Rensselaer Union, Volume 7, Number 21, Rensselaer, Jasper County, 11 February 1875 — KOPP’S COMPANY (LIMITED). [ARTICLE]

KOPP’S COMPANY (LIMITED).

One autumn, not long since, I was staving with my family at Brighton; and as I strolled along the beach enjoying the fresh air and the sight of the equipages that dashed along I was accosted by a gentleman with whom I had made -a slight acquaintance in London. I knew little of Mr. Kopp—such being his name —farther than that he seemed perfectly respectable and was spoken of as being in business in the city. On the present occasion he was lively and chatty, making remarks on the fashionables who were driving along in theif smart carriages. Drawing my attention to a handsome phaeton dfiven by a man showily dressed, he' Said: “ That’s a smart fellow. He was once a clerk in some Government office, but getting disgusted with the drudgery he watched his opportunity, attached himself to a good concern in the city and is now making his three or four thousand a year.” In this intelligence I felt a degree interested. I was not ill off, for I had a fair competence; but why might not I, like the “ smart fellow” in the phaeton, get into a “ good concern in the city?” “What sort of a concern is the gentleman connected with?” I inquired of my companion. “Oh! he is a promoter of companies and a managing director in one 6f them, and I don’t know what besides. You must have heard his name—‘Fitzbarton.’ He is a rising man, a member of two or three clubs, and will probably soon be in Parliament.” On parting with my acquaintance I thought a great deal of Fitzbarton and the easy way in which he had glided into a fortune. I got restless and made up my mind to ask Kopp if he could point out any way by which I might follow the successful example of Fitzbarton. At next interview Kopp expressed himself delighted with the inquiry. “It is very curious you should have mentioned this to me; for only this morning I was thinking of you in connection with an affair I am shortly to bring out; and it is just the thing that is likely to suit you. Come and sit down here, and I will explain the nature of the undertaking—a splendid piece of business, if lam not greatly mistaken.” We sat down, and Kopp opened his budget. “It is,” he continued, “ a joint-stock concern to supply a want which every one must have experienced more or less in life, and which has for its intention to offer aid to our fellow-men as much as to put profit in our own pockets. It is to raise a capital of about £50,000, which is to be lent to small tradesmen, to officers in the army or navy when they require outfits, to help clergymen to buy livings—to give assistance, in fact, to every person whose position and character render such an investment a safe one. At present a man may be ruined for want of fifty pounds at short notice, or he may miss making a fortune for want of a few hundreds. The business in this way is done now by Jews, money-lenders, and extortioners, who charge their 60 and 80 per cent.; whereas we, as a company, would be content with 10 of 15. You see, the extent to which our business could be carried is unlimited, practically, and our success is certain, provided we have business men on our Board. Here is S preliminary prospectus; look over it, and let me know to-morrow what you think of it.” I looked over the prospectus; its statistics, compiled apparently with great care, were really most promising, and the affair seemed likely to succeed. What my position was to be in connection with the company I was yet to learn; but on the’ following day I was enlightened. I met Mr. Kopp in the afternoon, and he told me that though he was beset by applicants, yet he woul<j take care that I had a seaton the Board, and should commence my experience as a director. “The directors’ fees,” he said, “will amount to something, considerable—probably to £SOO a year; and the work will be' very light because I shall do nearly all the' work." Ij knew but little about companies then, yet I was aware that I must possesa some shares in order to be qualified as a director, so I asked my generous friend what sum must be Invested by me.* “If you work hard,” he replied, “I will tell you what I will do—but you must not mention this to the other directors —I will hand you over £SOO worth of shares fully, paid up, and you can repay for these out of vour director’s fees. I will make that all right.” I now began try hpfnra vpfy bright prospects. I was to be a co-di-rector with some vferv well-known names —a Scotch peer, an M. P., a general officer, an AdmiraNand two city men. All the preliminaries being settled, I found that Kopp was. going to supply all the money for the preliminary expenses, and

that none of us had any risk. Such a safe affair was very satisfactory, and as I found I should not have to attend the Board meetings more than once a week I could spare sufficient time to be a director of two or three companies, and might, therefore, net £I,OOO per annum. It was by no means unpleasant to see one’s name in the paper as director of so flourishing a company as “ Kopp’s Company (Limited)” and associated with the respectable names on our Board. I was congratulated by many acquaintances, but cautioned by one or two over-pru-dent friends, who no doubt meant well, but whom I dared not tell that I incurred no risk, in consequence of being qualified as a director by my friend Kopp. We took offices in the city and had Board meetings, at which, however, our M. P. rarely, if ever, attended, and I soon found that nearly all the work devolved on me. We advertised in every paper and we had £5,500 subscribed by the public, which Kopp assured me was quite enough to begin upon. During six months I attended Board meetings, which took place once a week; the city men now and then came, the General was a regular attender, and we waited for business. The Scotch Peer rarely made his appearance, for he lived a long way off. How His Lordship might have been induced to enter the concern was not quite clear to me, and I could only fancy that some special inducement had been held out to him for the sake of his title, which looked well in our directorial list. Two loans were made to people whose references seemed to us satisfactory, and who undertook to pay us 20 per cent.; but we soon found that the demands upon us for rent for offices and incidental expenses left us but a very slight balance at our banker’s. As time advanced and no business came in, Kopp seemed to cool in his friendship to me, and more than once he hinted that he was much disappointed at my not having found more customers; but as among my friends there were none in business, or in difficulties, to whom a loan could be more than a temporary staving-off of the evil day, I could not recommend that money should be lent them even on the chance of their paying 20 per cent. At our first general meeting we made out what we believed was a very tolerable statement of accounts, and showed that, although up to the present time we had not actually made any profit, yet we hoped shortly to be able to give a more favorable and satisfactory account of our trust as directors. Unfortunately, one of our shareholders was himself a money-lender, and he was unmerciful on us. He spoke well, and he carried other shareholders with him. He declared we never ought to have commenced business on so small a -capital, that we had actualljrdone nothing, that the loans we had made had been rashly granted, and he voted for the winding-un of the company. Having several of our friends present, we managed to out-talk him at the meeting; but shortly afterward he obtained an order for the winding-up, and our books, etc., were handed to him, as he was appointed official liquidator of Kopp’s Company (Limited). My £SOO worth of shares had not been handed over to me; but as Kopp had promised that this business should be all right I was not distressed or alarmed about it; I knew I was qualified as a director, and so there was no cause for anxiety. About a month after the affairs of the company were taken out of my hands I received a lawyer’s letter stating that the sum of £SOO was due from me for shares in Kopp’s Company (Limited), and requesting that I would at once pay the money into the hands of the official liquidator of the company. I took this, document to Kopp, who laughed at it, and said it was a mere form and that he wouldsee. it was all right, and that nothing could be he had reserved the shares for me and I was duly qualified. Although anxious I was to a certain extent satisfied by this statement and took no notice of the letter. In about three weeks, however, on returning home one afternoon I was told a man was waiting in my dining-room who desired to see me on important business. I ehtered my room and found a dirtylooking man, who bowed to me, asked my name, and then, handing me a paper, said that he thought it better to see me himself privately; that it was no doubt all right, but that it was his duty to serve me with a writ for £SOO • due to Kopp’s Company (Limited). I must admit that this proceeding almost took my breath away. I jumped into a hansom and drove down to Kopp’s office. He had gone to the north on important business and would not be back for a week or ten days. I then rushed off to the solicitor of the company, who said that the opposition hadn’t a leg to stand on and that of course I must defend the action. On my way home I met the Admiral, one of the co-directors, who bluffly informed me I had led him into a pretty mess. “ Led you into a mess?” I inquired. “In what way?” “Why, do you think I’d have joined this company,” he exclaimed, “ unless Kopp had assured me there was not a more careful man in London than you, that you had examined all details, had found it must sucoeed, and had agreed to be a director? With your experience of accounts I never thought for one moment you could make a mistake, and so I joined because you had done so. It’s all your fault; and I’m let in for £SOO, and my name i is dragged in the dirt, which is worse.” „ I returned home with a thoroughly puzzled feeling; that I had done nothing really wrong I hoped, but I was uncertain about everything, for things seemed suddenly to change their aspect, and to present an utterly different appearance from that which I had expected. I waited patiently for news, either from Kopp or the solicitor, but nothing transpired for some weeks. One about six weeks after my being presented with my writ, I received a note from the solicitor, informing me that my case would come on the\ next day in the Vice-Chancellor’s Court, and that he had no doubt I should gain my cause. It was my first law case and I did not sleep a wink the night before.

I attended the court and hoped I might soon be freed from my liabilities, but received a fresh surprise. I was disposed of in about ten minutes. It was shown that I had never paid a farthing for my shares, that I had acted as director, and was from formation of the company on the Board. A somewhat severe censure w r as passed on me, and an opinion expressed that men holding such positions as I Lad done ought not to act in the manner shown by the evidence. I must pay £SOO and £215 6s. Bd. costs. I left that court a miserable man; but there was vet a chance. My solicitor advised me to appeal; the case would not stand for a moment; he could upset it at once; and I should be wrong to submit to the decisionT Such was the advice; but I decided to be rid of the affair and be a wiser, although a poorer, man. I did so, and paid my liabilities. Kopp had returned to town; he was busy with another company—a patent fuel company—and could spare me but little time. He owned that he had been wrong in his opinion as regarded my qualification as a director, but he could not help it. He himself was almost ruined by the confounded business, and he must say the failure of the company was in a great measure due to my not having exerted myself enough to procure shareholders, and so nothing could be done^ I left my friend Kopp with a feeling of depression; I was not the man I supposed myself to have been; I knew nothing of law, nothing of business, and certainly nothing of companies, at least not much; but I had gained most valuable experience, at least experience that had cost me £715 6s. Bd. I had, however, yet much to learn and much to endure. Soon after paying this amount I met an old friend, a city solicitor, to whom I confided my troubles. Having stated my case he remarked that Kopp, no doubt, had made a good thing out of it. “ Far from it,” I replied; “he was nearly ruined.” My friend smiled and said: “What capital was subscribed?” “ Nearly six thousand pounds.” “ What was paid for law expenses, advertising, rent of offices, etc. ?” “ About two thousand pounds.” My friend smiled and said: “Iwould l bet odds that at least a thousand pounds of this went into Kopp’s pocket; and probably the official liquidator and he were not entirely unknown to one another. Liquidation is, of course, expensive, and some one gets the money. I don’t fancy Kopp has made a bad thing out of it, nor has the lawyer of the company. Are you not aware of the fact that joint-stock companies, limited, are sometimes got up by parties for the very purpose of getting the job of winding them up—to say nothing of the pickings that may be otherwise secured?” “ Never heard of such a thing,” saidl. “It is clear I have got a lesson in affairs of this sort.” “Just so. Do not, however, imagine that all those companies rest on a visionary foundation. All you have to do is to be cautious. I recommend you in future to consult me before you join as a director of another company, and I will give you advice gratis.” My troubles were not yet over. My family heard I had lost heavily in this speculation, and hints and innuendoes innumerable were uttered in condemna tion of those who could afford to throw away hundreds in reckless speculations but were so stingy as to refuse a few pounds for a trip to Paris, or another fort night at Brighton; if I could afford the one, surely I could the other. I have meditated long and patiently over my experience, and I have, after due deliberation, come to the conclusion that men in my position should not hastily become directors of Limited Liability Companies with a view to increasing their incomes. This advice has been bought at a price already named, and is now given to the reader, who pays a small sum only for it. If I receive a fair sum for this article I shall put it carefully away and label it, “ Change out of £715 6s. Bd. paid on account of Kopp’s Company;” and if the reader, seized with a fit of generosity at finding himself saved from a similar experience, likes to for» ward in a tangible form his thanks to the editor, no doubt it will be duly handed over to the author of this brief history.— Chambers' Journal.