Bridlington Quay, 12th September 1880 

My dear Lafargue, 

How can I advise you on business if you give me all the informa- 
tion afterwards? If you had sent me the draft articles before, 
I should have known better what to say. Do not say that you had not 
got it; it was your business to have had it as soon as printed. Mazs on 
dirait que vous briilez de vous faire voler.” 

You say the articles forbid to borrow at more than 10%. Whoever 
told you that, reckoned upon your credulity. Article 74 says distinctly 
that the directors can raise money upon such terms and conditions in all 
respects as they think fit. Now I do not know and cannot be expected to 
know whether the acts of parliament forbid limited companies to 
raise money at more than 10%. I doubt it. But if it be the fact, you 
have before your eyes the proof that that is no use whatever. Have 

* Marx’s pseudonym -” But anyone would think you were begging to be robbed. 

you not written to me that Grant wanted to raise £ 3,000—at 10% 
and a bonus of 20% at the end of five years? 20% divided by 5 is 4, 
and 10 + 4 are 14; thus, you pay really 14% for your money. Why do 
you not speak of that when people want to make you believe that 
Grant cannot get more than 10°% out of your company in interest? 

Then you say, Jervis and Mason had pris des garanties contre 
Grant, en ce que rien de nouveau pouvait étre décidé sans qu’on ait 
au moins le vote des 4/5, des actionnaires, et que Grant n’avait que 
55°% et que par conséquent il ne pouvait rien faire sans votre consen- 
tement. 

Décidément on se moque de vous.’ In the whole agreement not 
a word about */5 of the shareholders. All resolutions by simple majori- 
ties. It may be in the acts of parliament that 4/5 are required to alter 
the original deed of association. But that is not the question. I have shown 
you the way how Grant by his system of loans at 10° and any bonus 
he likes, can suck all the profits out of the company. And Article 74 
gives him the right to do so, without even consulting anybody but his 
directors who, whatever they may be, are sure to be his puppets. 

Secondly. All the capital being subscribed you have 

1) 5,000 votes for original capital —£ 5,000.- 

2) 3,000 votes for preference shares 3,000 at £5 each (Art. 49). 
8,000 votes in all. Out of these you, Jervis and Mason have together 
2,250 votes, that is to say not 45% against 55%, but 28% against 
72°. Still more than '/s, but not very far off. Let a few shares be sold 
by one of you, and the power to stop even alterations of deed of asso- 
ciation is lost by you. You will be told that it is not intended to issue 
all the preference shares. But how long that remains so, will depend 
upon Grant. 

There is another article which may affect you and alter the case. 
Art. 21 says that for calls not yet made, but paid up by the share- 
holder voluntarily, interest up to 10°% shall be paid. I should pre- 
sume that this applies to your paid up shares, only, if it was so, 
Jervis and Mason would have pointed it out to you; at least I should 
think so. If that be the case and you can secure 10% on the greater 
part of your shares that would be so much in your favour. See 
whether it 1s so or not. 

* safeguarded themselves against Grant in that no new decision could be taken with- 
out the consent of at least */s of the shareholders and that Grant had only 55% and 
hence could do nothing without your consent.—They’re having you on, no doubt 
about that. 

Upon the whole I think, after your last letter, a little more favour- 
ably of the business. If the money raised at such ruinous interest can 
be limited to the first £ 3,000 .- and these repaid after the 5 years or 
before, the thing may work well. But it strikes me that it will require 
very large profits indeed to pay all these lavish expenses. £ 50.- to 
each director, £ 100.- to the Chairman, £? to the Manager, £ 300.- to 
the directors in London and Paris and so forth. All that with a work- 
ing capital of £3,000.-, less than three times the salaries named 
above! And 14% interest besides. 

I cannot write to you about Jervis as you say you read my letters to 
him and Mason. Else I should have something to say to that. Any- 
how, the honesty of a financier is different from that of some people, 
be it ever so honest in its own way. 

I must conclude; dinner is going to be laid. Si vous ne voyez pas 
d’autre voie, naturellement vous vous étes trop avancé pour reculer 
tout seul. Mais réfléchissez bien, et rassurez-vous sur les points indi- 
qués ci-dessus. 

Je n’ai que l’argent absolument nécessaire pour mon voyage et 
méme peut-étre pas cela. Mon cneque-nook est 4 Londres ou je serai 
de retour samedi soir *°; jusque la, je ne pourrai rien faire. 

Si vous pouvez retarder |’affaire G. jusqu’a mon arrivée, on pour- 
rait peut-étre avoir plus de renseignements. 

Bien des choses a Laura de la part de nous tous. 

Bien a vous 

FE. 

Je rapporterai les articles d’association a moins que vous n’en avez 
un besoin immédiat.*