property itself, still immobile, still there, still demanding the service of human beings, managers, and operators. Related to this is a set of tokens, passing from hand to hand, liquid to a degree, requiring little or no human attention, which attain an actual value in exchange or market price only in part dependent upon the underlying property. Into it enter elements which are not normally admitted to be elements in the value of the latter. The tokens may, for instance, represent in their value an appraisal of the supposed ability of the particular man agement interposed between the properties and the owners. A first-rate manager would not increase the values of the properties were they to be sold; but he will cause an increase in value of tokens represent ing that property. A poor management will have an opposite result. Speculative activity may cause the tokens to have a temporarily ab normal market price. Or the price may be the result of purely artificial manipulation. Most striking of all, a liquid token acquires a value purely and simply because of its liquidity. Property in non-liquid form is worth one price. Property represented by liquid tokens is worth another price, which may be higher or lower as the bulk of the community demands this liquid quality or avoids it. The privilege of being able to borrow upon property at once, or the ability to turn it into cash on twenty-four hours’ notice may in itself be worth paying for and thereby enhance the value of the token. Or the very sensitiveness of the value of liquid property to unreasoned surges of popular fear may detract from its value. Finally, as the token becomes more and more separated from the physical properties through the interposition of managements and their endowment with legal power which can be traced through to the physical assets, the "jus disponendi” over the physical property ceases to be in the owner of the token. His real right of disposition is a right of disposition over the token itself, over any returns which may be distributed to him, and over the proceeds of its sale. He has, in fact, exchanged control for liquidity. It is thus plain that the concept of a share of stock must now be vigorously changed. No longer can it be regarded, from the point of view of the investor as primarily a

DOI link for property itself, still immobile, still there, still demanding the service of human beings, managers, and operators. Related to this is a set of tokens, passing from hand to hand, liquid to a degree, requiring little or no human attention, which attain an actual value in exchange or market price only in part dependent upon the underlying property. Into it enter elements which are not normally admitted to be elements in the value of the latter. The tokens may, for instance, represent in their value an appraisal of the supposed ability of the particular man agement interposed between the properties and the owners. A first-rate manager would not increase the values of the properties were they to be sold; but he will cause an increase in value of tokens represent ing that property. A poor management will have an opposite result. Speculative activity may cause the tokens to have a temporarily ab normal market price. Or the price may be the result of purely artificial manipulation. Most striking of all, a liquid token acquires a value purely and simply because of its liquidity. Property in non-liquid form is worth one price. Property represented by liquid tokens is worth another price, which may be higher or lower as the bulk of the community demands this liquid quality or avoids it. The privilege of being able to borrow upon property at once, or the ability to turn it into cash on twenty-four hours’ notice may in itself be worth paying for and thereby enhance the value of the token. Or the very sensitiveness of the value of liquid property to unreasoned surges of popular fear may detract from its value. Finally, as the token becomes more and more separated from the physical properties through the interposition of managements and their endowment with legal power which can be traced through to the physical assets, the "jus disponendi” over the physical property ceases to be in the owner of the token. His real right of disposition is a right of disposition over the token itself, over any returns which may be distributed to him, and over the proceeds of its sale. He has, in fact, exchanged control for liquidity. It is thus plain that the concept of a share of stock must now be vigorously changed. No longer can it be regarded, from the point of view of the investor as primarily a

ABSTRACT

This idea does not accord either with the popular or the legal concept of a shareholder. Economically, however, it seems inescapable. A set of legal rights which can hardly be enforced, constituting claims on an economic operation from which the individual shareholder is separated by so many barriers, present an appearance of satisfactory legal relationships to the enterprise, which in practice have little significance to the individual investor. The various incidental rightsvoting, preëmptive rights in new stock issues, and the like, discussed in this Book, all affect and enter into this open market appraisal. Save as they are likely to do so, they are of little interest to the in vestor. Economically, the various so-called “legal rights” or the eco nomic pressures which may lead a management to do well by its stock holders, in and of themselves are merely uncertain expectations in the hands of the individual. Aggregated, interpreted by a public market, and appraised in a security exchange, they do have a concrete and measurable value; and it is to this value that the shareholder must and in fact does address himself. His thinking is colored by it; and in large measure the corporate security system is based on it.