Evening Republican, Volume 21, Number 29, Rensselaer, Jasper County, 12 February 1918 — INVENTORS’ FINANCIAL DIFFICULTIES [ARTICLE]

INVENTORS’ FINANCIAL DIFFICULTIES

How They Have Struggled to Obtain Money; Your Thrift Help* Progreaa of World

By S. W. STRAUS

(Pranintat New Ywk aid Chieu# Banker)

It has been said that there is room for just so much in the human brain and if one’s ability is as highly Specialized as an inventor’s, there is no chance of being capable in business affairs. Certainly, this has been borne out in the case of most inventors. Those servants of civilization have, almost without exception, faced financial difficulties of the most disheartening character. Only a few were fortunate in connecting up with men of business ability who relieved them of financial responsibilities. Watt, the inventor of the steam engine, was so situated. When he started his experiments he was the possessor pf a prosperous instrumentmaking business, employing sixteen men. He soon became greatly in debt and formed a partnership with a Doctor Roebuck, who agreed to pay $5,000 of his debts, provide money for further experiments and secure a patent. In return for these advances he became a two-thirds owner. After the two had achieved partial success Doctor Roebuck suffered financial reverses. He was forced to transfer his interest to Matthew Boulton, a famous merchant of Birmingham, to whom he was in debt. . Boulton was just the sort of business genius Watt required. He\ built a factory for the manufacture of steam engines and financial difficulties hampered Watt no more.

Edison, on the other hand, early in his career refused an offer for a partner. Although he has built up a large fortune he has frequently lost practically everything he possessed and been forced tostart all over again. His “business methods” were sometimes impractical in the extreme. Once Edison was offered SIOO,OOO for an invention. He voluntarily offered to receive payment in annual installments of $6,000 without Interest 1 Again, he once received an. offer by cable for “30,000.” He accepted. When he' received his remittance he was greatly surprised to learn that it was £30,000. He had expected $30,000. EH Whitney, inventor of the cotton gin, never really freed himself of financial worries. He went in partnership with a Mr? Miller, and the’two were forced to fight almost continually for their rights. While Whitney was experimenting and producing his

letter to the envelope and decided ho would go over it again that night. In the quiet of his home he argued the matter out. In the letter it was stated that Smith & Brown courted the most rigid investigation and suggested that prospective clients inquire of Gunn & Bradburn, a commercial agency,. a«- ta thelY . standing. Mr. Jones decided such would be a reasonable test, and accordingly wrote a letter to Gunn & Bradburn, asking for complete information regarding the firm of brokers. The reply was very favorable. “Smith & Brown are responsible and have ample capital. We recommend them without qualiflca■tion,” said the report. Mr. Jones sent SIOO to become a member of the syndicate. • The days that followed were full of anxiety for him. How was the venture progressing? When would he receive the letter apprising him of the outcome? The news came in an unexpected manner. It was in the metropolitan newspaper he received weekly. He read: ANOTHER MARKET SWINDLE Smith & Brown, "brokerß,” collect thousands from would-be speculators and decamp. The thing he feared had happened to him. He was swindled! A week or so later a letter came to him from the Society for Protection of Investors. It stated that if he had had any unfortunate dealings with the unscrupulous investment houses they, a society formed purely for protective purposes, would look into his case and see what could be done. But Mr. Jones had become wary through his experience with Gunn & Bradburn, deciding that’ he would stick to business and not mix in with high finance. In this he was very wise, for the Society for Protection of Investors was in reality backed by the owners of the defunct Smith & Brown. Its purpose was to direct Mr. Jones to their newest venture. And the Gunn & Bradburn commercial agency was also backed by the renowned Jim Smith and his nefarious associates for a purpose that is readily apparent. Such, in brief, is the composite experience of thousands who trust themselves to the doubtful mercies of firms in the same category of Smith & Brown - . Their appeal is subtle and often blinds the shrewdest. How can you discriminate between the legitimate and illegitimate investment banker? First, beware of the financial house that offers stock that will on a specified date sell for a higher price, or where extravagant dividends are guaranteed, or where stock is sold ’way below par and a large commission paid to agents. These are generally the earmarks of the offerings of an unscrupulous house and should be shunned. Second, inquire at your local bank as to the standing of the firm with which you propose dealing.

first machine, people heard of the wonderful invention and broke into his house. They carried away the model and soon a dozen similar machines were in use. This was before Whitney could obtain a patent. He worked night and day to produce another model so that lie could go to Washington and patent it, but he was handicapped for lack of funds. At length the patent was secured and then two years of struggle elapsed before Whitney succeeded in proving the superiority of his machine over the imitations. In 1795 he returned from the South to New Haven, where his factory was located, only to find that it had burned down. All his machines were destroyed. In answer tonls letter apprising Miller what had occurred the latter replied, “I will devote all my time, all my thoughts, all my exertions andall the money I can earn or borrow to encompass and complete the business we have undertaken.” Whitney set to work to replace his factory. He had great difficulty in securing the necessary capital. To add to his difficulties, a certain manufacturer in England stated that the product of the machine was unsatisfactory. • Whitney wrote to Miller, “The extreme embarrassments which have been fo.r a long time accumulating upon me have now become so great that it will be impossible for me to struggle. against them many days longer.”

I He was still forced to fight in the courts because of infringements. Law suits went against him. At last Whitney succeeded in selling rights of his machine to 'the state of South Carolina for $50,000. He repeated this in North Carolina and Tennessee. But then when success seemed within his grasp. South Carolina attempted to recind its action and announced it would not pay the $50,000 and tried to have the money already advanced to Whitney returned. Affairs were at the darkest point in Whitney’s long struggle. Just as he was about to give up, South Carolina thought better of its decision and paid the inventor in full. But a better day seems to have arrived for inventors. Modern Industrial progress has made so many demands for better methods that inventors are now eagerly sought after and usually treated fairly. Financial aid is easier to secure. The individual investor, when he purchased his bono may be assisting the development of an invention every bit as revolutionary as the cotton gin. Without the aid of his thrift the world’s progress could hardly proceed.