The Plymouth tribune. (Plymouth, Ind.) 1901-1911, 1901-10-31
BICYCLE TRUST
Disastrous Experience of a Combin
Having Interest in Plymouth.

The bicycle trust was formed topre-
vent the ruinous competition incident
to twice as many factories as were
needed to stock the market. When
the bicycle craze was at its height fac
tories sprang up on every hand, the
builders seeming not to realize that
there could be limit to the demand,
or that in time few people would use
the wheel for recreation. Owners of
factories and promoters put their
heads together to form single COM
pany which should buy and close many
of the factories and thus enable the
one company to limit production and
control prices. The combination was
made when many manufacturers must
have realized that the falling off in
the use of bicycles would compel the
closing of many factories. This was
two years ago. The capitalization of
the combination was not excessive
compared with other trusts, yet it was
said at the time that the several COM
panies bought up received a generous
price for their plants. Quite num-
Der of the plants were closed, yet they
represented money or bonds upon
which interest must be paid if not
earned. The second annual meeting
of the bicycle trust was recently held.
1t seems to have been bad year for
bicycles. At any rate, the earnings
would have paid 3 per cent dividend
on the preferred stock and nothing on
the common stock, mad not the money
thus earned been needed for a reserve
fund, but being thus needed the
shareholders did not receive cent.
Nor does the future present any en-
enlargement, since the earnings pro-
mise to be less this year than last.
AS the bicycle has ceased to be fad
and has become a convenience to peO-
Pile whose business requires them to
60 from place to place rapidly, there
will be steady demand. The extent
of the dead investment by this COM
bination appears in the fact that of
the twenty-eight plants purchased
only ten were operated the past year.
The discarded factories may be sold
at a loss for other purposes, but the
machinery cannot have any part of
the value which it cost the CONSOLE
dated company. The company charged
off as loss nearly a million and half
of dollars the past year, while the loss
on machinery by wear and tear is put
at million dollars.
The bicycle trust is not alone in
this condition. The same thing has
appeared in dozen other trusts. All
of the trusts have purchased COM
peting plants at extravaganza prices.
During times of great pros Derity the
trust manages to pay diviuends, but
when reaction comes stockholders
must suffer loss. already there have
been enough of such collapses to warn
people against investing in overcap-
italized enterprises. Another and a
constant danger is tie appearance of
fresh competitors whose plants repre-
sent only the actual cost of construct
ion. Such plants can earn dividends
upon profits which would be ruinous
to the owners or plants which are cap
italized for two or three times their
actual value. Thus it begins to ap-
pear that the overcapitalization which
has been denounced because the man.
ayers of such plants would compel the
people to pay exorbitant prices in
order to pay dividends on watered
stock is more likely to involve the
shareholders in heavy loss than to be
burden upon consumers.-Ind
polls Journal.