ng with
something paid for in the shape of goodwill, which is of enormous
importance, but can hardly be called a tangible asset; and even in the
case of our railway companies, many millions of original capital went
into Parliamentary and legal expenses, which have been, in one sense,
dead capital ever since, though without this expenditure the railways
could never have got to work. The American system of Common shares,
representing what appears to be water, is only a modification of what
every company has to do, in one form or another, on this side or
anywhere in the world. Wherever an existing business is bought out
something has to be given over and above the old iron value of the
concern for the value of the connection and other intangible assets.
Wherever an entirely new industry is started it has to meet certain
initial expenses. It has to placate, to use the unpleasant American
word, various interests in order to get to work, or it has to lay out
money, in building up a concern by advertising or otherwise. It is
impossible that every penny which is put into it will go into actual
buildings, plant, machinery, and stock-in-trade.

In America the system has been preferred by which the actual tangible
assets of a new concern are financed wholly or largely by issues of
bonds or Preferred stock, and the Common stock is given away to those
interested in the promotion, for them either to hold or to use in
order to secure the co-operation of those who may be useful, or modify
the opposition of those who may be dangerous. The net result of it is
that the Common stock is represented in fact by goodwill or the power
to get to work. If the company prospers, then it is the business of
those who hold these Common shares to see that assets are accumulated
out of profits, to be held against their Common stock, so squeezing
the water out of it and making it good. The system thus possesses this
very considerable advantage, that those who promote a company are
interested in its future welfare, and watch over it and guide it
through its subsequent existence, putting energy and good management
at its disposal in order that the paper which they hold may be
represented, not by water, but by real assets, and so may bring them a
tangible reward. It has thus in some ways a great advantage over the
English system, by which the company promoter is too often concerned
merely in the immediate success of the promotion. He is, as one of the
grea