23 
long to make it helpful to prepare certificates for the “rights” 
and list them on the Stock Exchange. For this reason, at 
almost all times dealings are going on there in “rights” to 
issues already listed. Such dealings of course terminate with 
the expiration of the subscription period, because thereafter the 
privilege of subscription conveyed by the “right” is withdrawn 
and the “right” certificates become valueless. “Rights” or 
“subscription warrants’ are sometimes attached to securities 
other than common stocks, although such cases are somewhat 
axceptional. 
THE EVOLUTION OF SECURITIES 
Preferred Stock.—American corporations have very fre- 
quently issued “preferred stock,” which from the investor's 
standpoint partakes of the nature of both common stock and 
bonds. As a rule, preferred stock never pays more than a 
stipulated rate of dividend, irrespective of the dividends paid 
on the common stock. Sometimes, however, preferred stocks 
have “participating” or other similar features, whereby the 
rate of dividend paid on it is subject to increase over the reg- 
ular rate, in proportion as larger dividends are paid on the 
common shares. 
Preferred stock is not an obligation of the issuing com- 
pany, and the omission or “passing” of a preferred dividend 
payment does not indicate that the company is insolvent. Thus, 
preferred dividends cannot be paid unless all bond interest 
has been paid. On the other hand, dividends on common stock 
cannot be paid while preferred dividends are in arrears. With 
“cumulative” preferred stock, even though a dividend or divi- 
dends may be passed, they “accumulate” on the stock, and must 
all be paid off before any common stock dividends can be paid. 
But with “non-cumulative” preferred stock, no such privilege 
is extended, and as long as preferred dividends are being paid 
currently, common dividends may also be paid, even though 
previously preferred dividends have been omitted. 
In case a company is liquidated, the first claim to its assets 
is enjoyed by its creditors if sufficient assets remain after the