The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1866-06-25


otherwisc-had the general public got so accus-
toned TO the name and system OF the scheme as
to invest more largely in their shares, the ruin
brought about would have crushed forever hun
dreds o, thousands of poor men, instead Of only
partially iuiuring q few hundreds of compare
tyely wealthy individuals. The faith i'm these
new institutions has been very iervent, but it
has by no means been general. The belief in
their stability has been confined mostly to city
men, who ought 10 have kno wn better, and has
hardly been shared in at all by country gentle
men, OF by that numerous body OF the middle
classes who have q fixed but small income to
live upon. Sensational leading articles TO the
contrary notwithstanding the immense majority
OF Englishmen are careful OF their means, and no;
over credulous with respect to new undertak-
ings. Had the finance companies lasted
longer IL would have heen far otherwise, and as
many more would nave invested their little all
in these companies year or two hence, so
when the crash came the ruin would have been
far more general than it is now.
The second reason for congratulation in our
late monetary troubles, IS that the working
classes in England have entirely held aOot from
any speculatons in these undertakings Neither
individually nor collectively has there been any
buying of shares amongst the artisans OF Lon
don, or any of our large towns, in investments
which their own rough common sense told tnem
he'd out promises far too bright to be real. Had
the mania taken amongst them-had the work.
ingmen OF England been induced by golden pro-
nises 10 believe in the new gospel OF immense
profits upon outlays of small capital, who can
tell what the results would have been when
the bitter fruit of failure had to be
eaten! If the many thousand associations of
odd Fellows" "Foresters,n and "Frlendly
Societies. had invested their funds in these
concerns, MIR. Tid1 Pratt would have needed no
small amount of extra help to get through the
additional work OF his office. No; am DIST the
general feeling of regret for the misfortune of
so many individuals who have been led into
buying at high price shares which they can
hardly get rd OF nov upon any terms, we have
good reasons to be thankful that the working
classes OF this country were not tempted by
large dividends to risk their money in such
straw. built ed6ces. .... ....,'. ....
But it is-or rather it was-on paper and not
on straw that these finance palaces were
founded, and by the same material they were
built up. Once fairly started at work, it was the
directors business to find out how, where, and by
what means the largest returns could be made,
and the following is but specimen OF the many
ways by which they worked the oracle.
A railway contractor finds that he is IN want
OF funds with which to conclude the contracts.
On application to the company to which the
intended lire belongs, he meets with frank
avowa] that, what between fair expenses, sur
veying, fees engineers charges, and other out
lays, their balance with their bankers is in a state
of collapse. What is to be Done? To go on
without money is lmpossbte-to declare his
inability to proceed Is bankruptcy and ruin. In
place OF hard cash. will the directors give him
certain amount in debentures or pqid-up shares
upon the future line? Ot course they will, and
are delighted to do So In other words they
profits of a line not yet made, or, at any rate,
not finished. 1t is as ii a young man newly ap-
pointed TO a commission in the army should
pay for his outfit by bills which would fall due
when he shall become a captain in the service.
But anything is better than to stop the works
OF the railway. To place debentL Lres bearing
four, five, or even six per cent, and which are
only payable after a term of years, with the
general public, rs an Impossbility. What man
outside OF Bedam would dream OF investing in
such securities with Consols at lightweight and
finance companies paying forty per cent? But
these securities serve the purpose of the con-
tractor, who has undertaken far more more than
his capital justified him in doing, and his en-
ployers are equally pleased to pay him on these
terms. But OF what use are these debentures to
a man whose chief outlay is the weekly wages
he has to pay? Navvies, even il they could be
made 10 understand the nature of sIch securi-
ties, could hardly be induced to take them in
has 6 % Sek 81 ans Bg To pai
off the paper he holds upon the rough
giants he employs. With, say, f50,000 OF
these debentures in his hand, he betakes himself
to the Universal Finance and Comprehensive
Credit Company, Limited" and after one or two
interviews with the general manager, his pecu-
mary arrangements are completed. BY deposit.
ing these bedentures for $4,000 with the 'Uni-
versal Finance" he obtains the acceptances OF
that company to sundry small bills draw wn IN
sums of perhaps $500 each, and amounting to a
total perhaps of 100000, thus leaving margin
on the security of 100000.
L
and accepted by the "Unversal Finance" he
has to pay at the rate of from fifteen to thirty
ger cent by way of commission. Ii he is well
to do in the world the company would make
him pay the smaller, If needy, the latter
sum. The bills are drawn at three months,
and as the "Universal Finance and Com
prehensive Credit Company, Limited" enjoy
good credit in the city, what banker could refuse
| to discount them? OF course the paper is
| 'good," quite good, and so the contractor gets
| it discounted at once, and placing the proceeds
to the credit of his account with his own banker,
| obtains the credlt of being wealthy man. But
three months is not long time to wait, particu-
| larly when the end OF that time is noted by the
| date upon stamped paper, as many OF us know
| TO our cost, or have known at some period or
| other In three months time ''The Universal'
| will have to meet their bills, and with their
| small capital of but Go paid upon each of the
! 25 600 shares that we're issued where is the money
| to come from, for our contractor is by no means
| the only party with whom 'The UNIVERSAL
| does business OF this kind? This small difficulty
| is, however, easy of solution. With little more
| stamped paper, and pen and ink, fresh
bills are drawn out, discounted, and the old ones
! taken up, By the initiated this process is called
! renewing bills; and, according TO the agree ment
| of "The Universal" with the contractor, that in
| stitution is obliged to renew these little docu-
] ments over q certain number OF years. But what
| say the bankers to whom acceptances, bearing
! the same Names are offered again ana again tor
| discount? in the first place Judlclous dlstri-
| button OF these documents is made-no mono
! poly OF favors being conferred upon any one
| bank. If the first set of bills are discounted,
| say by 'slhe London Joint Stock Bank, the
| second, with which they are to be taken up,
| will be sent to "The London and Westminster" "
or 10 Paris, Blistol Liverpool-anyWhere. What
would, what could, Messrs. Blount, or Mallett
Freres, or HottinQuer OF the iirst OF those towns
| Messrs. Baille u Co., or Stuckey q Co., OF the
| second, or Barned IL Co., or 'The Consolidated
| Bankn at the third, know of the acceptances
1 Nuhi oh nd s