Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1890-02-12
WORTH 81. $50 A SHARE.

the New York Chemical Bank.
Every now and then there is an an
nouucement in the newspapers Of the
sale OF few shares of the Chemical
Bank stock. In the last three years
there have been about half a dozen Of
these sales, and they have been of es.
pecial interest to very rich men always
on the alert to invest their surplus
wealth, says the New York Sun. To
the poor man, even if he chances at the
announcements of the sales and the
prices realized for the stock of the
bank, they are of no particular inter-
est, except to inoculate his fancy with
the possibility that at some time in toe
dim future he too may be able to be
member among the owners of Chemical
stock,
Three years ago the shares of the bank
sold in the neighborhood of $4,000 a
share. A few days ago ten shares were
sold at auction on the real estate eX-
change for "a $50 share. Starting first
with the statement that the shares have
a par value of $l00 each, just as most
other banking and railroad securities
have, why is it that people pay 81, $50
for piece of autographed paper which
says on its face that it is worth only
500? In the words of man with some
cash himself, alter reading OF the sale of
ten shares at 81 800 q share, "Is this not
altogether fancy price, or, perhaps, q
fashionable price for the stock? If SO,
why will people pay SO much Tor 1t? Is
it because they think it is smart to own
little, and they like to tell their friends
IL E nf for fol
me why it is worth so much: is it be-
cause of the big surplus, or because Of
the dividends, or what?"
This is pretty good line of questions,
and vet it is marvelouslv interesting
fact that every one of them conveys by
inference the correct explanation Of the
cause for the high price for the shares.
1t is true that ii there is any fashion
in financial circles it is considered the
correct thing to own a few shares of
Chemical stock. Well-known and ver-
acious authorities ale responsible for
this statement, as they also are for the
additional one that many men like to
die with ten shares or so of Chemical in
their strong box" The shares are lith-
ographed on nc better paper than that
used for the shares of other banks.
The Chemical building on Broadway Is
modest structure. OF the thou
sands who pass it every day
comparatively few know that it is there.
Save for the occasional announcements
of sale of a few shares of the stock
little is heard of the bank. The officers
of the bank seem also 10 carry the
modesty, or, to speak more properly in
financial sense, the conservatism of
the institution into their daily lives. On
snap guess not 10 per cent
of the members of the New
York stoch-exchange could tell the
name of the president, and possibly not
half of that number could tell that
the administration of the banks affairs
is conducted by but five directors. Yet,
when fnanciers know that a few shares
of the banks stock are advertised for
sale they flock to the scene and bid
with alacritv and vigor.
It should be explained that these sales
only occur when the affairs of the afOre
said man, who wanted to die with few
shares OF the stock in his strong box,
are in the process Of settlement by the
executors of the will or the heirs them
selves. There are only 5000 of the
shares, which, at a par value of 800
share, make the capital stock of the
bank 100000. The shares are held by
old New York families. Yet, with its
small capital stock, the last report OF
the banks officials to the proper au-
thorities shows that in round numbers
it has S31, 124, 700 in its possession. This
vast amount is made up Of the surplus
or undivided profits, amounting to S.
056, 900, the capital stock of 5000
and the deposits OF patrons amount
ing to $24, 1853, 700. AS the bank
is required by the national bank
ing act to keep in its vaults 2o per cent.
of its deposits, the total available funds
in the bank are $24, 932, 525. This vast
amount in parcels is lent to bankers,
brokers, merchants and manufacturers
on sound collateral. It is turned over
and over many times year, and at all
sorts of ratee Of interest. This is done
SO successfully that the bank now pays
out in dividends $3.50, 90 year in % per
cent. payments every two months, or
total of $50 per cent. year. This, of
course, is on the par value of the stock,
and thus it is clearly demonstrated that
on the ten shares which were sold the
other day at 81 $50 share, and which
cost $45, $50, and which represents par
value of 81 900, the annual income is
81 800. The problem as to the pet in
come on the actual value of the stock
at 81 $50 q share is then easily demon
strated to be about 1923 per cent. a year.