t is necessary for a number of persons to
come together and make a certificate to the effect that they propose
to form a company to bear a certain name, for the purpose of
transacting a certain kind of business at a certain place. The
certificate states that they propose to issue a certain number of
shares of stock at a certain price per share, that the capital stock
is to be a certain amount, and that the company is to continue to
exist for a definite period of time. Blank forms for such certificate
are supplied by the Secretary of the State where the company is being
organised, and when such certificate is properly filled out, signed,
and delivered to him, he issues a license, or charter, to the persons
making such certificate, giving them permission to open books, sell
stock, and carry on the enterprise outlined.

State laws regarding stock companies differ very largely. Students of
this course who desire to know the law in any particular State can
easily secure the information by writing to the secretary of that
State.

The usual par value of a share of stock is $100. That is, if a company
organises with a capital of $200,000, there will be 2000 shares to
sell. Each person who buys or subscribes for the stock--that is, who
joins the company--receives a CERTIFICATE OF STOCK. Our illustrations
show two examples; one of a national bank, and the other of a
manufacturing company. These certificates are transferable at the
pleasure of the owners. The transfer is made usually by a form of
indorsement on the back of the certificate, but to be legal the
transfer must be recorded on the books of the company.

[Illustration: A certificate of stock in a national bank.]

The men subscribing in this way become responsible for the good
management of the business and are obliged to act according to the
laws of the State in which the company is organised. Usually they are
not responsible individually for the liabilities of the concern beyond
the amounts of their individual subscriptions.

[Illustration: A certificate of stock in a manufacturing company.]

Every person who subscribes for stock owns a part of the business and
is called a SHAREHOLDER. All the shareholders meet together, and out
of their number they choose a certain number of DIRECTORS. The
directors choose a president and other necessary officers, and in a
general way direct the policy of the company. As a rule directors have
no salaries attached to their positi