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Preface

We are pleased to bring you Equity Asset Valuation, Fourth Edition. We believe this book serves as a
particularly important resource for anyone involved in estimating the value of securities and
understanding security pricing.

The content was developed in partnership by a team of distinguished academics and practitioners,
chosen for their acknowledged expertise in the field, and guided by CFA Institute. It is written
specifically with the investment practitioner in mind and is replete with examples and practice
problems that reinforce the learning outcomes and demonstrate real-world applicability.

The CFA Program Curriculum, from which the content of this book was drawn, is subjected to a
rigorous review process to assure that it is:

• Faithful to the findings of our ongoing industry practice analysis

• Valuable to members, employers, and investors

• Globally relevant

• Generalist (as opposed to specialist) in nature

• Replete with sufficient examples and practice opportunities

• Pedagogically sound

The accompanying workbook is a useful reference that provides Learning Outcome Statements,
which describe exactly what readers will learn and be able to demonstrate after mastering the
accompanying material. Additionally, the workbook has summary overviews and practice problems
for each chapter.

We hope you will find this and other books in the CFA Institute Investment Series helpful in your
efforts to grow your investment knowledge, whether you are a relatively new entrant or an
experienced veteran striving to keep up to date in the ever-changing market environment. CFA
Institute, as a long-term committed participant in the investment profession and a not-for-profit
global membership association, is pleased to provide you with this opportunity.

The CFA Program

If the subject matter of this book interests you and you are not already a CFA Charterholder, we
hope you will consider registering for the CFA Program and starting progress toward earning the
Chartered Financial Analyst designation. The CFA designation is a globally recognized standard of
excellence for measuring the competence and integrity of investment professionals. To earn the CFA
charter, candidates must successfully complete the CFA Program, a global graduate-level self-study
program that combines a broad curriculum with professional conduct requirements as preparation
for a career as an investment professional.

Anchored by a practice-based curriculum, the CFA Program Body of Knowledge reflects the
knowledge, skills, and abilities identified by professionals as essential to the investment decision-
making process. This body of knowledge maintains its relevance through a regular, extensive survey
of practicing CFA charterholders across the globe. The curriculum covers 10 general topic areas,
ranging from equity and fixed-income analysis to portfolio management to corporate finance—all
with a heavy emphasis on the application of ethics in professional practice. Known for its rigor and
breadth, the CFA Program curriculum highlights principles common to every market so that
professionals who earn the CFA designation have a thoroughly global investment perspective and a
profound understanding of the global marketplace.

Acknowledgments

We would like to thank these distinguished practitioners for enriching the book with writing in their
areas of expertise:

Matthew L. Coffina, CFA

Patrick W. Dorsey, CFA

Anthony M. Fiore, CFA

Ian Rossa O’Reilly, CFA

Raymond D. Rath, CFA

Antonius J. van Ooijen, CFA

Reviewers

Special thanks to all the reviewers, curriculum advisors, and question writers who helped to ensure
high practical relevance, technical correctness, and understandability of the material presented
here.

Production

We would like to thank the many others who played a role in the conception and production of this
book: the Curriculum and Learning Experience team at CFA Institute, with special thanks to the
Curriculum Directors, past and present, who worked with the authors and reviewers to produce the
chapters in this book; the Practice Analysis team at CFA Institute; and the Credentialing Product
Marketing team at CFA Institute.
Series

CFA Institute is pleased to provide you with the CFA Institute Investment Series, which covers major
areas in the field of investments. We provide this best-in-class series for the same reason we have
been chartering investment professionals for more than 50 years: to lead the investment profession
globally by setting the highest standards of ethics, education, and professional excellence.

The books in the CFA Institute Investment Series contain practical, globally relevant material. They
are intended both for those contemplating entry into the extremely competitive field of investment
management as well as for those seeking a means of keeping their knowledge fresh and up to date.
This series was designed to be user friendly and highly relevant.

We hope you find this series helpful in your efforts to grow your investment knowledge, whether
you are a relatively new entrant or an experienced veteran ethically bound to keep up to date in the
ever-changing market environment. As a long-term, committed participant in the investment
profession and a not-for-profit global membership association, CFA Institute is pleased to provide
you with this opportunity.

The Texts

Corporate Finance: A Practical Approach is a solid foundation for those looking to achieve lasting
business growth. In today’s competitive business environment, companies must find innovative
ways to enable rapid and sustainable growth. This text equips readers with the foundational
knowledge and tools for making smart business decisions and formulating strategies to maximize
company value. It covers everything from managing relationships between stakeholders to
evaluating merger and acquisition bids, as well as the companies behind them. Through extensive
use of real-world examples, readers will gain critical perspective into interpreting corporate financial
data, evaluating projects, and allocating funds in ways that increase corporate value. Readers will
gain insights into the tools and strategies used in modern corporate financial management.

Fixed Income Analysis has been at the forefront of new concepts in recent years, and this particular
text offers some of the most recent material for the seasoned professional who is not a fixed-income
specialist. The application of option and derivative technology to the once staid province of fixed
income has helped contribute to an explosion of thought in this area. Professionals have been
challenged to stay up to speed with credit derivatives, swaptions, collateralized mortgage securities,
mortgage-backed securities, and other vehicles, and this plethora of products has strained the
world’s financial markets and tested central banks to provide sufficient oversight. Armed with a
thorough grasp of the new exposures, the professional investor is much better able to anticipate and
understand the challenges our central bankers and markets face.

International Financial Statement Analysis is designed to address the ever-increasing need for
investment professionals and students to think about financial statement analysis from a global
perspective. The text is a practically oriented introduction to financial statement analysis that is
distinguished by its combination of a true international orientation, a structured presentation style,
and abundant illustrations and tools covering concepts as they are introduced in the text. The
authors cover this discipline comprehensively and with an eye to ensuring the reader’s success at all
levels in the complex world of financial statement analysis.

Investments: Principles of Portfolio and Equity Analysis provides an accessible yet rigorous
introduction to portfolio and equity analysis. Portfolio planning and portfolio management are
presented within a context of up-to-date, global coverage of security markets, trading, and market-
related concepts and products. The essentials of equity analysis and valuation are explained in detail
and profusely illustrated. The book includes coverage of practitioner-important but often neglected
topics, such as industry analysis. Throughout, the focus is on the practical application of key
concepts with examples drawn from both emerging and developed markets. Each chapter affords
the reader many opportunities to self-check his or her understanding of topics.

One of the most prominent texts over the years in the investment management industry has been
Maginn and Tuttle’s Managing Investment Portfolios: A Dynamic Process. The third edition updates
key concepts from the 1990 second edition. Some of the more experienced members of our
community own the prior two editions and will add the third edition to their libraries. Not only does
this seminal work take the concepts from the other readings and put them in a portfolio context, but
it also updates the concepts of alternative investments, performance presentation standards,
portfolio execution, and, very importantly, individual investor portfolio management. Focusing
attention away from institutional portfolios and toward the individual investor makes this edition an
important and timely work.

Quantitative Investment Analysis focuses on some key tools that are needed by today’s professional
investor. In addition to classic time value of money, discounted cash flow applications, and
probability material, there are two aspects that can be of value over traditional thinking.

The New Wealth Management: The Financial Advisor’s Guide to Managing and Investing Client
Assets is an updated version of Harold Evensky’s mainstay reference guide for wealth managers.
Harold Evensky, Stephen Horan, and Thomas Robinson have updated the core text of the 1997 first
edition and added an abundance of new material to fully reflect today’s investment challenges. The
text provides authoritative coverage across the full spectrum of wealth management and serves as a
comprehensive guide for financial advisors. The book expertly blends investment theory and real-
world applications and is written in the same thorough but highly accessible style as the first edition.
The first involves the chapters dealing with correlation and regression that ultimately figure into the
formation of hypotheses for purposes of testing. This gets to a critical skill that challenges many
professionals: the ability to distinguish useful information from the overwhelming quantity of
available data. Second, the final chapter of Quantitative Investment Analysis covers portfolio
concepts and takes the reader beyond the traditional capital asset pricing model (CAPM) type of
tools and into the more practical world of multifactor models and arbitrage pricing theory.

All books in the CFA Institute Investment Series are available through all major booksellers. In
addition, all titles are available on the Wiley Custom Select platform
at http://customselect.wiley.com/ where individual chapters for all the books may be mixed and
matched to create custom textbooks for the classroom.
CHAPTER 1
Overview of Equity Securities

Ryan C. Fuhrmann, CFA

Asjeet S. Lamba, PhD, CFA

Learning Outcomes

After completing this chapter, you will be able to do the following:

• describe characteristics of types of equity securities;

• describe differences in voting rights and other ownership characteristics among different
equity classes;

• distinguish between public and private equity securities;

• describe methods for investing in non-domestic equity securities;

• compare the risk and return characteristics of different types of equity securities;

• explain the role of equity securities in the financing of a company’s assets;

• distinguish between the market value and book value of equity securities;

• compare a company’s cost of equity, its (accounting) return on equity, and investors’
required rates of return.

1. Introduction

Equity securities represent ownership claims on a company’s net assets. As an asset class, equity
plays a fundamental role in investment analysis and portfolio management because it represents a
significant portion of many individual and institutional investment portfolios.

The study of equity securities is important for many reasons. First, the decision on how much of a
client’s portfolio to allocate to equities affects the risk and return characteristics of the entire
portfolio. Second, different types of equity securities have different ownership claims on a
company’s net assets, which affect their risk and return characteristics in different ways. Finally,
variations in the features of equity securities are reflected in their market prices, so it is important to
understand the valuation implications of these features.

This chapter provides an overview of equity securities and their different features and establishes
the background required to analyze and value equity securities in a global context. It addresses the
following questions:

• What distinguishes common shares from preference shares, and what purposes do these
securities serve in financing a company’s operations?

• What are convertible preference shares, and why are they often used to raise equity for
unseasoned or highly risky companies?

• What are private equity securities, and how do they differ from public equity securities?

• What are depository receipts and their various types, and what is the rationale for investing
in them?
 • What are the risk factors involved in investing in equity securities?

• How do equity securities create company value?

• What is the relationship between a company’s cost of equity, its return on equity, and
investors’ required rate of return?

The remainder of this chapter is organized as follows. Section 2 provides an overview of global
equity markets and their historical performance. Section 3 examines the different types and
characteristics of equity securities, and Section 4 outlines the differences between public and private
equity securities. Section 5 provides an overview of the various types of equity securities listed and
traded in global markets. Section 6 discusses the risk and return characteristics of equity securities.
Section 7 examines the role of equity securities in creating company value and the relationship
between a company’s cost of equity, its return on equity, and investors’ required rate of return. The
final section summarizes the chapter.

2. Equity Securities in Global Financial Markets

This section highlights the relative importance and performance of equity securities as an asset class.
We examine the total market capitalization and trading volume of global equity markets and the
prevalence of equity ownership across various geographic regions. We also examine historical
returns on equities and compare them to the returns on government bonds and bills.

Exhibit 1 summarizes the contributions of selected countries and geographic regions to global gross
domestic product (GDP) and global equity market capitalization. Analysts may examine the
relationship between equity market capitalization and GDP as a rough indicator of whether the
global equity market (or a specific country’s or region’s equity market) is under-, over-, or fairly
valued, particularly compared to its long-run average.

Exhibit 1 illustrates the significant value that investors attach to publicly traded equities relative to
the sum of goods and services produced globally every year. It shows the continued significance, and
the potential overrepresentation, of US equity markets relative to their contribution to global GDP.
That is, while US equity markets contribute around 51 percent to the total capitalization of global
equity markets, their contribution to the global GDP is only around 25 percent. Following the stock
market turmoil in 2008, however, the market capitalization to GDP ratio of the United States fell to
59 percent, which is significantly lower than its long-run average of 79 percent.

As equity markets outside the United States develop and become increasingly global, their total
capitalization levels are expected to grow closer to their respective world GDP contributions.
Therefore, it is important to understand and analyze equity securities from a global perspective.
Exhibit 1 Country and Regional Contributions to Global GDP and Equity Market Capitalization (2017)

Source: The World Bank Databank 2017, and Dimson, Marsh, and Staunton (2018).
Exhibit 2 lists the top 10 equity markets at the end of 2017 based on total market capitalization (in
billions of US dollars), trading volume, and the number of listed companies.1

Note that the rankings differ based on the criteria used. For example, the top three markets based
on total market capitalization are the NYSE Euronext (US), NASDAQ OMX, and the Japan Exchange
Group; however, the top three markets based on total US dollar trading volume are the Nasdaq
OMX, NYSE Euronext (US), and the Shenzhen Stock Exchange, respectively.2

Total US Dollar Market Total US Dollar Number of Listed

Rank Name of Market Capitalization Trading Volume Companies

1 NYSE Euronext (US) $22,081.4 $16,140.1 2,286

2 NASDAQ OMX $10,039.4 $33,407.1 2,949

Japan Exchange
3 Groupa $6,220.0 $6,612.1 3,604

Shanghai Stock
4 Exchange $5,084.4 $7,589.3 1,396

5 Euronextb $4,393.0 $1,981.6 1,255

6 Hong Kong Exchanges $4,350.5 $1,958.8 2,118

Shenzhen Stock
7 Exchanges $3,617.9 $9,219.7 2,089

National Stock
8 Exchange of India $2,351.5 $1,013.3 1,897

9 BSE Limitedc $2,331.6 $183.0 5,616

10 Deutsche Börse $2,262.2 $1,497.9 499

Notes:
a
Japan Exchange Group is the merged entity containing the Tokyo Stock Exchange and Osaka
Securities Exchange.
b
As of 2001, includes Netherlands, France, England, Belgium, and Portugal.
c
Bombay Stock Exchange.

Exhibit 2 Equity Markets Ranked by Total Market Capitalization at the End of 2017 (Billions of US
Dollars)

Source: Adapted from the World Federation of Exchanges 2017 Report (see http://www.world-
exchanges.org). Note that market capitalization by company is calculated by multiplying its stock
price by the number of shares outstanding. The market’s overall capitalization is the aggregate of the
market capitalizations of all companies traded on that market. The number of listed companies
includes both domestic and foreign companies whose shares trade on these markets.
Exhibit 3 compares the real (or inflation-adjusted) compounded returns on government bonds,
government bills, and equity securities in 21 countries plus the world index (“Wld”), the world ex-US
(“WxU”), and Europe (“Eur”) during the 118 years 1900–2017.3 In real terms, government bonds and
bills have essentially kept pace with the inflation rate, earning annualized real returns of less than 2
percent in most countries.4 By comparison, real returns in equity markets have generally been
around 3.5 percent per year in most markets—with a world average return of around 5.2 percent
and a world average return excluding the United States just under 5 percent. During this period,
South Africa and Australia were the best performing markets followed by the United States, New
Zealand, and Sweden.

Exhibit 3 Real Returns on Global Equity Securities, Bonds, and Bills During 1900–2017

Source: Dimson, Marsh, and Staunton (2018).

Exhibit 4 shows the annualized real returns on major asset classes for the world index over 1900–
2017.

Exhibit 4 Annualized Real Returns on Asset Classes for the World Index, 1900–2017
Source: Dimson, Marsh, and Staunton (2018).

The volatility in asset market returns is further highlighted in Exhibit 5, which shows the annualized
risk premia for equity relative to bonds (EP Bonds), and equity relative to Treasury bills (EP Bills).
Maturity premium for government bond returns relative to treasury bill returns (Mat Prem) is also
shown.

These observations and historical data are consistent with the concept that the return on securities
is directly related to risk level. That is, equity securities have higher risk levels when compared with
government bonds and bills, they earn higher rates of return to compensate investors for these
higher risk levels, and they also tend to be more volatile over time.

Given the high risk levels associated with equity securities, it is reasonable to expect that investors’
tolerance for risk will tend to differ across equity markets. This is illustrated in Exhibit 6, which shows
the results of a series of studies conducted by the Australian Securities Exchange on international
differences in equity ownership. During the 2004–2014 period, equity ownership as a percentage of
the population was lowest in South Korea (averaging 9.0 percent), followed by Germany (14.5
percent) and Sweden (17.7 percent). In contrast, Australia and New Zealand had the highest equity
ownership as a percentage of the population (averaging more than 20 percent). In addition, there
has been a relative decline in share ownership in several countries over recent years, which is not
surprising given the recent overall uncertainty in global economies and the volatility in equity
markets that this uncertainty has created.
Exhibit 5 Annualized Real Returns on Asset Classes and Risk Premiums for the World Index, 1900–
2017

Notes: Equities are total returns, including reinvested dividend income. Bonds are total return,
including reinvested coupons, on long-term government bonds. Bills denotes the total return,
including any income, from Treasury bills. All returns are adjusted for inflation and are expressed as
geometric mean returns. EP bonds denotes the equity risk premium relative to long-term
government bonds. EP Bills denotes the equity premium relative to Treasury bills. MatPrem denotes
the maturity premium for government bond returns relative to bill returns. RealXRate denotes the
real (inflation-adjusted) change in the exchange rate against the US dollar.

Source: Dimson, Marsh, and Staunton (2018).

 2004 2006 2008 2010 2012 2014

Australia – Direct/Indirect 55% 46% 41% 43% 38% 36%

South Korea – Shares 8 7 10 10 10 N/A

Germany – Shares/Funds 16 16 14 13 15 13

Sweden – Shares 22 20 18 17 15 14

United Kingdom – Shares/Funds 22 20 18 N/A 17 N/A

New Zealand – Direct 23 26 N/A 22 23 26

Exhibit 6 International Comparisons of Stock Ownership: 2004−20145

Source: Adapted from the 2014 Australian Share Ownership Study conducted by the Australian
Securities Exchange (see http://www.asx.com.au). For Australia and the United States, the data
pertain to direct and indirect ownership in equity markets; for other countries, the data pertain to
direct ownership in shares and share funds. Data not available in specific years are shown as “N/A.”

An important implication from the above discussion is that equity securities represent a key asset
class for global investors because of their unique return and risk characteristics. We next examine
the various types of equity securities traded on global markets and their salient characteristics.

3. Types and Characteristics of Equity Securities

Companies finance their operations by issuing either debt or equity securities. A key difference
between these securities is that debt is a liability of the issuing company, whereas equity is not. This
means that when a company issues debt, it is contractually obligated to repay the amount it borrows
(i.e., the principal or face value of the debt) at a specified future date. The cost of using these funds
is called interest, which the company is contractually obligated to pay until the debt matures or is
retired.

When the company issues equity securities, it is not contractually obligated to repay the amount it
receives from shareholders, nor is it contractually obligated to make periodic payments to
shareholders for the use of their funds. Instead, shareholders have a claim on the company’s assets
after all liabilities have been paid. Because of this residual claim, equity shareholders are considered
to be owners of the company. Investors who purchase equity securities are seeking total return (i.e.,
capital or price appreciation and dividend income), whereas investors who purchase debt securities
(and hold until maturity) are seeking interest income. As a result, equity investors expect the
company’s management to act in their best interest by making operating decisions that will
maximize the market price of their shares (i.e., shareholder wealth).

In addition to common shares (also known as ordinary shares or common stock), companies may
also issue preference shares (also known as preferred stock), the other type of equity security. The
following sections discuss the different types and characteristics of common and preference
securities.

3.1. Common Shares

Common shares represent an ownership interest in a company and are the predominant type of
equity security. As a result, investors share in the operating performance of the company,
participate in the governance process through voting rights, and have a claim on the company’s net
assets in the case of liquidation. Companies may choose to pay out some, or all, of their net income
in the form of cash dividends to common shareholders, but they are not contractually obligated to
do so.6

Voting rights provide shareholders with the opportunity to participate in major corporate
governance decisions, including the election of its board of directors, the decision to merge with or
take over another company, and the selection of outside auditors. Shareholder voting generally
takes place during a company’s annual meeting. As a result of geographic limitations and the large
number of shareholders, it is often not feasible for shareholders to attend the annual meeting in
person. For this reason, shareholders may vote by proxy, which allows a designated party—such as
another shareholder, a shareholder representative, or management—to vote on the shareholders’
behalf.

Regular shareholder voting, where each share represents one vote, is referred to as statutory
voting. Although it is the common method of voting, it is not always the most appropriate one to use
to elect a board of directors. To better serve shareholders who own a small number of
shares, cumulative voting is often used. Cumulative voting allows shareholders to direct their total
voting rights to specific candidates, as opposed to having to allocate their voting rights evenly among
all candidates. Total voting rights are based on the number of shares owned multiplied by the
number of board directors being elected. For example, under cumulative voting, if four board
directors are to be elected, a shareholder who owns 100 shares is entitled to 400 votes and can
either cast all 400 votes in favor of a single candidate or spread them across the candidates in any
proportion. In contrast, under statutory voting, a shareholder would be able to cast only a maximum
of 100 votes for each candidate.

The key benefit to cumulative voting is that it allows shareholders with a small number of shares to
apply all of their votes to one candidate, thus providing the opportunity for a higher level of
representation on the board than would be allowed under statutory voting.

Exhibit 7 describes the rights of Viacom Corporation’s shareholders. In this case, a dual-share
arrangement allows the founding chairman and his family to control more than 70 percent of the
voting rights through the ownership of Class A shares. This arrangement gives them the ability to
exert control over the board of directors election process, corporate decision making, and other
important aspects of managing the company. A cumulative voting arrangement for any minority
shareholders of Class A shares would improve their board representation.

Viacom has two classes of common stock: Class A, which is the voting stock, and Class B, which is the
non-voting stock. There is no difference between the two classes except for voting rights; they
generally trade within a close price range of each other. There are, however, far more shares of Class
B outstanding, so most of the trading occurs in that class.

• Voting Rights—Holders of Class A common stock are entitled to one vote per share. Holders
of Class B common stock do not have any voting rights, except as required by Delaware law.
Generally, all matters to be voted on by Viacom stockholders must be approved by a
majority of the aggregate voting power of the shares of Class A common stock present in
person or represented by proxy, except as required by Delaware law.
 • Dividends—Stockholders of Class A common stock and Class B common stock will share
ratably in any cash dividend declared by the board of directors, subject to any preferential
rights of any outstanding preferred stock. Viacom does not currently pay a cash dividend,
and any decision to pay a cash dividend in the future will be at the discretion of the board of
directors and will depend on many factors.

• Conversion—So long as there are 5,000 shares of Class A common stock outstanding, each
share of Class A common stock will be convertible at the option of the holder of such share
into one share of Class B common stock.

• Liquidation Rights—In the event of liquidation, dissolution, or winding-up of Viacom, all

stockholders of common stock, regardless of class, will be entitled to share ratably in any
assets available for distribution to stockholders of shares of Viacom common stock subject
to the preferential rights of any outstanding preferred stock.

• Split, Subdivision, or Combination—In the event of a split, subdivision, or combination of

the outstanding shares of Class A common stock or Class B common stock, the outstanding
shares of the other class of common stock will be divided proportionally.

• Preemptive Rights—Shares of Class A common stock and Class B common stock do not
entitle a stockholder to any preemptive rights enabling a stockholder to subscribe for or
receive shares of stock of any class or any other securities convertible into shares of stock of
any class of Viacom.

Exhibit 7 Share Class Arrangements at Viacom Corporation7

As seen in Exhibit 7, companies can issue different classes of common shares (Class A and Class B
shares), with each class offering different ownership rights.8 For example, as shown in Exhibit 8, the
Ford Motor Company has Class A shares (“Common Stock”), which are owned by the investing
public. It also has Class B shares, which are owned only by the Ford family. The exhibit contains an
excerpt from Ford’s 2017 Annual Report (p. 144). Class A shareholders have 60 percent voting rights,
whereas Class B shareholders have 40 percent. In the case of liquidation, however, Class B
shareholders will not only receive the first US$0.50 per share that is available for distribution (as will
Class A shareholders), but they will also receive the next US$1.00 per share that is available for
distribution before Class A shareholders receive anything else. Thus, Class B shareholders have an
opportunity to receive a larger proportion of distributions upon liquidation than do Class A
shareholders.9

CAPITAL STOCK AND AMOUNTS PER SHARE

All general voting power is vested in the holders of Common Stock and Class B Stock. Holders of our
Common Stock have 60% of the general voting power and holders of our Class B Stock are entitled to
such number of votes per share as will give them the remaining 40%. Shares of Common Stock and
Class B Stock share equally in dividends when and as paid, with stock dividends payable in shares of
stock of the class held.

If liquidated, each share of Common Stock is entitled to the first $0.50 available for distribution to
holders of Common Stock and Class B Stock, each share of Class B Stock is entitled to the next $1.00
so available, each share of Common Stock is entitled to the next $0.50 so available, and each share
of Common and Class B Stock is entitled to an equal amount thereafter.

Exhibit 8 Share Class Arrangements at Ford Motor Company10

3.2. Preference Shares

Preference shares (or preferred stock) rank above common shares with respect to the payment of
dividends and the distribution of the company’s net assets upon liquidation.11 However, preference
shareholders generally do not share in the operating performance of the company and do not have
any voting rights, unless explicitly allowed for at issuance. Preference shares have characteristics of
both debt securities and common shares. Similar to interest payments on debt securities, the
dividends on preference shares are fixed and are generally higher than the dividends on common
shares. However, unlike interest payments, preference dividends are not contractual obligations of
the company. Similar to common shares, preference shares can be perpetual (i.e., no fixed maturity
date), can pay dividends indefinitely, and can be callable or putable.

Exhibit 9 provides an example of callable preference shares issued by the GDL Fund to raise capital
to redeem the remaining outstanding Series B Preferred shares. In this case, the purchaser of the
shares will receive an ongoing dividend from the GDL Fund. If the GDL Fund chooses to buy back the
shares, it must do so at the $50 a share liquidation preference price. The purchasers of the shares
also have the right to put back the shares to GDL at the $50 a share price.

RYE, NY—March 26, 2018—The GDL Fund (NYSE:GDL) (the “Fund”) is pleased to announce the
completion of a rights offering (the “Offering”) in which the Fund issued 2,624,025 Series C
Cumulative Puttable and Callable Preferred Shares (the “Series C Preferred”), totaling $131,201,250.
Pursuant to the Offering, the Fund issued one non-transferable right (a “Right”) for each outstanding
Series B Cumulative Puttable and Callable Preferred Share (the “Series B Preferred”) of the Fund to
Series B Preferred shareholders of record as of February 14, 2018. Holders of Rights were entitled to
purchase the Series C Preferred with any combination of cash or surrender of the Series B Preferred
at liquidation preference. Therefore, one Right plus $50.00, or one Right plus one share of Series B
Preferred with a liquidation value of $50.00 per share, was required to purchase each share of the
Series C Preferred. The Offering expired at 5:00 PM Eastern Time on March 20, 2018.

Exhibit 9 Callable Stock offering by the GDL Fund12

Dividends on preference shares can be cumulative, non-cumulative, participating, non-participating,

or some combination thereof (i.e., cumulative participating, cumulative non-participating, non-
cumulative participating, non-cumulative non-participating).

Dividends on cumulative preference shares accrue so that if the company decides not to pay a
dividend in one or more periods, the unpaid dividends accrue and must be paid in full before
dividends on common shares can be paid. In contrast, non-cumulative preference shares have no
such provision. This means that any dividends that are not paid in the current or subsequent periods
are forfeited permanently and are not accrued over time to be paid at a later date. However, the
company is still not permitted to pay any dividends to common shareholders in the current period
unless preferred dividends have been paid first.
Participating preference shares entitle the shareholders to receive the standard preferred dividend
plus the opportunity to receive an additional dividend if the company’s profits exceed a pre-
specified level. In addition, participating preference shares can also contain provisions that entitle
shareholders to an additional distribution of the company’s assets upon liquidation, above the par
(or face) value of the preference shares. Non-participating preference shares do not allow
shareholders to share in the profits of the company. Instead, shareholders are entitled to receive
only a fixed dividend payment and the par value of the shares in the event of liquidation. The use of
participating preference shares is much more common for smaller, riskier companies where the
possibility of future liquidation is more of a concern to investors.

Preference shares can also be convertible. Convertible preference shares entitle shareholders to
convert their shares into a specified number of common shares. This conversion ratio is determined
at issuance. Convertible preference shares have the following advantages:

• They allow investors to earn a higher dividend than if they invested in the company’s
common shares.

• They allow investors the opportunity to share in the profits of the company.

• They allow investors to benefit from a rise in the price of the common shares through the
conversion option.

• Their price is less volatile than the underlying common shares because the dividend
payments are known and more stable.

As a result, the use of convertible preference shares is a popular financing option in venture capital
and private equity transactions in which the issuing companies are considered to be of higher risk
and when it may be years before the issuing company “goes public” (i.e., issues common shares to
the public).

Exhibit 10 provides examples of the types and characteristics of preference shares as issued by
Tsakos Energy Navigation Ltd (TNP.PRE).

Athens, Greece, June 21, 2018—TEN Ltd. (“TEN”) (NYSE: TNP), a leading diversified crude, product
and LNG tanker operator, today announced the pricing of its public offering of its Series F Fixed-to-
Floating Rate Cumulative Redeemable Perpetual Preferred Shares, par value $1.00 per share,
liquidation preference $25.00 per share (“Series F Preferred Shares”). TEN will issue 5,400,000 Series
F Preferred Shares at a price to the public of $25.00 per share. Dividends will be payable on the
Series F Preferred Shares to July 30, 2028, at a fixed rate equal to 9.50% per annum and from July 30,
2028, if not redeemed, at a floating rate. In connection with the offering, TEN has granted the
underwriters a 30-day option to purchase 810,000 additional Series F Preferred Shares, which, if
exercised in full, would result in total gross proceeds of $155,250,000. TEN intends to use the net
proceeds from the offering for general corporate purposes, which may include making vessel
acquisitions and/or strategic investments and preferred share redemptions. Following the offering,
TEN intends to file an application to list the Series F Preferred Shares on the New York Stock
Exchange. The offering is expected to close on or about June 28, 2018.

Exhibit 10 Examples of Preference Shares Issued by TEN Ltd13

compare the ROE of the same company over time if its accounting methods have changed during
that time.

Exhibit 16 contains information on the net income and total book value of shareholders’ equity for
three blue chip (widely held large market capitalization companies that are considered financially
sound and are leaders in their respective industry or local stock market) pharmaceutical companies:
Pfizer, Novartis AG, and GlaxoSmithKline. The data are for their financial years ending December
2015 through December 2017.26

Financial Year Ending

Dec 31, 2015 Dec 31, 2016 Dec 31, 2017

Pfizer

Net income $6,960,000 $7,215,000 $21,308,000

Total stockholders’ equity $64,998,000 $59,840,000 $71,287,000

Novartis AG

Net income $17,783,000 $6,712,000 $7,703,000

Total stockholders’ equity $77,122,000 $74,891,000 $74,227,000

GlaxoSmithKline

Net income $12,420,000 $1,126,000 $2,070,700

Total stockholders’ equity $113,092,500 $6,127,800 $4,715,800

Exhibit 16 Net Income and Book Value of Equity for Pfizer, Novartis AG, and GlaxoSmithKline (in
Thousands of US Dollars)

Using the average book value of equity, the return on equity for Pfizer for the years ending
December 2016 and 2017 can be calculated as:

Return on equity for the year ending December 2016

Return on equity for the year ending December 2017

Exhibit 17 summarizes the return on equity for Novartis and GlaxoSmithKline in addition to Pfizer for
2016 and 2017.
Another random document with
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 When the abolitionists of Rhode Island were seeking to defeat
the restricted constitution of the Dorr party, already referred to in this
volume, Abby Kelley was more than once mobbed in the old Town
Hall in the city of Providence, and pelted with bad eggs.
And what can be said of the gifted authoress of “Uncle Tom’s
Cabin,” Harriet Beecher Stowe? Happy woman must she be, that to
her was given the power, in such unstinted measure, to touch and
move the popular heart! More than to reason or religion are we
indebted to the influence which this wonderful delineation of
American chattel slavery produced on the public mind.
Nor must I omit to name the daughter of the excellent Myron
Holley, who in her youth and beauty espoused the cause of the
slave; nor of Lucy Stone, and Antoinette Brown; for when the slave
had few friends and advocates they were noble enough to speak
their best word in his behalf.
Others there were, who, though they were not known on the
platform, were none the less earnest and effective for anti-slavery in
their more retired lives. There were many such to greet me, and
welcome me to my newly found heritage of freedom. They met me
as a brother, and by their kind consideration did much to make
endurable the rebuffs I encountered elsewhere. At the anti-slavery
office in Providence, Rhode Island, I remember with a peculiar
interest Lucinda Wilmarth, whose acceptance of life’s duties and
labors, and whose heroic struggle with sickness and death, taught
me more than one lesson; and Amorancy Paine, never weary in
performing any service, however arduous, which fidelity to the slave
demanded of her. Then there was Phebe Jackson, Elizabeth Chace,
the Sisson sisters, the Chases, the Greenes, the Browns, the
Goolds, the Shoves, the Anthonys, the Roses, the Fayerweathers,
the Motts, the Earles, the Spooners, the Southwicks, the Buffums,
the Fords, the Wilburs, the Henshaws, the Burgesses, and others
whose names are lost, but whose deeds are living yet in the
regenerated life of our new Republic, cleansed from the curse and
sin of slavery.
 Observing woman’s agency, devotion, and efficiency in pleading
the cause of the slave, gratitude for this high service early moved me
to give favorable attention to the subject of what is called “Woman’s
Rights,” and caused me to be denominated a woman’s-rights-man. I
am glad to say I have never been ashamed to be thus designated.
Recognizing not sex, nor physical strength, but moral intelligence
and the ability to discern right from wrong, good from evil, and the
power to choose between them, as the true basis of Republican
government, to which all are alike subject, and bound alike to obey, I
was not long in reaching the conclusion that there was no foundation
in reason or justice for woman’s exclusion from the right of choice in
the selection of the persons who should frame the laws, and thus
shape the destiny of all the people, irrespective of sex.
In a conversation with Mrs. Elizabeth Cady Stanton, when she
was yet a young lady, and an earnest abolitionist, she was at the
pains of setting before me, in a very strong light, the wrong and
injustice of this exclusion. I could not meet her arguments except
with the shallow plea of “custom,” “natural division of duties,”
“indelicacy of woman’s taking part in politics,” the common talk of
“woman’s sphere,” and the like, all of which that able woman, who
was then no less logical than now, brushed away by those
arguments which she has so often and effectively used since, and
which no man has yet successfully refuted. If intelligence is the only
true and rational basis of government, it follows that that is the best
government which draws its life and power from the largest sources
of wisdom, energy, and goodness at its command. The force of this
reasoning would be easily comprehended and readily assented to in
any case involving the employment of physical strength. We should
all see the folly and madness of attempting to accomplish with a part
what could only be done with the united strength of the whole.
Though this folly may be less apparent, it is just as real, when one-
half of the moral and intellectual power of the world is excluded from
any voice or vote in civil government. In this denial of the right to
participate in government, not merely the degradation of woman and
the perpetuation of a great injustice happens, but the maiming and
repudiation of one-half of the moral and intellectual power for the
government of the world. Thus far all human governments have
been failures, for none have secured, except in a partial degree, the
ends for which governments are instituted.
War, slavery, injustice, and oppression, and the idea that might
makes right, have been uppermost in all such governments; and the
weak, for whose protection governments are ostensibly created,
have had practically no rights which the strong have felt bound to
respect. The slayers of thousands have been exalted into heroes,
and the worship of mere physical force has been considered
glorious. Nations have been and still are but armed camps,
expending their wealth and strength and ingenuity in forging
weapons of destruction against each other; and while it may not be
contended that the introduction of the feminine element in
government would entirely cure this tendency to exalt might over
right, many reasons can be given to show that woman’s influence
would greatly tend to check and modify this barbarous and
destructive tendency. At any rate, seeing that the male governments
of the world have failed, it can do no harm to try the experiment of a
government by man and woman united. But it is not my purpose to
argue the question here, but simply to state, in a brief way, the
ground of my espousal of the cause of woman’s suffrage. I believed
that the exclusion of my race from participation in government was
not only a wrong, but a great mistake, because it took from that race
motives for high thought and endeavor, and degraded them in the
eyes of the world around them. Man derives a sense of his
consequence in the world not merely subjectively, but objectively. If
from the cradle through life the outside world brands a class as unfit
for this or that work, the character of the class will come to resemble
and conform to the character described. To find valuable qualities in
our fellows, such qualities must be presumed and expected. I would
give woman a vote, give her a motive to qualify herself to vote,
precisely as I insisted upon giving the colored man the right to vote,
in order that he should have the same motives for making himself a
useful citizen as those in force in the case of other citizens. In a
word, I have never yet been able to find one consideration, one
argument, or suggestion in favor of man’s right to participate in civil
government which did not equally apply to the right of woman.
 CHAPTER XIX.
RETROSPECTION.

Meeting of colored citizens in Washington to express their sympathy at the

great national bereavement, the death of President Garfield—Concluding
reflections and convictions.

On the day of the interment of the late James A. Garfield, at

Lake View Cemetery, Cleveland, Ohio, a day of gloom long to be
remembered as the closing scene in one of the most tragic and
startling dramas ever witnessed in this, or in any other country, the
colored people of the District of Columbia assembled in the Fifteenth
street Presbyterian church, and expressed by appropriate addresses
and resolutions, their respect for the character and memory of the
illustrious deceased. On that occasion I was called on to preside,
and by way of introducing the subsequent proceedings, (leaving to
others the grateful office of delivering eulogies) made the following
brief reference to the solemn and touching event.
“Friends and fellow citizens:
To-day our common mother Earth has closed over the mortal
remains of James A. Garfield, at Cleveland, Ohio. The light of no day
in our national history has brought to the American people a more
intense bereavement, a deeper sorrow, or a more profound sense of
humiliation. It seems only as yesterday, that in my quality as United
States Marshal of the District of Columbia, it was made my duty and
privilege to walk at the head of the column in advance of this our
President-elect, from the crowded Senate Chamber of the National
Capitol, through the long corridors, and the grand rotunda, beneath
the majestic dome, to the platform on the portico, where amid a sea
of transcendent pomp and glory, he who is now dead, was hailed
with tumultuous applause from uncounted thousands of his fellow
citizens, and was inaugurated Chief Magistrate of the United States.
The scene was one never to be forgotten by those who beheld it. It
was a great day for the nation, glad and proud to do honor to their
chosen ruler. It was a glad day for James A. Garfield. It was a glad
day for me, that I—one of the proscribed race, was permitted to bear
so prominent a part in its august ceremonies. Mr. Garfield was then
in the midst of his years, in the fullness and vigor of his manhood,
covered with honors beyond the reach of princes, entering upon a
career more abundant in promise than ever invited president or
potentate before.
Alas, what a contrast, as he lay in state under the same broad
dome, viewed by sorrowful thousands day after day! What is the life
of man? What are all his plans, purposes, and hopes? What are the
shouts of the multitude, the pride and pomp of this world? How vain
and unsubstantial, in the light of this sad and shocking experience,
do they all appear! Who can tell what a day or an hour will bring
forth? Such reflections inevitably present themselves, as most
natural and fitting on an occasion like this.
Fellow citizens, we are here to take suitable notice of the sad
and appalling event of the hour. We are here, not merely as
American citizens, but as colored American citizens. Although our
hearts have gone along with those of the nation at large, with every
expression, with every token and demonstration of honor to the
dead, sympathy with the living, and abhorrence for the horrible deed
which has at last done its final work; though we have watched with
beating hearts, the long and heroic struggle for life, and endured all
the agony of suspense and fear; we have felt that something more,
something more specific and distinctive, was due from us. Our
relation to the American people makes us in some sense a peculiar
class, and unless we speak separately, our voice is not heard. We
therefore propose to put on record to-night our sense of the worth of
President Garfield, and of the calamity involved in his death. Called
to preside on this occasion, my part in the speaking shall be brief. I
cannot claim to have been on intimate terms with the late President.
There are other gentlemen here, who are better qualified to speak of
his character than myself. I may say, however, that soon after he
came to Washington, I had a conversation with him of much interest
to the colored people, since it indicated his just and generous
intentions towards them, and goes far to present him in the light of a
wise and patriotic statesman, and a friend of our race.
I called at the Executive Mansion, and was received very kindly
by Mr. Garfield, who, in the course of the conversation said, that he
felt the time had come when a step should be taken in advance, in
recognition of the claims of colored citizens, and expressed his
intention of sending some colored representatives abroad to other
than colored nations. He enquired of me how I thought such
representations would be received? I assured him that I thought they
would be well received; that in my own experience abroad, I had
observed that the higher we go in the gradations of human society,
the farther we get from prejudice of race or color. I was greatly
pleased with the assurance of his liberal policy towards us. I
remarked to him, that no part of the American people would be
treated with respect, if systematically ignored by the government,
and denied all participation in its honors and emoluments. To this he
assented, and went so far as to propose my going in a
representative capacity to an important post abroad—a compliment
which I gratefully acknowledged, but respectfully declined. To say the
truth, I wished to remain at home, and retain the office of United
States Marshal of the District of Columbia.
It is a great thing for Hon. John Mercer Langston to represent
this republic at Port au Prince, and for Henry Highland Garnet to
represent us in Liberia, but it would be indeed a step in advance, to
have some colored men sent to represent us in white nationalities,
and we have reason for profound regret that Mr. Garfield could not
have lived to carry out his just and wise intentions towards us. I
might say more of this conversation, but I will not detain you except
to say, that America has had many great men, but no man among
them all has had better things said of him, than he who has been
reverently committed to the dust in Cleveland to-day.”
Mr. Douglass then called upon Professor Greener, who read a
series of resolutions eloquently expressive of their sense of the great
loss that had been sustained, and their sympathy with the family of
the late President. Prof. Greener then spoke briefly and was followed
by Prof. John M. Langston and Rev. W. W. Hicks. All the speakers
expressed their confidence in President Arthur and in his ability to
give the country a wise and beneficial administration.

conclusion.
As far as this volume can reach that point I have now brought my
readers to the end of my story. What may remain of life to me,
through what experiences I may pass, what heights I may attain, into
what depths I may fall, what good or ill may come to me, or proceed
from me in this breathing world, where all is change, uncertainty, and
largely at the mercy of powers over which the individual man has no
absolute control, if thought worthy and useful, will probably be told by
others when I have passed from the busy stage of life. I am not
looking for any great changes in my fortunes or achievements in the
future. The most of the space of life is behind me, and the sun of my
day is nearing the horizon. Notwithstanding all that is contained in
this book my day has been a pleasant one. My joys have far
exceeded my sorrows, and my friends have brought me far more
than my enemies have taken from me. I have written out my
experience here, not to exhibit my wounds and bruises to awaken
and attract sympathy to myself personally, but as a part of the history
of a profoundly interesting period in American life and progress. I
have meant it to be a small individual contribution to the sum of
knowledge of this special period, to be handed down to after-coming
generations which may want to know what things were allowed and
what prohibited; what moral, social, and political relations subsisted
between the different varieties of the American people down to the
last quarter of the nineteenth century; and by what means they were
modified and changed. The time is at hand when the last American
slave, and the last American slaveholder will disappear behind the
curtain which separates the living from the dead, and when neither
master nor slave will be left to tell the story of their respective
relations, and what happened in those relations to either. My part
has been to tell the story of the slave. The story of the master never
wanted for narrators. They have had all the talent and genius that
wealth and influence could command to tell their story. They have
had their full day in court. Literature, theology, philosophy, law, and
learning, have come willingly to their service, and if condemned they
have not been condemned unheard.
It will be seen in these pages that I have lived several lives in
one. First, the life of slavery; secondly, the life of a fugitive from
slavery; thirdly, the life of comparative freedom; fourthly, the life of
conflict and battle; and, fifthly, the life of victory, if not complete, at
least assured. To those who have suffered in slavery, I can say I too
have suffered. To those who have taken some risks and encountered
hardships in the flight from bondage, I can say I too have endured
and risked. To those who have battled for liberty, brotherhood, and
citizenship, I can say I too have battled; and to those who have lived
to enjoy the fruits of victory, I can say I too live and rejoice. If I have
pushed my example too prominently for the good taste of my
Caucasian readers I beg them to remember that I have written in
part for the encouragement of a class whose aspirations need the
stimulus of success.
I have aimed to assure them that knowledge can be obtained
under difficulties; that poverty may give place to competency; that
obscurity is not an absolute bar to distinction, and that a way is open
to welfare and happiness to all who will resolutely and wisely pursue
that way; that neither slavery, stripes, imprisonment, or proscription,
need extinguish self-respect, crush manly ambition, or paralyze
effort; that no power outside of himself can prevent a man from
sustaining an honorable character and a useful relation to his day
and generation; that neither institutions nor friends can make a race
to stand unless it has strength in its own legs; that there is no power
in the world which can be relied upon to help the weak against the
strong—the simple against the wise; that races like individuals must
stand or fall by their own merits; that all the prayers of Christendom
cannot stop the force of a single bullet, divest arsenic of poison, or
suspend any law of nature. In my communication with the colored
people I have endeavored to deliver them from the power of
superstition, bigotry, and priest-craft. In theology I have found them
strutting about in the old clothes of the masters, just as the masters
strut about in the old clothes of the past. The falling power remains
among them long since it has ceased to be the religious fashion of
our refined and elegant white churches. I have taught that the “fault
is not in our stars but in ourselves that we are underlings,” that “who
would be free, themselves must strike the blow.” I have urged upon
them self-reliance, self-respect, industry, perseverance, and
economy—to make the best of both worlds—but to make the best of
this world first because it comes first, and that he who does not
improve himself by the motives and opportunities afforded by this
world gives the best evidence that he would not improve in any other
world. Schooled as I have been among the abolitionists of New
England, I recognize that the universe is governed by laws which are
unchangeable and eternal, that what men sow they will reap, and
that there is no way to dodge or circumvent the consequences of any
act or deed. My views at this point receive but limited endorsement
among my people. They for the most part think they have means of
procuring special favor and help from the Almighty, and as their “faith
is the substance of things hoped for and the evidence of things not
seen,” they find much in this expression which is true to faith but
utterly false to fact. But I meant here only to say a word in
conclusion. Forty years of my life have been given to the cause of
my people, and if I had forty years more they should all be sacredly
given to the great cause. If I have done something for that cause, I
am after all more a debtor to it than it is debtor to me.
 APPENDIX.
ORATION BY FREDERICK DOUGLASS, DELIVERED ON THE OCCASION
OF THE UNVEILING OF THE FREEDMEN’S MONUMENT, IN MEMORY
OF ABRAHAM LINCOLN, IN LINCOLN PARK, WASHINGTON, D. C.,
APRIL 14, 1876.

Friends and fellow citizens:

I warmly congratulate you upon the highly interesting object
which has caused you to assemble in such numbers and spirit as
you have to-day. This occasion is in some respects remarkable.
Wise and thoughtful men of our race, who shall come after us, and
study the lesson of our history in the United States; who shall survey
the long and dreary spaces over which we have traveled; who shall
count the links in the great chain of events by which we have
reached our present position, will make a note of this occasion; they
will think of it and speak of it with a sense of manly pride and
complacency.
I congratulate you, also, upon the very favorable circumstances
in which we meet to-day. They are high, inspiring, and uncommon.
They lend grace, glory, and significance to the object for which we
have met. Nowhere else in this great country, with its uncounted
towns and cities, unlimited wealth, and immeasurable territory
extending from sea to sea, could conditions be found more favorable
to the success of this occasion than here.
We stand to-day at the national center to perform something like
a national act—an act which is to go into history; and we are here
where every pulsation of the national heart can be heard, felt, and
reciprocated. A thousand wires, fed with thought and winged with
lightning, put us in instantaneous communication with the loyal and
true men all over this country.
 Few facts could better illustrate the vast and wonderful change
which has taken place in our condition as a people, than the fact of
our assembling here for the purpose we have to-day. Harmless,
beautiful, proper, and praiseworthy as this demonstration is, I cannot
forget that no such demonstration would have been tolerated here
twenty years ago. The spirit of slavery and barbarism, which still
lingers to blight and destroy in some dark and distant parts of our
country, would have made our assembling here the signal and
excuse for opening upon us all the flood-gates of wrath and violence.
That we are here in peace to-day is a compliment and a credit to
American civilization, and a prophecy of still greater national
enlightenment and progress in the future. I refer to the past not in
malice, for this is no day for malice; but simply to place more
distinctly in front the gratifying and glorious change which has come
both to our white fellow-citizens and ourselves, and to congratulate
all upon the contrast between now and then; the new dispensation of
freedom with its thousand blessings to both races, and the old
dispensation of slavery with its ten thousand evils to both races—
white and black. In view, then, of the past, the present, and the
future, with the long and dark history of our bondage behind us, and
with liberty, progress, and enlightenment before us, I again
congratulate you upon this auspicious day and hour.
Friends and fellow citizens, the story of our presence here is
soon and easily told. We are here in the District of Columbia, here in
the city of Washington, the most luminous point of American territory;
a city recently transformed and made beautiful in its body and in its
spirit; we are here in the place where the ablest and best men of the
country are sent to devise the policy, enact the laws, and shape the
destiny of the Republic; we are here, with the stately pillars and
majestic dome of the Capitol of the nation looking down upon us; we
are here, with the broad earth freshly adorned with the foliage and
flowers of spring for our church, and all races, colors, and conditions
of men for our congregation—in a word, we are here to express, as
best we may, by appropriate forms and ceremonies, our grateful
sense of the vast, high, and preëminent services rendered to
ourselves, to our race, to our country, and to the whole world by
Abraham Lincoln.
 The sentiment that brings us here to-day is one of the noblest
that can stir and thrill the human heart. It has crowned and made
glorious the high places of all civilized nations with the grandest and
most enduring works of art, designed to illustrate the characters and
perpetuate the memories of great public men. It is the sentiment
which from year to year adorns with fragrant and beautiful flowers
the graves of our loyal, brave, and patriotic soldiers who fell in
defence of the Union and liberty. It is the sentiment of gratitude and
appreciation, which often, in the presence of many who hear me, has
filled yonder heights of Arlington with the eloquence of eulogy and
the sublime enthusiasm of poetry and song; a sentiment which can
never die while the Republic lives.
For the first time in the history of our people, and in the history of
the whole American people, we join in this high worship, and march
conspicuously in the line of this time-honored custom. First things
are always interesting, and this is one of our first things. It is the first
time that, in this form and manner, we have sought to do honor to an
American great man, however deserving and illustrious. I commend
the fact to notice; let it be told in every part of the Republic; let men
of all parties and opinions hear it; let those who despise us, not less
than those who respect us, know that now and here, in the spirit of
liberty, loyalty, and gratitude, let it be known everywhere, and by
everybody who takes an interest in human progress and in the
amelioration of the condition of mankind, that, in the presence and
with the approval of the members of the American House of
Representatives, reflecting the general sentiment of the country: that
in the presence of that august body, the American Senate,
representing the highest intelligence and the calmest judgment in the
country; in presence of the Supreme Court and Chief-Justice of the
United States, to whose decisions we all patriotically bow; in the
presence and under the steady eye of the honored and trusted
President of the United States, with the members of his wise and
patriotic Cabinet, we, the colored people, newly emancipated and
rejoicing in our blood-bought freedom, near the close of the first
century in the life of this Republic, have now and here unveiled, set
apart, and dedicated a monument of enduring granite and bronze, in
every line, feature, and figure of which the men of this generation
may read, and those of after-coming generations may read,
something of the exalted character and great works of Abraham
Lincoln, the first martyr President of the United States.
Fellow citizens, in what we have said and done to-day, and in
what we may say and do hereafter, we disclaim everything like
arrogance and assumption. We claim for ourselves no superior
devotion to the character, history, and memory of the illustrious name
whose monument we have here dedicated to-day. We fully
comprehend the relation of Abraham Lincoln both to ourselves and
to the white people of the United States. Truth is proper and beautiful
at all times and in all places, and it is never more proper and
beautiful in any case than when speaking of a great public man
whose example is likely to be commended for honor and imitation
long after his departure to the solemn shades,—the silent continents
of eternity. It must be admitted, truth compels me to admit, even here
in the presence of the monument we have erected to his memory,
Abraham Lincoln was not, in the fullest sense of the word, either our
man or our model. In his interests, in his associations, in his habits of
thought, and in his prejudices, he was a white man.
He was preëminently the white man’s President, entirely devoted
to the welfare of white men. He was ready and willing at any time
during the first years of his administration to deny, postpone, and
sacrifice the rights of humanity in the colored people to promote the
welfare of the white people of this country. In all his education and
feeling he was an American of the Americans. He came into the
Presidential chair upon one principle alone, namely, opposition to the
extension of slavery. His arguments in furtherance of this policy had
their motive and mainspring in his patriotic devotion to the interests
of his own race. To protect, defend, and perpetuate slavery in the
States where it existed Abraham Lincoln was not less ready than any
other President to draw the sword of the nation. He was ready to
execute all the supposed constitutional guarantees of the United
States Constitution in favor of the slave system anywhere inside the
slave States. He was willing to pursue, recapture, and send back the
fugitive slave to his master, and to suppress a slave rising for liberty,
though his guilty master were already in arms against the
Government. The race to which we belong were not the special
objects of his consideration. Knowing this, I concede to you, my
white fellow citizens, a preëminence in this worship at once full and
supreme. First, midst, and last, you and yours were the objects of his
deepest affection and his most earnest solicitude. You are the
children of Abraham Lincoln. We are at best only his step-children;
children by adoption, children by force of circumstances and
necessity. To you it especially belongs to sound his praises, to
preserve and perpetuate his memory, to multiply his statues, to hang
his pictures high upon your walls, and commend his example, for to
you he was a great and glorious friend and benefactor. Instead of
supplanting you at this altar, we would exhort you to build high his
monuments; let them be of the most costly material, of the most
cunning workmanship; let their forms be symmetrical, beautiful, and
perfect; let their bases be upon solid rocks, and their summits lean
against the unchanging blue, overhanging sky, and let them endure
forever! But while in the abundance of your wealth, and in the
fullness of your just and patriotic devotion, you do all this, we entreat
you to despise not the humble offering we this day unveil to view; for
while Abraham Lincoln saved for you a country, he delivered us from
a bondage, according to Jefferson, one hour of which was worse
than ages of the oppression your fathers rose in rebellion to oppose.
Fellow citizens, ours is no new-born zeal and devotion—merely
a thing of this moment. The name of Abraham Lincoln was near and
dear to our hearts in the darkest and most perilous hours of the
Republic. We were no more ashamed of him when shrouded in
clouds of darkness, of doubt, and defeat than when we saw him
crowned with victory, honor, and glory. Our faith in him was often
taxed and strained to the uttermost, but it never failed. When he
tarried long in the mountain; when he strangely told us that we were
the cause of the war; when he still more strangely told us to leave
the land in which we were born; when he refused to employ our arms
in defence of the Union; when, after accepting our services as
colored soldiers, he refused to retaliate our murder and torture as
colored prisoners; when he told us he would save the Union if he
could with slavery; when he revoked the Proclamation of
Emancipation of General Frémont; when he refused to remove the
popular commander of the Army of the Potomac, in the days of its
inaction and defeat, who was more zealous in his efforts to protect
slavery than to suppress rebellion; when we saw all this, and more,
we were at times grieved, stunned, and greatly bewildered; but our
hearts believed while they ached and bled. Nor was this, even at that
time, a blind and unreasoning superstition. Despite the mist and
haze that surround him; despite the tumult, the hurry, and confusion
of the hour, we were able to take a comprehensive view of Abraham
Lincoln, and to make reasonable allowance for the circumstances of
his position. We saw him, measured him, and estimated him; not by
stray utterances to injudicious and tedious delegations, who often
tried his patience; not by isolated facts torn from their connection; not
by any partial and imperfect glimpses, caught at inopportune
moments; but by a broad survey, in the light of the stern logic of
great events, and in view of that “divinity which shapes our ends,
rough hew them how we will,” we came to the conclusion that the
hour and the man of our redemption had somehow met in the person
of Abraham Lincoln. It mattered little to us what language he might
employ on special occasions; it mattered little to us, when we fully
knew him, whether he was swift or slow in his movements; it was
enough for us that Abraham Lincoln was at the head of a great
movement, and was in living and earnest sympathy with that
movement, which, in the nature of things, must go on until slavery
should be utterly and forever abolished in the United States.
When, therefore, it shall be asked what we have to do with the
memory of Abraham Lincoln, or what Abraham Lincoln had to do
with us, the answer is ready, full, and complete. Though he loved
Cæsar less than Rome, though the Union was more to him than our
freedom or our future, under his wise and beneficent rule we saw
ourselves gradually lifted from the depths of slavery to the heights of
liberty and manhood; under his wise and beneficent rule, and by
measures approved and vigorously pressed by him, we saw that the
handwriting of ages, in the form of prejudice and proscription, was
rapidly fading away from the face of our whole country; under his
rule, and in due time, about as soon after all as the country could
tolerate the strange spectacle, we saw our brave sons and brothers
laying off the rags of bondage, and being clothed all over in the blue
uniforms of the soldiers of the United States; under his rule we saw
two hundred thousand of our dark and dusky people responding to
the call of Abraham Lincoln, and with muskets on their shoulders,
and eagles on their buttons, timing their high footsteps to liberty and
union under the national flag; under his rule we saw the
independence of the black republic of Hayti, the special object of
slaveholding aversion and horror, fully recognized, and her minister,
a colored gentleman, duly received here in the city of Washington;
under his rule we saw the internal slave-trade, which so long
disgraced the nation, abolished, and slavery abolished in the District
of Columbia; under his rule we saw for the first time the law enforced
against the foreign slave-trade, and the first slave-trader hanged like
any other pirate or murderer; under his rule, assisted by the greatest
captain of our age, and his inspiration, we saw the Confederate
States, based upon the idea that our race must be slaves, and
slaves forever, battered to pieces and scattered to the four winds;
under his rule, and in the fullness of time, we saw Abraham Lincoln,
after giving the slaveholders three months’ grace in which to save
their hateful slave system, penning the immortal paper, which,
though special in its language, was general in its principles and
effect, making slavery forever impossible in the United States.
Though we waited long, we saw all this and more.
Can any colored man, or any white man friendly to the freedom
of all men, ever forget the night which followed the first day of
January, 1863, when the world was to see if Abraham Lincoln would
prove to be as good as his word? I shall never forget that memorable
night, when in a distant city I waited and watched at a public
meeting, with three thousand others not less anxious than myself, for
the word of deliverance which we have heard read to-day. Nor shall I
ever forget the outburst of joy and thanksgiving that rent the air when
the lightning brought to us the emancipation proclamation. In that
happy hour we forgot all delay, and forgot all tardiness, forgot that
the President had bribed the rebels to lay down their arms by a
promise to withhold the bolt which would smite the slave-system with
destruction; and we were thenceforward willing to allow the
President all the latitude of time, phraseology, and every honorable
device that statesmanship might require for the achievement of a
great and beneficent measure of liberty and progress.
Fellow citizens, there is little necessity on this occasion to speak
at length and critically of this great and good man, and of his high
mission in the world. That ground has been fully occupied and
completely covered both here and elsewhere. The whole field of fact
and fancy has been gleaned and garnered. Any man can say things
that are true of Abraham Lincoln, but no man can say anything that is
new of Abraham Lincoln. His personal traits and public acts are
better known to the American people than are those of any other
man of his age. He was a mystery to no man who saw him and
heard him. Though high in position, the humblest could approach
him and feel at home in his presence. Though deep he was
transparent; though strong, he was gentle; though decided and
pronounced in his convictions, he was tolerant towards those who
differed from him, and patient under reproaches. Even those who
only knew him through his public utterances obtained a tolerably
clear idea of his character and his personality. The image of the man
went out with his words, and those who read them, knew him.
I have said that President Lincoln was a white man, and shared
the prejudices common to his countrymen towards the colored race.
Looking back to his times and to the condition of his country, we are
compelled to admit that this unfriendly feeling on his part may be
safely set down as one element of his wonderful success in
organizing the loyal American people for the tremendous conflict
before them, and bringing them safely through that conflict. His great
mission was to accomplish two things: first, to save his country from
dismemberment and ruin; and second, to free his country from the
great crime of slavery. To do one or the other, or both, he must have
the earnest sympathy and the powerful coöperation of his loyal
fellow-countrymen. Without this primary and essential condition to
success his efforts must have been vain and utterly fruitless. Had he
put the abolition of slavery before the salvation of the Union, he
would have inevitably driven from him a powerful class of the
American people and rendered resistance to rebellion impossible.
Viewed from the genuine abolition ground, Mr. Lincoln seemed tardy,
cold, dull, and indifferent; but measuring him by the sentiment of his
country, a sentiment he was bound as a statesman to consult, he
was swift, zealous, radical, and determined.
Though Mr. Lincoln shared the prejudices of his white fellow
countrymen against the negro, it is hardly necessary to say that in
E
his heart of hearts he loathed and hated slavery. The man who
could say, “Fondly do we hope, fervently do we pray, that this mighty
scourge of war shall soon pass away, yet if God wills it continue till
all the wealth piled by two hundred years of bondage shall have
been wasted, and each drop of blood drawn by the lash shall have
been paid for by one drawn by the sword, the judgments of the Lord
are true and righteous altogether,” gives all needed proof of his
feeling on the subject of slavery. He was willing, while the South was
loyal, that it should have its pound of flesh, because he thought it
was so nominated in the bond; but farther than this no earthly power
could make him go.

E
“I am naturally anti-slavery. If slavery is not
wrong, nothing is wrong. I cannot remember
when I did not so think and feel.”—Letter of Mr.
Lincoln to Mr. Hodges, of Kentucky, April 4,
1864.

Fellow citizens, whatever else in the world may be partial, unjust,

and uncertain, time, time! is impartial, just, and certain in its action.
In the realm of mind, as well as in the realm of matter, it is a great
worker, and often works wonders. The honest and comprehensive
statesman, clearly discerning the needs of his country, and earnestly
endeavoring to do his whole duty, though covered and blistered with
reproaches, may safely leave his course to the silent judgment of
time. Few great public men have ever been the victims of fiercer
denunciation than Abraham Lincoln was during his administration.
He was often wounded in the house of his friends. Reproaches came
thick and fast upon him from within and from without, and from
opposite quarters. He was assailed by abolitionists; he was assailed
by slaveholders; he was assailed by the men who were for peace at
any price; he was assailed by those who were for a more vigorous
prosecution of the war; he was assailed for not making the war an
abolition war; and he was most bitterly assailed for making the war
an abolition war.
But now behold the change: the judgment of the present hour is,
that taking him for all in all, measuring the tremendous magnitude of
the work before him, considering the necessary means to ends, and
surveying the end from the beginning, infinite wisdom has seldom
sent any man into the world better fitted for his mission than
Abraham Lincoln. His birth, his training, and his natural endowments,
both mental and physical, were strongly in his favor. Born and reared
among the lowly, a stranger to wealth and luxury, compelled to
grapple single-handed with the flintiest hardships of life, from tender
youth to sturdy manhood, he grew strong in the manly and heroic
qualities demanded by the great mission to which he was called by
the votes of his countrymen. The hard condition of his early life,
which would have depressed and broken down weaker men, only
gave greater life, vigor, and buoyancy to the heroic spirit of Abraham
Lincoln. He was ready for any kind and quality of work. What other
young men dreaded in the shape of toil, he took hold of with the
utmost cheerfulness.

A spade, a rake, a hoe,

A pick-axe, or a bill;
A hook to reap, a scythe to mow,
A flail, or what you will.

All day long he could split heavy rails in the woods, and half the
night long he could study his English Grammar by the uncertain flare
and glare of the light made by a pine-knot. He was at home on the
land with his axe, with his maul, with gluts, and his wedges; and he
was equally at home on water, with his oars, with his poles, with his
planks, and with his boat-hooks. And whether in his flat-boat on the
Mississipi river, or on the fireside of his frontier cabin, he was a man
of work. A son of toil himself, he was linked in brotherly sympathy
with the sons of toil in every loyal part of the republic. This very fact
gave him tremendous power with the American people, and
materially contributed not only to selecting him to the Presidency, but
in sustaining his administration of the government.
Upon his inauguration as President of the United States, an
office, even where assumed under the most favorable conditions,
fitted to tax and strain the largest abilities, Abraham Lincoln was met
by a tremendous crisis. He was called upon not merely to administer
the government, but to decide, in the face of terrible odds, the fate of
the Republic.
A formidable rebellion rose in his path before him; the Union was
practically dissolved; his country was torn and rent asunder at the
center. Hostile armies were already organized against the republic,
armed with the munitions of war which the republic had provided for
its own defence. The tremendous question for him to decide was
whether his country should survive the crisis and flourish, or be
dismembered and perish. His predecessor in office had already
decided the question in favor of national dismemberment, by denying
to it the right of self-defence and self-preservation—a right which
belongs to the meanest insect.
Happily for the country, happily for you and for me, the judgment
of James Buchanan, the patrician, was not the judgment of Abraham
Lincoln, the plebeian. He brought his strong common sense,
sharpened in the school of adversity, to bear upon the question. He
did not hesitate, he did not doubt, he did not falter; but at once
resolved at whatever peril, at whatever cost, the union of the States
should be preserved. A patriot himself, his faith was strong and
unwavering in the patriotism of his countrymen. Timid men said
before Mr. Lincoln’s inauguration, that we had seen the last
President of the United States. A voice in influential quarters said
“Let the Union slide.” Some said that a Union maintained by the
sword was worthless. Others said a rebellion of 8,000,000 cannot be
suppressed; but in the midst of all this tumult and timidity, and
against all this, Abraham Lincoln was clear in his duty, and had an