ELECTRIC LIGHT COMPANIES A GIGANTIC GAMBLE.

Globe, Volume XXIV, Issue 2582, 17 July 1882, Page 4

ELECTRIC LIGHT COMPANIES A GIGANTIC GAMBLE.

[“Pall Mall Qaxatte.” 1 When the Stock Exchange makes up its mind for an out and out reckless gamble nothing can well be more foolish than to try to give it advice. For ten days past it has thus made up its mind in respect of electric lighting companies’ shares, and company after -company has been floated, only to bo laid hold of by organised croups of speculators, and its •hares tossed hither and thither in the wildest manner poarible, Nobody seems to pay the least attention to the fact that there is not at -iuia-moßisnt in existence a system of electric lighting capable of standing alone and paying its way as an ordinary Commercial venture. All inventions must be described as still in tha crude or rudimentary stags—tha stage of experiment. Groat promise there may be. but not-hirg more. Not even the “ Brush ” -system, with its many p-itonts —some good, perhaps, others certainly bad in the sense of toeing highly disputable—is able to compete ■with gas as a cheap illuminating agency, and more than one of the “ Brush ” Company's rivals must already have suck an immense amount of capital which they have extremely little chance o£ ever getting back again. That some day a cheap and effective mode of producing electricity will be devised as well as lamps handy and moveable as (hose oil lamps now in use we have no doubt, but tho day has not yet come, and the public is therefore asked to bu.v “rights ” that are no rights in the Benue of securing to their possessors a valuable rovenue yielding property. But this, as we have •aid. doss not at present trouble the market *t all. Times are dull, oud business in its usual channels is flat to a degree unknown since 1878. Stock operators, therefore, having no legitimate employment, have created for themselves an exciting amusement by floating electric light companies. Wo reckon at least a dozen of such companies that have Been the light within the past fortnight. Of course, to get up a successful excitement in anything of this kind, it is necessary that the public should be to a certain extent inter rated, and willing to risk money ; it does not way the market operator to carry oa the game by himself alone, and in the present instance there is no doubt that the public has been much interested in the progress of electric light discoveries—interested to on extent that baa induced many to open their purses in rapport of the movement. The earlier companies were all, wa believe, subscribed for by the public, am a basis was thus created upon which to build the subsequent superstructure of speculation. As the speculation has now rcaehodla height no prodigious that the shares of one company alone—the Anglo American Brush Light Company, of the original value of £400,000, including £IOO,OOO in fully paid-up shares paid as part of tha purchase-money to the Anglo-American Electric L : ght Company—are now worth in the market more than £1,600,000, a few facts regarding the development of the gamble will be interesting, and possibly useful, to outsiders apt to be drawn su by the sight of the apparent gains now being pocketed. Including the South African Company, issued on Saturday, with a modest capital of £IOO,OOO, the Brush Light Company or its offshoots has created nine sub - nidiary companies, to which it has sold the “rights” attached to its patents in the provinces, or iu various places abroad. Or rather the Brush Light Company has first •old concessions to individuals, and these in tarn have formed new companies, in a manner that has been highly profitable to sdl concerned—except, possibly, the ultimate fiadsra of the cash. We have examined their prospectuses for particulars regarding the prices paid by the shareholders to the " vendors ” of these tributary companies, and havo noted also where possible, the cash said to have been paid by these vendors to the parent company for their concessions. As a rule, the latter fact ia not stated, but without that the result is very instructive. Altogether £205,000 in cash and £l7B 000 in shares have in the way been paid by these companies to the vendors, in the manner exhibited by the folio sing table;—

a 1000 founders* shares in addition, b 20 founders’ shares in addition. Now, apart altogether from the question of the wisdom or prudence of those sales by the Brash Light Company—a question that may be considered to embrace its 'manager’s estimate of the worth of the company’s property—this table raises a very important point so far es the public concerned. Granting the thing purchased to be of groat excellence, is it right or fair to the investor that it should oooie to him through the hands of third parties who handicap hia property to the extent of perhaps a couple of hundred thousand pounds for no reason whatever ? If the Brush Light Company intended to do the beet it could either for the spread cf i's own method of produoiaii; the light, or for the future of electric lighting in general, it was surely going the wrong way to work thus to weigh down at the start an industry which does not in itself pay, and cannot pay unless a system of a much cheaper, handier, and more certain description is developed cut of the present crude beginnings, Shore can, in oar opinion, be bnt one answer to this question, and it is so unfavorable to the policy of tho -company that the utmost hesitation should be exhibited in touching any concerns which the privileged traders now dangle before the public by means of fancy premiums in a market prone to foolish excitements. The Metropolitan (Brush) Electric Lhht

and Power Company (Limited) is the most ambitions offshoot of the “ Brush ’’ system we have yet seen. It has a nominal capital of £1,000,000, of whioh half is now issued, making it a bigger company then the parent one. The money will all be needed, however, if We may judge by the sum paid for the rights, licenses, and privileges within the metropolitan area. These it bays, not direct from the parent company or companies, but, «B usual, from an intermediary called the City and Suburban Electric Company (Limited). It is the “vendor and promoter ” of this Metropolitan Company, to whioh it hands over its agreement with the ■ .Hammond Company and its other privileges, together with plan;, steam engines, and the righ'u- of that company, as scheduled. In consideration of all these benefits the Metropolitan Company in to pay to the vendors the xaodeat sum of £235.000, of which £175,000 goes to thtrSTashvOompany and £20,000 to the. Hammond leaving a paltry £40,000 for the “vendor and promoter” company. Everybody agrees that such a bargain mnst be an excellent thing for the Brash ” Company, which gets out of all its Mictions in the matter of city lighting and what not with a cash payment equal to fully two-thirds of its own cash capital. Ho better illustration of the folly of , paying huge sums for electric lighting patents could be gives than that furnished by another prospectus which appeared on the same day as that of the Metropolitan Company. This prospectus seta forth the superiority of the “ Pilsen” and other electric lights ; and if half of what it says is true, not only has the Brush light no monopoly to sell, hat sot even a superior article cr budget of articles. The Pilsen Arc light, we are told, is simplicity itself, there being no machinery of any kind in the lamp. It is, therefore, a cheap light. Then there is the Joel light, olio declared to be something admirable. In short, this company has a set of patents which it declares to boos good or better than any in the market, and there foie it intends to follow the example of the Brush Company _4n telling the “right#” to subsidiary com-

panics all over the empire, bb well a* in manufacturing apparatus for these its children. Where, it may well be asked, is this kind of thing going to stop ?

Kamo of Company. Capitol issued. Cash paid to vendor. Amount in shares to vendor. Portion of cash to Brush Co, Electric Light and Power Company oi Scotian d (Stash) £150,000 £15,C00 £45.000 not South Eastern Electric Light and Power (Brush) Midland Elec100,000 13,750 12,000 stated £10.000 trio Light and Power (Brush) 125,010 25.750 18,000 ProvincialEleotric Light and Power( Brush) 100,000 30,000 25,000 Australasian £1 eotric Light, Power "■ and Storage Company (Brash) 155,000 45,000 35,000a not South African E lectric Light and Power (Brush) Eastern Electric 100.00. 25,000 32.00) 33,005 stated not Hammond 125,000 35,00jb stated not Great "Weetarn 125,000 19,500 15,000 stated £12,750