ities issues a
loan, the subscribers have their names registered in a book by the
debtor, or its banker, and merely hold a certificate which is a receipt,
but the possession of which is not in itself evidence of ownership.
There are no coupons, and the half-yearly interest is posted to
stockholders, or to their bankers or to any one else to whom they may
direct it to be sent. Consequently when the holder sells it is not
enough for him to hand over his certificate, as is the case with a
bearer security, but the stock has to be transferred into the name of
the buyer in the register kept by the debtor, or by the bank which
manages the business for it.

When the securities offered are not loans by public bodies, but
represent an interest in a company formed to build a railway or carry on
any industrial or agricultural or mining enterprise, the procedure will
be on the same lines, except that the whole affair will be on a less
exalted plane. Such an issue would not, save in exceptional
circumstances, as when a great railway is offering bonds or debenture
stock, be fathered by one of the leading financial firms. Industrial
ventures are associated with so many risks that they are usually left to
the smaller fry, and those who underwrite them expect higher rates of
commission, while subscribers can only be tempted by anticipations of
more mouth-filling rates of interest or profit. This distinction between
interest and profit brings us to a further difference between the
securities of companies and public bodies. Public bodies do not offer
profit, but interest, and the distinction is very important. A
Government asks for your money and promises to pay a rate for it,
whether the object on which the money is spent be profit-earning or no,
and, if it is, whether a profit be earned or no. A company asks
subscribers to buy it up and become owners of it, taking its profits,
that it expects to earn, and getting no return at all on their money if
its business is unfortunate and the profits never make their appearance.
Consequently the shareholders in a company run all the risks that
industrial enterprise is heir to, and the return, if any, that comes
into their pockets depends on the ability of the enterprise to earn
profits over and above all that it has to pay for raw material, wages
and other working expenses, all of which have to be met before the
shareholder gets a penny.

In order to meet the objections of steady-going investors