had to be tried in order to teach a few doctrinaires what any intelligent man of business could have told them in advance if only they would have listened.
In the modern development of industry in the United States there has been something more subtle than the possession of the ordinary knowledge of how to do things—how to make fabrics and shoes, how to run railways, etc.—and this has been one of the accomplishments of the great corporations. I refer to the creation of organizations and the acquisition of knowledge by experience and research that permits new enterprises to be instituted with certainty of success, or innovations to be introduced in old ones.
I may illustrate my meaning by imagining the position of a mining company, whose mine is upon the point of exhaustion and abandonment. If the enterprise has been successful the stockholders’ original investment has been returned to them and has been written off the company’s books. But the company still has an asset of great value in its organization and the knowledge of its staff, enabling it to find, develop and operate successfully another mine. In point of fact such procedure will have been put far along before the exhaustion of the original mine. In this way even a mining company, which works with wasting physical assets, will be self-perpetuating and will realize upon its intangible asset.
I am acquainted with a great exploration company which seeks to buy only developed properties—going concerns. Such properties have certain earning capacities, which may be capitalized according to the conventional formulae and would normally command a price equivalent to their worth. The company is
