Barbour County index. [volume] (Medicine Lodge, Kan.) 1880-current, 1897-06-16
THEY ROB THE PEOPLE.


PractIced by the spoliators Of the
Masses.
Most of the colossal fortunes in this
country which have given rise to much
Of the current complaint against the
concentration of riches in the hands of
comparatively small number of per-
sons have grown out of a. most repre-
hensible abuse of the privileges of in
corporation. Thousands of men have
been made rich by the over-capitaliza-
companies, and their riches have been
accumulated in such way as to cause
direct losses to many thousands of con-
fiding investors.
The process may be thus described:
An enterprise, such as the construction
of a gas plant, or the consolidation of
number of separate concerns into a
trust, is found to require the invest
ment of 81, 900, 900 in actual cash. The
managers of the affair organize their
company and Immediately issue per-
haps 81, 600, 900 in capital stock and
So, 900, 900 in bonds. A little less than
half the stock is offered as bonus to
buyers of the bonds. For example,
the bond may be offered to the public
for so cents on the dollar, and $500 in
stock given with every 81, 900 bond pur-
chased. In that way company requir-
ing but 81, 600, 900 is capitalized for S.
600, 600. The sale of bonds leaves large
cash surplus in the treasury after the
plant is completed and the company is
enabled to make such an auspicious
start, with prompt payment of inter
est and dividends, that its securities
are looked on as first-class and the
managers of the affair find no trouble
to sell their stock at par, which is SO
much clear gain. In the course of
time competition or legislation forces
reduction in the price of gas down to
a point which will provide for ample
returns on the capital invested, but
not on the extra securities issued.
There is passing of dividends, par
tial default of interest payment, and
| people who thought they had high
grade investments find themselves in
the possession of worthless paper.
Their money is gone. 1t is in the pos
session of men who sold them the
! shares which were issued in violation
of the spirit, if not the letter, of the
|
i've bunko game, and the men who
thus gather in riches are robbers just
the same as though they had deliber-
ately taken money out of the pockets
of the defrauded investor.
Many of the enormous fortunes OF
the day have been made in this way
and hundreds of thousands of small in.
vestors have in this manner contrib
uted to the accumulations of the few.
All sorts of enterprises have been over
capitalized in the manner here de
scribed for the purpose of enabling g
few men to gather in the small posses
sions of thousands. Sometimes the
overcapitalized industry has beer
made to pay steady returns on the
watered stock, and small purchasers Of
it have not been robbed. In those
cases 1t is the general public which
suffers. for the people have to pay fol
the services performed by such corpo
rations more than should justly be col
lected from them. In either case 6
favored few are enabled to accumulate
great fortunes through dishonest
means by reason of the fact that law.
relating to corporations are either in
adequate or are not enforced.
1t should not be possible for any in
corporated company to issue stocks OIL
bonds beyond the actual sum of money
invested in the possession of such com
pany, and rigid enforcement of the
law in this regard would save small in
vestors from losses that aggregate mil
lions in the course of every year
| Kansas City Star.