capital. Such could be the case only so long ai all the securities which go to make up the company's capital were quoted at par on the market. The effective capitalization of any modem company, that is to say, the capitalization which is effective for current business purposes as distinct from the formal requirements of the charter, is ! given by the quotations of the company's securiI ties, or by some similar but less overt market ' valuation in case the company's capital is not quotable on the market. The effective (business) capitalization, as distinct from the dejure capitalization, is not fixed permanently and inflexibly by a paat act of incorporation or stock issue. It is fixed for the time being only, by an ever recurring valuation of the company's properties, tangible and intangible, on the basis of their eaming-capacity.'
In this capitalization of eamingKiapacity the nucleus of the capitalization is not the cost of the plant, but the concern's good-will, so called, as has appeared in the last preceding chapter."
■ "Nothing is more Illusive ajid delusive than the idea that if ft corporation's slock be only paid In in money at the outset it is therefore better off than one that has iuued its stock for property that could not be converted for one cent on the dollar. The question is what ■uetA the corporation has got at the time of the particular transaction, •nd that can be ascertained only by present inquiry," — Testimony off. L. Stetson, Report of the Induatriai Commiiiion, vol. I. p. 970. Cf. Meade, TYitit Pimnee, ch. XVI, and XVIII,
I Eaming-capacity is practically accepted as the efEectlve baals of Dapitalixation for corporate business conoems, particularly for ttaoM