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BUSINESS OWNERSHIP

ORGANIZATION

BY

ARCHIBALD H. STOCKDER, M.A.

COLUMBIA UNIVERSITY

NEW YORK
HENRY HOLT AND COMPANY

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PREFACE

The subject of business organization has usually been approached from one of two points of view. The first of these approaches is from the standpoint of the principles and problems involved in building up the legal form of organization under which the business is to be owned, and that bear upon the relations of the entrepreneur, the creditor and third parties to one another and to the business establishment itself. The second strikes the problem from the angle of the technique involved in making those internal arrangements that are necessary or desirable to secure efficiency in the administration and operation of the enterprise. For the sake of brevity, we shall call the subjectmatter of the first ownership organization and of the second administrative organization. It is the former with which this work has to do.

Most writers on the subject of ownership organization in business have been lawyers, a circumstance which has so influenced their work that they have almost invariably limited their writings to a consideration of the legal aspects of parts of this broad subject. Thus we have numerous treatises on the law of partnership, on corporations, on trusts, etc., that are intended to appeal primarily to the student of law. As a result they fail to interest the student of applied economics, for they lack that broadness of view that is so essential to a full understanding of the intricacies of organization of the present system of business ownership.

The legal institutions that form the basis of the ownership forms of today have very largely developed from social custom, in consequence of which they differ somewhat in principle, form and application from country to country.

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They were nearly all in existence long before the industrial revolution ushered in the modern era of big business enterprise. They had to be adapted to meet those new conditions that were brought about by large scale production, a widened concept of business capital and the economic forces driving competing business establishments into monopolistic and semi-monopolistic combines. These powerful influences have played a far more important part in shaping the modern forms of ownership organization than can be ascribed to legal principles and differences.

A study of the business ownership organizations of today is, therefore, something more than a mere analysis of legal forms. It is the application of these forms to business uses in the light of the modern industrial system. This is the point of view that has been uppermost in my mind during the preparation of this brief exposition; and it is my hope that, through this work, the general public, as well as the student of applied economics will be enabled to obtain a clearer picture and a fuller understanding of the ownership of business than has heretofore been possible.

A. H. S.

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