HIGH FINANCE

Wanganui Chronicle, Volume 71, Issue 276, 21 November 1928, Page 2

HIGH FINANCE

A SCINTILLATING BUBBLE I TWO THOUSAND VICTIMS ' Ono of the most scintillating aw:’.’ dazzling of the bubbles of the German inflation and stabilisation periods came up recently in Berlin for judicial investigation. The case was expected to last several weeks. The victims number 2000, and their losses many million marks. The, bubble begun with a prominent advertisement in the daily press offering investors 4 per cent, per nionfTi with complete security. A promise ot 48 per cent, per annum interest, it the police allow it publicity, will always obscure the judgment of a certain number of people with money to lose, and in Berlin at that time the rate did not seem so very extravagant, for there were periods when savings banks paid up to 20 per centon deposit;'. The response to the advertisement was voluminous, and applicants found themselves in a gorgeous suite of offices on one ot the best sites in Untcr den Linden, the Piccadilly of BerlinThe busines' conducted there was that of a glorified pawnbroker, who would advance money on any kind ot movable property, from a fur cape or an engagement ring to a ton of coals or a barge-load of potatoes. Jt. seems possible that at the very beginning of the blowing of the bubble Paul Bergmann played square •with his lenders. In those days of frenzied finance he took JO per cent, on the sum advanced, and could, therefore, afford to give 4 per cent, for additional capital. Thus, the first, people who brought him their money were given unimpeachable liens on pledge* as security, and received their 4 per cent, monthly aw! were quite satisfied. Spreading the Glad Tidings In fact they were too well pleased and the excess of their gratification was the probable ruin of themselves and their congeners. They imparted the glad tidings to their friends, and these to theirs, and soon money poured in so copiously that the property pledged no longer sufficed to cover even a fraction of it. This difficulty Bergmann got over, it is alleged, by the very simple device of assigning the same pledge as security to two different lenders, and, when need arose, it was quite natural io extend the application of this prim i <iple, even further, so that on the bursting of the bubble no fewer than

22 persons put in claims for one identical article which had served as cover for advances by all of them. But by r the time his business had become, as is assertel, purely frauii'iilent, Bergmann was no longer depending solely on “security” to allay the | pos.-ible misgivings of the providers i of the new deposit*? necessary to pay interest on the old ones and to furnish him with his “profits-” Concurrently he had developed; a wonderful system of references of a most reassuring character. Impressive References Among others who were ready at ■ any time to attest in the most emphatic terms to the honesty and sound ness of Bergmann’s business were a “Councillor of {State,” a “Government Councillor,” a retired major, the owner of a manorial estate, and—his greatest triumph of all—a high oflicinl of the Department of the Public Prosecutor. >Some of his “references” had very substantial reasons for speaking well of Bergmann, for, according to his statement in Court, a lawyer received from him in fees no less than 80,000 marks (£4000) in the course of 18 months. However, the King’s Counsel anri some of his other stalking horses are his partners in the dock. Others ot tho ten accused were among his score of employees, and are said to have spent their time in cafes and similar places collecting signatures to licti* lions bills and warehouse warrants. One of the most curious features ot the case is tho number of experienced men of affairs among Bergmann 's victims. Tho list comprises many officials, merchants, lawyers, and at least one “adviser in matters of taxation.” Of the 2000 sufferers only 80 have come forward to give e\ ir>ence. The others prefer to consign their folly Io immediate oblivion.