The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1914-04-24

Of affairs earlier, only he felt that
sooner or later the price of the two
commodities would improve and that
somehow he would be able to eliminate
the debts.
t''This seems to mo could nevor
have happened, for once in debt the
only method by which the companies
could have cleared themselves would
have been been through assessment 20
the inside stockholders. Any increase
IN the price of rubber would have un.
der the share agreement have accrued
70 shareholders, and the same argument
would apply equally TO the coffee crops
of recent years.
81 Financial Structure.
In order that the many evils Of
the present system of dual ownership
may be corrected in any reorganization
and the conflicting interests unified,
| will briefly state the methods pur.
sued an. the formation and operation Of
the Hidalgo Plantation and CONNER.
cial Company from the date of incor-
poration. This may also aid share.
holders in understanding and Analysing
the present debt.
z For many years previous TO the
formation of. the Harrison properties !
Q. II. Harrison was manager Of the
Mexican Land and Colonization Com
pany, a large land company which is
still operating in this district under
the title Of The Land Company Of
Chiopas. =
Inside" Companies Capitalized.
IS The inside companies were capital.
bed as follows: Zacualpa No. 1, $500.
COO; Hidalgo, 100000; Zaeualpa No. 2,
slOO,00Q These three had practically
no cash paid in. "Acre-sharesu were
sold 10 the public as above shown.
.In the share agreement q feature
was incorporated by which the com.
pany after the contract period was
over would retain control Of the entirs
organization perpetually. This refers
to the arrangement to market the crop
for q commission of ten per cent on
the, net proceeds of each harvest. .,
ITO small eoterie of individuals
formed INTO aaeorposation for eonven.
fence and with no available cash as.
sets--the Purchasers of ,Hidalgo shares
contributed 81 1896, $4,000. - the total
amount paid in by shareholders in all
Harrison properties under similar con.
ditions amounts to the large sum of
n, 523.346.5L,'h continues the report. !.
,2sfThis company did not even allow
on it's board Of directors
10 shareholders, so that in no way have
shareholders been in position TO Sc
cure information as TO the expending
IF this large investment.
~ The company contracted to carry
m certain extensive Developments re.
hiring heavy expenditures of capital,
nut in the event Of the estimates prov.
ng In error. what financial response
'ihty could be attached to corpora
ion with no capital for its inability TO
i've up to contract No bond OF
was ever executed by which
might recover.
Al certificate in Hidalgo reads
Represents for each share s9ld one
Undivided aero of rubber and one un-
divided acre of coffee, but Dies in M
way state that title to this land will
yer be conveyed to shareholders or
o trustee for shareholders. II would
ppear that the most liberal construc-
ion possible to put on this contract
3 that IL constitutes declaration Of
rust and an appropriation of the lands
D the uses and benefits of shareholders.
ust what legal weight this would carry
am unprepared TO state.
Rights Of shareholders.
g As the titles to the lands and prop.
rites are vested in tho inside corpora
ion, these are recognized as assets by
he company and accepted as security |
n loans by banks and bankers in Mex
20. Apparentiy the shareholders are
Unknown In Mexico, or if known are
as unsecured creditors only |
he bylaws are recorded In Mexico and |
j California, and this, I believe. con.
titItes the only legal evidence of a
ontract between the corporations and
larehoiders N That portion Of the by.
Tvs pertaining to the shareholders in
rest is virtually a facsimile Of the
ontract as 1t appears on the back OF
10 share certificate.
"lt would be hard to find in any
naneial scheme such complete domi.
alton sof all operations of businest
] was offered to the inside corporations
the HidalRO and other Harrison prop
ties through their share contracts.
1.-THE entire proposition seems to be
1 experiment. in finance on4a decidedly !
rye scale with no precedent, so far as
|. Fl. Harrison knows OF, and certainly
, followed none ia his operations.
."The defects in the organization,
with numerous errors ia judo.
emit, eventually brought about The
,esent chaotic conditions. ANY rea,
hpble business Arrangement would
ave made this condition known 20
Iareholders in time 10 have perm tied
em 10 have taken action and perhaps
I'VE averted What now(seems almost a