for the purpose of pointing out that the immediate evil of an increased discount on his £1000 worth of stock, may be to a director of much less consequence than the favours, patronage, connexions, which his aid in carrying a new scheme will bring him. So that here too the supposed identity of interests between directors and shareholders does not hold. Moreover, this disunion of interests is increased by the system of preference-stock. Were there no other cause in action, the raising of capital for supplementary undertakings, by issuing shares bearing a guaranteed interest of 5, 6, and 7 per cent., would destroy that community of motives supposed to exist between a railway proprietary and its executive. Little as the fact is recognized, it is yet readily demonstrable that by raising one of these mortgages, a Company is forthwith divided into two classes; the one consisting of the richer shareholders, inclusive of the directors, and the other of the poorer shareholders; of which classes the richer one can protect itself from the losses which the poorer one has to bear—nay, can even profit by the losses of the poorer one. This assertion, startling as it will be to many, we will proceed to prove. When the capital required for a branch or extension is raised by means of guaranteed shares, it is the custom to give each proprietor the option of taking up a number of such shares proportionate to the number of his original shares. By availing himself of this offer, he partially protects himself against any loss which the new undertaking may entail. Should this, not fulfilling the promises of its advocates, diminish in some degree the general {87} dividend; yet, a high dividend on the due proportion of preference-stock, may nearly or quite compensate for this. Hence, it becomes the policy of all who can do so, to take up as many guaranteed shares as they can get. But what happens when the circular announcing this apportionment of guaranteed shares is sent round? Those who possess much stock, being generally capitalists, accept as many as are allotted to them. On the other hand, the smaller holders, constituting as they do the bulk of the Company, having no available funds with which to pay the calls on new shares, are obliged to part with their letters of allotment. What results? When this additional line has been opened, and it turns out, as usual, that its revenue is insufficient to meet the guaranteed dividend on its shares—when the general income of the Company is laid under contribution to make up this guaranteed dividend—when as a consequence, the dividend on the original stock is diminished; then the poorer shareholders who possess original stock only, find themselves losers; while the richer ones, possessing guaranteed shares in addition, find that their gain on preference-dividends nearly or quite counterbalances their loss on general dividends. Indeed, as above hinted, the case is even worse. For as the large share-proprietor who