EFFERVESCENCE OF THE ZOEDONE COMPANY.

Daily Telegraph (Napier), Issue 3558, 4 December 1882, Page 4

EFFERVESCENCE OF THE ZOEDONE COMPANY.

(From Vanity Fair.) Most of our readers will remember the flourish of trumpets with which this brilliant company was ushered into the world in the year 1880. A new era had dawned iipon drinkers ; a beverage which combined in itself all the virtues of the most popular intoxicants, from champagne to cider, with none of the faults ; which, as the ploughman said of Ind and Coope's A.K., would rot the feet of your stockings out before it would make you drunk ; which was to exhilarate the spirits, improve the health, and banish drunkenness and vice from the face of the earth, had been discovered. It was, we ■were told, what men had been looking for for ages, though ita- t/lieir Bearcli hud boon rather in the direction in which intoxicating beverages were to be found, it was not wonderful perhaps that success had been so long deferred. At any rate, it was attained at last, and though Chancellors of the Exchequer might tremble for their Excise returns, and though sinners like Bass and Allsopp, not to mention Derrier Jouet and Pommery, might foresee the cessation of their noxious trades, and virtue was to be restored to tho earth, and Hume Webster, and Co. were to be the apostles of the new dispensation.

All these thoughts were suggested to our mind by a perusal of the prospectus which heralded tho new revelation. The directors were—C. E. Hoare, Chairman (of the firm of J. Hume, Webster, and Co.), E. Baker, H. Bazley, E. Moreton, and J. H. v'Vebster (ivhipper in). The capital was £100,000, which in some fashion or other was all subscribed. Everyone must admit that this was a good working team, calculated to inspire confidence in the most unwary, and as it was currently rumored in the city that the renowned composer Albert Grant was at the hack of the whole concern, those who had followed the career of that great man in the company-promoting line entertained no doubt as to the financial character of the enterprise. We, at any rate, entertained no doubt whatevor. Hume Webster singlehanded would have drawn conviction to our mind, but Hume Webster phis Albert Grant formed a combination as to the nature of which there could be no mistake.

The first thing the company appears to have done was to pay £85,000 out of its capital of £100,000 for the patent rights connected with the ambrosial beverage, and having done that they disposed of the remaining £15,000 and something besides in fixing up plant and machinery wherewith to carry out the manufacture. They commenced business therefore with rather less than nothing, a point which seems to have been overlooked in the beginning—and yet it was a curious point to overlook, for you cannot sell without manufacturing, and if you pay away all your money in return for the patent and its adjuncts, what are you to work the business with ? The empty exchequer seems to have forced his consideration on the Board, who, equal to that or any other emergency, proceeded forthwith, according to Mr .Barker, to raise another sum of £15,000 in debentures, and so at last the Company got fairly to work. About this time it dawned on us that it might be as well to try the compound, and we did so. We paid an enormous price for a rerj small bottle. The first sip came on us as a surprise ; the second revived some old recollections of someting, we know not what; tho third and last made us feel ill, and we went home to think. The result of our cogitations was that we procured a bottle of gingerbeer at two-pence. Into this we scraped off the phosphorous from half-a-dozen of Bryant and May's safety matches. We stirred the whole with a rusty iron key we got out of the stable, and finally we produced a mixture which resembled Zoeclone so exactly that we at once threw it away. We arc inclined to be virtuous. We do not mind drinking nasty things to stimulate our virtue, but when we are called upon to pay three times as much for the nastiness as we are in the habit of paying for the drinks we like, our virtue has to wait for more favourable opportunities of airing itself. But though we neither increased our fortune nor invigorated our system by taking Bhares in the Company or by drinking its products, we have never failed to watch its career with friendly interest. We noted how the shares rose in price, and we heard a little about the means by which tho rise was caused. We saw that, following the example of the Date Coffee Company, the Zoedone people were forming new Companies to purchase patent rights for foreign conntries ; we saw that the Company was paying large dividends, partly in shares of the new Companies, and wo knew how tho whole thing would end. The end we foresaw has come, a balance-sheet has been presented which indicates collapse, accompanied by a report which does nob modify the indications of the balance-sheet. A stormy meeting has been held, hard words have been used, hard

blows have been threatened, if not delivered The Directors have got the best of it so far, as they always do ; the shareholders threaten law proceedings, as they often do; and general chaos reigns in tho purlieus of the Company. We must say a word as to the balancesheet. It has the merit of being neither long nor complicated. On the debit side we find .— Capital ... _ £100,000 Amount credited on sale of Foreign Patents 10,500 Reserve Fund 15,000 Suspense Account (Indian) ... 0,500 Creditors 8,355 £140,355 Against this sum we find on the credit side :— Patent Rights, &c £85,000 Buildings, Plant, &c 16,597 Shares in Foreign Patents ... 11,139 Debtors 20,847 Stock-in-Trade 8,053 Prussian Consols ... ... ... 4,981 Bills Receivable 1,044 Cash 195 £147,856

This account shows in round numbers a profit of £7500, sufficient on the face of it to pay a dividend of 7_ per cent.; nevertheless, the Directors decided not to pay any dividend at all, and as they appear to have no cash in hand with which to pay it, and their long-contemplated sale of patent rights to Patagonia not being completed, tbey cannot make a dividend out of the new Company's shares. Perhaps their resolution was a wise one ; but what is the state of affairs which the balance-sheet really discloses ? Liabilities of £14-0,000, and assets —nil. That is how wo should read it if we had to value the concern. No one supposes that the patents and goodwill are worth a penny piece, or that the buildings, plant, and machinery for concocting a beverage which no one wants to drink could be sold for even an old song. The shares in the foreign Companies aro next to worthless, and the stock-in-trade is little else. The debts owing we should not care to take for much more than tho trouble of collecting, and as for the money lodged with the Prussian Government, there is a proverb about the difficulty of getting butter out of a black clog's mouth which bears upon that; and on the whole we do not hesitate to say that if tho Company were to go into liquidation to-morrow, if it realised enough to pay off the creditors for £8355, that is probably the outside it would do.

It is not surprising that in tho face of I such a balance-sheet as this the tendency of the meeting was not in the direction of amiability, but that everything should have indicated a general row. Appearances were not deceiving. No sooner had Captain Hoare, the Chairman, stated his ease, which was a bad one, than Mr Barker followed him, and exposed the fallacy of the promises which hnd been n-ade. He accued the Board of having made various mis-state-ments, particularly in connection with the sale of the American patent, and he complained generally of the mess that had been made of the whole affair. Of course such charges camo as a shock to Mr Hume Webster, and in a highly dignified speech he pointed out inferentially that Mr Barker was a fool, and that other people were maligners. If people would not drink Zoedone—and it was admitted they would not —what was a virtuous Board to do ? It could not drench them ; but it could hope, and, in fact, it did hope, that the public would see the error of their way 3, and come back to Zoedone, and that the business would be as good as ever, which is, of course possible, though in the absence of a trading account it is difficult to say whether very much would be gained even then. Tho meeting, at any rate, refused to accept the report, and the Directors were compelled to resort to the old familiar device of a poll, which they took, and at a subsequent meeting declared to be in their own favour. This is the point at which the real fun begins. Tho shareholders fought against the poll and declared it was wrong. Tho Directors stood to their guns and dissolved the meeting, or rather declared it to be at an end, and took their departure. A storm arose ; the solicitor was served, physically, with a writ of ne exeat by an indignant shareholder, but fought his way out. A relay of the Company's clerks came to the rescue; but Zcsdone is evidently not good stuff to fight on, for the clerks were beaten by the whisky-drinking shareholders, who finished by getting undisputed possession of the room. Then they formed themselves into a meeting and passed resolutions hostile to the Board. They determined to ask the assistance of the Court of Chancery, and to raise money for the purpose by assessing the shares. This is all very well if they can do it, and if they have the sense to use their money in a rational way. Our advice to them is not to spend a single penny in turning out the Board or in resuscitating the Company. That would be like buying a new whip to flow a dead horso with. Let them raise money by all means, and when they have got it let them see if they can trace the channels into which that sum of £85,000 flowed. It is in that direction that the remedy lies. The task will not be difficult if they know how to set about it, and good may come of the inquiry. Suppose, for instance, it should turn out that the patentee only received £34,000 for the patent rights, it would be incumbent on someone to show what became of the £51,000 which make up the amount of £85,000 which appears in the balance-sheet. We have heard that at one time the patent was offered to a well-known house for a ludicrously small sum, and wo find it hard to believe that any such sum as £85,000 was ever paid for it. This, is the point which requires investigation.