y unimpaired even by this
short-sighted finance. As it was, attracted several competitors, some
of which were extremely well managed and financed, and although it
still does a most useful work for the community, its earning power has
suffered considerably. But this is only an extreme example of a system
which is reasonable enough if it is not carried too far. The Canadian
Pacific Railway, for instance, has for many years adopted a very
moderate use of this system, making new issues to its shareholders on
terms rather cheaper than it could have obtained by a public issue,
but not giving away enough to impair its future seriously in order
to make presents to the existing stockholders by this means. By the
continued making of small presents to their constituents the directors
of the company have obtained the support of a very loyal body of
stockholders, who feel that they are being well treated but not
pampered. This system of granting a small bonus to existing
shareholders on occasions when the company has to issue new capital is
one which is quite unobjectionable as long as it is not abused. If,
owing to the use of it, the directors are encouraged to finance
themselves badly, that is to say, to pay out of new capital for
improvements and extensions which a more prudent policy would have
financed out of earnings, just because they find that these issues
carrying a small bonus makes them popular with the stockholders, then
the system is being abused. Otherwise there seems no reason to object
to a measure which keeps the shareholders happy and does not do any
harm to the concern so long as it is worked in moderation.

Finally, there is a Bonus share or stock which does not represent
accumulation out of vast profits or issues of new shares at a premium,
and does not involve a bonus by the sale to existing shareholders at
a price below the terms which could be got in the market, but is at
first sight pure water, representing merely possibilities, perhapses,
and potentialities. This kind of Bonus share is chiefly known on the
other side of the Atlantic, and is usually damned with bell, book and
candle by purists among English financial critics. We say on this side
of the water that every pound of an English well-financed company
represents a pound which has actually been spent and put into tangible
assets which help the company to earn profits. This boast is by no
means true, since nearly all industrial companies come into bei