At the beginning of this chapter the case was mentioned of Seymour Scott who, having carried through two successful promotions, lost everything that he had made on both of them in an unsuccessful beet sugar promotion. Mr. Scott's experience is not abnormal; on the contrary, the probabilities are that loss and failure in promotion is the ultimate result of fully one-half of the serious attempts to start new enterprises.

There are, to be sure, classes of enterprise in which failure has become rare, as for example public utility corporations. The standards for estimating the probable income and expenses of such corporations have become so exact, and the estimating is now so carefully and scientifically done, that there is little reason to fear disaster. The chief risks in these enterprises are, first, the possibility of onerous regulation or partial confiscation of profits by governmental authorities; second, the possibility that the territory which they serve may decline in population and wealth.

Other enterprises, particularly those engaged in manufacturing and trading, are most apt to be shipwrecked through lack of careful calculation, foresight, and provisions for the future. Yet, in addition to these probable causes of disaster, there are innumerable contingencies which cannot be foreseen. This is true of all business enterprises. In addition to the serious risk that the new enterprise itself may prove to be unsuccessful and all the promoter's profits, represented in common stock, may be wiped out, there is the further risk to the promoter that he may fail to carry through the enterprise and may lose all his own expenditures of money, time, and energy devoted to its promotion. This may easily occur without any fault traceable to the promoter. The writer has in mind one instance in which a year's work, some tens of thousands of dollars of expenses and additional tens of thousands of dollars interested in options were lost to the promoter through the sudden death of one of the principals in a small combination which he was organizing.

Besides the monetary loss, there is constantly a serious risk in promotion, even of the most legitimate kind, of damage to the promoter's business reputation. In order to attract capital he makes many recommendations, which he may believe to be thoroughly justified. If the enterprise is successful, the fortunate purchaser of stock thanks his own excellent business judgment and forgets that he was persuaded to accept the judgment of the promoter; if the enterprise is a failure, these same representations are likely to be used as material for legal and personal attack. After the disastrous failure of the United States Shipbuilding Company, there was a great deal of discussion as to whether the real promoter was Colonel John J. McCook, a New York lawyer, or John W. Young, a New York banker. Colonel McCook was said to have employed auditors who investigated the value and earnings of the plants to be absorbed, and was also said to have introduced two of the principals in the new combination to each other. On the other hand, Mr. Young represented to certain of the vendors that he had employed the auditors; and he was the only person who apparently possessed their detailed statement. It was claimed further that Mr. Young was the man who actually introduced the two principals just referred to. Dewing expressed the opinion "that Mr. Young was the promoter and that Colonel McCook actively co-operated with him in floating the plan, but could not be considered responsible for certain misrepresentations."*

The instance serves as a clear illustration of the point that an unsuccessful promotion necessarily carries with it some discredit to all who are connected with it, and particularly to the organizers of the enterprise.