DOI Page / Citation link:
https://doi.org/10.11588/diglit.22140#0162
146
INDUSTRIAL AND COMMERCIAL HISTORY.
future responsibility of the shareholders is exhausted. Under-
takings which under unlimited liability have, and should have, no
chance of success, are constantly floated, to the injury of trade, to
the loss of creditors, and, a smaller matter, to the loss of those who
assisted in floating them, under this new system. The concession
of limited liability is the harvest of adventurers, who would have,
and ought to have, no place in honest and legitimate business.
In the same way, after the dupes, who have been invited to
speculate, are cleared out of what they have subscribed, advantage
is taken of some disficulty, perhaps temporary, perhaps inherent, to
wind up the concern by unscrupulous attorneys and equally un-
scrupulous liquidators. There are legal firms in London which
have a scandalous notoriety for this practice. They are known by a
rigorous metaphor as wreckers. Besides, it constantly happens
that owing to a failure in such undertakings, quantities of property
are thrown on the market, disposed of by forced sales, at an
entirely inadequate price, and in this way depress the value of
stocks and property possessed by old-fashioned and legitimate
traders. You cannot deny that the tendency of profits is to an
equality. But it follows from this rule that if property purchased
at an inadequate price, falls into new hands, it tends to diminish
the profits of those who gauge their business and their profits, by
the only legitimate canon which trade affords, the cost of produc-
tion under the most favourable conditions and the most intelligent
supervision.
" Nor is this all. As profits tend to an equality, so does the
interest of capital. In those undertakings with limited liability,
the subscriber has no reason to expect, and as a rule, cannot get
for his shares more than the average rate of interest plus a further
amount to represent his risk, in so far as it can be calculated. It
is notorious that in investments such as railways, the average rate
of dividend, calculated in the price of the companies' stocks, and
spread in the shape of admitted earnings over the whole of these
undertakings is not more than the interest on Government securi-
ties. It is less notorious, but equally true, that the same result
would be found to ensue if a capitalist invested largely on the faith
of circulars in joint-stock companies. The occasional large profit,
always heralded and constantly exaggerated, may fall into the hands
INDUSTRIAL AND COMMERCIAL HISTORY.
future responsibility of the shareholders is exhausted. Under-
takings which under unlimited liability have, and should have, no
chance of success, are constantly floated, to the injury of trade, to
the loss of creditors, and, a smaller matter, to the loss of those who
assisted in floating them, under this new system. The concession
of limited liability is the harvest of adventurers, who would have,
and ought to have, no place in honest and legitimate business.
In the same way, after the dupes, who have been invited to
speculate, are cleared out of what they have subscribed, advantage
is taken of some disficulty, perhaps temporary, perhaps inherent, to
wind up the concern by unscrupulous attorneys and equally un-
scrupulous liquidators. There are legal firms in London which
have a scandalous notoriety for this practice. They are known by a
rigorous metaphor as wreckers. Besides, it constantly happens
that owing to a failure in such undertakings, quantities of property
are thrown on the market, disposed of by forced sales, at an
entirely inadequate price, and in this way depress the value of
stocks and property possessed by old-fashioned and legitimate
traders. You cannot deny that the tendency of profits is to an
equality. But it follows from this rule that if property purchased
at an inadequate price, falls into new hands, it tends to diminish
the profits of those who gauge their business and their profits, by
the only legitimate canon which trade affords, the cost of produc-
tion under the most favourable conditions and the most intelligent
supervision.
" Nor is this all. As profits tend to an equality, so does the
interest of capital. In those undertakings with limited liability,
the subscriber has no reason to expect, and as a rule, cannot get
for his shares more than the average rate of interest plus a further
amount to represent his risk, in so far as it can be calculated. It
is notorious that in investments such as railways, the average rate
of dividend, calculated in the price of the companies' stocks, and
spread in the shape of admitted earnings over the whole of these
undertakings is not more than the interest on Government securi-
ties. It is less notorious, but equally true, that the same result
would be found to ensue if a capitalist invested largely on the faith
of circulars in joint-stock companies. The occasional large profit,
always heralded and constantly exaggerated, may fall into the hands