New-York tribune., 1922-06-25

Three important contracts were
signed Immediately after incorporation
Of the company, one with L. L. Barnett
tho physician. who originated the idea
OF a comparatively owned hotel; one
with Horgson Brothers, contractors,
OF which W. J. Hoggson. who was as
sociafcd with Mr.. Barnett, was presi-
dent. and ono with Henry L. Merry, a
hotel manager Mr. Barnett was 20
be treasurer Of The hotel company and
TO ac; as its selling agent in disposing
Of tho Sl5.O00OO0 capital stock, receiy-
ing for the latter service Sl4.5O for
each share sold The contractors were
20 erect and equip tho hotel on cost
plus basis with maximum price OF
81. 500 600 set. Merry was to serve as
hotel manager at salary OF $2o'OOV
n wear from the date Of commencement
Of construction, and after the motel
was opened for business his salary was
10 be increased 81 900 for each $1,000
COO Capitalization Of tho corporation IN
excess o. $4,000 900. lie was also TO re-
cciye per cent Of the net profits.
Later a New York corporation called
r. l.. Barnett, Inc. was formed, whose
stockholders consisted largely Of IN.
dividuais and companies VINO would
derive advantage from the construc-
tion Of the proposed hotel Ihis com
panv took over Mr.. Barnetts contract
10 dispose OF the stock and has since
acted as fiscal agent for the hotei com
many. but under the terms OF the new
contract Mr. Barnett was TO receive 81
for each share sold up 20 10000 and
10 per cent Of any excess OF the sale
price above par.
As result OF these contracts the
cost Of marketing the stock appears
% have been increased 70 basis com
psrable 70 industrial promotions, Tor
some OF which fiscal agents take from
Is 20 80 per cent OF capital raised
This situation was due partly to tho
liberal terms on which subscriptions
( were received. Instead OF demanding
an initial payment Of $50 n share IN
each case, as was contemplated, the
agents received subscriptions without
taking any payments, 80 tnat on June
/ 80. 1921. there were outstanding sup
ec-intions 20 b0T8s shares, OF which
85167 shares had been partly naid ior'
/ but for about one-third nothlhs
/ had been received. The commission,
on these had been allowed, or treated
as duo. however. ard the cost OF mar
/ ketinc these Ind % be met out Of re-
CENTS from other shares. The com
many took tho position that these
qubsrrintions would be worth 50 per
cont of their face value ultimately ana
/ has recently placed in the hands OF
a collection attorney tho task OF clos
,rg these accounts despite the doubt
on tho part of some whether the claim
we're cnforcihle According 10 tho last
annual statement Of the company there
was duo on subscriptions S2,66s Os@
and this sum-uncertain Of collection
as il is-forms more than ~ per cent
OF listed assets.
Net results Of financing 20 the time
90 beginning construction, therefore
amounted 20 receipts of $2.o7O'i72 foi
stock subscriptions and commission
Maid and allowed Of S853,63l, indicating
That for each 800 received 81 IN com
missions was allowed.
Now. regarding the site for the hote
and its asset value. IL is learned tha'
the Rarrott company entered writer
contract with the hotel company anae'
which the Barnett company was u
purchase and sell 20 the hotel eompa -
a site. The one chosen was bought II
this way for S3,75e,00O. The purchase
was consummated through the agency
OF Clark r. Chambers, a real estate
broker and stockholder in the Bar
nett company, who, under the terms o.
the contract. was 20 receive two-third'
OF the profits from the sale Of th'
property 20 the hotel company. Thi'
proa. was about S55O.O0O, as the cos
Of the property was s3,2of,2i6. In ad
di.ion 10 this profit the Barnett com
pany has assessed against tho hote
company varius sums, termed site eH
penses." amounting in June. 1921. e
$4,000. OF which S226,675 had beer
allowed and paid up 20 that time. Ih'
statement for the full year 1921 showed