all these details of organization and of issuance of stock that the promoter gets his profit. In most cases, as it has been his special labor to bring together the corporation or the combination of corporations whose profits are largely a matter for the future to determine, his pay is justly enough given him in part or altogether in the more speculative securities of the company organized—that is, in common stock. For example, testimony given before the United States Industrial Commission seemed to show that in the organization of the Standard Distilling and Distributing Company, for each $100,000 cash value that was secured, in the form of either cash or tangible property, there was issued to the promoter $150,000 in common stock. addition to this, $100,000 in preferred stock and $100,000 in common stock were issued to the seller of the property who entered into the combination, and $100,000 preferred and $150,000 of common stock were issued to the underwriters, the nature of whose services will be spoken of hereafter. It will be noted that each $100,000 cash valued property was presumed, if dividends were to be paid, to earn interest on $600,000. Would the attempt to

In

do this put prices up, especially if the organization had some monopolistic power?

An account of the organization of the American Tin Plate Company will show one way in which a promoter may receive his pay. Most of the manufacturers of tin plate in the United States, feeling severely the lessening of profits that came from competition and depression in business, thought it wise to organize a combination which should practically control the market. To that end they asked Judge William H. Moore, of Chicago, to aid them. He visited the different tin plate manufacturers and secured an option of purchase for cash at a fixed sum upon the plants of each one of the firms or corporations which contemplated entering the combination. After these options had been secured, Judge Moore organized a company with an authorized capitalization of $50,000,000, of which about $46,000,000 were later issued. For this capital stock there were to be furnished to the company some $4,000,000 in cash as running capital and the plants of all of the companies which entered into the agreement. It was understood that the cash options on the plants amounted to something less than

$18,000,000, although as the contract was made with each establishment separately, and as each one of the options was a purely private matter between the promoter and the person selling, it was not publicly known exactly what sum was agreed upon for the value of each separate plant.

It was understood that in most cases the choice was given to each company to receive for its plants either cash or preferred stock, of which the par value should be an equal amount with that of the cash option, together with a like amount of common stock as a bonus. In this way it was supposed that about $18,000,000 of preferred stock and the same amount of common stock were issued, as against the properties and cash, whereas $10,000,000 more of common stock went to the promoter to pay him for his services and for all of the expenses of getting the organization together. It was, of course, necessary that organization fees, lawyers' fees, etc., be paid. It was also probably true that in order to raise the necessary cash certain commissions had to be paid to bankers and others who advanced it. It might have been also true that, instead of the pre

ferred and common stock being taken on the terms suggested before, better terms in certain instances had to be given, and it is even possible that in other instances less favorable terms may have been accepted. Inasmuch, however, as at the time that the company was organized one share of preferred and one share of common stock together sold for considerably more than $100, it seems fair to assume that the promoter had the opportunity of making very large profits indeed out of the $10,000,000 in common stock assigned him for covering the cost of formation and for his pay for services rendered. It will be noted that aside from this $10,000,000, he had the opportunity of making much more if he could make close enough bargains with those who entered into the organization so as to buy their plants at less than the $18,000,000, which seems to have been generally agreed upon as the value of the plants with the cash capital; whereas, on the other hand, if he could not secure them for that sum, his profits would be correspondingly diminished.

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With the promoter ordinarily works the "financier" or the underwriter. If the com

pany is to be a success, it is necessary that the stock be sold in order that the needed capital in the form of either plants or cash, or both, be secured to carry on the business. Private bankers are ordinarily chosen to negotiate the sale of stocks and bonds, and very frequently they are persuaded also for a consideration more or less large to underwrite the stock. By this "underwriting" is ordinarily meant an agreement to secure the sale, at a named price, of a certain amount of the stock of the company. If persons not connected with the company or the banker concerned purchase all of the stock under the agreement at a price as high as that named in the contract, the banker has no further responsibility. If, on the other hand, all has not been sold at the time agreed upon, the banker takes the remainder at the rate mentioned and furnishes the cash to pay for it. In that case, his profits or losses will depend upon the price at which he may be able thereafter to sell the stock; or in case he holds it, upon the dividends that may be paid by the company in its regular course of business. is commonly believed that the sums asked by the underwriter are as high or higher than those

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