| Show CORPORATION CAPITALIZATION TION Edward M Shepard Discusses Its Evils and the thc Cure For Them PRESENT PLAN IS DECEIVING r Would Abolish bolls ho Dollar Mark on out or of Stock Shock til m II July 13 tAn An address n by I Edward dard M lit Shepard of or Now York on flit Corporation Capitalization und anti Public Morals Moral was ns the h feature tent ro ot or to today days day dS s eulon of ot the annual meeting mooting of ot the th Illinois Stute Bit association The Tho abolition of oC the thc purely pur nominal money capitalization of ot business cor con corporations as aN n it euro cure for tor the evils els o over oer capitalization was W wa I tot set forth b h Mr Shepard In his address The rt rs of ot tho the dollar mark trout from capital stock will he lie believes go o far tar toward solving the time problem Ills It Is the falsity of ot the present plan planor ot or corporAte capitalization which Should condemn it ho lie said suld For lor Forthe Forthe the very ery reason renson that U It facilitates de tie deceit celt emmit tho tio delusion of Investors anti and In Iii sIncere dealing with public by public pu llo it should ba ha ended ende If It there thero ba II b a It bettor better plan I think there Is III I r suppose that tho tue share of ut o stock shall have hao no tie dollar mark that Its only ni essential feature shall be the tho truthful that It Ja Js ono one or of a II given total number ot of o equal shares Into which thc th enterprise Is dl Who ho a 11 corporation money upon uron the nominal amount of oC Us lIs rump It The Tho creditor who Is sane constants consilIIs not net the time nominal but tho thu situation his hits concern Is with the compans realizable property Its mortgage ot of lien debts deb tN its debt its gross Income its net Income I Is not lieS however the tho creditor entitled to know that the capital of at which he hue has hM been assured n shall not until he lie is paid be bo taken from Crom the company compan In dividends but remain a u fund tumid for his hlA security Indeed ho Is Iii entitled to that Our system of ot nominal capital hatlon does not amot give gle him that assur assurance flare ance The Tho creditor might however a corporation as Ill a condition of ot his extension of credit to provide him with u a l statement of present and amid actual conditions Just as a IL broker requires a II statement of solvency of ot a is partnership whose note he lie places on the time market For or die dis honesty In lit making such statements the tho common law low provides ample rem rein edy ody cd Tho The essential thing ns mis I con conceive cele It Is that the basis of ot the time divi 1111 doM or of ot o the tho credit shall ba bo found In some aetna responsible statement of at pres present ent uit actual facts tact not miot In fictitious or nominal or obsolete capitalization Mr tr Shepard also sloko of ot tho the common Idea Iden that lint the tho profits of ot rail roads and an other othor public service cor con should be bo restricted to 6 per cent This In his opinion is a Q fallacy and nna If It so restricted rc would prevent Industrial Int advancement Int Private capital will not go Into new re and untried enterprises unless upon import a promise that in ease caso of ot sue suc success cess eeB tha tho profits shall exceed the tho rate of or Interest Inter Kt which could be earned up on assured investments ho Sensible capitalists will alit never hover tal nice i the tho th risk of ot total or 01 partial loss unless patti paid for tOI em the risks In the magnitude of or probable or possible profit it is ab lb surd Curd to suppose that constructive ic genIus and ant financial and even moral courage would have havo carried railroads over oer tho the Alli Allegheny mountain or the thc Hockles or tho the Sierras nn un tha timit tion that thi If It tho th enterprise failed a R great groat loss lOB should be bo borne brne by 11 the pro motors motels but that tho t If the Ito enterprise sue suc succeeded then their profit should be bo limited to what they the could have earned without risk by lending their capital on bond and mortgage However tho owners of or railroads and anti other like Iko in conald arabic emble part port have havo themselves to thank If from rain the beginning beginning they the hind had open ly 1 Insisted that their risks should bo be compensAted by lar large c just junt as 18 would be bo the tho risks of ot a I pioneer manu or the tho merchant who loads a ship sill for tor Cathay it If I in this title matter there hero hud had been bean b ln neither r concealment 11 tor nor lor Insincerity In nor Juggling or of figures there thero would today be less of ot tho the no tion ton that railroad rates ought to bo be 10 adjusted to produce morn more than 4 or 5 or C G per cent |
