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Capital of

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CAPITAL OF A COMPANY.--Capital may be defined in general terms as saved wealth devoted to the creation of more wealth. Such is the capital with which a trader carries on business, whether the trader is an individual owning his own business or a group of shareholders in a joint-stock company. Capital may consist of land, houses, furniture, re versionary interests— in fact, anything which possesses value ; but of what ever it may consist, there is always present one characteristic—it may be expressed in terms of money. The result is that capital is always spoken of as being represented by so many pounds, shillings, or pence, as the case may be. We will here give special attention to the subject of the capital of a company limited by shares, and in passing would point out that such capital falls well within the above definition.

Capital generally.—A number of persons, each of whom has saved some money, are desirous of making more ; they see in the pursuit of a certain trade or business an opportunity to satisfy their desire, accordingly they join together and each contributes something to a general fund of capital wherewith to carry on the proposed business. In other words, they form themselves into a company, incorporate it with limited liability, and become shareholders therein, each proportionately to the amount of his con tribution of capital. The total amount of their contributions should, in an ideal company, exactly correspond with its actual capital. But there is always some di&rence between reality and the ideal, especially in matters involving complicated business interests and methods of finance ever attended by contingencies, both foreseen and unforeseen. Consequently the capital of a company may appear in different forms and nature, and undu.r various distinctive names; and thus we have, e.g., nominal, uncalled, working, fixed, and circulating capital. will now deal with these examples. In this article companies limited by shares are alone dealt with.

company can be incorpor ited under the Companies Acts unless its memorandum states the amount of its capital, and it is upon that figure that the registration duties are assessed and payable. This capital is

called the company's nominal capital, and its amount may lie fixed after reasonable calculation as to the needs of the company, or merely in accord ance with the caprice of the promoter, or even with a view to a misleading effect upon the public. We will refer to and dismiss first the two possible methods of fixing the nominal capital, and they may be conveniently discussed together. An impecunious promoter desires to establish a banking company at the least possible cost to himself, and yet having such an appear ance of solidity and wealth as to attract the deposits of the public. He may accordingly fix the nominal capital at £2,000,000, and divide it into 2,000,000 shares of £1 each; and to do this requires only a few strokes of a pen and the payment of increased duty. But of this great capital there may very easily be only seven shares issued, one to each of the subscribers to the memorandum and articles, and even these shares may only be partly paid for ; the result of this operation is that the bank, with its nominal capital of £2,000,000, has in fact only issued seven shares of 1'1 for which it has only received a part payment of, say, 10s. on each—in an 1'3, 10s. And though the capital issued is only £7 and the amount thereof paid up is only half of that sum, yet wherever the prospectuses and advertisements of that bank go, there the public will have placed most prominently before it the fact that the nominal capital of the bank is X2,000,000. And a great many people will believe that the bank has really got that large sum behind it, and • will deposit money on the faith of that belief. Such things as this have been done, and are being done to this day, with the result that a confiding public is always losing its money, and unscrupulous so-called financiers are taking it. If the ordinary investing public only knew that the nominal capital need not necessarily represent anything more valuable than the ink with which it is so boldly printed, more hard-earned money would be saved and less thrown away for rogues to squander.

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