"The Banque d'Orval can stand a run. Look at the specie reserve! It must stand. The government must come to its rescue in case of need."
"No doubt. But think of the shares! If they fall back to par--and it is not so many years since they were only a few per cents above--the present value of an investment would be reduced one-half. And everything else on the share list would be affected by the distrust it would create. Many smaller institutions would go, and all would suffer. It is a serious consideration. There is the Proletarian Loan, now."
"That is sound at any rate. Mortgaged properties cannot be wiped out like the 'rest' in a bank ledger."
"But you must recollect the Proletarian receives deposits. They had quite a flourish in their last statement over the increased amount, and the smaller interest they have to pay on such moneys than on the bonds they issue; which is all very well, but in case of a run by their depositors, how are they to realize the long-time mortgages in which their funds are tied up? They cannot look for much help from the banks, who naturally would not be sorry to see a competitor for the public savings in a tight place. Again, are you perfectly confident that the affairs of the Proletarian would stand a close audit? I confess I have a feeling myself which is not one of security, notwithstanding the high quotations of the shares. It has always been a mystery to me how old Weevil, the managing director, made his fortune. When he went in there he appeared to have nothing but his salary from the company of three thousand dollars. Now the man is undeniably wealthy. Owns blocks of valuable city property, is director in several companies where he must have a large interest, and lives in a style which his salary could not keep up for a couple of months, far less a year--houses for his sons, who, by-the-way, do nothing for themselves, and English schools for his daughters, which a thousand dollars a-piece do not begin to pay for. I would be the very last man to say everything was not as it should be there, but at the same time it is hard to understand."
"Hm! These are new lights to me, friend Jordan. I must take time to comprehend them. Meanwhile what is your own opinion? And have you any suggestion to make as to what we should do?"
"Candidly, then, General--and with all deference in discussing a matter of finance with you, a member of the Stock Exchange, who make the subject your profession--I believe that you financiers have squally times before you. Confidence will be disturbed and quotations will fall. The investments of our late highly valued friend stand now at higher prices than ever before. The full value of the property is vastly greater than when he purchased, and I hate to think of its shrinking back to the sum, insignificant by comparison, which it amounted to when it came under our care."
"But I do not see that we can help that, even if it should occur. It has not occurred as yet. The investments were made by Gerald himself, and if, in the fluctuations of the market, the property becomes less valuable, we are not responsible."
"Not legally, even if morally. Still, we would like to do our best for our worthy friend. For myself, I confess I am proud to be guardian of so handsome a property; and, seeing we are not asked to work gratuitously, it appears to me we should do our best for it."
"All very true; but suppose it should turn out that our investments do not prove profitable--that, after we have sold, the old investments improve--what then? The estate will have suffered a loss, and the heir may hold us to account."
"My dear sir, present prices cannot rise any higher. Take my word for it. How could they? Unless the rate of interest falls materially, how could investors afford to pay higher prices? Consider that, and then discount those circumstances, not generally known, which I have mentioned to you--in confidence--and you cannot but agree with me. Besides, our friend Ralph--he is your friend more than he is mine--is a business man, prompt and off-hand. He knows. He is in big operations every day; and he will not haggle over the odd cents like a habitant farmer."