The Montgomery advertiser., 1906-12-09

ments are not met, the hondhoIdsri usually foreclose and then follows ths customary reorganization by Whict the original stockholders lose all or . large part of their investment.
 How Stockholders Are UndOne.
 Those who conduct q reorganization have frequently found It exceedingly pre- fltable, especially when the tempta- ton to Ignore the rights of the original stockholders has proved too strong Let an interruptions man or group of men be given an opportunity to mulcl
 the public and he will seldom fall to let the chance slip by to make a for. tune for himself at the sacrifice Of the stockholders interests, especially when there is little possibility of legal conn plications.
 It has frequently happened. when a railroad or industrial company has proven itself to be a money maker, that the attention of some large fnan- cfal interests, continually on the look out for attractive propositions with which to speculate, has been drawn to 1t, by the good field 1t offers for opera tionS. In one way or another, these speculators begin a series of opera tions by which they secure control of the company and place their own rep- resentatives in charge of the manage ment of 1t.
 In due time. a proposition is submit ted to the stockholders that the com pany issue @ series Of bonds with the idea of securing additional working capital to provide funds for additions or extensions. The management hav- Ing heretofore been conservative and satisfactory to the stockholders, the prorosit,on is approved and the cor poration now has a fixed charge to meet.
 If the necessity for an increased working capital had been the only motive such additional cash couil nave been secured through the issue Of more capital stock. the payment of dividends on which would be dependent upon the earnings Of the company and not obligatory as with. the interest on the bonds.
 The eompany. at this tir'e and rrlor' has been i've will ass"mS) In . pros perolus condition. The spectators. throurh their President and Board or Directors. negotiate the sale of the bonds issued and are thus epab'ed to secure such of them as they desi-e, at their own figures. Having thus ac- uuired the ma iority. or the entire isE sue. of the bonds the specu'ators now gradually dispose of their holdings or stock, which, at this period, Is se ling at a high figure and nets them good profit. They have taken care that re- ports of the company's conoItion nave been excellent.
 The next step is to so expend the earnings of the corporation ni operat- Ing expenses, maintenance and other that dividends upon the stock cannot be paid and later on, especially If a dull business season can be taken advantage of to such an ex- tent as to default In payment of Inter est upon the bonds
 The majority of the b'ndhold rs (the speculators) can now forecluse and thus acquire thu property al price far below its rs Il value These anne spectators thoroughly advertise the scheme of reor Eanizati m and, un- ler the new working pl'n. eas. ly show 1ow excellent the prospects are for in- 7 estmAnt in the new eoInpUnJ They nave, in fact, e good property and n. with proper management, aiily place t upon a paying basis. When this is they can either dispose of their holdings in the reorganized cor poration at a fine profit or retain them as good Investments
 These steps, as outlined above, were not taken in any haphazard manner that would reveal to the original stock holders of the general public the true of the spectators. It must be remembered that tlieSe nnaneial tugglers are shrSwd men, of a high