The consideration of such companies is exceedingly instructive for another reason. In them the functions of capital and of business ability are usually divorced. Their shares are, as to a great part, held by mere sleeping partners, while the business ability is supplied by managers or managing directors who, while they may have a certain proprietary interest in the company, rarely own more than a small part of the capital. In the cases quoted, after payment for both labour and skill in management, great and disproportionate sums remain over to reward those who "wait."

The companies quoted cannot be regarded as exceptional cases. The reader has but to glance from day to day at the reports of company meetings published in the daily newspapers to note the steady manufacture of dividends by industrial and other joint-stock concerns. In 1908 the number of joint-stock companies registered in the United Kingdom and believed to be trading was 45,000 and the paid-up capital £2,100,000,000. In 1908-9, the corresponding financial year, 37,937 "public companies" were assessed to income tax and declared their profits at £291,000,000. From this £291,000,000 we have to make certain deductions before we arrive at the profits of ordinary joint-stock companies, for the total includes railway companies and some banks, waterworks, etc., not registered with the Registrar of Joint-stock Companies. Allowing £65,000,000 on this score we have £226,000,000 left as the profit made by joint-stock companies having a nominal capital of £2,100,000,000. Many of these companies have debenture capital but, on the other hand, it is probable that, of the £2,100,000,000, fully one-third is "water"—exaggerated goodwills, promoters' profit, underwriters' commissions, bonus shares and the rest of it. Anyone who is interested in this point should examine the yearly return of companies registered which now shows not only the amount of capital "considered as paid up" but the actual amount subscribed in cash and the payments for underwriting. In a recent return I find such items as this:

Capital considered as paid up£76,683
Minimum Subscription required£7
Amount allotted before beginning business£16,729

and this:

Capital considered as paid up£25,000
Minimum Subscription required£8,000
Commission for underwriting25 per cent.
Amount allotted before commencing business£8,010

That is how a great part of the £2,100,000,000 of registered joint-stock "paid up" capital is made.

Setting dummy capital against debentures, we see that, after payment of wages to the workmen and foremen, after the payment of salaries to clerks and officials, after the reward of business ability by the payment of managers or managing directors, after the payment of royalties to patentees where such were payable, after the payment of all rents exacted by the owners of area, there remained a profit of £226,000,000, being over 10 per cent. on the total paid-up capital, watered and unwatered, of all the joint-stock companies registered in the United Kingdom.

We have also to remember that a large amount of unearned increment accrues to many of the sleeping partners who draw the £226,000,000 through the appreciation of their securities on the stock markets. Thus the £1 shares of Company H referred to above were quoted in July 1905 at £6 each, which means that either the present or past holders of the shares gained not only handsome interest, but saw their capital increased sixfold without any exertion upon their part. This creation of a market in the profits of usury has terribly unfortunate results for the employees of joint-stock companies. To the original shareholders who sold at a huge premium the 30 per cent. dividend was 30 per cent. To the new shareholder who pays the price which has arisen from the usurious profits, the 30 per cent. dividend is only 4 per cent. or 5 per cent. He goes to the shareholders' meeting clamouring for his 5 per cent., and eager to resist any suggestion that the wages of those who make his profits should be increased. The very success of the company thus becomes an argument not for the increase of wage but for a reduction of expenses. The managing director knows that he has got to face a body of shareholders who, for the most part, rate a high dividend as a low one. This point was illustrated in my own experience recently in a very striking way. Writing in the "Daily News" I commented upon the small wages paid by a well-known company paying a dividend of 30 per cent. per annum. This roused the indignation of a shareholder in the company who wrote me a letter the chief point of which ran as follow:

"Most of the shareholders have paid £6 or £7 per share, and so get a return of not more than 5 per cent."

So one set of taskmasters passes out of the game with its tremendous gains, and is succeeded by another set. To the latter the poor workpeople are not churning out 30 per cent. but a mere 5 per cent. When the new shareholders enter their premises they see easy work done by overpaid people who make dividends of only 5 per cent. If, at a shareholders' meeting (it has happened at company meetings) a shareholder pleads for higher wages for the employees, he is howled down. They are earning only 5 per cent!