The New York herald., 1922-05-19
ROOT WON'T UPHOLD
CRITICS OF SMELTERS
Referee Sides With Stockhold,
/ ers' Committeeman Who
Praise Guggenheims.

The stockhoIders' committee that FOR
more tl.an year has been investigating
the affairs Of the American Smelling
and Refining Company has completed
its work and submitted two reports,
majority report, witch severely criti-
cizes the management for certain trans
actions. and minority report which
calls such criticism unjust and which
praises the Guggenheim management for
the work 1t has done. Elihu Root. to
when both reports were submitted for
review and comment. has issued a state
nent In which he inclines to the side of
The minority in supporting the activities
or he Guggenheim management.
Signers of the majority report were
Henry Evans, Clarence II. Kelsey. Henry
Pomeroy and Willis ID. Wood. The
minority report was subscribed to by z.
9. Jameson, Lyman Candee and Wilfred
Shore
The chief points to which criticism is
directed are the policy Of paying large
dividends during years Of profitable
business and not making sufficient adj
ditions to capital reserve the turning
over to Guggenheim Bros. Of the copper
selling agency which had for ten years
previously been conducted by the smelt-
Ing company and "the organization
and issue OF varioug stocks by the
american Shelters Securities Company,
guarantees Of such stocks and purchases
by the smelling company and the e>sale
10Y the Guggcnheim Exploration Com
pany to the smelling company In 1911
of substantially half Of the common
stock CT the securities company" The
majority also holds subject to criticism
certain transactions wherein officers
and directors OF tie company dealt with
other corporations in which they also
were Interested"
The minority report declares that the
Guggenheims are entitled ITO q very
large share of the credit for the COM
pany's prosperity" and goes on to point
out many instances In which the man.
agement has made much money for the
company. As regards the transfer of
the copper selling agency to Guggen-
helm Brothers IN 1921, the minority re-
port declares. and Is supported in its
contention by the conclusions of Mr..
Root, that Guggenheim Brothers took
oyer the contract only because It was
no longer profitable for the smelling
company. Mr.. Root sets forth that
profits on the selling agency In 1921
were only S62,632 instead OF millions as
has been reported.
Mr.. Root pointed out that In twenty
Years the company has paid In dividends
S11S.79S,911 on an entire cash invest-
1nent OF $47,000,225. These dividends
nave returned to stockholders their en-
tire investment, 6 per cent. on their In
vestment for the full twenty years and
S23,0O0,000 with interest for twenty
years. Besides this. he finds, the COM
pany's properties have been built UP to
the point at which the stockholders
nave a clear, value of $12s.0O0. 900,
equivalent to par for both common and
preferred stocks and $17.o00.000 sur
plus"
The criticism. Mr.. Root declares came
largely as result of the business de-
preston of 1920. which affected the
smelling company as 1t did every other
corporatic.i. The three main points Of
criticism mentioned by the majority re-
port are held by Mr.. Root to be without
Just foundation.