THE NELSON AND CO. TEA BUBBLE.

Otago Witness, Issue 2664, 5 April 1905, Page 29

THE NELSON AND CO. TEA BUBBLE.

One cf 'the moot astounding bubbles of modern times ha 3 just been pricked ; but the bubble has proved to be a deadly bomb, whose bursting has caused widespread devastation. A certain tea fh*m called " Nelson end Co. (Limited) " has just been ordered to be wound up as hopelessly insolvent. Mr Justice Buckley, who heard the case, described the business of the company as that of attracting- married women to become customers of the company and purchasers of the company's tea. at prices largely — sas^. 4-0 per cent. — abov-e its fair market value, by the- delusive and reckless promise of impossible pensions, to be paid to them if and when they became widows. The pension scheme, remarked the - judge, " rested upon no actuarial basis of any kind. It ignored the age of the husband on whose death the pension would commence : it ignored the age of the wife, during whose widowhood it would be payable ; it ignored, with some exceptions, the health and expectation of life of the husband. The loading • which was added to the price of the tea, and which may, in a sense, be regarded as the preminm paid for the annuity contract, bore no actuarial relation what-ev-ei- to th<» liability which th« eompanv was undertaking. In no circumstances could it have justified a pension of anything approaching 10s a week. If the customers had known that they were overcharged 8d per pound for the tea. and, in the result, might possibly during widowhood receive ' a pension of, say, 6d per week, the number of the company's customers would probably have suffered a considerable reduction. E\en the 8d per pound did not go to provide for the annuity contracts. It went into the general business, and, under the limited company's contracts, the policyholders could look only to 75 per cent, of the profits realised by its employment with the company's other funds in the business. The offer which the company made was a mere reckless, promit-e of an impossible pension, with a. view to induce persons to become customers." By this time Nelson and Co. found themselves with no fewer than 19.000 widows on their pension list, and so after distributing among themselves the extra pi ice paid for tea, \\hich formed, virtually the premium on this life insurance, they had the astounding impudence to comrv forward arid seek sanction to a nevv scheme, under which thoii- existing liabilities to the unhappy women who so credulously trusted them, would be so materially reduced a,s to be vhtually wiped out. But Mr Justice Buckley promptly put the stopper on that. Ho pointed out that the- realisation of the Nelson Tea Pension Scheme and th& payment of the pensions undertaken by the firm would need at least a sum of 10 to 1$ millions .sterling, and, in the opinion of

actuaries. not less than £30,000,000—30 million pcunds sterling ! The sum actually available is under £20,000! I need hardly hay that tho outcome of this shameful trick Las been widespread misery and stiffering. Yet it would seem that no one- can be legally punished for so hug-e a crime. Verily one does sometimes think of Mr Bumble's view of the law!