U.S. Financial System

Corporations have the need to raise capital for a number of reasons. Smaller firms need capital to start up operations. Larger firms need capital to expand operations and to finance inventory. There are various ways in which a firm can raise capital through the financial system and numerous individuals and entities that can assist a corporation in this crucial venture.
Start-up firms and small businesses petition investors for what is known as venture capital. Venture capital comes from wealthy investors, usually a group, who see the potential for growth in smaller businesses. In the early 1990’s the Securities and Exchange Commission (SEC) expanded its role to assist small businesses. The SEC made it easier for small businesses to raise capital through public stock offerings.
Corporations also raise money to finance debt. Businesses sell bonds to investors in order to raise money for working capital and capital expenditures. The corporation agrees to pay back the principal plus interest, therefore making the investors creditors. Bond holders are able to sell bonds to others before they are due. Selling bonds are beneficial to corporations because, in addition to raising capital, bonds also have much lower interest rates that are tax deductible. The down side is that corporations must make interest payments regardless of whether they turn a profit. This often is not an option for smaller businesses.
Larger corporations that exist as public companies can also sell bonds in order to raise capital. Public companies can issue preferred stock along with common stock. Preferred stock is a higher-ranking stock than common stock and preferred stock holders have a greater claim to a company’s assets and earnings. Holders of preferred stock may also have dividends paid before holders of common stock and these dividends are paid at regular intervals, whereas common stock dividends are only paid out when a board of director’s decides to make a payout. Preferred stock often has no voting rights, however, as opposed to common stock. Preferred stock is usually offered to investors, where as common stock is usually offered to employees.
Another means of raising both short and long-term capital is through international markets. According to authors Stanley Block and Geoffrey Hirt (2005), “When the markets are good, money is cheap and easy to find, and when the markets are bad, money is hard to find and relatively expensive. The world economic markets often move back and forth between the two extremes”.
Short-term markets, or money markets, consist of securities that will mature in a year or less. Money markets provide short-term funding for the global financing system. Treasury bills and commercial paper are bought and sold in money markets.
Corporations may also use more traditional methods for raising capital by borrowing from banks and other established lenders. Businesses that require financing for inventory often borrow from banks. Firms can use retained earning, or profits, to raise capital. Depending on the size of the corporation some or all of a company’s profits may be held back for further investment before issuing dividends.
Corporations often look to investment bankers to handle many of these functions. Investment bankers typically have a solid background in finance and economics and are specialists in financial analysis. These bankers act as intermediaries, or middle men, between corporations looking to raise capital and investors. Investment bankers oversee the issuing of bonds, manage selling a company’s stock and advise corporations on acquiring and merging with other companies.

The Roman Empire

The Roman Empire had a huge task in front of them while it was first starting out and while it was becoming a dominant dynasty in the early civilizations. The main problem that the book «Discovering the Global Past» points out is how the Roman Empire found itself growing a little too quickly. The Roman Empire started out very small on the Tiber River and grew abruptly without warning. Before they knew it, they were not a small power but now one with a great number of people with a great number of cultures intertwined within the Roman Empire. They were now spread over an immense portion of land with much power coming with it. The question now is how they are going to be able to handle all of this power and continue to dominate the world without any blueprints to help them out from previous dynasties because it had never been done before. We now have some evidence to help understand this and to show how it did happen. So courtesy of the «Discovering the Global Past» they have seven pieces of evidence that will help prove that the Roman Empire could handle the challenge of taking on the mastery of world power.

The first piece of evidence that I have is The Achievements of the Divine Augustus, which states all of the achievements and accomplishments that helped him conquer the world under the Roman Empire. In this piece of evidence it shows all of Caesar Augustus’ tactics he used to help him conquer the world. Many of which were war related. He gained most of his power by going to war and overthrowing that particular ruler. Thus this helped him gain respect which was also a key factor in his dominance. Once gaining the respect of the Roman Senate and also the republic he became the top runner to be «elected sole guardian of the laws and moral with supreme authority». But Augustus refused to take that role of leadership in the Empire. He did many things in which the people love such as repairing the capitol and the theater of Pompey which cost a great amount and he did it without any public recognition. He did a number of things to help out the ruins and made the cities better by rebuilding them and making them nice again. Also what he wasn’t going to finish by his death he would make sure his heirs would complete it. This list goes on and on of things that Augustus had done to help out the lives of people under the Roman Empire. This piece of evidence showed the strength that Roman Empire would soon have because they were still on the rise. The second piece of evidence that I have is Powers and Titles of the Emperor. This was a key part of having a successful empire. Once the Roman Empire was established they thought up a hierarchy to help control the empire. The good thing that came out of this was that the senate and the republic agreed to pass all the power entirely to Augustus. Now that they had a good ruler, it showed that their empire was growing and was a very strong for to be reckoned with. With such a high status Augustus and his successors expected a lot of support from the people and from the Roman senate.

The third piece of evidence that was available was the Roman Coin of the Reign of Emperor Nero. This was a coin that was minted during the Emperor Nero which had his portrait on it along with his name, his relationship to Caesar Augustus, and the four most prized titles that he had been awarded. They do this to help show and advertise their public image. But this wasn’t the only way that Emperor’s helped their public image and helps make them well known. They would make statues of themselves like the one the Emperor Trajan had made which is our fourth piece of evidence called Trajan’s Column, which was located in Rome. This was made with him in a military outfit to show that he was a military commander. According to Discovering The Global Past, it had to say this about Trajan’s Column: «Although built primarily to hold aloft a huge statue of Trajan in military dress, the column also publicizes his most famous campaign, a war fought against the Dacians on the Balkan peninsula». So this went to show that they would build statues and make coins to make themselves they would also use them as campaigns to help recruit and make wars successful which is key to build up an empire.

Now leading us to our sixth piece of evidence the Roman Temple Inscription in Myra, Lycia, which was the inscription that Caesar Augustus had written on the wall. They do this to show the emperor’s divine status while in rule. This was a trend that was just beginning which helped sort out whom they were and whom they wanted to be remembered as by letting them write this in their own words for all the people to see. The last piece of evidence is the Edict and Speech of Nero to the Greeks, which is the speech where the Emperor Nero gives the Greek people a reward for good will and not out of pity on the people. This is exactly how an emperor can make the people happy by giving them rewards. When trying to control a whole nation one must try to make the people happy and this was a key thing to do to help the reign of the Roman Empire continue.

In conclusion I found it quite remarkable how the Roman Empire had redefined political authority to suit a new level of world mastery. The main question that we had was how was the Roman Empire going to continue to be successful while it was on the rise so fast? Well the answer is quite easy and that is by using tactics that had never been used before which we found out were very successful. The Roman Empire was good to its people which made it possible for them to stay under control of the current emperor. For an emperor to go out rebuild cities and start new cities for people to live in was amazing, and that is how these great officials were elected by both the senate and the republic which was the backbone of the Roman Empire. Now it is considered one of the greatest empires ever.