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Updated: June 1, 2025
One of these comprised Bayer, Badische, and Berlin; the other Hochst, Cassella, and Kalle. "By pooling profits, by so arranging capitalisation that each company held stock in the other companies of its own cartel, and by other familiar means, the risks incident to the enormous expansion of the business and the immense increases of export trade were minimised.
"At the time of the formation of this enormous organisation the capitalisation of each of the principal component companies was largely increased. Hochst, Badische, and Bayer each increased their capitalisation by 36,000,000 marks, bringing the capital of each up to 90,000,000 marks." "Berlin increased its capital from 19,800,000 to 33,000,000 marks.
This also Switzer had considered, and the result of his consideration was before them in a detailed scheme. By this scheme a local company was to be organised with a capitalisation of $500,000, which would be sufficient to begin with. Of this amount $200,000 should be assigned to the treasury, the remaining $300,000 disposed of as follows: to Mr.
Under the new dispensation of peace and security at large this manner of capitalisation and business enterprise might reasonably be expected to gain something in scope and security of operation. Indeed, there are few things within the range of human interest on which an opinion may more confidently be formed beforehand.
Commonly, however, when earnings rise to a striking figure, the business will be recapitalised on the basis of its earning-capacity, by issue of a stock dividend, by reincorporation in a new combination with an increased capitalisation, and the like.
Their little income, derived from the rent of three barren and stony farms and amounting to not more than sixty dollars a month, represented a capitalisation of whale oil. Even the old grey church whither they went twice of a Sunday, was whale oil too, and had been built in bygone days by the sturdy captains who now lay all around it under slabs of stone.
Other increases brought the total nominal capital of the group to over 383,000,000 marks. For many years a large part of the enormous profits of these concerns has been put back into the works with the result indicated by the stock quotations. The real capitalisation is thus much greater than this nominal figure.
But since, as has been shown, capitalisation of reserves has no effect upon the earning power and assets of the company, it is interesting to try and discover why the rumour and announcement of such an intention on the part of the board of directors is nearly always accompanied by a rise in the shares of the company affected.
In fact, the capitalisation of reserves is sometimes criticised by economic purists as a retrograde step because it seems likely to encourage the directors to be extravagant in the matter of dividends.
In this case the capitalisation of the reserve fund puts this temptation out of their reach since, when once the reserve fund has been capitalised, it can only be got at by greedy shareholders through the process of liquidation. Since, however, the shareholder in these times is not quite so short-sighted as he used to be, there is not perhaps really very much advantage in this point.
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