The New York herald., 1922-06-04

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merger. covering details OF the bankers
rarticipauon. Mr.. Untermyer ha
charged that the agreement was sup
PRESSED when the deal was made publ
last Thursday evening. This agreemen
follows:
The following tentative financial
plan IL approved In connection with
the proposed accession OF Midvale
y Steel and Ordnance Company, under
that or some other name OF the assets
and properties of the Inland Steel
Company. and Republic Iron and steel
Company. as set forth In the attached
memorandum: 1t is proposed that the
bankers are to organize a syndicate
or syndicates with the cash appiica-
ton Of $64.064.925. The syndicate is
to agree with the Midvale Company
that after the merger therein OF the
INLAND Company and accession or the
Republic Iron and Steel Companys
properties II will purchase $25,Sol'-
ATS, par value. OF preferred stock and
505.331 shares OF common stock with
out par value OF said Midvale Com
pany for $44.064.925, to provide Tor
the cash payment OF S24,064,s2b 10
Inland stockholders and 10 provide
additional cash working capital Tor
such Midvale Company. The syndicate
Is also to provide UP to S2o.0OO,000
cash TO be used in the discretion or
the syndicate managers In the pur-
chase of additional shares OF stock or
said Midvale Company from the COM
pany or otherwise. As managers OF
the foregoing syndicate or syndicstes
the bankers shall have the right to
charge a commission as managers not
to exceed is per centum of the profits
thereof. F'ifty-nine thousand five
hundred additional shares OF Midvale
stock without par value shall be sold
to the bankers at the price OF $40 per
share In order TO assure to them
substantial interest In the said MID
vale Company. and 25,500 shares of
said common stock shall be sold at
the same price TO Thomas l.. Chad
bourne, who has directed negotiations
of the plan as outlined in the at
tached memorandum
Trusts Public to Make Market.
Mr.. schiff explained that the bankers
were to get Is per cent. commission on
the profits of the syndicate for service
and management. but added that II the
syndicate did not make any money
there would be no profit for the syn
dicate.
You expect to underwrite 1t an2"
asked Mr.. Untermyer.
Yes replied Mr.. schiff.
You expect to market 1t in the open
market?"
Exactly
In order to market It in the open
market. the vendors agree to hold the
stock for n given timer"
NO"
so the vendors may sell their stock
upon the market that you are making
for this stock?"
II am not making any market"
who Is going to make the market?'
II trust the public will have sufficient
confidence In this thing, as we have.
to buy the stock
Mr.. Schiff do you mean to have the
Committee understand that this syndi-
cate does not propose to do anything to-
ward making the market?"
Il do not understand what you mean
by making a market"
You do not? How many years have
you been in the street?"
About thirty
How many pools have you been as
sociated WITH"
None whatsoever. Mr.. Untermyer.~
"Nsver Has Operated Pools."
And you don't know anything about
making q market In stock. do your"
II heard of 1t. but you apparently are
better informed on 1t than I am"
You have never been a party to any
syndicate operations. have your
Il have been q party to q good many
f
And those syndicatss have a man.
aser. asia rule?"
Yes"
"oensrally banking houses7"
Exactly"
And this manager operates that pool
buying and selling stock on the mar
ket?"
II have never operated q pool. so
cannot answer that"
You say you do not know that they
buy and sell stocks on the market. these
syndicate managers?"
Not from my own knoVledge. be-
cAuse we do not operate pools"
VERY we'll. we will see.f 30 that this
Is per cent. Of the profits that you are
to get. you are to get for doing whatT
For selling the stock--k0r our serv-
Ices"
"seilins the stock howf On tho mar.
kst?"
ION the market. or by issue or by
ARE You intending to mako a public
issus?"
we may
but you are intending to do so?''
.'I have no intentions at the moment
at all. Tho syndicate has not yet been
"rf the stock IL not sold by public
Issue. then Il In to be sold on the mar
kct, isn't itY'
Presumably"
And for that purpose you employ
brokers?"
Yes" s
wash Sale, Iaea Resented.
"And in the operation Of this syndi.
cate you are giving only selling orders
ana no buying ordersr' @e
Not necessarily. I am giving selling
crders."
you are going TO sive selling order,
and buying orders7"
mo, we give buying orders for stoch
which we wish 20 acquire"
"And selling orders for stock yo,
wish TO SELF"
Exactly"
And you are going to buy and"
the same stock?"
How do you mean ] am going TO buy
and sell the same stock?'
This passage marked the first Of the
open tilts between Mr. Schiff and Mr.
= -termyer. The banker made 81 clear
At he resented the lawyers imputa.
on that Kuhn, Loeb e. Co. were en-
aging In wash sales to create market
.t~r. 81, s<f 4, a.