The progressive farmer., 1900-07-10
The Thinkers,
HOW IT IS DONE.

Say five years ago a cornor..
was organized. A year latar '',cN ~
company finds that after Davir, ~s
penses, interest and reasonab7o 81 E
dends on paid-up stock, there !, |,~ oal
a fund on hand of $50, ,OOO-nat nuso So~
The general manager shows ~
board that this was one Of +ba
when America has been waor; '
her old clothes - that FOLLOWING vo us
promise even better returns ~
six cents is reasonable intnro,t
one dollar; that prosperity a1v.~
follows depression that 800, ,O00 naS
six per cent. interest on 81, 5oo oao
that our plant has increased in 49,,
productive value in the sum Of -
500, 900, and should be caDiraTzo5I
that additional amount. Tbis
duly effected, a dividend of siv ~.
cent. declared on this new issna ~ ~
books correctly balanced, and ~
company tells the world of its MO.
perity, and necessary increase -
capital to meet a growing trade
Here we have model corpora+ioo
but the 81, 100000, which cost noH
ing, is not all. This capitalizaHor
productive, paying six per cent. div
dend in depressed times and Dromis
ing more in better times. forms
selling and perhaps legal basis for
bond issue of another million dollars
and allows an increase of the bnS
ness without the investment of
dollar. In fact, they receive S90m
in cash for taking the 81, 800, ,O00h
stock and the $1,O0O,0O0 in bonds
With many companies doing this fn
years, it is no wonder capital has
passed into the hands of the few.
New promoters can usually ar
range to have sufficient capital stock
issued to avoid any troublesoms
question of method of increase. They
can protect the real investor bv me.
ferred stock and can usually make
the protection ample Then the7
can make an outlet for surplus earn
ings in common stock, but the sam
principle governs. Every six cent
of net earnings shall be d dolIarh
their hands.
Now the public is inquiring if this
method is just, if this stock should
be of the value Of money. They do
not see any individual manipulating
funds in this way. The laborer thinks
his influence in producing that $780,
900 was very direct, and not very
literally paid, and perhaps that this
81, 500, 900 Of stock dollars, if tits dol.
lars, should be his, and then he
could have a factory or mine or store
and bond it for $1,OOO,OO0, and do
business. He says the capital drew
it's dividend, the officers good SAL
aries, the bondholders their interest
and only his own wage was small,
yet that it is so arranged now that
hemust continue to earn this annuity
for all time, and that the grasping Of
this dollar by the stockholders IS an
unjust and oppressive scheme.
But the masses Of the people, not
being in direct contact with the
plant like the laborer, are beginnns
to see the influence Of these STOCK
dollars, and to learn their source,
and to think their base is taken from
them in unnecessary profits. ID7y
argue much the same, that tD'
capital, dividend, interest, saLar&
and wages are fully paid, and 1la'
they have furnished the net pronS
out of which this dollar in STOCK
maintained that it is in the han0
of moneyed men who will make IL
interest or dividend d perPe''"
annuity that the public must pay
Besides this kind Of capitalization
the public has furnished the man
contributions for many plants BON"
have completed the expenditure
and the public pays dividends on 'n'
L
If the 800, 900 stock mentlonS'
above and all like profits are to "
maintained as. dollars in value tns.
every employee in proportion to n5
effectiveness should be a reclPl7nO y .
his share with the capitalist.-P' y
D. in Saturday Evening Post
ATTTANCE NOTES