saleable, at a price, though it may be unsaleable except on terms which involve ruin to the seller. It is easy to conceive conditions under which a man might be ruined by holding too many consols with borrowed money, in fact people have been ruined by analogous operations, and the class of securities which Messrs. Baring held were in many cases not saleable at all, or likely to be for months to come, though they are no doubt 'good,' in the sense that they will eventually turn out to be good assets. A good security and a good asset are not necessarily convertible terms, as many a trader has discovered with pain and surprise, and no ingenious legerdemain will make them convertible. Moreover almost any security can be regarded as potentially 'good' by the unchecked exercise of the faculty for hope. A sanguine debtor is always liable to be shocked at the want of faith in the future manifested by unsympathetic creditors. It is desirable that it should be clearly understood that what was done for Messrs. Baring because it was practically impossible to do anything else, cannot safely be done in all cases, or indeed in any other case. Failures, whether actual or virtual, will have to take place where merchants or bankers allow their affairs to be too far involved. The safest plan in the long run is for the failure to be openly recognized, but as the Bankruptcy Act of 1883 made it costly to declare a man bankrupt, the usual practice for some years pest has been to make what are euphemistically termed 'compositions,' by which, in many cases, the insolvent firm continues in business. This is not a thoroughly healthy state of things.
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Current Topics
The Power of Commission.—During the past quarter one large loan and some moderate issues have been offered to the investing public. Among the less prominent loans was one which the colony of South Australia attempted to raise, and it was remarkable because of its nonsuccess. (1.) The Government of that Colony odered 3½ per cent. at 98 under the reasonable belief that its credit was quite equal to the support of this price in the market. But it reckoned without its brokers and commission hunters. What this class of business men desire is not so much to appraise new loans or old loans at their proper values as to get a 'turn' or commission on the negotiation of securities. They held aloof, and so the Colony of South Australia found itself much worse off by offering 3½ per cent. at a minimum of 98, than if it had offered the same bonds at as low as 95. In the latter case there would have been a 'turn' to the professional financiers, who make a quick profit by tendering for blocks of new securities at a wholesale price, and retailing those securities to investors at a slight advance. The highest bidders being the purchasers, it is very likely that the whole loan would have been freely taken at an average of 98, even if the minimum price had been lower. The appearance of success, so given to the issue, would have tempted the general public to come in, and the professional go-betweens would have been able to retail stock with ease at the trifling commission yearned for by their class. As it was, the public were frightened away because only a small part of the issue was subscribed at the minimum—98. From this it is plain that the success or failure of an issue may depend upon a very small commission being
