In the ordinary business corporation, an important practical distinction is to be made between "close" and "open" corporations (in England more frequently called "private" and "public" corporations). A "close" corporation is one the stock of which is held by only a few persons who make very few purchases or sales so that there is no public market for this stock. An "open" corporation is one the stock of which is constantly being bought and sold so that the ownership varies from time to time. There is obviously no clear-cut line of distinction. Many corporations enjoy only a small and local market for their shares, but nevertheless are in part "open" in the sense that there would be no difficulty for an outsider to purchase a few shares at any time he chose. On the other hand, there are many large and highly successful corporations the stock of which is in the hands of a few individuals who do not care to dispose of it. As will be pointed out more fully a little later, the tendency in the United States has been to concentrate the attention of the investing and speculating public largely on the shares of a few great corporations, with the result that other corporations have not had as full and free a market for their shares as may be found for corporations of the same size and class in other countries.

A "close" corporation is usually a direct successor to a partnership; or, if not, is a small concern. As a business enterprise expands and more and more people become interested, first the partnership is changed to a corporation, and later the shares of the corporation begin to be passed from hand to hand. Almost insensibly the concern gradually begins to emerge from the ranks of "close" corporations and, if it keeps on expanding, eventually finds its shares widely distributed and passed from hand to hand. This is the common, but not the universal, process. Among the large companies in the United States the shares of which are reported to be closely held, are the Winchester Repeating Arms Company, the Mills and Gibb Company, the Jones and Laughlin Steel Company, and the Cerro de Pasco Investment Company.