The title of this section is borrowed from an exceptionally readable book by Hartley Withers, to which reference is made below, At first glance the combination of words in the title seems to the American reader so much nonsense, for in the United States we are accustomed to apply the two words stocks" and "shares" almost indiscriminately, both meaning the units of a corporation's owned capital. We derive our meaning of the word "stock" in its financial sense from its original meaning of .something heaped up like a stack; this is the sense in which it is used in the phrase "stock in trade." Adam Smith uses the word to mean the capital of a firm or company, and this meaning has survived in the United States, but not in Europe. In England, stock is distinguished from shares by the fact that it is divisible into, and transferable in, odd and varying amounts, ranging from tens of thousands down to a penny, At the original subscription anyone may take any odd amount of the stock that he cares for. The Stock Exchange calls the amount that is not divisible by one bundled, a "broken lot." Stock quoted on the London Stock Exchange at so much per 100. Shares are distinguished from stock by the fact that they are expressed in terms of definite amounts and are indivisible. There are, however, some few English companies that will transfer fractions of shares*

*Hartley Withers "Stocks and Share*," pp. 33-38

In the United States there is no security which corresponds to what the English call stock. The owned capital of any corporation is always represented by an issue of shares, each share being of a uniform amount with the other shares in the same series, and of like standing and rights. In both countries the capital stock of the corporation may be of two or more classes, which in this country are usually called "common" and "preferred." In England the more usual titles are "ordinary" and "preference," and in that country there is a much larger variety of shares than we have here. There are "deferred" shares, "founders' " shares, "deferred ordinary" shares, "preferred ordinary" shares, and so on almost indefinitely. In this country, after we have used the terms "common" and "preferred" we usually fall back on such matter-of-fact titles as "first preferred," "second preferred," "third preferred," and the like.