THE WORK OF THE PROMOTER 239 



to the $75,000 profit which, out of a flotation of this size, he 

 frequently takes. And yet the profits of the promoter are 

 as legitimate as are the profits of any of the more familiar 

 professions. The promoter is a creator of value. He brings 

 into existence a means of producing wealth which did not 

 before exist. By combining the control of a number of 

 separate pieces of coal property into a fully equipped coal 

 mining enterprise, he is able to offer to the investor an oppor- 

 tunity to earn say 12 per cent on his money; in other words, 

 to sell to the investor $500,000 worth of stock which can be 

 depended on to pay dividends of 6 per cent, for $250,000. 

 Without this combination, in the hands of individual owners, 

 without transportation facilities, and without modern equip- 

 ment, the value of this coal, based on its earning power from 

 the small openings which produce for the local trade, did not 

 exceed $20 per acre. Combined under one ownership, con- 

 nected with a trunk line railroad, and equipped for large 

 operations, a value of $100 per acre is not excessive. This 

 increase in value of $80 per acre is the result of the invest- 

 ment of $35 per acre — $20 in the purchase of the coal and $15 

 in its development. In order to obtain the money necessary 

 to purchase and develop his proposition, the promoter has 

 been obliged to sell the opportunity which he controls at one 

 half its real value, i.e., at $50 per acre. Deducting the $35 

 which must be spent to put the coal on the market, there re- 

 mains $15 per acre, or in all, $75,000 as the promoter's profit, 

 a profit differing in no essential feature from the gains of the 

 manufacturer who contracts ahead for his pig iron and takes 

 advantage of a rise in the nail or wire market. 



But it may be objected, why should the promoter be 

 allowed to make this large profit? Why should it not be 

 divided between the farmer who owns the land and the in- 

 vestor who furnishes the money? What is the justification 

 for the promoter's profit? The answer to these questions 

 lies in the nature of the transaction. The promoter is en- 

 titled to his profit because he has optioned coal at the value 

 which its owners placed upon it, and has sold his rights to 

 another set of persons who place upon these rights a much 

 higher value. The farmers, except in exceptional instances, 



