FAMOUS COMPANY PROMOTERS

Wanganui Chronicle, Volume LXXVI, Issue 18531, 13 July 1922, Page 7

FAMOUS COMPANY PROMOTERS

By A Barrister, The five most famous company promoters of the last three reigns have been George Hudson, Albert Grant, Jabez Balfour, Whitaker Wright, and E. T. Hooley, and the list is a dismal one. None of these men have escaped disgrace, either through bankruptcy or the criminal law, and most were both bankrupts j and convicts. Each had a period of almost fa- > bulous wealth before his debacle. Hudson was a good business man, ! but-his companies shrank £28,000,-; 000 in value in a few months. Grant I obtained £24,000,000 from the pub- | lie, of which £20,000,00'0 was irretrievably lost. He and Balfour I specialised in tempting the small ■ investor. The united volume of misery due to this small handful of men almost exceeds imagination. Yet there is nothing inherently dishonest in buying, amalgamating, or launching commercial undertakings and selling them to the public at a reasonable profit. The business of a company may be sold as straightforwardly as a pill or a barrel of 'beer, but the great promoters do not die opulent and respected like | the pill-makers and brewers. The paradox may be worth following, and Tit may be even worth considering I whether the law- which has permitted these few men to ruin so many | homes is ‘to blame for their devas- | tation.

The point for the defence may be made that, given no desire to bang the fraudulent company-promoter for his iniquities, the law's last words to a cheat are bankruptcy ajad imprisonment, and they have been spoken to these men. To this the answer may be made that it has not been quick enough, and that they have done their harm before it has laid them by the heels. Obviously offence must precede punishment, but, the question is whether, by stricter requirements as to prospectus, eiC‘, the offence could be forstalled.

The answer to this question canaot be pldin yes or no. Law-givers have been trying to suppress the acivitles of cheats, and cheats to elude Law-givers, since the earliest history, and the battle is certainly not finished. Much has been done, even within living memory, and devices possible to the earlier operators have been barred for their successors, | Against wide-awake or well-advised ( investors surreptitious profits are I harder to makd. And it must always i remain very difficult to protect the foolish ones who shut their eyes and i swallow all the reputed great finan tier offers them. There is. however, still one manifest blot on the law, which has enabled dishonest promoters and directors to delay their fate and ruin another batch of investors on many occasions. This is the Jact that the statutory company audit is a sham, and will remain so as long as auditors are allowed to take stock valu ations at the directors’ figures. In this way Whitaker Wright published a, balance sheet, duly audited, showing ’that an insolvent company had £4 00,000 assets. And so with many other modern balance-sheets. Probably the public hardly give the promoter credit for the immense legal expenses and diplomatic work of flotation and raising capital, and j would grudge him the high profit on . his successful deals necessary to ba I- ; ance the failures. Thus he has to strike the top-note of cheery expectation, and conceal the weaker side of his ventures. This, however, must be known to certain people in his employment, who must then have good posts to keep their tongues quier t . And it may be that that is the “business” expense which ultimately breaks him.