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


tchdt securities, Tor that would be q betrayal OF
confidence, and secrets like this are held lnvio.
liable until the day TOR general ,masn arrives
they have advanced f30,O00 in b lis, Tor which
they have CHARGED 10 per cent, per anrum
interest, and 20 per cen. commission. Thus,
with margin of 40 per cent. ia case OF huctua-
tons in these 'securitles," they get 20 per cent.
for the use of their name, and not shilling pald
out, The tohOte or The pdld-up capital OF The com
manu- being still IN The hands of their bdRkeTs.
The last words we have put in italics,
for they are, or used to be, very generally
used by finance company directors, and we're
always sure to make an immense impression
upon the shareholders, particularly such
amc nPst them rs were not business men. With
perhaps hundred, thirty, or forty similar trans
actions in II course of the SIX months, what
wonder If The halfyearly dividend OF the com.
pany was INN, nse, IL the shares rose Ia value,
and If the outside worid-incluoing the great
majority of the shareholders-felt convinced
that, here in the city Of London, new Bldo-
RADIO had been discovered, in which money
could command thirty or iorCy per cent, and
stil be retained in the strong box of its owner.
elbow can we ever go wrong 2" said lady
shareholder in one Of the finance companies TO
the present writer, "when by our bankers own
books the whole of our capital is stu in his
hands, with the exception of a lew thousands,
and yet we are getting interest at the rate OF
twenty-five per cent per annum for our
mCneYY 1t Is greatly TO be feared that our
iriend-like many others of the innocent share
holding class-dd not fully understand the
mpaning of the word ''liabilities.r
And now let us glance at the other side of the
picture, with respect 10 this bargain with our
railway CONTRACTOR. 1t is true that the uni
yersal Finance and Comprehensive Credit Com
pany, Limited have upon securities OF ESQ, 900
value only advanced 100000; but what is the
| real nature OF such paper of what use would
! il be if required to be converted into cash in
| order to meet labll ties ? OF none whatever.
| The debentuTes have iour, FIVE. or more years to
! run; the very line on which they are to form
morteage is only partially CONSTRUCTED, and
| will not be at work Tor Il long time. Tue con-
| tractor may ia,l-such an event is by no means
| uncommon amongst men OF his ella and
! calling and where will be the money with
which the Universal" would have TO meet its
! engagements With perhaps hundred or
two such transactions OF the kind on their
books, of what use would be the El25,000
| (25,O00 shares, with f5 paid on each) of
paidup capital? It may be said that call
| could be made, Flo per share being still
payable on each share. But that is what all
| directors would avoid, and do avoid until the
| very last moment-a call, no matter Of how
small an amount, being certain to send down
the shares in the market, and put all the share
| holders in the very worst possible humOr.
| There are no pleasant hal-yearly meetings when
| a call has to be made, for the very reason that
more than balf the shareholders have not the
means with which to pay the call, and are
obliged to sell out at loss.
| Or, take for instance what we have witnessed
in the City during the last few weeks. Money
| gets dear; rumors OF companies getting
snhky" are anoat; bankers look sny az paper
| which they formerly took freely; it is impos-
sible to get any but the best bills "donen on
almost any terms; to obtain money with which
to keep up the renewing game is out OF the
| question; contractors fail, and the value of
| debentuTes as securities is shown to be mel; the
/ panic increases; one or two large houses go"
and, Tor tlmc, anything like business is at
an end, and credit, even to good houses, is sus-
! pended. Then comes the fall of Joint stock con-
Germs; the ruin OF shareholders; the angry meet
| ings; the threatening with GWldhall, and crimi-
nal indictments; and all the commercial panic
| and confusion through which we have Just
| passed.
| But although we have taken an advance made
| to railway contractor as an instance of the
business done by finance companies, our readers
must not think that all contractors are men OF
| straw, or that the instance we have adduced is
one by any means extraordinary. There are
! many u this class who can, ard do pay their
way with as much regularity as any men in the
| Der OF them have to contend, are, in most In
stances, brought about by the mismanagement
| OF those who employ them. Various and won.
| deriul are the proposals for "businessn which
are put before a finance companyMnd more eX
| traordinary still are the engagements which
| some OF these undertakings enter Into. We
| cannot wonder at this, when we consider the
| numerous companies that exist, and the immense
| competition. Nor is this all 1t is well known
| in the city that the business of 'iDancing"-oI
| OF granting credits with paper for long periods
| upon securities which VIII not be paid until
|
profitable that many establishments, constituted
tor perfectly different purposes have taken to it,
| This increases the existing competition, and
increases also the facilities which men of nc
| means have of obtaining Accommodation iol
their speculative schemes.
| 1t will hardly be believed what extraordinary
! proposals are brought before finance companies
| with requests for assistance, and often upon
! security which q child would condemn as utterly
| worthless. But still more wonderful are some o
/ the DlOD0S9lS which have been entertained auC
! are now, or were quite recently, working out
| their own destruction and the loss of the share
| holders under the auspices OF some of the tinan
cial companies. To obtain advances, By bills
Of course---Wth which to build cities in South
| America-the security offered being mortgages
on whole streets yet to be built, upon ground
| which is still virgin forest-was once proposed
to one of the finance companies in London, and
at board meetng at which there were nine
directors present. the scheme was only rejected
by majority OF one. On another occasion by
the board of another company, proposal to
borow-by acceptances as in the former
case-one hundred thousand pounds, with
! which to cut down in the far north oil
Sweden vast quantities of timber and import
| the same to Liverpool (the security offered
| being q large forest, from which the wood was
10 be cut), was accepted, but the resolution
| was not confirmed at subsequent meeting o
the directors. The chief reason Tor the more
| prudent action being that no one could find
the forest upon any known map of Europe; and
even II found, the name was such as no one IN
| the office could pronounce. A third proposition
! the promoters of which very nearly obtained
the acceptances they asked tor-brought before
| finance company, was to build warehouses at
| certain seaport in the south of Europe. BY
| mere accident the plans OF the buildings,
| together with the site on which they were to
| stand, we're shown to gentleman unconnected
| with the company, but who happened to be we'll
| acquainted with the town which was TO be thus
highly favored From what he said, an English