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The sharp process of deflation which business has undergone
during recent years has vested statutes relating to the reduction
of corporate capital with an importance little appreciated when
most of such statutes were enacted. Since 1929 an abrupt reversal
of the previous tendency to increase corporate capitalizations
has taken place. Enormous sums of money and the interests
of many people have been subjected to the procedures for
reduction of capital prescribed by the various corporation acts.
With a few exceptions the protection which these acts afford to
the creditors of the corporation involved is entirely inadequate,
a situation which may be ascribed largely to a failure to comprehend
the position of the creditor and the accounting problems
involved in the reduction situation.
Date of Authorship for this Version
corporate capital, deflation, creditor