New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1899-05-08
4 QUESTION. OF CAPITAL.

The interesting announcement is made that
thus far this year there have been incorporated
in the State of New-Jersey companies with an
aggregate capitalization OF more than $780,
100000. These arc not all properly New-Jersey
companies. Most of them doubtless conduct
the bulk OF their business elsewhere, and have
been incorporated in New,Jersey because of
some special advantages or facilities afforded
by the laws OF that State Many other con-
Germs were similarly incorporated there before
this year. and many others have been and are
being Incorporated In various other States.
Their range Of subjects is vast-copper, tobac
co. railroads. -four, matches motor vehicles.
dynamite rubber tires and what not being
among those of the New-Jersey companies
formed within these last four months. On the
face Of II such boom In company forming
should be a symptom Of vast industrial pros
perity. No doubt considerable share of these
companies owe their existence to the intensity
of competition and 10 the unnatural depression
of prices which has recently prevailed. Yet
there is ground for question whether the bust
ness OF company promoting" is not in danger
Of being overdone.
For here is the obvious and significant fact,
that the capitalization of these corporations
formed in only four months and in only one
State is considerably greater than the amount
of all the money-gold, silver greenbacks and
banknotes-in circulation In the whole coun-
try. We have said that their aggregate cap
italization was more than s1,50O,0O0,000, and
there is less than $1,40OOO0OO0 in circulation.
So that If an attempt had been made to pay
in the capital stock Of these concerns in cash,
in full, there would not have been enough
money in the whole United States to do 1t.
And these corporations are only few Of those
that have been formed and that are being
formed. OF course, no attempt was made to
pay In the capital in full. There was no
intention to do so. We may say, in
deed, that there was no need Of It, because
lands, buildings, patents. goodwill and other
assets may often figure largely, and with en-
tire propriety, as capital. But making the most
liberal estimate Of these latter elements, the
conclusion is inevitable that large part, e
major part of that enormous capitalizat ton Is
not paid In, is not represented by assets, but
exists only on paper We noted the other day
the case of concern that had been intr.
porated with several millions capital, Of which
not SO many thousands had actually been paid
In. That Is not capitalization. 1t is mere spec
ulation.
So this enormous capitalization, so called, is
no index Of wealth or of prosperity. Real cap
ital is. If a man company Of men invest a
million actual dollars In business enterprise
that means something. 1t means that the
dynamic force Of n million dollars is added to
the industrial enginery Of the Nation But II
a man or a company announce the "capitaliza-
ton" Of a scheme at a million dollars but
actually pay In and have In assets Of any kind
only a thousand dollars, what does It mean
1t means not a million, but only n thousand
dollars Of capital. We may go beyond that,
and say that such fictitious capitalization Is
not merely Of no service TO industry, but is a
positive injury TO IL. IL railroad, for exam
pie. require s1,0O0.OO0 for construction, equip
ment and working capital, and s1,000,00O be
actually paid in and used for those purposes.
then II has an honest capital of S1,0O0,000, and
its owners have right to reasonable pronts
thereon. and are entitled. within certain bounds,
to regulate their scale Of charges and wages so
a. TO secure such profits But II In addition
the owners issue s1,000O00 more In certificates
Of stock, Of which not a dollar is paid in, or