ON RAISING AND LAYING OUT CAPITAL. 2^ 



inflated capital must mean, at least, one of two things a 

 high selling price, or a low rate of profit ; and probably an 

 undesirable combination of both. There is enough to do 

 to earn a fair dividend on the bare structural expenditure, 

 especially during the first year or two, while the business is 

 in process of development, and very little margin for profit 

 on added capital. I never heard of a small company that 

 could run a loaded capital on lines that were equally satis- 

 factory to the shareholders and consumers. In taking over 

 a going concern, an accurately drawn statement of accounts, 

 showing all the details of the outlay on capital, and 

 the annual income and expenditure, authenticated by an 

 experienced accountant, should be obtained. And if more 

 than one undertaking is to be included, a similar course 

 should be taken with regard to each one, and each one 

 should stand on its own bottom. If the circumstances 

 warrant an important addition for profit or goodwill, or as 

 a consideration for interest on unproductive outlay during 

 the development of the business, it will be well to consider 

 the advisability of liquidating this by an annual charge on 

 the profits, rather than to allow it to stand as a permanent 

 capital liability. 



The above remarks apply especially to prospectuses 

 addressed to ladies only. A wife is a convenience in many 

 ways, and one of them is that if she happens to appear on 

 a list of shareholders in her own name, she will be the 

 recipient of circulars that are not also sent to her lord and 

 master. Such, at least, is my personal experience. I have 

 in this way obtained a perusal of some of this class of 

 literature that otherwise would have been inaccessible. 

 There is usually some sort of a special inducement, such as 

 a " guaranteed " 6 per cent, dividend for a limited time, or 

 a prospect of the property obtaining a position and value 



