The Washington herald., 1922-06-04
THREAT OF JAIL
GIVEN SCHIFF IN
STEEL HEARING
Chadbourne Also Warned
BY Untermyer to Pro-
duce Documents.
CHARGES SCHEME
TO UNLOAD STOCK
Kuhn, Loeb Alleged to
Have s2O,OOO,OOO for
Manipulation"

NEW YORK, June 3.-Threats 70
jail Thomas L. chadbourne, promo
ter OF the proposed quarter billion
dollar steel combine. and Mortimer
L. Schiff. Of Kuhn. Loeb and Com
pany. enlivenee the lockwood Com
mittee's hearing of testimony con-
cerning the merger today.
Charges that 2O.Ooo,Oo raised by
schiffs banking firm to assist the
proposed merger would be used for
marketing purposes" were made
by Samuel Untermyer. counsel for
the committee which is investigat-
OF this by Schiff led to sharp ex-
changes between witness and az
torney.
Schiff was threatened with prose-
cution for contempt OF court 81 he
fails 10 produce certain financial
documents relative TO the merger.
which he admitted possessing.
Contempt proceedings will be star
unless he produces documents de-
manded by Untermyer. Only the
absence Of a quorum prevented i'm
mediate institution of proceedings
against the promoter. who aroused
untermyer's ire by his testimony.
Charge Plot TO Unload.
The proposed amalgamation is
that Of Midvale Steel and Ordnance,
Inland Steel, and Republic Iron and
Steel into the North American Steel
Company. Kuhn. Loeb and Com
pany were to be the bankers
Throughout his two-hour session
on the stand Schiff attempted TO
evade many issues and declined to
roduce the merger records. He
had repeated clashes with Inter
myer. At the close Of the examina-
tion he asked that an exception TO
a printed statement attributed o
lUnermyer to be placed in the rec
ord.
The statement attributed to Un-
termyer was that SchIf's banking
firm agreed to raise $40. .OOO. 900 for
the new merger and that this money
was to be used for trading in the
market" so that when the stock
reached a certain level the insid-
ers could unload and outsiders could
load up"
UphOlds Untemyer.
In the argument that followed,
lCntermyer refused TO give an inch.
He argued that no such statement
had been placed in the record ana
what he said outside the court had
no bearing on court proceedings.
Chairman Lockwood upheld INT
ermyer and refused to permit
Schiffs statement to be placed in
the record.
Schif was questioned at great
length as to how the syndicate
would sell the stock and admitted
that it would be handled by forty
Tor fifty brokerage houses. lie ad-
mitted that the syndicate would
give buying and selling ORDER,
will you give buying orders?"
Untermyer asked.
Yes" Schif replied
ing7"
Yea"
Don't you call that. trading in
the stock
Mr. Chairman. resent Mr.. Unit
lermyer's statement" Schiff pro-
tested.
Calls IL Manipulation.
Schin then explained that Il was
the purpose Of the syndicate TO be
ready to purchase stock OF small
stockholders II they pressed the
market.
That's what ] mean by pool ma
nipulating." retorted Untermyer.
What the syndicate agrees TO
do" declared Untermyer during the
examination, "is-besides market
ing the stock-to expend up TO
s2o.ooo.ooo in the purchase Of sddi-
tional stock"
Yes. in the market replied
Schin.
so that while with one hand u
is selling stock to the public with
the other hand 1t is buying stock
from the public
NO, Mr.. Untermyer." was SchirTs
lreply. mo, because IL doesn't
happen simultaneously"
How do you know IL does not--
because IL does not We do not
wash stock. 1 resent that impli-
cation"
Adjourns to Thursday.
"All these resentments. you
know, don't count. The facts are
what We are looking for" Unter-
myer replied
Thomas l.. Chadbourne, legal ad-
wiser to the merging companies,
was next summoned TO the stand.
He refused TO divulge any OF the
records or correspondence between
himself and the companies. on the
ground that II was giving informa-
tion Of a client.
| Untermyer asked the witness q
series OF questions on these mat
ters and then referred the question
OF whether Chacbourne should be
forced TO present the records in
court to the committee. The mat
ter was taken under advisement
John A. Topping. chairman Of the
executive board OF the Republic
Steel Company. and Albert d.
sturgis, secretary OF the New York
Curb Market, were other witnesses
summoned.
Sturgis admitted North American
steel was dealt in on the curb
market yesterday upon request. He
declared that tho request was in
vestigated by the traders and per-
mitted.
The hearing was then adjourned
until Thursday.