by a skilled personage known as a "promoter."
The stereotyped prospectus must now be familiar
to most people, and the public respond freely
to the invitation to subscribe for shares, without
consideration or inquiry. The prospectus is
usually replete with statistics, showing the suc-
cess which has attended the business whilst in
private hands, and the enormous profits made;
and one is apt to wonder why they did not keep
it to themselves, instead of inviting the public
to share in the gains. But there are good com-
panies and bad companies, and it is to be feared
that the latter largely preponderate. A good
company may have a genuine reason for its
existence, such as the desire of a last surviving
partner to retire from active life, or the growth
of the business to such an extent that more
capital is required than could be obtained from
a private person, or upon some other equally
valid ground. A bad company is often the
make-shift to save a decaying firm from insol-
vency, or to dispose of a business at a price
quite out of proportion to its real value. The
prospectus affords no opportunity of discrimi-
nating what is genuine and likely to succeed
from what is false and sure to fail. If, as it has
been said, eighty per cent. of companies floated
sooner or later go to the wall, then, indeed,
inquiry and much circumspection are needed
before entering upon a speculation of the kind.