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The sale of corporate shares.

employed in his business. He decides, therefore, to obtain the additional capital by selling an interest in his enterprise. Fortunately he finds another miller who has $50,000 in funds, and who is looking for a business opening. The books of the mill are gone over and its present Sale of partnership earning capacity is calculated; the cost of iminterest. provement and the probable increased earning power is computed; the whole situation is carefully canvassed. Each of the two men look into the business standing and reputation of the other. They finally come to an agreement. The first miller sells a partnership half-interest in his concern on condition that the second miller will put in $50,000 more of funds. With this the mill is newly equipped; there is an increased return in profits to each. With the development of the wheat supplies and the wheat-growing resources of the vicinity in which the mill is located, the partners find that they are still unable to supply the market with flour at a price which gives them a handsome return in profits to the company. Three-fourths of the wheat grown in the vicinity is shipped away for grinding, while they are not using more than one-third or one-quarter of the water power already developed. The question again arises, How may they obtain the capital with which to equip their industry in such a manner as to take advantage of the present business situation? To do this will require an expenditure of four or five times the amount expended in their present plant. They find no other miller who wishes to join with them in the business; they have no properties to sell by means of which they may secure the funds. They finally decide to incorporate the business-i. e., to offer shares to those who have capital to invest, but who are not millers, and who would not care to participate as partners. By placing shares at $100 apiece on the market, they are able to sell 2,000 shares. In other words, they find that they are able to obtain $200,000 additional capital made up

of income from the sale of proprietary interests in the corporation to stockholders. With the additional $200,000 they build two other mills of capacity and equipment similar to the first.

Capital stock is the total amount of capital funds of a corporation invested by its shareholders. The certificates of interest held by investing members are called stock. Another term commonly used is "shares." This term is almost exclusively employed in England. There, "stock" has the same significance that the term “Government security" has in America. The stockholders of a

Capital stock.

corporation are those who make the joint contributions to the capital funds or capital stock of a corporation. They have (1) such corporate rights as: To participate in the organization of the company, to attend meetings of stockholders, elect officers, to hold meetings for the purpose of determining the powers to be granted and the rules governing their officers and agents, to give direction to the general policy of the corporation through the officers elected, etc.; (2) the financial rights, first, to share in the dividends set apart for the shareholders out of the net profits of the business of the corporation; and, secondly, to have a share in the capital distributed to the stockholders after the corporation proper has been sold and its affairs wound up. While the corporation exists, however, the stockholder has no right to touch a dollar of its assets or transact any of its business. The capital once contributed becomes the property of the corporation absolutely. The stockholder may be said to have sold a certain amount of his money, or credit, or other property, to the corporation, and in return has received one or more shares of its capital stock, the amount being estimated in the funds-equivalent or price of that which has been sold. For example: In the organization of a corporation a certain amount of the stock may be issued in exchange for plants purchased at an agreed price, while other

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shares may be sold for "cash." No one may transact any business for the corporation except a duly authorized officer or agent. The business of a corporation is in the hands of its officers. The assets of a corporation belong to the corporation as fully and completely as the moneys in the Treasury of the United States belong to the Government. A stockholder has as little right to appropriate assets and to attend to the business of the corporation as has a private citizen to take money from the public treasury or to attempt to do the business of the Government.

Stock certificates.

A stock certificate is the written evidence of a proportionate amount of the total capital which has been invested by a single stockholder in the stock of a corporation. The capital stock of a corporation is usually divided into shares having a fundsequivalent of $100 each. That is, if a company were organized with a capital of $100,000 they would have 1,000 shares of stock to sell. Each person who buys or subscribes for "stock" receives a "certificate" which indicates the number of shares which he has purchased by exchange of money or other property.

Difference between corporation and partnership.

The differences between a corporation and a partnership are many. In the first place, each partner may transact any business for which the partnership was organized, and each partner is liable for all the debts of the partnership. In a corporation, however, the stockholders have no right to transact any business of the concern, this being left to the properly appointed agents, and the stockholders are not liable for the debts of the company. With the death or withdrawal of a partner the partnership becomes dissolved, and the business of the partnership must be wound up. The death of a stockholder does not in any manner affect the life of the corporation. Its business may go on regardless of who holds its stock. A partnership interest may not be sold without the consent of the other partners; a stock

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