The Farmington times. (Farmington, St. Francois County, Mo.) 1905-1926, 1921-07-22


The Middle States Corporation OBJ
tanned the stock at $3.50 a share and
sold it for $3.50. The company sold
only 100000 worth of stock in two
inapths, Hart said, which was not suf-
fcient to prevent operation at loss.
Hart said he had received lettaEE-
from Edwards addressed to him and
dictated ITO whom it may concern"
male from Galveston, Tex. He also
admitted having heard from Gamble
through mutual acquaintance. He
said Gamble offered to return if he
were needed in Strengthening out the
company's affairs.
How Stores Were Started.
The method of adding links to this
chain of stores is as follows, accord
ing to the testimony:
Stock statesmen would go into
small town and engage'the co-opera-
ton of local banker, to whom Gin
ducements were made" for his assist
ance. These would be in the form of
supplying the salesman with the names
of farmers and others in the COM
munity who either had ready cash, or
whose notes he would be willing to
discount. AS the stock was usually
sold half cash and half on time pay
ments, represented by notes given to
the salesman, the latter would sell
the notes to the banker at a generous
discount, since he. the salesman, re-
ceiyed from 20 to 80 per. cent cop-
mission.
An added inducement allowed the
banker to retain the cash which had
been paid to discount the notes. This
was done by the issuance of a certi-
ficate of deposit payable in three or
six months, carrying or 5 per cent e
interest, so that in order to obtain the
actual cash, it was necessary for the
salesman to negotiate the certificate
of deposit at another bank. The
third inducement to the banker was
contract to keep 60 per cent of the
money collected from stock sales In
his community. This he could deposit
at his bank until the new store actu-
ally began operations, with an agree
ment to deposit the grocer's money in
the bank after it had opened for bus
mess.
Nearly 60 per cent of the stores
were started in this manner, Hart
said. Another plan whereby the chain
was increased was to buy out the pro-
prietor Of grocery and make him
manager of the new store at large
salary for term of years. The pro-,
prietor was induced to take stock in
the corporation for large proportion
Of the value of the goods in his store.
Stock valuation and leases were plac-, +.
ed at an unusually high figure. Hart
said. ..., e.- go. ~
The corporation agreed to sell gro
ceries at lower price than its COM
pet:tors, Hart asserted, thereby caus-
ing them to lose money.
When the affairs of the company be-
came desperate, Hart testified, that
at board of directors meeting, Jan
uary 6, resolution was adopted to
withdraw the 60 per cent deposits in
towns where the stock had been sold
but the stores had not yet been start,
ed. In spite of the objection voiced
by the country bankers about $10O, 900
was obtained in this way and was used
u to cover the losses incurred by the
stores then operating, 1 Without this,
money; Hart admitted ther company
would have had to discontinue BUSH
ness. t',, 1E5.f .rHtflg. sstniT sT
The charter for the transportation
company was issued in 1904 by Con-
gress as electric. railway. transporta-
ton company, with extremelysbroad
powers, allowing it to operate .inaev-
cry state in the Union. This charter,
was never used until 1918, which it
was purchased by Edwards and the
purpose altered to start a chain of gro.
ceries. The capital stock was then i'm
creased to 10000. OOo from 81, 5000
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Mr.. and. Mrs. Eugene, Williams and