with this request, they charged off only $359,541.95, and at the time of the sale of the plant to the United States Shipbuilding Company the statement submitted contained a surplus $250,000 in excess of what Bethlehem knew to be the actual amount. Still another matter should be brought to the attention of the Court. On the 22d of June, 1903, while proceedings were pending for the appointment of a receiver of the Shipbuilding company, and, as it seems to your Receiver, with a view of forestalling the action of the Court, and in contempt thereof, the directors of said Company adopted a resolution, as provided for under Mr. Schwab's mortgage, requesting the New York Security Trust Company to vote the entire shares of the capital stock of the Bethlehem Steel Company in favor of and for the following persons, as directors of said Bethlehem Steel Company, namely, E. M. McIlvain, Archibald Johnson, Adolphe E. Borie, and Lewis Nixon. Mr. McIlvain was at that time and is now the President of the Bethlehem Steel Company; Mr. Borie was and is the Vice-President of the Bethlehem Steel Company, and Mr. Johnson was and is the General Superintendent of said Company. As the remaining directors were selected by Mr. Schwab's trustee, it is apparent that but one of the seven could be said to represent interests other than those of Mr. Schwab. By this means, if successful, Mr. Schwab was able to place the control of Bethlehem beyond the reach of the Court for at least another year. BETHLEHEM STEEL COMPANY From the reports submitted by the officials of this Company, it is evident that during the past year it earned far more money than the necessities of the plant required to be retained there. From what is hereinabove set forth, it is also evident that so long as the present Board of Directors, or a Board subject to present influences, shall retain office, no benefit shall ever be permitted to escape to the Receivership. Your Receiver is convinced that the present controlling influence at this plant is wholly hostile to the Shipbuilding company and its representatives, and your Receiver believes, in view of the excessive price paid for its plant, that the Shipbuilding company, or its repre sentative, should be permitted to have at least some voice in its management. At present this is denied, but your Receiver hopes that such action may be taken as may result in the removal of the present Board of Directors, or a majority of them. Your Receiver believes that the meeting of the Board of Directors of the United States Shipbuilding Company, held on the 22d day of June, 1903, and hereinbefore referred to, at which four directors were designated to represent the United States Shipbuilding Company on the Board of the Bethlehem Steel Company, was solely for the purpose of circumventing any order of this Court which might be made in the proceedings then pending; that it was intended to hinder and delay the creditors of the United States Shipbuilding Company and to place this property beyond their control and the control of the Receiver to be appointed, and was otherwise illegal and void. Your Receiver believes such Board is deliberately furthering a course at once illegal and greatly injurious to the creditors represented by your Receiver, and accordingly he makes the recommendation concerning this Company hereinafter set forth. GENERALLY Since the 'appointment of your Receiver the principal office has been engaged in legal matters rather than building ships. Accordingly your Receiver found the services of several of the officers and subordinates of the Shipbuilding company to be unnecessary, and in this connection has reduced expenses upwards of $55,000 a year. RECOMMENDATIONS Your Receiver respectfully submits the following recommendations: 1. That in order to avoid depreciation by disuse, and because of the existence of controversies as to the validity of the encumbrances upon the premises, the Crescent Shipyard be sold free and clear of all such encumbrances as soon as the work now in contemplation is completed. 2. That similar action be taken with reference to the plant of the Harlan & Hollingsworth Company, Wilmington, Dela ware. 3. That as soon as the debts of the company shall have been ascertained suit be instituted against all persons who received the stock of this company without paying full value therefor to recover from them such an amount as shall be necessary to pay said debts in full, under section 21 of an act of the Legislature of the State of New Jersey, entitled, An Act concerning Corporations (Revision of 1896). 4. That suit be instituted against the Bethlehem Steel Company to procure the appointment of a Receiver and to compel the appropriation of the earnings of that company by way of dividends on the stock. Respectfully submitted, JAMES SMITH, Jr., Receiver, United States Shipbuilding Company Dated October 31, 1903. Certain other highly disreputable details of this affair were concerned with the attempts to float the stock in Europe. Much of the correspondence, showing connivance with notorious parties in Paris, was published in the New York daily papers between December 22, 1903, and the first of January, 1904. Moody's Truth about the Trusts, pp. 366-369, gives many additional details. A paper by L. W. Sammis of the New York Sun, published in the Annals of the American Academy of Political Science, 1904, is also suggestive. After protracted controversy and litigation, a reorganization plan was agreed upon and published May 25, 1905; and a new company was formed to take over the wreck of the old one. Dewing, op. cit., should be consulted for details. - ED. NOTE. A more impartial account will be found in Dewing's Corporate Promotions and Reorganizations, 1914, chapter XVIII. At p. 505 he alleges this was practically a partisan document. It is the official Receiver's report, nevertheless, and affords admirable matter for debate. The teacher should read Dewing carefully. THE XIII THE ASPHALT COMBINATION1 HE visible assets of Asphalt Company of America having been sold and their proceeds distributed, . . . it is proper that the Court should be informed of certain matters and things relating to the promotion of Asphalt Company of America, for such action thereupon as the Court may determine should be taken. The facts hereinafter set forth have been ascertained through investigations made by the Receivers continuing from immediately after their appointment up to the present time. Asphalt Company of America was incorporated under the laws of the state of New Jersey, June 28, 1899, with an authorized capital stock of $30,000,000, divided into 600,000 shares of the par value of $50 each. The corporation was the outcome of plans previously arranged by and among some or all of the persons hereinafter mentioned as promoters, the essential features of which were (1) the transfer to the corporation of the shares of stock of certain other corporations engaged in the asphalt business and more or less competitive in character, and the issue to the owners of such shares, so transferring their holdings, of Collateral Gold Certificates, in the nature of bond obligations of the new corporation in exchange for said shares of stock, the terms of exchange being mutually arranged, the shares of stock so transferred then being deposited with a trust company (The Land Title and Trust Company being selected) as security for the payment of the interest and principal of the said certificates. (2) The providing of working capital 1 From Transcript of Record, U. S. Circuit Court of Appeals for the Third Circuit, September Term, 1903. The Land Title and Trust Co. v. Henry Tatnall as Receiver of Asphalt Co. of America, etc., pp. 370-380. Receiver's Report on Promoters' Liability, etc. A more adequate account of the affair will be found in A. S. Dewing, Corporate Promotions and Reorganization, Harvard Economic Studies, 1914, chapter XV. The economic background will be especially appreciated by the teacher. for the new corporation by calls upon its capital stock. In the case of the transfer of the shares of stock by some of the said companies to the new corporation, it was stipulated that, in addition to the purchase price to be paid in Collateral Gold Certificates, the vendors should have the privilege of purchasing stock of Asphalt Company of America, without premium at par, to the amount of 50 per cent of the par value of the stock deposited by them. The following is a list of the corporations whose shares of stock to the amounts and on the terms therein stated were transferred to Asphalt Company, and Collateral Gold Certificates, to the amounts therein mentioned paid therefor: West Virginia 800,000 5.00 799,900 6.00 4,799,400.00 United Asphalt Company 40,000 100.00 39,975 91.808 3,670,000.00 The evidence in the possession of the Receiver shows that the persons who transferred to Asphalt Company of America the shares of stock in the above named corporations, receiving Col |