Corporation Finance and the Wage Worker

Abstract

THE primary object of any industry is production-production of commodities or of services. In these commodities or services three groups in society have an economic interest. These three groups are the capitalist whose money is invested, the worker who supplies the labor, and the consumer who pays the price for the commodity or service. As viewed from the welfare of these three classes, which combined comprise all members of society, the fundamentals of the finances of production should be a fair return to the owners of the capital, a fair wage to the possessors of labor, and a fair price to the consumers of the commodity or service. These finances should be so organized that the attainment of any two of these fundamentals or objects would automatically produce the third. That is, a fair interest or dividend and a fair wage should of themselves in combination result in a fair price; a fair interest or dividend and a fair price should of themselves in combination result in a fair wage; and a fair price and a fair wage should of themselves in combination result in a fair return to capital in interest or dividends. If this is true then it is equally a fact that the prime essential of the finances of any corporation engaged in production is to show the actual true capital investment of money and services. If the finances do not show this-if the true capital investment is arbitrarily increased by paper capitalization and hidden or concealed by corporate organization and similar methods-then it is impossible to ascertain what is a fair return to any single one of the three elements to successful production. If, for example, only one million dollars of money and services are invested in a corporation, with its finances showing a capitalization of, say, ten million dollars, and an endeavor is made to pay a return on the ten million, there cannot possibly be a fair return on capital, a fair wage, and a fair price-every one of the three is most likely to be unfair. So at the very outset it is impossible, for any industry so capitalized 271