital but simply a surplus of betwee
q FIVE and six million dollars to pu
J. chase fourteen million dollars
S stock. To take out of that corpor'
d ton, whose book value was wha
d ever that surplus of FIVE million do
o lars divided over thirty thousar
e shares of stock, would amount to-
/ to take out Of that corporation tv
= hundred dollars a share for the bi
j. gest shareholder. and let him and h
o capital go out-what could be thoug
5, of such a proposition?
II Answers JOhnsOn's Arguments.
al Mr.. Johnson advances three prop
q sitions to sustain his argument. TT
v first is that Mr.. Pierre S. duPo
y owed a duty. that there was an age
N cy. The second is that the peculE
n relation of these gentlemen TO d
h corporation and to its finances ga
: them an opportunity to take adva
\ tage of that in financing the corpor
IF ton; and his third proposition WI
r what he calls the farcical action
! the board Of directors.
g Let US examine these three prop
!? sitions, one after the other, as brief
4. as possibly. The duty Where d
r the duty come from? This corpor
Ie tion was not dealing in its own stoC
is What I claim is the interpretati
a of every charter exists in this ca
ht Their business was the manufactu
tv Of munitions not buying and selli
at their own stock. And when you ia
b. the history Of this corporation, frC
is 1903. down to this period. you W
ty realize that they never engaged
re the business Of buying and selli
IL their own stock. Mr. Alfred l.
IL pont himself admitted when | ask
IL him on the stand: MI dupont,
ey you know Of an instance where Il
or corporation bought and sold its o.
IA stock from 1903 down TO this tin
mr. except for bonus purposes to its e