The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1903-08-26
The Y. c. CO.'S EU|Kous LOAN.
a Lesson Of undigested securi-
ties Which Will go Hard in the
South.

Concerning the loan negotiation re-
Gently by the Virginia-Carolina
Chemical Company in Wall street at a
ruinous rate of interest, The Wall
Street Journal of Thursday afternoon
says:
Complaint reaches us from the
South that the report that the Vir-
ginia-Carolina Chemical Company was
forced to pay Is per cent for a one
year accommodation for Sc, 900, 600 by
the Wall street bankers in the recent
financial stress is erroneous and a vici-
Gus attempt to attack the company.
Ii there was any error in the report.
it was in an under statement ard if
there was any attack of viciousness
toward the conlpany's credit, the Off
GERS and the Wall street bankers are
responsible, for the bankers get 6 per
cent interest and the 10 per cent com
mission. The Wall street reporters
did not get it, but every stockholder in
the Virginia-Carolina Chemical Com
pany, as we'll as every investor and
every money lender, is entitled to
know the facts, and thank tie Wall
street reporter.
It was plain duty to investors and
to the community to state the truth
and that the truth may be fully told
we will state the rest of it. There vas
a bankers commission of 2175 per cent
for organization and management of
the syndicate that put up the money
and received 6 per cent interest ard 10
per cent commission. The fact of
these large commissions, in addition
to the legitimate interest rate, was be-
ing used in Wall street to Cypress other
corporations who were in the market
for millions of money. Other bankers
who knew the Virginia Carolina
Chemical Company syndicate terms
were demanding 10 per cent CON-
mission all around, and some of them
were given the alternative of a re-
ceivership or better financial rates.
The publicity to sefnancial trans
actions has warned financial men, and
it is not likely to be repeated. It
is also warning to corporation man
ayers that Wall street is no respecter
Of their financial business interests and
that foresight is as necessary in the
expansion cf any corporation business
as any other kind of foresight. It is
also a warning to stockholders that
they insist upon that financial fore
sight and provision concerning any e1-
pansion; otherwise, their dividends,
when money is tight, 60 to the
bankers.
Of course, it goes without saying
that the common stockholders of the
Virginia-Carolina Chemical Company
can not receive dividends when they
are paying lS11a per cent for money.
During the coming year, provision
must be made for the return of this
capital, as we'll as the payment cf in
terest thereon, and new obligations
must issue. It becomes important,
therefore, to consider the relations of
the various parts of the company's
capital accounts.
The company has ST, 600, 600 Of 5 per
cent bonds which are rarely quoted,
but may be rated, at present time,
marketed only at discount; SO, Co.,
OCO of per cent cumulative preferred
stock which has declined from 1915 to
so and s2S, O00, 600 of common stock,
upon which the dividend was raised
from 4 per cent to per cent about
year ago. This has declined from the
high point in 1902 of 76ss to As and
has just recently dropped from Is to
1879. The enterprise is legitimate
and profitable and has millions of
property, including 100000 of
foreign potash concerns, purchased in
the past TWO years, and nearly 100
cotton seed mills in the South, pur-
chased in the past two years, and
fertilizer business which in importance
in the South ranks next to railways
and cotton.
It is more important that such great
enterprise should not be strangled by
the abuse of the muscle of money, and
it is more important that the same
terms of borrowing are not applied to
other worthy industries. The South
is quite likely to misunderstood the
motives of an outcry about undigest-
ed securities followed by an interest
tax of 1879 per cent upon the inoiges-
tion.