Sales Possibilities For Plants

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The corporation is an entity marvellously adapted to the requirements of all parties involved. It developed in response to the needs of the business community for funds over and beyond its own resources to enable it to build, expand, and grow.

The basic, one-celled form of business life is the individual entrepreneur—the store owner who merchandises goods, the artisan supplying services, the small manufacturer—whose capital needs are met out of savings or through a modest bank loan.

Somewhat more complex is the partnership, the pooling of the resources of several individuals to share in a joint venture. Presumably the credit of the group is somewhat stronger than that of the individual. The partners also assume responsibility for management of their company, participate in all profits accruing, and are legally liable for all debts outstanding.

As long as firms remain relatively small, either type of organization is adequate. As opportunities for expansion present themselves, however, when new plant and equipment are required, when greater amounts of raw materials must be stockpiled, and branch offices and distributors underwritten, and personnel increased, the individual and the partners are hard pressed. Their surplus generally is too small, their normal lines of credit too limited to do the job.

Enlargement of the partnership is no answer. Outside investors willing to take on the mutual responsibilities of partnership, or to immobilize their funds in a partnership agreement, are hard to come by. In any event, the range of financial needs at this stage usually is so great that only by increasing the partnership to ridiculous proportions could they be met.

The solution? A public stock corporation. Ownership thereby is spread among as many hundreds or thousands of people as are willing to buy in, their proportional part of the firm being represented by the amount of stock—or number of shares—they hold. Their reward is likewise a proportional share of their firm's profits. Their control is exercised through the board of directors they elect. And because their stock is a standardized, known quantity—and because there are stock exchanges—they can readily withdraw from the company and sell their piece of ownership to someone else.

The corporation, once established and in being, is an impersonal thing of indeterminate duration. Directors and officers may come and go, investors may buy in and sell out, but the corporation has a momentum and life force which may enable it to run on indefinitely.