ÆäÀÌÁö À̹ÌÁö
PDF
ePub

Let us trace the effect of the holding company on competition. Suppose there is one great corporation having ten million dollars of capital in some line of industry, and five minor ones having two millions each, and that their capital is commensurate with the value of their assets. Suppose the large establishment seeks to absorb the whole business. Without the device of the holding company, it would be necessary to absorb each by purchase or to consolidate with the unanimous consent of all. It is reasonably certain that one of these five competitors will wish to continue in business. Even if all the plants should be purchased outright, some of their managers who have ability in that line of business would start another, perhaps more thoroughly equipped, factory. Competition would almost certainly survive if these five competing companies could only be eliminated by the ordinary means of amalgamation. But the large corporation, acting as a holding company and having the power to acquire the stocks of other corporations, can buy up, for a little over a million dollars each, a controlling interest in the five companies. Instead of requiring an investment of ten millions, competition could be eliminated by an expenditure of a little more than five millions. The evil does not end there. There is often a possibility of concealment which does not square with the best business methods. Where interholding of stock exists, it is not always easy to trace or detect the control

of one corporation by another, or to place responsibility upon the proper parties.

The

A very ludicrous incident illustrating this point occurred in a Southern city. A corporation was established with the name of the Good Oil Company -not at all modest in its selection of a name. avowed and widely advertised object of that concern was to cut prices and compete with the larger corporation, which had incurred the ill-will of the public. Subsequently it became known that for three or four years it had been owned by the very corporation which it was denouncing and against which it was masquerading as a competitor, thereby capitalizing a pretended independence, when none existed.

If it seems best for a number of companies to unite because of ruinous competition or other good reason, such a course might be justified, and in most circumstances the law would interpose no barrier. But when these combinations are formed by the investment of half the amount of their capital, and frequently not by the payment of money, but by issuing new stock, then the public is not benefited, but, on the contrary, is injured. Such a power stimulates speculative control of enterprise rather than a serious effort to render efficient service. Doubtless in many cases the holding company is dealing fairly with the public, and if declared illegal, and dissolved, in some instances great injury would result. But neverthe

less, in view of the possibilities for exploiting the public which this form of organization affords, it should be forbidden in the future, whatever course may be pursued toward those already in exist

ence.

The true conception of a corporation is too often lost sight of. This conception was well expressed in 1809 by Judge Spencer Roane in Currie's "Administrators v. Mutual Assurance Society," as follows: 1

With respect to acts of incorporation, they ought never to be passed, but in consideration of services to be rendered to the public. This is the principle on which such charters are granted even in England (1 Bl. Com., 467), and it holds a fortiori in this country, as our bill of rights interdicts all exclusive and separate emoluments or privileges from the community, but in consideration of public services. (Art. 4.) It may be often convenient for a set of associated individuals to have the privileges of a corporation bestowed upon them; but if their object is merely private or selfish, if it is detrimental to, or not promotive of, the public good, they have no adequate claim upon the legislature for the privilege.

In granting valuable powers and privileges to these corporate organizations, the purpose of the state is, or should be, to promote the general weal and not to enrich a certain few individuals.

Un

1 Hening & Munford's Virginia Reports, vol. iv, pp. 347-48.

less a corporation can perform some service for the public which the individuals composing it could not accomplish individually without these powers, the corporation has no moral right to existence, and should forfeit the special privileges which it has been permitted to exercise.

CHAPTER VI.

ADVISABLE REGULATION OF PRIVATE

CORPORATIONS

THERE are four ways in which the state can deal with corporations. The first is to leave them alone, and allow them free course. The second, is to destroy them, the third, to regulate them, and the fourth, to acquire and own them. The first method suggested is out of the question. It would be taking a long step backward after all these years of beneficial regulations to give corporations full and unrestricted control of the respective branches of industry and transportation in which they are engaged. It would afford them a power deleterious to the public welfare. To destroy them, as suggested in the second plan, would amount to a declaration that to conduct operations on a large scale is not desirable. The fourth method, that of acquiring and operating large combinations, has its advocates. Many believe that the great transportation lines will be gradually acquired by the government, and that later the state will take over industrial establishments, one by one according to magnitude.

One of the numerous objections frequently urged

« ÀÌÀü°è¼Ó »