Mr. Lamb walked away with a new valuation of things. Not a penny of deposit had been asked, for the mere appearance of Mr. Wallingford and his air of owning the entire garage were sufficient. In the room at the hotel that afternoon they made some further experiments on tacks, and Mr. Wallingford gave his young partner some further statistics concerning the Eureka Company: its output, the number of men it employed, the number of machines it had in operation, the small start it had, the immense profits it made.
"We've got them all beat," Mr. Lamb enthusiastically summed up for him. "We're starting much better than they did, and with, I believe, the best manufacturing proposition that was ever put before the public."
It was not necessary to supply him with any further enthusiasm. He had been inoculated with the yeast of it, and from that point onward would be self-raising.
"The only thing I am afraid of," worried Mr. Wallingford, "is that the Eureka Company will want to buy us out before we get fairly started, and, if they offer us a good price, the stockholders will want to stampede. Now, you and I must vote down any proposition the Eureka Company make us, no matter what the other stockholders want, because, if they buy us out before we have actually begun to encroach upon their business, they will not give us one fifth of the price we could get after giving them a good scare. Between us, Eddy, we'll hold six tenths of the stock and we must stand firm."
Eddy stuck his thumbs in his vest pocket and with great complacency tapped himself alternately upon his recent luncheon with the finger tips of his two hands.
"Certainly we will," he admitted. "But say; I have some friends that I'd like to bring into this thing. They're not able to buy blocks of stock as large as you suggested, but, maybe, we could split up one lot so as to let them in."
"I don't like the idea of small stockholders," Mr. Wallingford objected, frowning. "They are too hard to handle. Your larger investors are business men who understand all the details and are not raising eternal questions about the little things that turn up; but since we have this tack so perfect I've changed my plan of incorporation, and consequently there is a way in which your friends can get in. We don't want to attract any attention to ourselves from the Eureka people just now, so we will only incorporate at first for one thousand dollars, in ten shares of one hundred dollars each—sort of a dummy corporation in which my name will not appear at all. If you can find four friends who will buy one share of stock each you will then subscribe for the other six shares, for which I will pay you, giving you one share, as I promised. These four friends of yours then, if they wish, may take up one block of twenty-five thousand when we make the final corporation, which we will do by increasing our capital stock as soon as we get our corporation papers. These friends of yours would, necessarily, be on our first board of directors, too, which will hold for one year, and it will be an exceptional opportunity for them."
"I don't quite understand," said Mr. Lamb.
"We incorporate for one thousand only," explained Mr. Wallingford, slowly and patiently, "ten shares of one hundred dollars each, all fully paid in. The Eureka Company will pay no attention to a one-thousand-dollar company. As soon as we get our corporation papers, we original incorporators will, of course, form the officers and board of directors, and we will immediately vote to increase our capitalization to one hundred thousand dollars, in one thousand shares of one hundred dollars each. We will vote to pay you and I as inventors sixty thousand dollars or six hundred shares of stock for our patents—applied for and to be applied for during a period of five years to come—in carpet-tack improvements and machinery for making the same. We will offer the balance of the forty thousand dollars stock for sale, to carry us through the experimental stage—that is, until we get our machinery all in working order. Then we will need one hundred thousand dollars to start our factory. To get that, we will reincorporate for a three-hundred-thousand capital, taking up all the outstanding stock and giving to each stockholder two shares at par for each share he then holds. That will take up two hundred thousand dollars of the stock and leave one hundred thousand for sale at par. You, in place of fifteen thousand dollars' worth of stock as your share for the patent rights, will have thirty thousand dollars' worth, or three hundred shares, and if, after we have started operating, the Eureka Company should buy us out at only a million, you would have a hundred thousand dollars net profit."
A long, long sigh was the answer. Mr Lamb saw. Here was real financiering.