1903-06-23-New York Times-Attack on Schwab in Shipbuilding Fight
New York Times
23 June 1903, page 14
ATTACK ON SCHWAB IN SHIPBUILDING FIGHT.
Those Seeking Receivership Say He Used the Trust. PLANTS WERE LEASED BACK Representatives of Individual Interests Say Suit Has Hurt Business -- No Witnesses Examined.
TRENTON, N. J., June 22.--Efforts on the applicants for a receivership to show that the United States Shipbuilding Company, known as the Shipbuilding Trust, had been using its subsidiary concerns as scapegoats to avoid its debts distinguished to-day's hearing before Judge Kirkpatrick in the United States Court on the order to show cause why a receiver for the trust should not be appointed.
Another feature of the proceedings, which involved spirited discussion among half a dozen prominent lawyers of New York and New Jersey, was the continuous attack by the complainants on Charles M. Schwab, President of the United States Steel Corporation, who was charged every few moments during the day with having used the shipbuilding company for his own ends. Then there were prolonged arguments bearing on the detail management of the individual companies within the trust, and it was brought out in affidavits submitted by the trust's lawyers that the action for a receivership had injured the credit of the separate concerns, damaged their business, and threatened them with incalculable harm in the future, perhaps with entire ruin.
It was admitted that certain statements made to the Stock Exchange were incorrect, but they were taken from the accountant's report made to the company at the time, and later, when they were discovered, losses were charged up. The statement to the Exchange was not made under oath.
Lewis Nixon's affidavit said that every insinuation that he planned the combination was false, as it was John W. Young who prompted the organization, and he himself had nothing to do with the selection of the other companies besides his own, the Crescent. He said there was no agreement between him and Mr. Schwab, and the latter turned over to the combination the Bethlehem works at the same time he turned over his shipyard. The insinuation that he was in favor of the reorganization plan because it would prevent him from being prosecuted and his conduct investigated, he continued, was entirely false, and he concluded by saying that he feared no investigation of anything he had done.
Mason Smith Chase of the Crescent yards stated that the appointment of a receiver would result in an interruption so serious as to interfere with the company's business. He said the Crescent was operating under a lease of the property. This aroused a dispute as to how the individual companies managed to lease back their yards after having sold them to the combination through John W. Young, as the answer of the trust had admitted. The Judge asked for an explanation from Messrs. Corbin and McCarter.
The lawyer's explanation was simply that each company did business for itself, leasing its yards (or the yard that used to belong to it) from the party to whom it had sold them. The leases, it was explained, were cancelable on five days' notice.
"Then the shipbuilding company owns all the assets and is not responsible for the debts," inquired the Judge with a smile.
"That's it," said Mr. Lindabury. "The subsidiary companies own the debts."
