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tain that somebody will be badly hurt. You cannot reasonably expect a syndicate to find money for a sinking concern, without adequate compensation and approximate security. But, if the situation is radically a false one, it is extremely doubtful whether it is worth while to prolong the agony. Our observer will do well to make note that the necessity of drastic measures of funding and the possibility of carrying them out may afford him profitable subject for reflection in connection with railroads in which he holds, or proposes to acquire, an interest.

CHAPTER XI.

RECEIVERS' CERTIFICATES.

A FORM of security in which a good deal of money has been made and lost is the Receivers' certificate. It may be said shortly that investment in this form of security is good for the inside, and somewhat risky for the outside, investor. It goes without saying that the strength of the Receivers' certificate is the priority over all previous encumbrances with which it is invested by the special action of a court of competent jurisdiction. The validity and completeness of the order creating it is a very simple matter, calling for no special business knowledge. But other considerations occur which our enquirer will do well to note.

The purpose of this special form of security is to meet a grave emergency, so grave that, in the opinion of the Court, it is entitled to take precedence over mortgagees. To arbitrarily set back the priority of a first mortgagee is obviously a tremendous exercise of power, and can be justified only by strict vigilance and close examination of the urgent need which it is proposed to meet, and by the enforcement of unconditional compliance with the orders of the Court. Suppose it to happen (and in the writer's experience it has often happened) that the certificates were duly issued and, so far as the face of the documents were concerned, were in every respect satisfactory. Let us suppose next that the proceeds of such certificates, instead of

being expended on purposes within the four corners of the order, have been diverted to other purposes. The chances are that the holder of the certificate will have to fight his battle with the first mortgagee, and is very likely to get nothing out of it beyond some valuable hints for his future guidance. Our enquirer's rough conclusion will be to invest freely in Receivers' certificates when he is inside, and to leave them alone when he is outside.

CHAPTER XII.

CORNERS.

FIFTEEN or twenty years ago the effect of a wellorganized corner was so tremendously drastic that it was apt to leave an enduring mark on subsequent railroad history. But of late years, owing to increased publicity and a more general diffusion of knowledge on the subject of railroad business, the occurrence of an effective corner is comparatively rare. Only at very long intervals are the special conditions necessary for complete success found in juxtaposition. A successful exhibition of the process postulates as a matter of course, first, the existence of a market in a particular stock so active (in its speculative sense) that extensive short sales have been made, and the amount of such sales must bear a very large proportion to the total amount of the particular stock. Secondly, the campaign must be engineered by fairly strong and adroit manipulators. Thirdly, these must be able to rely with reasonable confidence on the entire good faith of their confederates. The leading conditions being fulfilled, it is easy to see that the quiet acquisition or control of the whole or nearly the whole of the stock of a given company will enable the holders to squeeze the short sellers, and make them pay for their release whatever price may be demanded. It has been discovered however by experience that the combination of these necessary elements is very rarely perfect at all points.

Although the holders of nearly all the stock of a company-in connection with which a corner is projected— may feel that they are logically in command of the situation, their corner may be broken by an irregular issue of new stock. This was the method pursued with much effect by the late Mr. James Fisk Jr. Or again they may be conscious of holding nearly all the stock of a company, and have orders in the market to buy up the small outstanding residue at comparatively high prices. This they can afford to do in view of large profits to be realized hereafter. But presently they discover that there is apparently no end to the amount of stock which they can purchase at these comparatively high prices; and it eventually dawns on them that this high-priced stock which they have lately purchased has been unloaded on them by one of their own confederates. On the whole, it may be considered—for practical purposes-that the oldfashioned corner, in its highly picturesque and dramatic development, is played out. More or less remote imitations of it are still in vogue. But the enquirer will probably be well advised to leave the corner business alone. Outside meddlers with a corner may generally count on getting hurt in one form or another; and, apart from the doubtful morality of the transaction, the investor will generally find that the game is not worth the candle.

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