Le secours de chômage en Belgique pendant l'occupation Allemande

The nature of capital and income

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Monograph

Identifikator:: 1690007133

URN:: urn:nbn:de:zbw-retromon-103422

Document type:: Monograph

Author:: Mahaim, Ernest http://d-nb.info/gnd/116679514

Title:: Le secours de chômage en Belgique pendant l'occupation Allemande

Place of publication:: Paris

Year of publication:: [1926]

Scope:: XII, 322 S.

Digitisation:: 2020

Collection:: Economics Books

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84 NATURE OF CAPITAL AND INCOME [Cuar. V purpose of minimizing this risk, but it cannot eliminate it altogether. § 12 The principle that a creditor of a concern is a risk-taker has two important corollaries. The first is that, when bankruptey occurs, though the nominal liabilities exceed the assets, their actual value does not. We may say that so far as their actual value is concerned, the value of the liabilities of a company can never be greater than the assets, for they derive their value from these assets. A com- pany which can pay only fifty cents on the dollar must have its obligations classified as “bad debts,” worth only half their nominal amount. This fact does not, of course, justify the intentional repudiation of debts. Some states of the United States have, it is true, attempted to reduce the burden of their debt by offering to buy up their own bonds at their market price, when this price was below par, owing to a lack of confidence in their ultimate redemption. Such an operation is evidently a species of repudiation. On the other hand, we must not regard it as an unfor- givable sin for the bona fide bankrupt not to pay his debts in full. So long as the creditor understands in advance the nature of the risk he is taking, he must abide by the result. Nowadays, in the case of investments in large corporations, this is perfectly well understood. Many railroads have been bonded for almost their entire cost, the bondholder realizing fully that he could obtain nothing unless the road was a success. This participation in risk is particularly evident in the case of income bonds, which specifically pay interest only so long as the road’s income is adequate. The principle that the true value of the liabilities isderived from the assets and can never exceed them may seem to have an exception in the case of a person who succeeds in borrowing money “without capital.” It is clear, how-

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