by Napoleon Hill
Available in 122 free installments
Owner:
"I thought you would be interested in knowing that the Commercial Credit Company of Baltimore will probably liquidate the Pennsylvania Casualty Company because of its tremendous losses. Of course, you know Commercial Credit owns Pennsylvania Casualty. There will be a meeting of the Board of Directors next Thursday in Baltimore. All the Pennsylvania Casualty Company's business is already being reinsured by two other insurance companies owned by Commercial Credit. The name of the executive vice president of Commercial Credit is E. H. Warheim."
I thanked Joe Gibson warmly, asked him one or two more questions, and then hung up the phone. After a few minutes of thought it flashed into my mind that if I could conceive a plan whereby Commercial Credit Company would accomplish its objectives more quickly and with greater certainty than under its proposed plan, it shouldn't be difficult to persuade the directors to accept such a plan.
I didn't know Mr. Warheim, and therefore was hesitant to call him, but I felt that speed was of the essence. And then two self-motivators forced me to act.
Where there is nothing to lose by trying and everything to gain if successful, all means try. Do It Now!
And without a second's further hesitation, I picked up the phone and placed a long distance call to E. H. Warheim in Baltimore. "Mr. Warheim," I began with a smile in my voice. "I have some good news for you!"
And then I introduced myself and explained that I had heard of the possible action to be taken regarding the Pennsylvania Casualty Company and that I thought I would be in a position to help them reach their objectives more quickly. Then and there I made an appointment to see Mr. Warheim and his associates the following day at 2 p.m. in Baltimore.
At 2 p.m. the next day W. Russell Arlington, my attorney, and I met with Mr. Warheim and his associates.
Pennsylvania Casualty Company fulfilled my needs. It had a charter permitting it to operate in 35 states. It had no insurance in force as the business had already been reinsured by other companies. By making the sale, Commercial Credit Company accomplished its objectives quickly and with certainty. In addition they received $25,000 from me for the charter.
Now the company had $1,600,000 in liquid assets: negotiable securities and cash. How did I get the one million six hundred thousand dollars? I used OPM. It happened this way:
"What about the one million six hundred thousand dollars in assets?" Mr. Warheim asked.
I was ready for the question and immediately responded: "Commercial Credit Company is in the business of lending money. I will just borrow the one million six hundred thousand dollars from you."
We all laughed, and then I continued: "You have everything to gain and nothing to lose. For everything I own will be behind the loan, including the one million six hundred thousand dollar company that I am now buying.
"Besides, you are in the business of lending money. And what better security could you have than the pledge of the company you are selling me? In addition, you will receive interest on the loan.
"What is most important to you is that this way you will solve your problem swiftly and with certainty."
When I hesitated, Mr. Warheim asked another very important question: "How are you going to repay the loan?"
And I was ready for that question too. My response was: "I will repay the entire loan in sixty days.
"You see, I don't need more than a half million dollars to operate an accident and health company in the 35 states in which Pennsylvania Casualty Company is licensed.
"As the company will be wholly owned by me, all I need to do is to reduce the capital and surplus of Pennsylvania Casualty Company from one million six hundred thousand dollars to five hundred thousand dollars, which I can then apply to my loan with you.
"You and I know that a businessman is faced with the matter of income taxes on any transaction involving income or expenditures. But no income tax payments will be required on this transaction for the simple reason that the Pennsylvania Casualty Company has not made profits, and no part of the money I receive when I reduce the capital will, therefore, be from profits."
And then another question was asked me: "What about your plans to repay the balance of the half million dollars?"
