The Bridgeport evening farmer., 1914-04-10


 present state of things, be formed by men with Wall Street connections, or, at the very least, Wall Street knowl- edge. This is almost imperative if success be desired. The average stockho1der. even when a very sue cessfu1 sbusiness man or a very we'll educated man, has no real knowledge of finance Indeed,f only those who have had actual experience in reor- ganizations can appreciate the utter Ibewild lderment of the average Ameri- can citizen when he sees the secur- ity for which he paid good money calmly stripped of it's value and the latter passed quietly over to some group of banks and their allies.
 The utter lack of any legal remedy further confuses him. Only recently is the. public beginning to realize that definite, overt acts of plain spOIiation, as larceny or eInbezzlement, may oc- cur with impunity because our crim- inaI statutes, based on the customs and manners of other times, cannot even by implication cover acts which banking and corporation finance have made possible in interruptions hands.
 The matter of the Sealshipt Oyster System presents another and very different situation. This company was organized in 1910 by 8 Western
 promoter named Brooks, with the. idea of dominating the oyster field of America. and also of changing the method of selling oysters by furnish ing them in strictly. .hygienfc cases called sealshiptors. Some of. the Unit ed Fruit crowd of Boston were inter ested from the start, and towards the end of 1910 they and Henry Horn blower, of Horn blower and Weeks, members of the New Y ork Stock Esx- change, took complete control of the directory. This well known financial
 group were then about as thoroughly and completely esstung' by a lot of un-
 scrupulous owners of oyster beds
 some connected with the company in one way or another, some outsiders as ssrubes at a country circus. Oys- ter beds were bought right and left
 at their owners own appraisals and at the same time reckless extrava-
 gance in salaries prevailed. An or gy of throwing away money lasted for about a year when the United Fruit people. beginning to realize the posi- tion they were in, took executive as l well as directorate control In Ju- l ly, 1913, the company defau1ted in the interest payment on s2,5OO. 900 l three-year notes, and after the an nual meeting in New York on Octo- Der 28, the chief creditor. and trus- tee for the notehoIders. the Old Col ony Trust Company, of Boston. plac7 l ed the company in the hands of re l ceivers- In this case there was no malversation on the partIof at least a majority of the directors, but there l was the same old attempt to keep the 1 stockholders in the dark, and the same 1 utterly unethica1 use of proxies to vote down at the annual meeting the I demand of stockholders for inves- I tigation. A reorganization of the I company is now pending which may I or may not leave something for the preferred stockholders. An attempt l by the management to recover the ex- orbitant moneys spent for the oyster l beds under tIeir owners' Inisrepre- 1 senfatIons woslsas prtssthe directofs in I the position of having acted with ex- 1 trerne rashness and folly and as the main directors are also directors of l the main creditor. the Old Colony 1 Trust Go. there is not much chance l that this will be attempted. ; The Sealshipt Oyster episode exhibits an instance where the chief directors are .l opposing the stockholders partly be cause of other connections and part Iy to avoid the likelihood of being l publicly exhibited as completely lack ing in business sense in their man ] agemerlt Of this corporation. The I whole situation illustrates another l fact, namely, that officers and direc- ! tors Of fscorporations should be prof1ib- I ited from being, or being connected Il with, creditors. The outcomes of ! the whole situation in this company I anad how the stockholders will Fl make out is not yet clear.