Asabusinessproposition，“capital“meansafundofmoneyvalues；andsincethecrediteconomyandcorporationfinancehavecometobetherulingfactorsinindustrialbusiness，thisfundofmoneyvaluestakenasanaggregatebearsbutaremoteandfluctuatingrelationtotheindustrialequipmentandtheotheritemswhichmayperhapsproperlybeincludedundertheold-fashionedconceptofindustrialcapital。1*
Capitalhasbeenspokenofasthecapitalizedaggregated
costofindustrialequipment，etc。，2*aviewwhichhaditssignificanceforeconomictheoryahundredyearsago；butsincecorporationfinancehascometopervadethemanagementofbusinessthisviewisnolongerofparticularuseforatheoreticalhandlingofthefacts。Toavoidthetediumofargumentitmaybeconcededthatundertheolddispensation，ofpartnershipsandindividualmanagementinbusiness，thebasisofcapitalizationwasthecostofthematerialequipmentownedbyanygivenconcern；andsofarasthemethodsofpartnershipandprivatefirmsstillprevailssuchmaystillbethecurrentmethodofcapitalization，especiallydejure。Butinsofarasbusinessprocedureandbusinessconceptionshavebeenshapedintheimageofthemodemcorporationorlimitedliabilitycompany，thebasisofcapitalizationhasgraduallyshifted，untilthebasisisnownolongergivenbythecostofmaterialequipmentowned，butbytheearning-capacityofthecorporationasagoingconcern。3*
Agivencorporation’scapitalis，ofcourse，dejureamagnitudefixedinthepastbyanactoflegislaturecharteringthecompany，orbyanissuanceofstockbythecompanyunderthetermsofitscharteroroftheactswhichenableit。Butthisdejurecapitalizationisnominalonly，andtherearefew，ifany，casesinwhichtheeffectivecapitalofacompanycoincideswithitsdejurecapital。Suchcouldbethecaseonlysolongasallthesecuritieswhichgotomakeupthecompany’scapitalwerequotedatparonthemarket。Theeffectivecapitalizationofanymoderncompany，thatistosay，thecapitalizationwhichiseffectiveforcurrentbusinesspurposesasdistinctfromtheformalrequirementsofthecharter，isgivenbythequotationsofthecompany’ssecurities，orbysomesimilarbutlessovertmarketvaluationincasethecompany’scapitalisnotquotableonthemarket。Theeffectivebusinesscapitalization，asdistinctfromthedejurecapitalization，isnotfixedpermanentlyandinflexiblybyapastactofincorporationorstockissue。Itisfixedforthetimebeingonly，byaneverrecurringvaluationofthecompany’sproperties，tangibleandintangible，onthebasisoftheirearning-capacity。4*
Inthiscapitalizationofearning-capacitythenucleusofthecapitalizationis。notthecostoftheplant，buttheconcern’sgood-will，socalled，ashasappearedinthelastprecedingchapter。5*“Good-will“isasomewhatextensibleterm，andlatterlyithasamorecomprehensivemeaningthanitoncehad。