organization of credit. Next in order to banking deposits as a part of the new mechanism of finance comes the jointstock company. A joint-stock company affords the means for dividing the ownership of properties in such a way that, on the one hand, an individual of small means may become part owner in a great enterprise, and, on the other hand, enterprises may be successfully carried out, of a magnitude which could not well be undertaken by a single individual. The creation of share companies divides the risk of an undertaking among many persons, and places the enterprise beyond the accidents of a single existence by giving it a fictitious body dowered by law with continuing life.

When these properties are listed on the stock exchange they are afforded a general market, in which it is easy to obtain a definite test of their value. A mill or a factory which is in private hands is salable or not according to individual and local circumstances. When not converted into the form of shares, a small property of

this character has a market which is narrow and uncertain. The property may pay a fair dividend upon the capital invested or upon the cost of replacement, but unless it happens to attract the attention of a capitalist who is also an expert in the same line of industry, it cannot be sold at the will of the owner. When, however, it is a part of a property which comprises many other mills, and this property is represented by bonds, preferred stock, and common stock, distributed among a multitude of owners and listed on the stock exchange, then it is in the power of the individual owner to part with his property at will at the quotations of the market.

One of the natural consequences of the abundance of capital seeking investment is the tendency to produce new forms of securities. The evidence of this is afforded by the great variety of securities which are now at the command of the investor in the principal markets of Europe and America. The first form of investment offered in the stock markets was government

obligations. These represented capital taken from the community and often applied in a manner which was not economic, for the purposes of war or preparations for war. Then came the primitive form of the stock company, which was simply the issue of shares establishing a common and divisible right in a large property. It has remained for recent years to develop the preferred share, the mortgage bond, income bonds, convertible bonds, debentures, and many other forms of obligation.

These various types of securities offer a variety of investment which permits. each investor to choose among them according to his individual valuation of the relative advantages of risk with large returns, security with small returns, prompt returns or ultimate profit. The mortgage bond of a first-class railway, varying little under ordinary conditions in its market quotations because it pays a fixed income, is the most secure investment after the government bond, and the most appropriate for the investment of trust funds.

The preferred stock of a well-established investment enterprise offers a fixed return with perhaps a higher degree of risk, and is, therefore, likely to pay a larger return in relation to its price than the bond. The convertible bond offers a high degree of security, with the additional allurement of admitting the bondholder to a share in the expanding profits of the preferred shareholder when the price of stock rises above the price of the bond.

Every form of investment which proves more attractive to a certain class of investors than previous forms adds to the means for drawing capital out of hoards and private hands and putting it at the command of the community. If bonds and ordinary shares prove unattractive to a certain type of investor, then the market where only those forms of investment are available does not afford the highest facilities for drawing hoarded capital from idleness into utilities. The device so frequent in the organization of American industrial corporations, by which the assured earning power is capitalized as preferred stock and

the contingent profits of bankers and promoters are converted into common stock, to be sold for what it will bring or laid away until it earns dividends, has not until recently been available for the French financier. Hence the inducement was lacking to unify and strengthen French industry by consolidating old companies and putting the best equipment and most far-sighted management at the command of new companies.

The countries of Europe, especially those of the Continent, have much to learn from America in diversifying the forms of investment so as to put saved capital to its most productive use; but America has also something to learn from Europe. We have done much more than France and Germany to draw the small capitals of the masses into our commercial banks; but they have developed forms of investment which we have not tried, or which we have not managed with prudence.

A striking instance of the diversification of banking methods which has thus far failed to obtain a firm footing in America