1903-12-18-New York Times-Relied on Schwab in Bethlehem Deal

New York Times

18 December 1903, page 3

RELIED ON SCHWAB IN BETHLEHEM DEAL

Steele Says Morgan & Co. Thought Shipbuilding Trust a Great Thing. Lawyer Alexander Non-Committal and Refuses to Produce Papers Demanded -- Delay in Calling Schwab and Pam.

It was thought at first that on securing George W. Perkins as a witness in the shipbuilding inquiry the complainants would bring out the whole story of the part played by J. P. Morgan & Co. in the formation and brief career of the shipyards combine, but the testimony given by Charles Steele yesterday showed that he and not Mr. Perkins ws the Morgan partner who participated in all the negotiations of the banking firm.

According to Mr. Steele, his partners expected the United States Shipbuilding Company to be a great thing. He was sure that even its common stock would pay a dividend the first year. There was no hesitation on his part about giving up the Bethlehem Steel Works to the combination and receiving in part payment $3,000,000 of the shipyard securities, although the Bethlehem concern had earned more than $1,000,000 in the year preceding. And in forming his judgment of the Shipyard Trust's greatness he relied upon Charles M. Schwab's statements almost entirely, not troubling to make any detailed investigations.

After Mr. Steele the complaintants' lawyer called to the stand Charles Beatty Alexander of the law firm of Alexander & Green, counsel for John W. Young, promoter, and later for the shipbuilding concern. It was Mr. Alexander who sent from Paris the many cables in regard to the French underwriting subscriptions, and he ws served several days ago with a subpoena that commanded him to produce the cable and other correspondence on the subject yesterday afternoon.

Skipped many paragraphs with no connection to John W. Young

C. B. ALEXANDER QUESTIONED

After Mr. Guthrie had announced that he would ask the court to throw out the entire testimony of both Mr. Steele and Mr. Perkins on account of Mr. Untermyer's methods, and after the latter had responded that he knew his opponent wanted to throw out everything from every witness, Charles B. Alexander was called.

Having refused to produce the cablegrams and other correspondence relating to the French underwriting, Mr. Alexander said that his client in the matter had been John W. Young, the combine's promoter. He had sent certain copies of correspondence to D. Le Roy Dresser. Asked if he knew Mr. Dresser as President of the Trust Company of the Republic, he said he only knew him as Dresser, and individual to whom he had been asked to send some papers. He did not know who was raising money for any shipyard concern. He did not know the relation of Dresser to any such combine. Nor did he know the connection of the Republic Trust Company.

After saying he did not know whether there ever was a shipbuilding ocmpany, he was asked if his firm did not help to organize it. Not as far as he knew, no. As to a cablegram he received from "Republicus," he said he did not know of his own knowledge who "Republicus" was. Yes, he assumed that the sender had been the Republic Trust Comapny. Then he refused to answer a question as to his reply.

Q.--What did the trust company have to do with the shipbuilding company? A.--I am unable to testify.

Q.--As a matter of fact, you did know the relation of the Trust Company of the Republic with the plan, did you not? A.--I knoew of some relation, but not what it was.

Mr. Guthrie examined Mr. Alexander and brought out the statement that the lawyer did not go to Paris to arrange underwriting, but was on a vacation when he met Young in Paris on July 12, 1902. After that he was interested in the matter, and several eminent French lawyers advised him that the underwriting was collectible under the French law. He believed that to be so and had never heard to the contrary. He never told Dresser that bonds had been placed in Paris. His firm, so far as he knew, never had anything to do with the matter except as lawyers. He said that he did not know, having been in Europe, but he assumed that his partners, being lawyers, did not act as promoters. He did not know which partner had the matter in charge here.

"It is a large firm," he explained.

Mr. Young never told him what the law firm was to receive as compensation and he never asked. he knew only what ws going on in Paris, he said.