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Altneuland- Theodor Herzl's Zionist Utopia

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"Understand?" queried the Professor.

"No. Did the stockholders give their money away? If that's the idea, it's all a fairy tale."

"It will be clear to you in a moment, Mr. Kingscourt." David assured him. "You need only distinguish between the various legal entities involved. We have here three judicial or abstract persons. Number one comprises the endowed foundations which had a combined capital of twelve millions sterling in 1900. Number two was a joint stock company organized with a capital of ten millions by London financiers who became interested in our cause when the grant of the charter was assured. Number three was the co-operative association of the colonists. The latter were represented at the congresses by their chosemeaders. These leaders set the masses in motion only after an agreement had been reached with the joint stock company that it would later become a co-operative association."

"You astonish me, noble fairy prince!" laughed Kingscourt. "Do you mean to tell me that stockholders, syndicate hyenas, agreed to anything of that sort?"

"They were not syndicate hyenas, Mr. Kingscourt, but reputable business men who contented themselves with a fair profit. Capital and labor came to terms. Neither by itself could have surmounted all the difficulties. The money-people required guarantees. The labor people as well. Had they not agreed between themselves in advance, injustice would have been done one party or the other in the course of time. Either the people would have disregarded the rights of the stockholders, or become enslaved by them. Both eventualities were obviated by an agreement granting the colonists an option for taking over the stock ten years later. The shares were to be redeemable at the equivalent of the average income of the New Society during the previous five years, capitalized at five per cent. But the total of this redemption fund was not to be less than the actual paid-up value of the shares, plus interest..."

Friedrich hesitantly offered an objection. "But that condition seems to me impossible. Where were the impecunious colonists to find the sums required to buy the shares of the stock corporation?"

"Ah, there, my son!" said Kingscourt. "Now I see it all as clearly as a hole in a doughnut. If the enterprise prospered, it would not be difficult for the colonists to find the money. As a prosperous co-operative society, they could get it on tick."

"That's correct," assented David. "When the co-operative decided to redeem the shares, it secured the required capital in the form of a loan at four per cent. And it came off very well on the transaction. The net profits of the settlement from the fifth to the tenth years averaged one million pounds annually. The settlers therefore needed twenty millions to redeem the shares. But, if they undertook an annual interest obligation equal to their net annual profits up to that time, they could borrow twenty five millions through their co-operative society. They did so, and had a balance of five million pounds on hand after taking over the shares...."

"Damn the fellows!" cried Kingscourt. "How did the joint stock company get so rich?"

"Primarily through the increase in the value of its land. However, since the increased values were due to the efforts of the workers, it was only just and proper that they should derive the benefits. You see now how we were able to transfer the land to the commonwealth. The stock corporation came into the possession of the co-operative which, from then on, was officially called the 'New Society.'"

"It may not seem right to our friends," remarked the architect, "that we should have availed ourselves of disreputable means like shares and that sort of thing. But we had no other way of helping ourselves."

"If you think me such a donkey," retorted Kingscourt, "you're very much in error. I have lived in America. I know a spade when I see one. A stock company is a vessel, into which one may put either good things or bad. We might as well object to a bottle, because it can be filled with poison or bad whiskey. Moreover, there are plenty of examples in history of such stock companies for colonization. The East India Company was not at all bad. I even see a kind of moral principle in your New Society...that part where it was turned into a co-operative. ...Now I'd like to hear how it was after that open the rattle trap!"

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