spent, wisely or unwisely, if he had got it, and using it to increase the value of his holding and the probability of a larger income from it in future years. If it is used to pay off debt then a larger part of the company's assets—its land, buildings, machinery, stock-in-trade and so forth—is the unencumbered property of the shareholders, and more of the income derived from them will be theirs; if it is added to reserve or to carry forward it is still owned by the shareholders and is put into assets that will earn more for them. Shareholders are too apt to set up an imaginary distinction between themselves and the company, and to fancy that what the directors keep back is not theirs but the company's. In fact, they are the company, and every increase in its property and income is theirs in proportion to their holdings.
The important difference, referred to on page 10, between proprietorship represented by an investment in real property and proprietorship represented by a holding of stock exchange securities has thus emerged. The investor in house property, who manages his investment personally or through an agent, takes the whole income that comes in after meeting charges, and after, perhaps, making a somewhat sketchy allowance for depreciation. If he is wise enough to adhere steadily to the practice
