In the capital market the commodity in which trading is done, then, is the capitalized putative earning-capacity of the property covered by the securities bought and sold. This property is in part tangible, in part intangible, the two categories
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being seldom clearly distinguishable. The iteniB bought and sold are put into merchantable form by being standardized in terms of money and subdivided into convenient imaginary shares, which greatly facilitates the traffic. The earning-capacity on which the market capitalization runs and about which the traffic in merchantable capital turns ia a putative earuing-capacity. It followa that this putative earning-capacity of a given block of capital, aa it takea shape iu the aurmiaes of outaide investors, may differ appreciably from the actual earning-capacity of the capital as known to its managers; and it may readily be to the latter's intereat that such a discrepancy between actual and imputed earning-capacity should arise.' When, e.g., the putative earning-capacity of the capital covered by a given line of securities, as shown by the market quotations, rises appreciably above what is known to its managers to be its actual earning-capacity, the latter may find their advantage in selling out, or even in selling short ; while in the converse case they will be inclined to buy. Moreover, putative earning-capacity is the outcome of many surmises with re.spect to prospective earnings and the like ; and these surmises
Something of this kind is the uaual gniiuid of the obMlnate TMlstance which most biuineas meD oppose to publicity or sccoudIs. Iq Udm of buaineia, as, e.g.. railroading, In which accounts are readily and eflectnally sophisticated (" doctored "), the objections to publicity are commonly less strenuous.