Eaton v. Campbell

In Youngstown last week Cyrus Stephen Eaton, large stockholder in Youngstown Sheet & Tube Co., offered $12,000,000 cash for 100,000 shares of Youngstown stock. Though the offer was promptly refused, as Mr. Eaton must have known that it would be, this was an adroit counter- attack on the part of the Eaton forces who have gone into court to prevent consummation of the Youngstown-Bethlehem Steel Corp. merger voted by Youngstown stockholders on April 11. White-haired, 76-year-old James Anson Campbell, Youngstown chairman and leader of the Youngstown pro merger party, had testified that Mr. Eaton, in questioning the legality of the merger, was preventing Youngstown from proceeding with the construction of a new mill. Thereupon Harry Crawford, Eaton attorney, made the $12,000,000 offer, pointed out that with the money secured by this transaction Youngstown could immediately begin work on the new mill and that Mr. Eaton could not therefore be accused of interfering with Youngstown progress. When Mr. Campbell refused to sell at 120, said that the stock should be sold at 133, Mr. Crawford triumphantly pointed out that for purposes of the Youngstown-Bethdehem merger. Youngstown stock had been valued only at $110.

Quizzed and scolded by Eaton attorneys, Mr. Campbell was confronted by various discrepancies in statements made by him last April during the hectic and disputed ratification of. the Bethlehem deal by Youngstown stockholders. He finally announced that he "didn't give a damn" what he had said in other depositions, that he "didn't care" what he may have testified to, that he was now trying to tell the truth as he understood it. In April Mr. Campbell had said that on Jan. 2 he told President Eugene Gifford Grace of Bethlehem that Youngstown was free to negotiate with Bethlehem because a pending Youngstown-Inland Steel Co. merger had been called off. As a matter of fact, the Youngstown-Inland merger was not officially abandoned until Jan. 8 or Jan. 10.

The main Eaton line of attack last week centered on attempts to show that the Youngstown-Bethlehem merger gave Youngstown stockholders no fair deal and that in urging it Mr. Campbell had been strongly influenced by pro-Bethlehem interests. Eaton attorneys emphasized the fact that Henry G. Dalton, who had sat in with Mr. Campbell in meetings with Mr. Grace, was a director of Bethlehem as well as of Youngstown. It was also brought out that Pickands, Mather & Co., ore firm of which Mr. Dalton is a partner and which was active in the purchase of Youngstown stock proxies voted in favor of the Bethlehem merger, had received from Bethlehem a loan of $800.000 to replenish current cash drained by proxy purchases. Mr. Dalton testified that this loan had been repaid within a few days, testified also that Mr. Grace had regarded the loan as a "mistake" because it might be "misunderstood."

Meanwhile Mr. Campbell clung firmly to the position that he was entirely and solely responsible for the Youngstown-Bethlehem merger, that he had foreseen a bad year coming and was eager only to get good terms for his stockholders while he could still do his negotiating on the basis of Youngstown's prosperous 1929 season. As Youngstown was last week running at only about 60% of capacity, Mr. Campbell had certainly looked accurately into the future. The week closed with attorneys for the two factions attempting to draw up a bill of facts agreed to by both sides, thus endeavoring to hasten proceedings which seemed likely to be prolonged for many more weeks.

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