1903-12-19-New York Times-Light On Bethlehem Deal

New York Times

19 December 1903, page 16

LIGHT ON BETHLEHEM DEAL.

Some Cable Dispatches That Were Sent and Received While Mr. Alexander Was Abroad.

Connection between the acquisition of the Bethlehem steel plant by Charles M. Schwab and the effect of its final transfer into the Unted States Shipbuilding Company on the efforts made in Paris to float the "underwriting" of the new combination is indicated by a series of cable dispatches signed by "Beatty," which is the middle name of Charles B. Alexander, and "Maccook," the cable name of the law firm of Alexander & Green of this city, in the Summer of 1902.

Bethlehem had been purchased "overnight" by Charles M. Schwab about a year previous in the teeth of an offer by a syndicate of New York bankers, of which the firm of Kuhn, Loeb & Co. is understood to have been the head. That offer was made in pursuance of a scheme to combine the Vickers-Maxim Company of England, the Craps of Philadelphia, and the Bethlehem properties in a great corporation to build ships and engage in other branches of the steel business.

The story goes that suggestion was made by Mr. Schwab that Bethlehem was a good purchase by a railroad man having close connections with parties in the banking syndicate, and this version of the affair is accepted at present rather than the report that was current two years ago that Mr. Schwab was himself prospectively interested in the combination designed to rival the United States Steel Corporation.

After the transfer of the Bethlehem properties to the United States Steel syndicate their fate hung in the balance until determined by the sale to Messrs. Nixon and Dresser for the United States Shipbuilding Company. Of the transaction Charles H. Steele of J. P. Morgan & Co. on the stand at a shipbuilding hearing the other day said that it was made so that Bethlehem might be developed as a "customer" of the United States Steel Corporation, there being, as he said, no question of competition between Bethlehem and the Carnegie armor plant, for the reason that the United States Government determined the price of armor plate, of which the two companies were the sole manufacturers in this country.

But at this time Mr. Alexander of the firm of Alexander & Green was in Paris getting "underwriting" for the shipbuilding company, and Mr. Alexander had his troubles over Bethlehem, as the following cables will indicate:

New York, July 28, 1902.

Beatty, Paris:

Seligmans largely interested in Craps and greatly disappointed at failure to combine Bethlehem, Cramps, and McVickers. Efforts to discredit originating from this source, and England should be understood and considered favorable.

MACCOOK.

To this the answer from "Beatty" was as follows:

Paris, July 28, 1902.

Maccook, New York:

Indignant Seligmans telegrams. First cable, no actual market nor probable for the bonds. Second cable, for the shares no market whatever at the present time or probably ever. Their relation to Cramps now explained. Statements largely discounted have corrected.

ALEXANDER.

One cablegram at this critical time evidently did not meet the requirements of the situation, for on the same day the following was sent:

Paris, July 28, 1902.

Maccook, New York:

Seligmans telegram creates panic. Obstructs Rogniat's loan and asks not to recall to-day's, but is evidently worried.

BEATTY.

Shortly after this "panic" was created it appears that the situation began to clear, for July 20 the following was sent over to John W. Young, then in Paris, by "Republicus," the cable name of the Trust Company of the Republic. That cable name was used on several occasions without the formality of being taken of entering a record of the message in the trust company's office:

Young, Paris:

Seligmans have cabled absolutely denying having said anything against shipbuilding. Morgan has sent strong cable Harjes. Unwise to see other houses as you suggest. See Maccook's cables to Alexander.

REPUBLICUS.

Shortly after July 29 another cable message was sent to this side from Paris with more explicit instructions regarding the process of "panic" subdual. In this instructions were given to induce a trust company which recently sued to determine the standing of its holdings of Shipbuilding first mortgage bonds, and a well-known life insurance company, the son of whose President was at that time a Director of another trust company which had a part in the shipyard financing, to cable assurances of the "respectability and stability" of the institution back of the proposition, and the personnel of the men connected with it. Also instructions were given to get "twenty cables by bankers and brokers and individuals and friends" saying as much as possible about the "good" shipbuilding prospects.

That the efforts on this side were not with a certain effect is shown in still another cable message, as follows:

Beatty, Paris:

Seligmans deny absolutely having sent any cables Paris in regard to the shipbuilding matter. Request you to state use their name unauthorized and run rumors down at my request. Are cabling their Paris house.

MACCOOK.

With reference to the final cable, Mr. Alexander testified at the hearing yesterday that the reports affecting the Seligman firm, referred to in the cables, proved to be without foundation.