The Montgomery advertiser., 1905-05-16

know nothing about the management but who are willing to allow their names to stand in the advertisements to stimulate public confidence.
 Still another and the worst feature of all is the modern invention known as Underwriting, neat financial trick by which the director of one corpora tion sells to himself, as directors of an- other corporation. block of securities and pockets a large profit to pay him. self for the trouble he has taken. The way this is done. for example. is when John Doe. manager of a great railway corporation, hes been authorized by his board of directors to borrow money he calls together a number of his friends and they 'underwrite" the loan. In
 other words, they agree to float the
 whole amount at 95 or 98 cents on the
 dollar. In the syndicate are members
 of the finance committees of the big in-
 surance companies, savings banks, or
 other institutions which have large
 amounts for investment, who apportion the loan in blocks among the com
 panies whose funds they control. and for an advance of 1, or 3 per cent upon the underwriters" figure. This difference, which often amounts to mill lions, is divided among the members of
 the syndicate as their compensation for selling bonds to themselves.
 Such transactions have been going on in New York City for several years among the best and most honorable or
 men, who consider them legitimate and
 are willing to accept the profits with out a twinge of conscience. And mo- 1 body objects to the money they con- tribute to foreign missions, either. The officers of the Equitable Com pany accuse each other of having been largely engaged in this business. Young MT. Hyde has not only admitted that
 he has been underwriting syndtcates
 with the money to the credit of the Equitable Company, but has handed to the treasurer several checks for large amounts, which he says represent his profits in such transactions. Other of ficers have been underwriting also; not only in the Equitable, but in the other insurance companies. A high officer of
 one of them remarked the other day:
 If Jimmie Hyde has committed petty
 larceny in that respect, am guilty or
 highway robberyl"
 That is strictly true. Young MT. Hyde Is one of the least sinners in this respect. His transactions have been insignificant compared with other of- ficials of his own and other companies.
 If the pockets of the directors were
 searched for the profits they have de- |
 with the money and the credit of the
 insurance companies, a very large sum
 would be collected.
 gentleman who was formerly en-
 gagged in the banking business in Chi
 cago made some sagacious observations last night about the financial morality of New York, which, he declared, was very much lower than that of Chicago or other Western cities
 'sThey do things here" he said, that
 would not be tolerated in Baltimore. Washington, St. Louis, or even San Francisco; while the board of directors
 of no Chicago bank would even discuss propositions that are common In Wall
 Street and lower Broadway. The
 worst charge that has been made
 against young MT. Hyde is that he has
 used trust funds for private profit, and
 he pleads guilty. He probably will ex- plain before they get through with him, that he was not only permitted but encouraged to do 1t by the Presi- dent of the company, and the Board of Directors. which consists of as fine d | body of men as one could round up in the city. This has been going on for | five years and nearly everybody con- | neeted with the company has known IL.
 The big financiers have been using l Hyde for their own purpose. If you
 want to know who they are look at the
 list of companies In which he was elect
 ed a director before he was 23 years
 of age. You will find his name In the | directorates of forty-six great corpo- l rations. and he was not elected to them | because of his financial ability or expe-
 rience, but because the big men in | those corporations were not too big to
 pull the young mans leg"