from Atlantic Monthly
The Financial Structure
by Ellis Parker Butler
Mrs. Jooks looked up from the newspaper she was reading and asked, in that bland way that gets so many husbands into trouble: --
"Walter, dear, what is a 'financial structure?'"
"A what?" asked Mr. Jooks, looking up from the part of the newspaper he had been reading.
"A financial structure," repeated Mrs. Jooks. "It says here: 'Now that the Oceanic Bank Company has secured 75 per cent of the stock of the Plethoric Title and Mortgage Company, its financial structure is complete. The Oceanic Bank Company owns 100 per cent of the stock of the Oceanic Banking Company, 80 per cent of the stock of the Transatlantic Oceanic Company, and all but the directors' qualifying shares of the International Transatlantic Company. The Plethoric Title and Mortgage Company holds 90 per cent of the stock of the Balzac Trust Company, 100 per cent of the Premium Mortgage Company' -- and a lot more of the same sort of thing, Walter. What does it mean?"
"Why, that's simple, my dear," said Mr. Jooks with a pitying smile. "What you have just read me is the financial structure you asked me about. In this day, when great combinations of capital are required to swing the vast transactions that --"
"But I don't understand it," said Mrs. Jooks.
"I can explain it to you very easily, Jessie," said Mr. Jooks. "Let us suppose that we buy a small place in the country --"
"Oh! I should love to!" exclaimed Mrs. Jooks.
"I am just supposing," said Mr. Jooks. "Suppose, then, we buy a small place in the country -- ten acres, let us say. You and I and Dorothy put our money together and buy it. We call it the Jooks Farming and Dairy Company, and we each put in $3333.33, and pay $10,000 for the place. That is simple, isn't it?"
"You couldn't get much of a place for $10,000," said Mrs. Jooks.
"That's just the point," said Mr. Jooks. "You couldn't. But we do it anyway. So we go out there and start a garden. We have beets and spinach and beans and corn. So we go along for a year. At the end of the year I say to you, 'Jessie, I think I'll buy a cow;' so I take my own money and pay a hundred dollars for a cow, and I call it the Jooks Cow Company. So there are now two companies -- the Farming and Dairy Company, and the Cow Company. You understand that?"
"Certainly," said Mrs. Jooks.
"Good!" said Mr. Jooks. "We now have a cow. But we could use a pig, so you take your own money and pay fifty dollars for a pig, and you call it the Jooks Pig Company. There are now three companies."
"I can see that," said Mrs. Jooks.
"But Dorothy thinks a chicken can pick up a living on the place, so she buys a chicken for two dollars."
"I don't think one chicken would be enough,' said Mrs. Jooks. "I think one chicken would be lonely.'
"All right! All right!" said Mr. Jooks, a little irritably. "Make it ten chickens -- ten chickens for twenty dollars."
"If you wouldn't mind, Walter," said Mrs. Jooks, "I would rather have the chickens -- I always did want to have chickens."
"Then you have the chickens," said Mr. Jooks. "I am only trying to explain what a financial structure is, and --"
"And I'm sure Dorothy would rather not have the pig," said Mrs. Jooks. "Dorothy is always so dainty about things."
"All right! Let her have the cow," said Mr. Jooks. "It makes no difference whatever. I'll have the pig, capital fifty dollars, and you have the chickens, capital twenty dollars, and Dorothy has the cow, capital one hundred dollars. So you call your chickens the Mrs. Jooks Chicken Company. There are now four separate companies, all independent and good going concerns. But when we have been operating another year we find we could do better if we had more land and more stock to raise, so we look around. Next door to us are Mr. and Mrs. Smith and their son."
"How old is the son? It would be nice for Dorothy if he was --"
"Never mind that," said Mr. Jooks. "The Smiths have organized much as we have. They own eight acres, and they raise cucumbers and peas and squash and corn, calling it the Smith Farming and Culturing Company. They have two cows, two hundred dollars, called the Smith Cow Company. They have no pig. They have five chickens, ten dollars, called the Smith Chicken Company. They have nine rabbits, nine dollars, called the Smith Rabbit Company. The Smiths are getting along well enough, but none too well. Smith and his wife and their son --"
"What is the son's name?" asked Mrs. Jooks.
"Algernon," said Mr. Jooks.
"It's queer that they gave him a name like that," said Mrs. Jooks. "I should never call a boy Algernon."
"Please! Please, Jessie!" begged Mr. Jooks. "I'm trying to explain what a financial structure is."
"Well, I'm listening, Walter," said Mrs. Jooks, slightly offended. "I think I have a right to know something about my neighbors, if I'm going to live next to them."
"Yes? Well, please let me go on," said Mr. Jooks. "These Smiths, next door to us, are up-to-date people. They see that combining allied interests is the modern financial trend, so one day at dinner Mr. Smith says, 'Folks, this thing of having a lot of separate companies is getting us nowhere. The Smith Farming and Culturing Company proposes to buy out the Smith Cow Company, the Smith Chicken Company, and the Smith Rabbit Company. How about it? I will sell the Smith Cow Company to the Farming and Culturing Company -- 100 per cent of it.'"
"So, then," said Mrs. Jooks, "there is no more Smith Cow Company."
"But there is!" declared Mr. Jooks. "Mr. Smith does not sell his cows; he keeps on running the cows; he remains Chairman of the Board of the Cow Company, and he only sells the stock of the Cow Company to the Smith Farming and Culturing Company. That is the way it is done, Jessie."
"I see," said Mrs. Jooks.
"But when Mr. Smith turns to Mrs. Smith and Algernon, they look at each other queerly. Mrs. Smith says, 'John, I forgot to tell you, but Algernon needed money for some new rabbit hutches, and I bought 80 per cent of the stock of the Rabbit Company, and that stock is now owned by the Chicken Company.'"
"Wait a minute, Walter," said Mrs. Jooks. "There were nine rabbits and Algernon sold 80 per cent. That left him --"
"One and eight-tenths rabbits," said Mr. Jooks promptly. "But Mrs. Smith was fond of her chickens, and she did not want to part with them entirely to the Farming and Culturing Company, so she proposed to sell to it 90 per cent of the chickens and rabbits she now owned. For the Farming and Culturing Company Mr. Smith accepted that offer, which included 90 per cent of Mrs. Smith's five chickens, and 90 per cent of 80 per cent of Algernon's nine rabbits. In other words," said Mr. Jooks, getting out his pencil and an envelope and doing some figuring, "Algernon now had one and eight-tenths rabbits, the Mrs. Smith Chicken Company had one half a chicken and seventy-two one-hundredths of a rabbit, and the Smith Farming and Culturing Company had two cows, four and one-half chickens, and, -- wait a minute, -- yes, six and forty-eight one-hundredths rabbits. But of course," Mr. Jooks added brightly, because Mrs. Jooks looked a little discouraged, "the Cow Company and the Rabbit Company now owned part of the farm.'
"Oh!" said Mrs. Jooks.
"Which they got in exchange,' said Mr. Jooks. "And the Rabbit Company owned part of Mrs. Smith's chickens and part of Mrs. Smith's part of the farm."
"Oh!" said Mrs. Jooks.
"Mr. Smith now thought the financial structure was complete," said Mr. Jooks, "but what do you think we had been doing all this while, my dear?"
"Farming," said Mrs. Jooks after a moment of deep thought.
"No. Yes -- farming, of course," said Mr. Jooks, "but we had been building our financial structure in exactly the same way, Jessie. Financial structure building is the slogan of the day."
"I see I am going to lose some of my chickens," said Mrs. Jooks sadly. "And I loved my chickens!"
"Oh, come now!" said Mr. Jooks. "We must be progressive, my dear. We must follow the trend of the times. As a matter of fact you were the first to propose a deal. You said to Dorothy, 'The Mrs. Jooks Chicken Company will sell you 80 per cent of its chickens for stock in your Cow Company,' and the deal was made. The Cow Company now had eight chickens and your Chicken Company retained two chickens."
"I hope one was a rooster," said Mrs. Jooks.
"We will say it was," said Mr. Jooks generously. "For our financial structure building that makes no difference. But what was I doing? I went to Dorothy and proposed to buy 90 per cent of the Cow Company. She agreed, and the deal was made. My Pig Company now owned nine-tenths of the cow, seven and two-tenths chickens, and the pig. But, seeing that a farm could do better as a farm than as a lot of separately managed concerns, the Jooks Farming and Dairy Company came to me --"
"You came to yourself?"
"I was president of the Farming and Dairy Company," said Mr. Jooks, "so I came to myself, as president of the Jooks Pig Company, and I bought 80 per cent of the Pig Company. I now owned, as the Farming and Dairy Company, seventy-two one-hundredths of a cow, five and seventy-six one-hundredths chickens, eight tenths of a pig. You owned, as the Chicken Company --"
"Never mind, Walter," said Mrs. Jooks, in a dull tone. "I see what is coming. You're going to buy 76 per cent of the Smith outfit --"
"Ninety per cent, to be exact," said Mr. Jooks. "Ninety per cent, Jessie, thus bringing under one control -- wait a minute! When the deal is completed, the Jooks Farming and Dairy Company would own --"
Late that night Mr. Jooks was still computing hundred-thousandths of a rabbit, and tens of thousandths of a chicken, and saying, "No! Eight and nine hundred and seventy-six thousandths from eleven and eighty-four hundredths -- no, that's not rabbits, that's cow -- no, it couldn't be cow, there were only three cows; it's chickens. Hold on! I subtracted rabbits from pig here. Wait a minute, now --"
Mrs. Jooks had long since gone up to bed. At two o'clock Jooks crumpled up his papers and put them in the fireplace. He stole upstairs quietly and undressed as noiselessly as he could, but as he was putting on his pajamas Mrs. Jooks opened her eyes. She lay quiet for a moment, getting awake.
"Walter?" she said then.
"Yes, my dear," said Mr. Jooks.
"Walter, I was thinking, before I went to sleep. I think fifty dollars is too much to pay for a pig,' said Mrs. Jooks. "I think I'd rather have a cheaper pig and have more chickens."
"Yes?" said Mr. Jooks.
"And, Walter," said Mrs. Jooks, "I don't want to be in partnership with those Smiths. I want to own my own chickens myself."
She closed her eyes and a moment later Mr. Jooks knew, by her deep breathing, that she was asleep. She had left him only about 33 1/3 per cent of the bed. Very carefully, not to awaken her again and bring up the matter of financial structures, Mr. Jooks got into bed. He drew over himself 64 3/5 per cent of the bed covers. He fell asleep immediately, for he was feeling exceptionally well satisfied with himself -- he had explained the higher finance to his wife.