The sun. [volume] (New York [N.Y.]) 1833-1916, 1877-02-11
THE PICTORIAL ELEPHANT.
OrER HALF 4 MILLION ALREADY SUNK
IN THE GR1PHIC
Report or Director. TO the sharehoider~-A
Statement TINT Aroused Suspicion thas all
was not Exactly Hight-Proposed Sale.

] SiltTtUOufFS OF tuc tTOUttC tDulDUuv, cir
Francis Hincks. the President. submitted re-
port containing the following:
The Drcctort Of the Graphic Company deem
| it eXpcdicnt. under existing circumstances. to
review the history OF tho company from the
| period Of its organization in 1872. by refer
ence to the prospectus 1t will he seen that the
object was the establishment in the United
States OF business, the counterpart on
nm extended scale Of that carried on in
Montreal by George T.. Desbarats. pub
| Usher Of the Canadian Illustrated N1rs.' which
| business was then generally believed to have
been cOnspicuously prosperous. although the
| concern has long since made most disnstrous
| q. f. Desbarats and William A. Leggo claimed
! 70 be owners Of valuable patents in the United
States. Tor the transfer OF which. TO the pro-
lccted Company. they required s!5o,OOO in paid;
| up stock. They estimated the required
capital at sl59.Oo0- $4,000 for plant. &c.. and
$4,000 Tor preliminary outlay and running cX-
| pcnscs. The capital 20 I've subscribed WIS $780,
900 OF which only $4,000 was TO be called up.
| The prospectus, after giving detailed estimates
| Of expenditure and revenue. declared that
those figures show minimum profit OF 33S per
turn With may I've eXpectcd BY sharehold"rs on
| their paid MP stock. and the correctness Of the
| figures was Vouchod for by three practical prin-
| tors of high standing in the city of Montreal.
! The scheme was INTRODUCED to the public under
! the highest auspices and the stock was prompt-
! ~ subscribed. and was speedily quoted on the
| Stock Exchange ~ cOnsiderabc premium.
The promoters. Mcssrs. Desbarats < Leggo.
!
! t. themselves the organization and management
of the enterprise, and the privilege of selecting
! the employees, being anxious that the concern
| b esterod ON a sound basis. and Ia ac 'ordanrc
with the special knowledge their experience
" In accordance with the terms Of the prospcc-
| tus. Mr.. George t. Dcsbarats proceeded tp New
Me- ' II. and {. NJ q 53dseli. Under witch
/ these gentleman were to assume. on certain de-
| nn'd conditions. the entire management Of the
| business rs managing directors and TO he en-
| gagged ~ such for Il term of three years. All
Mr.. Dcsbarutss arrangements Were in duo
course. sanctioned 10y the directors. The DduY
! Graphic newspaper was launched in the early
| pnrt Of 1873. uith March, at "A time when bust
| moss pros pe,t- were apparently uncloudcd but
| In tn" IA nth Of september of that year a Imam
cial crisis of greats verify occurred in the United
States. and from that time up to the present
there has been a dcpr, ision in business of all
| kin,is. which the directors have reason to be-
| ev' has been experienced even by long-cStnh-
| sh ed newspapers. AMI which naturally must
| have pressed with great severity on al now un-
dcrtaking. 1t is true that from time Ia time IN,
| enlargement has been held out to the Montreal
directors. and through them TO the shurehOld-
ers, that the company had seen It's worst days,
| and that dividends might soon be expect ii. 1t
| n, however. only inir o. IN" managing directors
| "a Acknowledge that this encouragement was
ihNarlhply p't-"u on cNIr.iatlvhs 81 icNlNti Oh
business prosperity. and that such result has
| not vt hoen experienced.
The prosp, Gus WIS found to be wholly illu-
sorry m r"garlt thec capital required ana tne III
| rector- have often been assured that the idea Of
starting daily picture paper in New York. and
carrying II un. even with the whole Sl5l,Ou1. was
a chimercai idea When the original capital
was exhausted. a. il was in 1853 there were no
means OF raising additional capital. except 10y
obtaining power from the Legislature To- issue
preferential stock. and us the old capital II sjOJ
1.n ,ni tho .stinint.d ntuount r,',,uired was
s-51Ooo. II was deemed cXledicni To- encourage
Tho shareholders to take the preferential stock.
10y Offering them an .qual amount in Sec
$3.50 900 To rank third When this prefer ntial
slo'k was offered. early in ls5i II Was conll-
,ient t. clrry on the hu@n' until it IN luld h"
upon "a paying hn-l-; and II was hoped Tint ,hr
in Su-iniuins tao Iurl,n. These exp 4,tatl lns
| WDre disappointed. Out of $500 share, IT prof
er,ntial stock offered to the original -harchold-
who had to decide whether the cnt'rprls.
should be- abandoned. or whether they should
come forward 10 sustain i 10y their per-
sonal efforts TO an extent Tar beyond what tney
enter into NEGOTIATIONS with the managing
| directors. and ncguaint them that, unless they
could obtain substantial ass stan go In thu United
Siil.~ ihrr' WIS no mop 81 COM uuius me
/ hu-lnO So After protra ted negotiations ia" r.
sui was thnt Ia" required capital wa obtained.
CONDUIT 1utuy however. on new contract beng
| entered into for an tended term ~ three
years with the VI --r- Goplscll and Mr.. I. G..
Moore. who has since September. 1874. been
I Joined with them i'm thu munHi.cm NJ. AMI who
has. the directors believe. not only rcnd red
valuable scrVis,s- hut has ON all occasions acted
I with Independent Judgment. The directors were
/ compelled. ut the last annual meeting 10 report
| THAI thcir anti ripatou- uf a year of pros porous
| business had not been realized, and they are
| under the painful necessity VI making u similar
q" The aggregate share capital Of the company
| L. $4,000. Of which sjo0lo is preferential. with
large claims 10 arrears of interest. or this pref
| cr"ntial stock the directors themselves hold
sIsacoo while $4,000 is held 10y friends Of tho
/ managing directors In the United States. max
! ing in the aggregate sil7 800 Of preferential
stock represented by the directors themselves.
| in addition 10 s5l.eoO II ordinary stock. II can
/ scarcely Dee con-idcr't reasonable that the
/ wishes and views Of those are Ia De- ignored
on tn" demand 81 persons VINO nave It'll. more
than nominal interest in th" concern. In case
/ oi the winding up OF IN" business, the pre"ron-
/ tial shareholders are entitled 10 the proceeds
| realized from the assets with arrears of inter-
est. n"fure the ordinary shareholders would be
" The directors submit n balance sheet Of tho
| books at the head offlce made up Ia 3l~t pecefn-
/ ir.r. 1870 from which IL will appear that the total
I amount realized from stock WIS si9i,gh, Of
| which sl.6Ft.6l appears as bills receivable; on
tn" other side OF the account, 81 22l. 40 has been
| expended in manng' mcnt. interest and pre-
liminary expens :, $500 has been borrowed
ON the personal responsibility OF the directors.
and $i3i i9,il has been r"mt"d 10 the NV
lorA phlc'. THIS amount produced IN Ameri-
can currency. i5.lG,.G1. which amount repre-
; nj ihe cNWndi tur' on IRnt ana WuINthg
| cNl,ou-,- 1T both bran 'h' IF the business In"
d"iul"d accounts up g. 3ist December hay" only
Just renched 'ntrenl, some Yesterday and some
tins day. and they have not yet been audited
one sat sfartory aud TT Tie NV York accounts
wis mule hv tho lat Mr.. Riddle, and the dircc-
tors hope To- have another audit before the AL
Juurn"i meeting ON the 2l-i March. II l~, how
ever. impossible that any material nteratip IN
could be- made in the stat, OF accounts. or any
that would hay" any practical bearing on the
Mr. i. A. Prentice asked whether it was not
true that the contracts made by III" United
States Government were with tho GOOdsclls,
and not with the GrGDhic Company
The Chairman replied that he thought not.
| He added that he would not answer
Mr. Prrntec-l am informed 10y ono Of the
dire tors therefore, take it 10 be true and
worthy Of all crelonce. Tnereiorr. You see.
gentlemen. this valuable job business of ours
Will disappear for "A mora song; tn" valuable
plant and machinery will disappear. and all 10
be handed over 10 tho GOudsclI5 for u mere
/ song.
Mr. ]. IT, Morris said that he gathered from
| tho report and tho statement by the dire tors
at that last meeting. TINT the company was n
disastrous failure. lie WIS present a. tn last
meeting of the GrGpiic Company. and h. recl-
lHt'l the directors made a staten mt that the
affairs Of the company wcr" in such stat, That
| n WIS absolutely necessary That tho DliU
Grdpltc should he sold that thn company WAS
! losing money every day. The dir tors did not
support this by any statement what YER ana
the directors have admitted that no staiemont-
nothorouSAN audited and aulhoutl pgi state
mrnt had boon -umurNd shortly after that
| thrre appeared am article IN the Il"D Hr1phc
| which directly coutrid tod In" stat cement of the
director. in Montreal and it was that -lalem"nt
that aroused tho suspicious OF tie shareholders
| that all was not right.
The b.otng for directors was then pro-
cecdod with, and resulted in reei"ctnE the re-