The daily morning journal and courier. [volume] (New Haven, Conn.) 1894-1907, 1899-03-27
A new "SOUTH SEA BUBBLE. ;
Continued from Fourth page.)

street and sells S3,O3O,0OO, face value, of
1t at 80 1-3 on the dollar and realizes
therefrom $1,010,000 The situation in
cash, bonds and stock now is as fol-
lows:
Mfgs. Bankers. Trust
Cash ........... 4,S00000 1910, 900
BONDS .........
p. stock. 1880, 900 100000
c. stock ....... 2,40O00O 100000
The general public now has all the
bonds and $3,0S0,000 of common stock,
Toward the end of the six months an
inventory is taken and everything, in
Guiding twenty-year-old steam, gas and
water pipes, wooden hams, nutmegs and
Yankee notions, is put into the mer-
chandise account at prices equal to new,
and the inventory made to do vallent
service as apparent foundation for a
dividend. When the six months have
expired, IL times have been good, the
factories are found to have held their
own and no more, and semi-annual
dividend, based upon the steam pipes
and the bond and common stock sales, Is
declared.
The dividend is 3h per cent. on pre-
ferred and per cent on common stock,
and 8 per cent. interest is directed paid
items are as follows:
Pref stock, 100000, 81 p. C. S4o5,5
Com. stock, 100000, S p. C. $4,000
Bonds, 1850, 900, p. C. $4,000
Indebtedness, 100000, p. c. 100000
Total, $1,21O,oOO
From the schedule next above it will
appear that this just exhausts the
trusts cash on hand received from the
sale of bonds and common stock. Now
comes the coup d etat. The general
public goes wild and common and pre-
ferred stock scars. When the top notch
has apparently been reached the bank
ers, promoters and manufacturers sell
out and load it on to the dear public
just let them have it,
When it is over the account stands
this way: The bankers have cleaned up
over four and one-half millions profit.
the manufacturers have gotten about
twice what their business was worth,
the trust, from the sale of the balance
of the common stock, has taken in con-
siderable money upon which it can SUBJ
sist a considerable time yet, and the
public has footed the bills.
1t is safe to average up the public's
account dollar for dollar, for the gain
on the common stock bought before the
dividend will be more than offset by
premiums paid for common and pre-
ferred stock after the dividend.
The public has now bought and owns
the trust. property and industry worth
net IS, 000 900; and for it they have paid,
capital stock $2O,oO0,0o0 and bonds S.
100000, that is, over three times what
it was worth.
The manufacturers had $12,000000 of
capital in the business, two-thirds their
own, third borrowed, and could
barely make a living; can the public
use twice as much capital in the indus
try and get rich?
If one barber in small town starves
can two flourish? But, illustration
aside the case is worse than that, for,
while the public has paid three times
the worth of the business, most of 1t has
gone into private pockets and not into
the business at all or it's treasury.
The public now owns the business and
it is loaded to the gunwales with in
debtedness, bonds, hungry and dissatis-
fled stockholders the ship is manned by
an Inexperienced and wire-pulling crew;
the men who understand the business
are mostly on the outside and starting
competing establishments. AS soon as
the returns from the stock sales have
been used up bankruptcy becomes inevi-
table. whereupon the manufacturers
buy back, each their original plant for a |
and many of the general public, |
off before, will be found |
for work at one and two dollars
per day.
The foregoing only mildly represents
the possibilities for the bankers and |
in present conditions,
and schemes have been and are being
worked much more to the profit of the |
inside specuiator and loss of the general
public than above represented.
The country is mixing possibilities
with ilnpossibilities and gong specula-
lively mad over the situation incident to
the reorganization Of industry from the
upon the trust basis.
At the present rate New Jersey Will
soon have incorporated more capital on
PAPER than the whole grand list OF the
United States amounts to, and the gen
eral public is straining and crying like
snake and frog. over it's effort to sWal-
low everything in sight.
The reaction will come, as in South
Sea bubble" days it came in England,
the wind and water will ooze out trusts
Fail. people find themselves impover-
shed; then there will be hot times in
The old towns about, panic, general IL
,uidation, and finally sanity again.
Saws Lord Macaulay: "A crowd OF
projectors, ingenious and absurd, hon
ast and knavish, employed themselves
In devising new schemes for the en-
olovment Of redundant capital 1t was
about the year 1858 that the word
,tock-iobber was first heard in London.
IN the short space Of four years acrowd
If companies, every one Of which conf
lently held out to subscribers the hope
If immense gains, sprang into exist
.nce: The Insurance company, the
PAPER company, the Lutestring COM
,any, the Pearl Fishery company, the
Glass Bottle company the Alum COM
,any, the Blythe Coal company, the
sword Blade company There was a
copper company, which proposed to ex-
,lore the mines of England, and held
tut a hope that they would prove not
ess valuable than those of Potosi.
NJ, o,A ,.,ac CroaTlar Fiobiro por1- |