Mr. Searles looked puzzled, for he had hoped to get the stock for less money. He hesitated, as if in deep study, but not long, for he believed that, if the Harrisville Iron & Steel Co. for ten successive years could pay $500,000 or an average annual dividend of 25% on its stock of $2,000,000, the plant re-organized could easily be marketed at a neat advance, say for £1,400,000 or $7,000,000, in London, where even sound 3% investments are eagerly sought; so Mr. Searles inquired again: "Colonel Harris, you omitted to state your conditions." Harris answered, "I must have cash enough to guarantee the sale, and short time payments for the balance."
"Well, Colonel Harris, how would the following terms please you?
One-eighth cash $625,000
One-eighth 30 days 625,000
One-fourth 60 days 1,250,000
One-fourth 90 days 1,250,000
One-fourth, Preferred Shares,
6% dividends guaranteed 1,250,000
_________
Total price named 5,000,000
"Colonel Harris, before you answer, please let me outline our London plan. Suppose I should take for Messrs. Guerney & Barring a contract, or option of purchase on the property with payments as named, the purchase to be conditioned upon a verification of the correctness of your statements. Our experts can examine and report soon on your accounts for ten years back, and on buildings, machinery, stock on hand, land, etc."
"Mr. Searles, please explain further your 'London plan' of reorganization."
"Colonel Harris, we would modify the old firm name, so as to read—'The Harrisville Iron & Steel Co., Limited, of London, England,' and capitalize it at £1,400,000, or $7,000,000.
Par value of shares £20 or $100
Number of shares 70,000
"When our experts shall have verified your statements at Harrisville, then the option of purchase is to be signed by us and forwarded to London, where it will be signed by Messrs. Guerney & Barring, the first payment made, and the contract underwritten or guaranteed by the Guardian, Executor & Trust Association, Limited, of London, whose capital is $5,000,000. The association will also underwrite the bonds and preference shares. This will practically complete the purchase."
"But what about the last one-fourth payment in preferred shares of $1,250,000?"
"Pardon me, Colonel Harris, that is just what I desire to explain further. The new company will issue debentures or bonds, running 30 years, at 4%, for £800,000 or $4,000,000; preference shares £400,000 or $2,000,000; with dividends 6% guaranteed, and a preference in distribution of property, if company is dissolved. Ordinary shares £1,200,000 or $6,000,000. And our London prospects will show that the ordinary shares can earn at least 5%. For the last one-fourth we wish you to take 12,500 preferred shares, or $1,250,000.