the commonplace business traffic of the corporations on whose securities the business man in question rests his solvency. So that in this higher business traffic the good-will engaged is also here turned to a secondary use. The business economies which are in this way made practicable by a reduplication of uses and made to inure to the greater business men's profit are of great magnitude; but the magnificent additions which are in this way made to the business community's capitalizable forces need scarcely be dwelt on here.
The elusive and flexuous character of the elements of wealth engaged, as well as the absence of an ascertainable ordinary rate of earnings in this line of business, has led economists to speak of this traffic in vendible capital as a "speculative" business.105 The mere buying and selling of stocks by outsiders for a rise or a decline is of course a speculative business; it is a typical form of speculative business. But in so far as such buying and selling is carried on by the managers of the corporations whose securities are the subject of the traffic, and especially where the securities are bought and sold with a view to the control of the corporations in question and their management for private, tactical ends, a characterization of the business as "speculative" is inadequate and beside the point. This higher reach of corporation financiering has little if any more of a speculative character than what belongs to the commonplace business management of any industrial enterprise. In all business enterprise that stands in relations with the market and depends on vendibility of its output there is more or less uncertainty as to the outcome.106 In this sense all industrial business, as well as commercial business, has something of a speculative character. But it is little to the purpose on that account to lump industrial enterprises and corporation financiering together as "speculative business" and deal with them as if this were their most salient and consequential bearing. What speculative risk there is in these lines of business is incidental, and it neither affords the incentive to engaging in these pursuits nor does it bound the scope of their bearing upon economic affairs. The speculative risk involved is no greater, relatively to the magnitude of the interests involved, in this larger traffic that deals in vendible capital than it is in the ordinary lines of business traffic that deal in vendible products. In both cases there may be speculation, but in both cases it is a side issue. Indeed, as near as one may confidently hold an opinion on so dark a question, the certainty of gain, though perhaps not the relative amount of it, seems rather more assured in the large-scale manipulation of vendible capital than in business management with a view to a vendible product.
What may obscure the question is the fact that the manipulations involved in this traffic in vendible capital commonly impose increased risks upon the business concerns engaged in industry - the corporations whose capital is involved, as well as other firms. The everyday business of the corporations whose securities are involved, as well as of other business concerns engaged in rival or related lines of industry, is rendered more hazardous than it might be in the absence of this financiering traffic in vendible capital. The manipulations carry risk, not so much to the manipulators as such, as to the corporations whose properties are the subject of manipulation; but since the manipulators commonly own but a relatively small proportion of the properties involved or touched by their manipulations, the risks which arise do not fall chiefly on them. To this is to be added, as of prime importance for the whole question, that the manipulators have the advantage of being able, in great part, to foresee the nature, magnitude, and incidence of the risks which they create. Rightly seen, this, of course, goes to say that the increased speculative risk due to the traffic in vendible capital does not fall on that traffic, but on the business enterprise engaged about the output of vendible goods. The traffic in vendible capital is not without its speculative risks, but the risks which it creates fall with relatively greater weight upon the business men who are not immediately concerned in this traffic. Indeed, so secure and lucrative is this class of business, that it is chiefly out of gains accruing, directly and indirectly, from such traffic in vendible capital that the great modern fortunes are being accumulated; and both the rate and the magnitude of these accumulations, whether taken absolutely or relatively to the total increase of wealth, surpass all recorded phenomena of their kind. Nothing so effective for the accumulation of private wealth is known to the history of human culture.
The aim and substantial significance of the "manipulations" of vendible capital here spoken of is an ever recurring recapitalization of the properties involved, whereby the effective capitalization of the corporations whose securities are the subject of the traffic is increased and decreased from time to time. The fluctuations, or pulsations, of this effective capitalization are shown by the market quotations of the securities, as noted above.107 It is out of these variations in capitalization that the gains of the traffic arise, and it is also through the means of these variations of capitalization that the business men engaged in this higher finance are enabled to control the fortunes of the corporations and to effect their strategic work of coalition and reorganization of business enterprises. Hence this traffic in vendible capital is the pivotal and dominant factor in the modern situation of business and industry.108 It has been noted above that what may be called the working capital on which this higher corporation finance proceeds is made up, chiefly, of two elements: the solvency (and consequent potential credit) of the men engaged, and the "good-will" of these men. Both of these elements are of a somewhat intangible and elusive character, resting, as they do, somewhat indirectly and shiftily on elements already elsewhere engaged in business enterprise. The solvency in question rests in large part on the capital of the corporations whose capitalization is subject to the fluctuations induced by the traffic in vendible capital. It is therefore necessarily a somewhat indeterminate and unstable magnitude. To this is to be added the "floating capital" and banking capital at the disposal of these men. If a common-sense view be taken of the business, the good-will engaged must also be added to the assets. There is involved a very considerable and very valuable body of good-will, appertaining to the financiers engaged and to the financing firms associated with them. This goodwill and this solvency is capital, for the purpose in hand, as effectually as the good-will and securities incorporated in the capitalization of any corporation engaged in industrial business.
But hitherto this particular category of goodwill has not been formally capitalized. There may be peculiar difficulties in the way of reducing this good-will to the form of a fund, expressing it in terms of a standard unit, and so converting it into quotable common stock, as has been done with the corresponding good-will of incorporated industrial enterprises. So also as regards the body of solvency engaged, - the potential credit, or credit capacity, of the promoters and financiers. Perhaps this latter had best also be treated as an element of good-will; it is difficult to handle under any other, more tangible, conception. It may be difficult to standardize, fund, and capitalize these unstable but highly efficient factors of business enterprise; but the successful capitalization of good-will and credit extensions in the case of the modern industrial corporations argues that this difficulty should not be insurmountable in case an urgent need, - that is to say, the prospect of a profitably vendible result, - should press for a formal capitalization of these peculiar elements of business wealth. There can be no question, e.g., but that the good-will and large solvency belonging to such a firm as J.P. Morgan and Company for the purposes of this class of business enterprise are an extremely valuable and substantial asset, as is also, and more unequivocally, the good-will of the head of that firm. These intangible assets, immaterial goods, should, in all consistency, be reduced to standard units, funded, issued as common stock, and so added to the statistical aggregate of the country's capitalized wealth.
It is safe to affirm that this good-will of the great reorganizer has in some measure entered in capitalized form into the common stock of the United States Steel Corporation, as also into that of some of the other great combinations that have latterly been effected. The "good-will" of Mr Carnegie and his lieutenants, as well as of many other large business men connected with the steel industry, has also no doubt gone to swell the capitalization of the great corporation. But good-will on this higher level of business enterprise has a certain character of inexhaustibility, so that its
