The Washington times., 1917-01-03
STOCK PURCHASER
PAYS TWO COSTS
Compensates Both Banker for
Selling and Company for
Issuing Shares.
TESTIMONY TO CLOSE TODAY
Million and a Quarter Words
Will Have Been Taken by
This Evening.
CONTINUED from First Page,

CONTINUED from First Page.)
"a banker deals in that commodity as
any other merchant deals in commodi-
ties.
Money is needed by everybody to
carry on business. The banker sells
1t to such people for as much as he
can get for 1t.
Great Responsibilities.
"hTe banker has great responsible
ties placed upon him and to perform
his duty conscisptiously he has a hard
job. He canES recommend to inves-
tors q concern in which he has not
absolute confidence and absolute con-
fldence only comes from proven abil-
ity."
The witness stated that his firm,
when asked to advance money to
public utility, first had the legal
status. Of the utility examined by its
attorneys. Then II had expert engs-
neers and expert accountants go over
respectively, to determine the value
OF the property and its earning
power.
do the companies you thus exam
inc pay the expense of the examina-
tion?" asked Attorney John S. Bar
Der.
Pay the Expenses.
I'VE pay the expenses" the wit
ness responded. Sometimes the
company bears part of it, but we
very seldom permit this, as we wish
to satisfy ourselves Independent of
the company"
The witness said this referred en-
tirely to going concerns of tried and
proved earning capacity and assured
future from past success. His firm,
he said, never takes up new proper
ties. The risk, he said, is too great.
He further stated that his concern,
however, frequently took part in eX-
or consultations. This form |
of investment follows the general line |
of investment in an established con- |
Germ. The banker always employees |
the most reliable and best established /
experts In the VARIOUS lines of investi- |
gationn, Mr.. Graham said, so that he |
can be completely satisfied as to- the
value of the property.
Two the Same Thing.
After all this process has been gone |
with the banker enters into
for the purchase of the
securities.
You underwrite the amount want
ed7" inquired Attorney Barbour.
Underwriting and purchasing are
the same thing" said Mr. Graham. "a
banker UNDERWRITERS the financing of
q concern by entering into q contract
to buy the securities. He must>sell
these to some one else, OF course. But
he actually buys them himself firs:."
The cost of extensions, Mr.. iGra-
ham said, for a company like the
Potomac Elatric Power Company
would be difficult to state. For a
going concern-that Is an establish
ed and paying business-without com
petition, enjoying certain rights rs
TO conduits, poles, etc, the cost would
be small. But for a larger extern
sion based upon less tangible rea-
sons, a large profit would be de-
by the banker.
Asks About Cost.
Attorney Barbour then asked the
witness what would be the cost OF
securing money for a concern that
was to deal in a commodity. like
power. which had been
tested In laboratories and
had been tried out with success in
smaller communities for a year or so.
Money for such a purpose couldn't
De raised at all by Investment brok-
srs," the witness stated positively. 81
recommend the purchase of
such securities by an investor.
ANY investor who puts this money
IN lah fna fa III IoNf |
don't think il possible to raise any
amount OF money for
'uch an enterprise. Any revolution
n Industry Is usually financed by a
'ew men who believe in 1t, and after
is use has been proved. the public
hen comes In to invest its money.
VIII EstabIished Channels.
Capital only flows into channels I
hat are well established" continued
he witness. ut does not flow into )
lew places and does not seek out ,
must be made and must have assured c
afety"
Mr.. Graham recited the fact that T
rhen gas was first introduced in Lon .
on as an ilIuminant it raised a great
ublic outcry.
The public geenrally protested
gainst the introduction of gas pipes
nto the houses, as they said that one
title leak would let out gas that 4
Tould kill all the inhabitants of the
lace.
The same thing was true with
lectric traction, he said. He said 9
e remembered distinctly a very
earned man, a Judge of one of the !;
ourts of Philadelphia, who presented