Evening star., 1925-07-26
BETHLEHEM STEEL
DENIES BIG PROFIT
Answers U. S. Suit With
$9,933,695 Counter Claim.
! SchWab Is Defended.
Rr The Associa,ed Press

BY the Associated Press.
PHILADELPHIA. July 25.-The
five Bethlehem Steel concerns today
filed answers in the Federal District
Court denying the Governments allie
cations in recovery suit that they
received excess profits of upwards of
$11 100000 for building ships during
the war emergency. In addition to
the denials, counter claims totalin &
$9,933,69 were filed by three of the
companies against the Government.
The suit was filed In Philadelphia
April II, and on the same day the
Bethlehem interests filed In the Fed
erai District Court in New York suits
for a total of $9.744.s99 against the
Government, claiming that amount as
balance due on account of ship con-
struction during and just after the
war.
Schwab is Accused.
The Government in its suit stated
that Charles NJ. Schwab, head of the
Bethlehem enterprises, was director
general of the Emergency Fleet Cor
poration and the dominating figure in
the Bethlehem companies at the time
the contracts for ships were given to
the Bethlehem Shipbuilding Corpora
tion, Ltd. 1t was charged that
Schwab as head of the Emergency
Fleet Corporation forced other ship
building companies to limit their
profits to 10 per cent on ship con-
struction, while he took no action to
have his own companies adhere to the
same rule of profit.
All these allegations were specifi-
cally denied by the five companies in
volved. Besides the shipbuilding cor
poration, the other defendants are the
Bethlehem Steel Corporation. Bethle-
hem Steel Co, Fore River Shipbuild-
ing Corporation and Union Iron Works
Co.
Demurred at Taking Charge.
The answer of the shipbuilding cor
poration said:
Charles NJ. Schwab was invited by
President Wilson to become director
general of the Fleet Corporation at a
time of an acute crisis in It's affairs
and for the special purpose Of speed
ing up its ship construction program.
Mr.. Schwab objected to accepting the
appointment. giving as one reason
that he could be of more service as
the head of the Bethlehem enterprises,
and as a second reason that he could
not entirely divest himself of his re-
lations with Bethlehem. He was as
sured, however, by President Wilson
and Messrs. Hurley and Colby that
he need have no fear on account of
his relations with Bethlehem, and he
finally yielded to their urgtngs upon
the express understanding and agree
ment that while director general of
the Fleet Corporation he was not to
participate in any way in transac-
tions between the Fleet Corporation
and the defendants"
The answer contained copy of a
letter dated April 80, 1918, to the
president and trustees of the Fleet
Corporation 'in which Schwab ex-
pressed the inadvisa bility of his par.
ticipation as director general in the
transaction of any business between
the corporation and the defendant and
requesting that such business be ham
died by other officers" Further to
show that steps had been taken to
offset any participation by him 1t was
set out in the answer that all con-
tracts had to be submitted to the
board of trustees for their approval
and that Schwab never at any time
was a member of the board Of trustees
of the Fleet Corporation.
Denies knowledge on Profits.
The shipbuilding corporation denied
IL had knowledge with respect to Gov
ernment contracts that all other ship
builders profits were below 10 per
cent, the contention set up by the
Government.
The shipbuilding corporation after
an audit of its accounts notified the
Fleet Corporation in February, 1923,
that it owed the defendant several
millions of dollars, but ignored the
notice and approved the recommends
tion of the standing committee on
claims of the Fleet Corporation that