The New York herald., 1922-06-04
KUHN, LOEB TOCET
100000 EXTRA
FROMSTEEL MERGER
ChadbOurne Also to Make
81, 100000 for Promoting
North American.
JAIL HINT TO SCHIFF
Untermyer at Inquiry Fails
to Make Him Admit to 4
Washing Sales.
MANIPULATIONS DENIED
Stock Offered to Public at S4a
Will Go to Underwriters
and Lawyer at SO.
MANIPULATIoNs DENIED

: Pursuing his inquiry into the mere
ger of the Midvale, Republic and Ina
land Steel companies. Samuel Unter~'
myer. counsel to the Lockwood Hous<
ing Committee, established yesterday
through Mortimer l.. Schiff that his
firm. Kuhn. Loeb & Co., as syndicate
managers and underwriters of the
merger, stand to make approximately
s2.t00,000 on the deal, apart from
commission of 15 per cent. on the
stock turnovers.
Thomas L. Chadbourne, counsel ia
some of the interested companies. Will
make something over $1,000 900 for his
efforts as promoter of the consolidas
ton, 1t was shown.
Mr.. Schiff was the principal witness
at the days session of the committee.
He had frequent oral clashes with Mr..
Unterniyer, in one of which the
banker was warned that ne was tak>
ing chances on going to Jail" He re-
torted that II he did so Mr.. Inter
rhyer would accompany him. Never
theless Mr. Schiff disclosed the terms
under which Kuhn, Loeb & Co. are 10
handle the merger-inforination which
the committee had been seeking vainly
for several days.
Mr.. Chadbourne relied on his pro-
fessional relationship as counsel for
the steel companies and frequently re-
fused to disclose information.
Mr.. tntermyer questioned Mr.. Chad,
bourne particularly with regard to dis
customs in which the latter participated
and at which third parties were present.
but Mr.. Qhadbourne refused to answer
except in cases where the information
was Of little value to the committee He
refused fatty to bring papers affecting
the merger with him when the commits
tee meets next Thursday.
Inside story OF the Merger.
The chief points OF the merger disc
closed were: ~
Mr.. Schiff admitted that Kuhn.
Loeb & Co. is to organize syndicate
with cash application OF ss},oe4.s25.
and that it will purchase $25,351.475. ,
par value preferred, OF the new issue.
10 De known dS (-HlcINdh
Steel. and 5o5,331 shares of common.
This stock will be offered at 500 1
for the preferred and s4s for inc
common. t
In addition Kuhn, Loeb & Co. Is to !
have the privilege of buying $500
additional shares OF North American
common at $40 u share. In order to
assure the firm a substantial imam
cial interest in the merger. and that
Chadbourne may buy 25,500 shares at
the same price as recognition OF his
work I'm directing negotiations
The syndicate also Is TO provide
$40. 900. 900 cash to be used in tho
discretion of the syndicate managers
in the purchase OF additional shares
or otherwise.
Mr.. schiff denied vigorously that
this fund was to be used for "trading"
or wash" sale purposes In order to
create market for the new stock
in which II might unload its bonus
shares
The basis OF the trade with the
Inland Steel Company Is TO be e5 in
stead OF 80 for the preferred and
that fund of approximately s24.-
600, 600 Is provided to satisfy the In
land preferred shareholders.
Mr.. Schiff expected that the COM
mon stock Of the North Americap/
Steel will sell higher than ~. and
that 1t will be listed on the Stock
Exhange within week or two.
A letter from Emil Mossbacher.
curb broker. received by the Curb
Market Friday morning. requesting
permission TO trade I'm North Amer
lean was introduced.
Mossbacher defaulted on a subpoena
when the committee sought to ex-
anime him as to who wanted the
stock listed on the curb.
Alfred 3. Sturges, secretary OF the
Curb Market, admitted that trading
In North American stock began FRI
day at l o'clock by permission Of the
Curb Association on less information
on the merger than was actually
printed in tho newspapers on Friday.
and that this information was sup
piled from Mr.. Chadbournes office y
Untermyer Defends His HoIdfnxs.
Mr. untermyer and Mr.. Schifr began
70 cross verbal lances practically at the
leginning OF the bankers examination.
Mr.. Schiff's rejoinders to some OF Mr..
Untermyer's questions. particularly
when he referred TO Mr.. Untermye,'s
own holdings in Bethlehem Steel. caused
the lawyer TO characterize them as
contemplate reference" and TO remini
the committee that his holdings in tha.
company had existed for fifteen years:
that they were an investment and not
speculation and fully on record before
the committee.
Mr. Untermyer asked Mr.. Schifr TO
produce all papers, reports and data af-
fecting the companies considered In tho
merger under investigation. Mr.. schift
declined to do so. on the ground that
some Of the data was confidential. and
that the merger. as far as some OF the
companies considered had been con-
ctrned. did not go through.
Mr.. Schiff denied that he had talked
with J. p. Morgan over the withdrawal
OF the Youngstown sheet and Tube Com
psny from the combination. The witncssN