20 THE WORK OF THE STOCK EXCHANGE
in respect to their priority to earnings, and in the event of
liquidation to assets. Volumes could be written on this sub-
ject alone. American railway bonds present unusual complexi-
ties in this respect.
The money in which the interest or the principal of bonds
's payable, is also frequently an important consideration. Some
bonds specifically provide for payment in gold—a feature
which is apt to become highly significant in case the given cur-
rency suddenly abandons the gold standard and in terms of it
gold goes to a premium. Sometimes, too, bonds are made pay-
able in a foreign currency, or in several different currencies
at the option of the holder. During the currency troubles in
Europe after the war, this aspect of many European bonds
proved highly important in determining their current value.
Shares of Stock.—In complete contrast to bonds are shares
of ordinary or common stock. Such shares do not, like bonds,
represent a debt owed to their holders by the issuing company,
but rather the company equities of which the shareholders are
the owners. A shareholder is therefore really a partner in the
given business enterprise, rather than a creditor of it. The
company is under no necessity (unless such an arrangement is
specially stipulated) of repaying the nominal value of the
shares to their holders, and indeed American shares frequently
have no par value anyway. An almost equal latitude (again
apart from special stipulations to the contrary) is enjoyed by
the company in respect to what dividends shall be paid to
shareholders, or indeed whether any dividends at all shall be
paid. On the other hand, the possible dividends which a com-
mon shareholder may receive are not usually limited as in the
case of bonds. The amount of the dividend to be paid on com-
mon stock is usually determined by the directors of the com-
pany, subject to ratification by a majority of the stockholders.
Thus shares as such are attended with more risk than bonds,
but possess greater possibilities of profit.
