Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-10
Youngstown Merger Ruling
Called Stakeholder Victory

While the United States Supreme
Court is expected to pass final judgment
on the proposed merger Of the Bethle-
hem Steel Corporation and the Youngs-
town Sheet g. Tube Co., the decision Of
Judge David c. Jenkins, holding up the
project. is viewed as an important con-
tribution to corporation law. The court
is credited with courageous action IN
emphasizing the ethical side OF the
proceedings, and Cyrus S. Eaton, CleVe-
land capitalist, is declared to have made
an effective fight for the rights OF
minority stockholders. The INTENDED
establishing of billion dollar corpora
ton" gives Importance to the case.
Another chapter in the years most
notable litigation" is seen by the Plus
burgh Gazette, which observes IN
teresting personalities on both SIDES
Charles M Schwab and Eugene O.
Grace of the Bethlehem and the vet
eran steelmaster, James A. Campbell, OF
the Sheet &, Tube among the repre-
sentatives of the pro-merger group and,
on the other hand, the exceptionally
energetic and determined opposition led
by Cyrus S. Eaton of Cleveland, who,
coming to the United States from Can
ada in 1900 as lad of II, has since
developed into one of the outstanding
financiers of the country" The Pitts
burgh paper also emphasizes the ind
ing that "the stockholders OF the
Youngstown corporation had not been
given sufficient information before the
merger vote was TAKEN" and 1t con-
cludes: Naturally the public at large
cannot be expected offhand to form
Judgment on the merits Of a case so
vast and complicated. There is assur-
ance in the finding for minority inter-
estS in cases of this character that their
proverbial day in court Is no empty
phrase. It is recognized, of course, that
the pro-merger forces may carry the
case to the highest court"
1.-THE decision and opinion OF Judge
jenkins, on the whole" according TO
the Philadelphia Evening Bulletin, is
an important lesson for big business, re-
CARELESS of whether or not the merger
of these two corporations is desirable"
The Bulletin also comments The
declaration of the court that the part
played by one director in common OF
both the Bethlehem and Youngstown
directories, regardless of his 1nten-
TONS was a breach of trust and con-
trary to public policy goes very deeply
into the question of a directors re-
sponsibility and whether or not a di-
| rector can serve two masters. The fGct
that the directors at their meeting
simply ratified an arrangement already
decided upon and that one director, OPP
posed to the merger. had no opportunity
to inform himself from essential data
as to the merits of the proposition, is
declared by the court to be shocking
setting up standard of ethics for big
business TO which heed should be given"
y n
at is not a small matter" declares
the Columbus Ohio State journal, that
Judge jenkins found so many vital mat
tiers meriting the rebuke of the court"
That paper also feels that 1T is Of vast
Importance that the court rose to the
situation and took brave stand in de-
manding the utmost of good faith and
fair dealing in such proceedings" The
State Journal also says: 1.-THE fact that
Bethlehem officials had distributed
some millions annually in bonus pay
mentS came out in the hearing and was
entirely new to stockholders. They had
right to know that President Grace
was paid for one year $1,600,000 in
salary and bonus. Funds of the COM
pany belong TO the stockholders and
fabulous salaries never have been in
cluded as ordinary affairs of business
management. The fact that ipcor-
rect figures were placed In the hands
of two groups of stockholders of the
youngstown Sheet &C Tube Co. was an
ugly feature in the case and the court
rightly refused to validate it by judicial
approval"
1.-THE injunction now secured by the
Eaton group" thinks the Springfield
(Mass) Republican, reveals the posi-
bilities when a determined, pugnacious
capitalist of large resources seeks to
prevent such a combination, involving
his own property interests" The New
ark Evening News offers the Judgment