Purchase of this book includes free trial access to www.million-books.com where you can read more than a million books for free. This is an OCR edition with typos. Excerpt from book: CHAPTER III What Is a Bond? How It Is Underwritten and Marketed—Why is a Bond Necessary?—What Happens to It? THE Great War has demonstrated the efficiency of the aeroplane. Men with ability and foresight—also capital—realized the profitable future for this aircraft business. It was for this reason that the Phantom Aero Co. was formed (Invented by the author for the purpose of illustration). During the first few years of existence, this new company experimented, changed and reorganized. Incorporated under the laws of New Jersey, there existed a capital account of $25,000,000, half preferred stock and half common stock. In 1917 the great test came. The United States Government entered boldly into the world struggle, and the great need was for aeroplanes. The Phantom Co. had not made money. Its both classes of stock had sold farbelow par. The seven per cent. preferred had never paid a dividend, and the common had been the football for speculative operations. The advent of aeroplane demand had created new possibilities and eager investors had purchased both classes of stock until the preferred was quoted at 60 and the common at 15. The credit of the company had advanced on account of new conditions. The affairs were conducted by the officers, elected by a board of directors, who, in turn, were elected by the stockholders. The present set of officers happened to be efficient. At a meeting of the board of directors, President Smith spoke. "Gentlemen, this company must grow. We have the patents and the manufacturing plant; we also have the orders. But, it is costing us too much to do business, as we lack sufficient working capital. We are paying an exorbitant rate of interest for loans and our credit is limited on account of the small deposits we carry. What must be don...