Materials of Corporation Finance

way and Atwood's Investment and Speculation, and Nelson's A B C of Stock Speculation.

Corporations depend largely on savings banks, insurance companies and private trustees for the "digestion" of their securities. It will be interesting for the student to study carefully the rules governing legal investments for trustees (p. 447) and then to analyze the lower part of the Baltimore and Ohio Ry. income statement for 1908 (p. 625). He will probably discover the reason why the railroad paid its dividend that year although it did not earn it.

Things necessary to be done to promote a public utility corporation are summarized in the excerpt from the brief of the Public Service Corporation of New Jersey (p. 455). For the steps taken in promotion see Lough's Corporation Finance, Chapter XII.

The report of the engineers (p. 457) may be taken as a typical engineer's report to the bankers who are asked to participate in the promotion of a new enterprise.

The complaint in Haskins vs. Ryan (p. 489) is included as an illustration of the method of "discovering" a consolidation. The student who has failed to read Meade's Trust Finance should do so at once. He will find Chapters IV, V, and VI of great importance in connection with this complaint.

The whole subject of intercorporate relations is too large to permit of any extensive commentary in this introduction. All the important forms of intercorporate relations are illustrated, from pools (p. 496) to the holding company (p. 570). Undoubtedly the best book that has ever been written on the subject-although it is now somewhat old-is Noyes on Intercorporate Relations (second edition, 1909). Stevens' Industrial Combinations and Trusts is a source book on that subject in the industrial field. See Interstate Commerce Commission's special report on Intercorporate Relationships of Railways in the United States as of June 30, 1906. For a concrete study of a number of industrial consolidations see Dewing's Corporate Promotions and Reorganizations. Anti-trust literature is boundless. The problem is well treated in Jenks' The Trust Problem, and in Haney's Business Organizations and Combinations. For a solution see Wyman's Control of the Market and Van Hise's Concentration and Control. For a historic and international survey of monopolies see Levy's Monopoly and Competition, Macrosty's Trusts and the State, and Hirst's Monopolies, Trusts and Kartells.

The subject of corporate financial management can best be studied in connection with annual reports. A comparison of the extremes of good and bad reports may be had by studying, on the one hand, the Westinghouse (p. 627) and New Haven (p. 663) reports, and, on the other, the report of the American Glue Company (p. 782).

It is likely that the Federal Trade Commission will in the course of the next ten years make such rules and regulations as will enable the stockholders of industrial companies to get the same information out of their annual reports as can the stockholders of the railroad companies, thanks to the Interstate Commerce Commission. The first book on the analysis of corporate reports was Woodlock's Anatomy of Railroad Reports; it has been entirely superseded by Sakolski's American Railroad Economics. Concrete studies in the analysis of reports will be found in Moody's Analyses of Public Utilities and Industrials, and Moody's Analyses of Railroad Investments, each published annually.

A wealth of material will be found in Professor Bemis' report (p. 783). It is recommended at once as a field for the study of financial management and as a concrete example of the analysis of financial statistics. The whole subject of physical valuation is ably treated in Whitten's Valuation of Public Service Corporations.

The three problems of financial management are those of maintenance, provision of working capital, and the distribution of surplus. The study of maintenance can be made in connection with annual reports (pp. 627, 663) and with Professor Bemis' Report (p. 783). The study of working capital may be taken up in connection with short term loans. See forms beginning with the application for bank loan (p. 902) down to and including the settlement of open accounts (p. 908). See generally Lough's Corporation Finance, Chapters VIII and XX. In connection with the registration of commercial paper, see Trust Companies Magazine, Volume XII, page 101.

Readjustment may be necessary on account of (1) desire for profit (p. 910), (2) existence of illogical capital account growing out of piece-meal financing (p. 929), (3) financial failure, imminent or actual (pp. 933, 966), or (4) disintegration in pursuance of a court decree after an anti-trust prosecution (p. 1001). On this subject see Lyon's Capitalization, Chapter III; Meade's Corporation Finance, Chapter XXXI; Dewing's Corporate Promotions and Reorganizations, and Daggett's Railroad Reorganization.

Since the publication of the first edition, MATERIALS OF CORPORATION FINANCE has been adopted in many colleges throughout the country and the author has frequently been consulted upon the best method of using it in class work. For his own class, the author has prepared a Syllabus of Corporation Finance containing a very concise statement of principles, and a book of problems based on MATERIALS OF CORPORATION FINANCE, which problems are made the basis of classroom discussion.

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