to the risks
involved by thus becoming industrial adventurers, a system has grown up
by which the capital of companies is subdivided into securities that
rank ahead of one another. Companies issue debts, like public bodies, in
the shape of bonds or debenture stocks, which entitle the holders of
them to a stated rate of interest, and no more, and are often repayable
at a due date, by drawings or otherwise. These are the first charge on
the concern after wages and other working expenses have been paid, and
the shareholders do not get any profit until the interest on the
company's debt has been met. Further, the actual capital held by the
shareholders is generally divided into two classes, preference and
ordinary, of which the preference take a fixed rate before the ordinary
shareholders get anything, and the ordinary shareholders take the whole
of any balance left over. Sometimes, the preference holders have a
right to further participation after the ordinary have received a
certain amount of dividend, or share of profit, and there are almost
endless variations of the manner in which the different classes of
holders may claim to divide the profits, by means of preference,
preferred, ordinary, preferred ordinary, deferred ordinary, founders'
shares, management shares, etc., etc.

All these variations in the position of the shareholder, however, do not
alter the great essential difference between him and the creditor, the
man who lends money to a Government or enterprise with a fixed rate of
interest, and, in most cases, a claim for repayment sooner or later. The
shareholder, whether preference or ordinary, puts his money into a
venture with no claim for repayment, unless the company is wound up, in
which case his claim ranks, of course, after that of every creditor. If
he wants to get his money out again he can only do so by selling his
stock or shares at any price that they will fetch in the stock market.

Thus, if we take as an example a Brewery company with a total debt and
capital of three millions, we may suppose that it will have a million
4-1/2 per cent, debenture stock, entitling the creditors who own it to
interest at that rate, and repayment in 1935, a million of 6 per cent.
cumulative preference stock, giving holders a fixed dividend, if earned,
of 6 per cent, which dividend and all arrears have to be paid before the
ordinary shareholders get anything, and a million in ordinary shares of
L10 each, whose holder