Letter to Paul Lafargue, September 12, 1880

Author(s) Friedrich Engels
Written 12 September 1880


First published, in the languages of the original (English and French), in F. Engels, P. et L. Lafargue, Correspondance, t. I, Paris, 1956
Published in English for the first time in Marx-Engels Collected Works, Volume 46


ENGELS TO PAUL LAFARGUE

IN LONDON

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[1] 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. Mais on dirait que vous brûlez 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 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 être décidé sans qu'on ait au moins le vote des 4/s 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.[2] In the whole agreement not a word about 4/5 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 is so or not.

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 êtes 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 même peut-être pas cela. Mon CHEQUE-BOOK est à Londres où je serai de retour samedi soir[3] ; jusque là, je ne pourrai rien faire.

Si vous pouvez retarder l'affaire G. jusqu'à mon arrivée, on pour- rait peut-être avoir plus de renseignements.

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

Bien à vous

F. E.

Je rapporterai les articles d'association à moins que vous n'en avez un besoin immédiat.[4]

  1. ↑ Marx's pseudonym. But anyone would think you were begging to be robbed.
  2. ↑ safeguarded themselves against Grant in that no new decision could be taken without the consent of at least 4/5 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.
  3. ↑ 19 September
  4. ↑ Unless you can see some other way out you have, of course, gone too far to withdraw all on your own. But think it over carefully and make sure about the points outlined above.— I only have such money as is absolutely essential for my journey, and maybe not even that. My cheque book is in London, whither I shall return on Saturday evening; until then I shall be unable to do anything.— If you can postpone the Grant business until my arrival, it might be possible to obtain more information.— Best wishes to Laura from us all.— Yours ever,— F.E.— I shall bring the articles of association with me unless you need them at once.