New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1920-09-08
Cleggeg Explains
Cash Seizure
11n Ship Deal
U. S. Took $4,000, 900 Be-
cause He and. Kerr Are
British Subjects Until
Next November, He Says
Bi e Profit i'm Stock Sale
Denial Made That Marine
Investors Planned to Quit
America After Liquidation

Explanation was made yesterday of
the governments seizure on August %
of $4,900,000 in cash as it was being
passed over the counter of the Chase
National Bank in payment by the Amer
lean Ship and Commerce Corporation to
H. Farquharson Kerr and Alfred E.
Clegg for stock in the Kerr Navigation
Corporation.
Dissatisfied with contract, the Kerr
Corporation, subsidiary Of the Ameri-
can Ship and Commerce Corporation,
had made with the Hamburg American
Line, which they assedted contained
provisions favorable to German ship
ping interests. Mr.. Clegg and Mr. Kerr
decided to take advantage Of an ar
rangement by which they were enabled
to sell $4,000 shares of stock in the
Kerr concern at 500 cash share, al
though the stock had a nominal value
on the firms books of only IS share.
Mr.. Kerr told The Tribune that while
SIS share was far below the actual
value, he and Mr. Kerr nevertheless
was the purpose Of Mr.. Kerr and him
self, he~said, to reinvest the $A900,0O0
in American-built shipping, thus claim
ing exemption from excess profits tax
alton under the American merchant
marine act Of Congress which exempts
profits from shipping deals when the
profits are reinvested in American
ships. The act provides that the in
vestors must be American citizens.
Real Reason for Action
"The fly in the ointment came when
it was discovered that neither Mr.. Kerr
nor myself were American citizens"
said Mr.. Clegg. eve will be technically
British subjects until our final papers
are taken out next November. Both of
US were active in the United States
Shipping Board during the war and
we did not feel it proper to start
American proceedings until the armi-
stice was signed.
"Under these conditions the govern
ment, to our establishment, felt JUS
tilted in Selling our money. We expect
TO rest our case on broad construc-
ton Of the marine act. The object Of
this act is to encourage American
shipping. 1t is our purpose to reinvest
every cent of the $4,000 900 in Ameri-
can shipping. If the United States
Shipping Board and the revenue au-
thorities decide In our favor we will. so
invest the entire amount. If they de-
eide against US we will pay the tax
shipping"
Mr.. Clegg explained that the reason
why he, Remit Roosevelt and General
George w. Goethals resigned as Off
Gals of the Kerr Navigation Corpora
ton last June was because of a con-
tract which the corporation had made
with the Hamburg-American Line and
because of the election of ". G. Sickel,
director of the Hamburg American
Line, to be assistant to the president
of the American corporation Mr..
Clegg said the contract contained pro-
visions Objectionable to himself and
his associates, because they made con-
cessions favorable to the German in
terests and detrimental to American
shipping.
Claim for Tax Exemption
Mr.. Ciegg quoted a paragraph from
the merchant marine act, which went
into eject last June, as bearing on his
claims for exemption from the excess
profit tax. The act provides:
THAT during the period of ten years
from the enactment of this act any
person a citizen of the United States
who may sell vessel documented
under the laws of the United States
and built prior to January /, 1914, shall
be exempt from all income taxes that
would be payable upon any Of the pro-
ceeds OF such SAFE under Title /, Title
II, and Title III Of the revenue act Of
1913 if the entire proceeds thereof
shall be invested in the building of
new ships in American shipyards, such
ships to be documented under the laws
of the United States and to be of a
type approved by the board"
Mr.. Clegg denied that either he or
Mr.. Kerr intended to leave the coun-
try because of their sale of the Kerr
stock. Mr.. Kerr's departure for Eng
land last Thursday, Mr.. Clegg said,
had Tong been arranged
W. Averal Hartman, president of
the American Ship and Commerce Cor
purchase by his company Of the Kerr
stock had no bearing on the contract
with the Hamburg American Line. He
said the latter contract, approved by
the Uuited States Shipping Board, had
! been made public in detail on August
II last, and that he had nothing to
conceal concerning the contract. He
SAID ne was convinced that if American
shipping interests did not enter into
such a contract British shipping in
terests would.
Ship and Commerce Corporation owned
slightly more than 80 per cent Of tho
stock Of Kerr Navigation Corporation,
which is the shipowning subsidiary"
said Mr.. Hartman. The ships owned
by the Kerr Navigation Corporation
have been operated by the Kerr Steam
ship Company under an operating
agreement between that company and
the Navigation Corporation.
THE steamship company is an en-
tirely independent company, none of
the stock Of which is owned bv the
American Ship and Commerce Corpora
tion or by the Navigation Corporation,
but it is understood that the stock is
owned by MIR. Kerr and Mr.. Clegg.
These same gentlemen, prior to Au-
gust 20 owned about 35 per cent Of the
stock Of the Kerr Navigation Corpora
ton. This operating agreement was
subject to cancellation. but in the event
of cancellation the American Ship and
Commerce Corporation agreed to pur-
chase. at 500 share, the minority
interest in the stock Of the Kerr Navi.
cation Corporation. This agreement
was cancelled and Messrs. Kerr and
Clegg rendered their stock on Satur-
day. August 20, under the agreement
and demanded payment in cash Of the
sum of about $4,ooO,ooo The Ameri-
can Ship and Commerce Corporation ar
| a..