New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1922-05-19
Committee Reports
On Management of
American Smelling
Statements Divided Into Ma
jority and Minority Opin-
ions: Elihu Root Com
ments on the Case

The report Of the so-called Henry
Evans committee which mas been in
vestigating the management and at
fairs of the American Smelling & Re-
fning Company has been completed
and is divided into two documents, one
called the majority report and the
other the minority report. The major
ity opinion is signed by Mr.. Evans,
Clarence H. Kelsey, Henry X. Pomroy
and Willis D. Wood. The signers of
the minority report are Lyman Can
dee, e. c. Jameson and Wilfred Shore,
all Of whom were elected directors at
the last annual meeting.
The chief points to which the ma
jority report directs criticism were the
policy of the company in paying large
dividends during years of prosperity
and not making sufficient additions to
capital reserves; the organization and
issue of various stocks by the Ameri
can Shelters Securities Company,
guarantees of such stocks and pur-
chases by the Smelling company. and
ton Company to the Smelling COM
pany in 1911 OF substantially half the
common stock of the Securities Com
pany, and the transfer to the Guggen-
helm Brothers in 1921 of the copper
selling agency, which had for ten years
previously been conducted by the
Smelling company.
Moreover" added the majority
opinion, "the investigation has dis
closed certain transactions which are
fully discussed in the report wherein
officers and directors Of the company
IN dealing with other corporations in
which they were also interested are
in the opinion of the committee subject
TO criticism"
The minority members of the commit
tee pointed out that they themselves
,"elther own or directly represent in
the aggregate. over 10000 shares of
the company's stock, while the majori-
ty own or directly represent a very
small amount of stock"
In giving their reasons for disagree
ing with the majority, the minority
state. in part:
tied to very large share of the credit
for the company's prosperity, not
alone by reason of their participation
IN building up the valuable organiza-
ton which now operates the business.
but primarily by reason of the fact
mat they have consistently brought to
the company the ores of the mines in
which they have been Interested"
W hen the committee was first or
Sdh'Neu the EuRRennelm management
suggested that ex-Presdent Taft no
requested to undertake the inquiry, and
he agreed upon condition that he was
to serve merely as a Judge in refer
ence to the matters concerning which
evidence should be presented Later,
when Mr. Taft was appointed Justice
OF the Supreme Court, it was agreed
that the conclusions of the stockhold-
ers' committee should be submitted in
MIR. Taft's place to ex-senator Elihu
Root for his study and comment. In
ms comment on the majority report
he says. in part:
The stockholders of the company
have behind their stock practically a
clear value of more than S12S, 900 900.
equivalent to par for both the com
mon and preferred stock and ST.
100000 surplus
Under these circumstances the man
agement of the company would prob
. ably be receiving testim onials of graft
tude from the stockholders were it not
that, as one of the unprecedented re-
suits of the great war. the bottom
dropped out of the metal market
There was one thing. however
which the management could not do
They could not escape from the tend
ency of human nature to blame some
body for something when misfortune
comes
With reference to the two main
points OF criticism in the majority
report, Mr. Root says:
81 have come to the clear conclusion
that both of these criticisms are with
ous just foundation. feel bound
also to say that the facts upon both
points are so incomplete as to be mis-
leading. They appear to be made up
under strong bias. such as account
snts. and even lawyers, do sometime
fall into. They omit many facts neces-
sary to right understanding and they
contain erroneous assumptions wholly
unsupported by evidence
The business of this company has
grown because the Guggenheims have
been great mining men, always looking
out IN their mining operations for the