The New York herald., 1922-06-09
SCHlFF IS RETICENT,
DEFYINGUNYERMYER
Banker Says Steel Merger
Puts No Obligation on
= Kuhn, Loeb & Co.
COUNSEL IN CONTEMPT
ChadbOurne Finds Flaw in
Subpoena and Charge
Falls Through. 2
SEES DETRIMENTAL CUT
Says New Company Will Take
ST a Ton From Advantage
Of U. s. Steel.
SEES DIFFERENTIAL CUT

Lockwood housing committee of the
Midvale, Inland and Republic Steel
companies, of which formal announce
ment was carried In advertisements in
the morning newspapers yesterday
was blocked for the time being later
in the day by the failure of Mortimer
L. Schiff Of Kuhn, Loeb & Co., and
Thomas L. Chadbourne to produce all
the data demanded by the committee
affecting four other companies that
dropped out Of the consolidation. e
At one point IA the proceeding Mr.
Chadbourne refused to produce the
original. statements and balance sheets
submitted by the companies that did
not become parties to the merger. He
refused On the ground that the COM
mittee was without jurisdiction. In
steal he offered extracts from the
combined balance sheets Of seven COM
panies, but showing only the figures
relating to the three companies in the
merger. When he persisted in his po-
sition he was declared in contempt by
Senator Lockwood. subsequently II
was discovered that the subpoena call
ing for the production Of the informa-
ton had not been specific, and Mr.
Chadbourne was served with another
subpoena to produce the information
to-day. t~s
The other developments of yesterdays
session Of the committee were:
A partial backdown by both Mr..
Chadbourne and Mr.. Schiff from their
stand of last week relating to the
three companies in the merger and the
terms of the merger.
Denial by Mr.. Schiff that his firm.
Kuhn, Loeb & Co.. recognized any OBJ
legation to go through with the deal
as bankers for the syndicate swinging
the merger, despite the advertisements,
or that the stock OF the merged COM
panies has been traded in since last
Friday on the.curb market. .r.
Renewal of the charge by Samuel
Cntermyer that Kuhn, Loeb q Co. pro-
posed to employ numerous brokers on
both sides of the market to create
demand for the new stock. and Mr..
Schiff's assertion that he had not de-
termined how the syndicate would
market the issue.
Mr. Chadbourne's admission that the
independent companies existed only
through sufferance Of the United
States Steel Corporation and his as
sertion that the Midvale merger would
help correct that situation by taking
at least 81 ton from the differential
enjoyed by the Steel Corporation.
More willing to Give Details.
Except when Mr.. Chadbourne was tenn
porarily adjudged In contempt and agar
when Mr.. Schiff appealed to Senator
Lockwood and challenged the pertinenct
of the inquiry to the housing situation
the session proceeded with comparative
tranquility. The banker refused poin
blank to express opinions on procedure
and pleaded ignorance of the techniqu,
OF the Stock Exchange.
Since the formal announcement of tn,
merger both Mr.. Schiff and Mr. Chad
bourne appeared more willing to let tn,
committee in on the details. At on,
point and after some verbal fencing Mr.
Schiff assured Mr.. Untermyer that tn,
committee might have any information
in his possession regarding the firms L
the merger, but that he would not fee
justified in disclosing the affairs Of the
four companies that dropped out-tht
Tube, Brier Hill and Steel and Tub,
Company of America.
But when Mr.. Untermyep asked why
since no conferences or development.
had occurred since last Saturday, the in.
formation disclosed in yesterdays ad
vertisements could not have been giver
to the committee then, Mr.. Schiff ex.
planned that 1t had not been prepared a
that time. Mr.. Schiff's examination be
gan with questions relating to the re
ports OF experts on the valuation Of the
plants In the merger. In this connection
it was disclosed that the book value o
the stock the syndicate will buy In a.
$43 share Is put between $73 and STA
Mr.. Schiff refused to say how he in
tended to sell the company's stock, and
Mr.. Untermyer asked:
you have no idea how you are going
TO raise this s44.0oo0o0, but you know II
the deal goes through you have got to
raise it?" Presumably"
"And you can give the committee nc
Idea as to how that Is going to be
done?" MY plans may be changed"
Refuses to Discuss Plans.
Mr.. Untermyer handed the witness a
copy OF yesterdays advertisement from
THE NEW YORK HERALD, stating thai
Kuhn. Loeb a Co. agreed to act as
bankers for the plan. The following
testimony was taken:
Q. That is true. isn't Il? A. 1t is true.
q. And yet you say you do not know
how you are going to raise the money.
A. We have not reached a definite con-
clusion.
@. Have you agreed? A. No. that is
the intention.
@. When you say that you have
agreed to the plan? A. We do, we say
we have agreed to the plan.
q. Have agreed to act as bankers for
the plan; that means that you have
agreed to furnish the money, does 1,
not? A. No.
q. II does not? A. No.
q. IL means that you have agreed 70
act as bankers In raising the money,
does 1t not? A. Not necessarily.
@. IT does not mean. when you say
that Kuhn. Loeb & Co. have agreed to
act as bankers for the plan. plan tina.
nrovides for the raising OF money or
grven securities at certain prices. yot,
do not understand that to mean thnt
Kuhn. Loeb & Co. have agreed to act
as bankers In providing this money
A. Not necessarily.
Q. And you want the committee 70
understand that you have allowed these
advertisements to 60 out setting forth
a plan of money requirements, and You
consider that you have agreed to act
as bankers for the plan and to have
people buy and sell this stock in tho