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Google And Priceline At $1000? Small Change, Buddy.

A railroad stock would be issued at u100 par.a This was the amount investors were expected to put into the company; however, the company would only ask for the money as needed.a The amount actually paid in was the Paid amount, and this could differ significantly from the par value.a The agreement was that as the building of the railroad progressed, the corporation could assess shareholders for additional money, which they would then be required to pay in, or lose their shares.a This allowed shareholders to get in on the cheap and spread out their u100 in payments over a period of several years, starting off at u10 and working their way up.a As always, the hope was that if the railroad were successful, investors could use the profits to pay for the shares, and if the railroad were not successful, this process would minimize their losses.a In theory, after several years, the u100 would be paid in full, and the shareholder would have made a successful investment.

In reality, this created a number of complications.a First, there was always the problem that someone might not have the cash ready when an assessment was due.a For this reason, shareholders began to resent the fact that at any point in time the corporation could ask them for more money with the threat of the loss of shares if the shareholder did not pay.a The goal was to receive money from the corporation, not pay money into it.a Shareholders especially resented this when the railroad ran into unexpected problems creating a need for the investors to share the burden.a It is one thing to lose money on a stock; it is another to have to pay money into the company in addition to losing your capital. This is why all shares today are non-assessable, meaning companies cannot ask shareholders for more money.

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