charter incorporating a trading company with power to open mines in New England, and the ground of their objection was that any such charter tended to create a monopoly and enhance prices. In 1717 the law officers of the British Crown advised against the incorporation of a marine-insurance company as a dangerous experiment; and it was only after evidence had been laid before the attorney general three years later, showing that more than 150 private insurers had failed, that the act of 1720 incorporating two such companies was adopted. The second half of the very act incorporating these companies contains the prohibition against corporate organizations which have given that act the popular name of the "bubble act."

The same prejudice makes it appearance in the decree of the Twentieth Germinal of the Year II by the French convention, which prohibited the formation of stock companies by anybody or for any purpose whatever.

In spite of all the enormous corporate development that has taken place in this country and in England in the last half century, and in spite of the reckless throwing down by the States of this Union of all the barriers anciently maintained against the indiscriminate organization of business corporations (on which I shall comment later), there has always been among the masses of the people a strong bias against corporations, manifesting itself in the verdicts of juries and sometimes in the opinion of the courts. This bias has now passed over into politics, and the favorite ground of attack by the demagogue on anybody in public life, or on anyone who desires to enter public life, is that he represents corporate interests or that he is a corporation lawyer.

By a short review of the corporation laws of this country I shall demonstrate that the people themselves are responsible for the conditions of which they now complain; that if there are Frankensteins in corporate form stalking over the land, spreading terror and threatening destruction, the people themselves have created them by their duly accredited representatives in the legislatures of the States.

In 40 States corporations may be organized for any lawful business or purpose. In 41 States there is no superior limit on the capital stock of a corporation. In only 11 States is there an inferior limit, ranging from $1,000 to $10,000. In 24 States perpetual charters are permitted, and in most of the others charters limited as to time may be renewed again and again.

In 17 States the merger or consolidation of corporations is specially permitted It is specially prohibited in only 2 States.

In 19 States the power to hold stock in other corporations is broadly given. It is specially prohibited in only 2, and given under restrictions in 7.

In 39 States there is no provision that any part of the capital stock shall be paid in money, either before the corporation becomes a going concern or at any period in its history. One State provides for the payment of $1,000 in money, 3 provide that 10 per cent, one that 20 per cent, one that 25 per cent, and one that 50 per cent of the capital stock shall be so paid.

In 38 States by statute, and in 3, by jurisprudence, it is provided that stock may be issued for property, and in most of them for labor or services as well. In only 14 States is the issue of fictitious stock declared void. In 9 States the judgment of the board of directors as to the value of the property for which stock is issued is declared conclusive, except in case of actual fraud; but the stock is not declared void. In Montana any arbitrary value whatever may be placed on a mine for which stock is issued. In Iowa, Massachusetts, Texas, and Virginia only is any State supervision exercised over the issuance of stock for property.

In 21 States corporate meetings may be held either within or without the State of incorporation.

Annual financial reports are required to be made to a State officer in 11 States. In 18 States is required an annual report containing nothing but certain formal matters such as the name and domicile of the company, the names and residences of officers, and the amount of capital stock.

In none of the States is any provision made against the same persons acting as directors in corporations of the same character and engaged in the same business.

In 32 States there are no provisions requiring any of the directors of a corporation to be residents of the creating State. Eleven States require one director, two States three directors, and two States a majority of the directors to be residents of the State.

During the last 10 years there seems to have been a competition between the States as to which of them would be able to invent and adopt the most unre

stricted corporation laws. The spur to this competition has been a greed for revenue, and the encouragement lay in the success of the State of New Jersey, which was the pioneer in this legislation. Out of her bosom have come the great trusts, the holding companies and the gigantic monopolies, all with their water-logged capital stocks. But there are now eight other States prepared to compete with her in the launching of similar piratical craft upon the sea of

commerce.

The corporation laws of the United States, for the incorporation of companies in the District of Columbia, and the national banking laws contain many of the objectionable features of the State incorporation laws.

In the District of Columbia a corporation without limit as to capital stock, and without limit as to corporate existence, may be formed for any enterprise or business which may be lawfully conducted by an individual, except to buy, sell, or deal in real estate. The power to consolidate with other companies is not given, and the holding of stock in other corporations is prohibited; and here, too, there is an absence of prohibition against the identity of directors or officers of corporations of the same character, and against the holding of their stocks by other corporations.

Under the national banking laws there is no limit to the capital stock. Corporate life is for 20 years but may be renewed an indefinite number of times. National banks can not hold stock in other corporations, but there is no provision against other corporations holding stock in national banks, and no provision against the identity of the directors in two or more banks. Merger or consolidation of banks is not provided for.

It thus appears that by the law of the land there stands prepared all the legal machinery apt to the hands of the unscrupulous to create combinations and monopoly, to concentrate wealth and power in a few hands, and to defraud the unthinking investor with wind-blown stock.

In New York, under whose laws a perpetual corporation with unlimited capital stock, with the power of merger, and with the power to hold stock in other corporations, can be formed for any lawful purpose or purposes, except to practice law, or to employ attorneys to perform legal services, they have begun to incorporate estates. If this is lawful there, it must also be lawful under the statutes of many other States whose laws are similar. Is not this a form of mortmain contrary to the fundamental principles of Anglo-Saxon government? How will it stand with the Republic in a generation from now if the estates of all the millionaires and multimillionaires are perpetually incorporated?

In some of the agricultural States great planting companies are organized, which absorb farm after farm until their land holdings approach a principality in extent. How can that firmest foundation of free government, a land-owning yeomanry, exist under such conditions? Down into the hearts of all Englishspeaking people have sunk the picture of The Deserted Village and the words of its author pronouncing accursed the land "where wealth accumulates and men decay."

Under the power to create corporations with unlimited capital stock, either directly or by consolidation, great aggregations of capital have been formed, which have seized upon specific industries and driven everybody else out of them. They stand like armed colossuses astride the gateways of commerce and destroy every entrant who presumes to compete with them. They have no legal grant of monopoly, but monopoly comes to them by virtue of their size, organization, and strength, just as surely as monopoly went to the East India Co. by royal grant.

No honest wise man will enter into competition with them, and only the dishonest would-be wise man attempts it sometimes, merely for purposes of blackmail. Which makes for the public good the more: To have employed in one industry in which capital and labor can be profitably invested 500 corporations with a capital of three millions each, or one corporation with a capital of fifteen hundred millions? The proposition is not discussable as long as our inherited ideals of what our democratic civil society is, or ought to be, remain unchanged.

Whether these enormous corporations are formed by original incorporation, or by consolidations or merger, or by the holding of the capital stocks of other corporations, the economic result is the same. Each of these forms spells practical monopoly. The result reached rather than the method of reaching the result is what concerns the public, and no amount of technical reasoning will convince the people that a monopoly produced by one of these methods is any different from a monopoly produced by any other of them. Hence all these

large corporations are popularly regarded as public enemies, and there is a general belief that if the Republic does not slay them they will slay the Republic. We may almost say of them what Sir John Culpepper said in the long Parliament of the monopolies of his time:

"They are a nest of wasps-a swarm of vermin which have overcrept the land. Like the frogs of Egypt, they have gotten possession of our dwellings and we have scarce a room free from them. They sup in our cup; they dip in our dish; they sit by our fire. We find them in the dye vat, washbowl, and powdering tub. They share with the butler in his box. They will not bate us a pin. We may not buy our clothes without their brokerage. These are the leeches that have sucked the commonwealth so hard that it is almost hectical."

The economic advantages, if any, that flow from these vast aggregations of capital are drowned in the firm belief that they exercise too much political power; that they exercise such power selfishly and unscrupulously; that they bar the door to private enterprises, blight local industries, cramp the industrial freedom of individuals, destroy equality of opportunity, and extinguish all hope, and hence all ambition, for industrial independence and autonomy. The law of the survival of the fittest is the divine law of progress and development in nature. It is the law of human society, and particularly of trade and commerce, which makes modern society possible. Contest and conflict, the death of old and the birth of new forms are essential to the working of this law, and the predominance of any force in commerce operating to destroy the benign germs of commercial ferment must exercise a deterrent effect on the growth and progress of any free people.

But the great American national disgrace is found in the issuance of fictitious or watered stock. This is made possible by those corporation laws which provide no governmental supervision over the organization of corporations, which require no part of the capital stock to be paid in money, and which permit the issuance of stock at the pleasure of the organizers and directors for property, labor, and services at such valuations as they may choose to place on them. It is known that one of the earliest industrial combinations of 30 years ago issued to its promoters $10,000,000 in stock for a patent which was not worth a copper cent, and which was never used in the operations of the company. The revelations made by the congressional probe now penetrating the history of two of the greatest industrial combinations of modern times are of the most unsavory nature. Indeed, I believe it can be truthfully stated that, under the pretense of anticipating a future earning value, it is the fashion to insert from 20 to 60 per cent of water into the organization of all corporations whose stocks are exploited on the great financial markets. In the notorious Chicago & Alton Railroad deal the Interstate Commerce Commission found that $62,660,000 of stocks and securities were issued for which the corporation received no value whatever. The proportion of water in that case exceeded 54 per cent.

The lax corporation laws above enumerated give rise to a host of fraudulent corporations which are exploited through the mails and the various advertising media. The post-office authorities are kept busy hunting down these swindles. They have duly attested charters, corporate seals, and handsomely engraved securities. If one should communicate with the public officials of the State of their domicile, the answer would be that such corporations are organized in due form of law with a named capital stock. No sworn public reports of these corporations being required, except in a few States, no information, as a rule, can be obtained of their condition. One reads with amazement of the objects and purposes of the fraudulent companies organized in England during the South Sea excitement and of the gullibility of the subscribing public, but such things are going on in this country all the time. The last scheme unearthed is that of a million-dollar company to manufacture and sell an antibug chalk. That is a chalk which will make a mark that no bug will crawl over. Wonderful new processes of manufacture and miraculous results to be produced by the mysterious power of electricity are the favorite bait used by the corporation fakers to catch the gudgeon investor.

To my mind the most vicious of all the provisions in the statutes above enumerated is that authorizing one corporation to own and vote stock in another. This provision is the mother of the holding company and the trust. It provides a method for combining under one management and control corporations from one end of the Nation to the other. Before these statutes were passed the courts of the country had held with great unanimity that it is against public policy for one corporation to hold and vote stock in another, and the general ground of the doctrine is that such stockholding tends to restrain trade and to foster

monopoly. That this doctrine is true has been demonstrated by the fact that most of the great trusts have clothed themselves in the form of holding companies.

One of the most remarkable of these stockholding statutes is that passed in the State of Utah in 1907, amending section 5 of chapter 26 of the laws of 1901 and giving to Utah railroad companies a power to acquire stock in other corporations so broad and unlimited that under it a Utah railroad company can acquire and control the stock of all transportation corporations by land, river, lake, or sea in the United States, even down to the smallest tramway in a country village; of all terminals, wharves, docks, or other shipping facilities; of all express companies; of all refrigerator lines and refrigerator plants; and of all corporations that manufacture, sell, lease, or otherwise provide railroad equipment. The only limitation on this grant is that it shall not extend to the ownership of stock or securities of a parallel and competing line of railroad situated within the State of Utah. When one remembers that Utah is the domicile of the Union Pacific Railway Co. and that this statute was passed after that company had acquired large blocks of stock in eight of our great railroad systems, one immediately discerns in this legislation the lion's pawthe masterhand of the now deceased president of that company.

As regards quasi public corporations, which are under or which can be put under strict governmental supervision and control and whose rates can be regulated by law, the right to hold stock in other similar corporations does not lead to the same consequences as in industrial private corporations, which are exempt from any such regulation, and therefore these corporations require in this regard a somewhat different treatment from industrial corporations.

It is no uncommon thing to see corporations organized under the laws of one State that do not operate in that State at all, that own their property, conduct their corporate business, and hold their directors' meetings in other States, and that have no connection with the State of their origin, except, perhaps, to conduct an annual meeting of stockholders by proxy. There are hundreds of corporations of this sort in several of the States, particularly in New Jersey.

This is the result of those statutes which permit corporate meetings outside of the domicile of the corporations.

This power, coupled with the absence of prohibition of the same persons serving as directors in corporations of the same character engaged in the same business, and the absence of requirement that directors shall be residents of the State of a corporation's domicile, is just as effective to produce a trust or a combination in restraint of trade as a holding company.

The majority stockholders in many corporations in many States can combine expressly, or by what is called a gentleman's agreement, and elect the same board of directors and the same officers in all the corporations. This board of directors can sit in some central city and govern all the corporations as if they

were one.

Of what avail will it be to break up the Standard Oil Co. and the American Tobacco Co. into their constituent elements if all these constituent elements have identical stockholders, a community of interests, and the legal power to establish substantial identity of directors among them?

Each constituent will claim that it has selected from among its stockholders the most expert and experienced persons to manage its affairs and that the selection of the same persons in all the corporations is a mere coincidence, resulting from the operation in each one of identically the same causes. Such a prop

osition is difficult to meet, and can only be overthrown by evidence to show that all of these elements are in fact acting in the same perfect harmony that characterized them when they were governed by the parent company. To prove this means other Government suits and more years of litigation.

Is there a remedy for all these evils? Manifestly, there is, and it lies in the source from which the evils have sprung; that is. in modifying the corporation laws of the various States. Concerted action among the States will end all the trouble. If every State in the Union will purge its corporation laws of all objectionable features, then the breeding places of industrial monstrosities are destroyed. If every State under whose laws these monstrosities have been brought into being will exercise its reserved power over corporations and compel them either to conform to the new régimé or to dissolve and liquidate, then the existing crop will be destroyed without hope of successors. The doctrine of Dartmouth College v. Woodward-that a corporate charter is a contract and can not be repealed or substantially modified by the legislature without the con

sent of the corporation-has been rendered inapplicable in practically all the States by the reservation of the right of repeal or modification.

It appears to me that it would require but a small amount of constructive statesmanship to bring about a State conference and united action on this grave subject. Even if the Commission on Uniform State Laws, in whose work this association takes such a large part, can ever agree on a uniform corporation law, it is doubtful whether it can exert the moral or the political power to get it adopted without such a conference among the States. This is work for the "house of governors," which assembles this year on September 12.

Every State in this Union is sovereign in every respect except in so far as it bas surrendered its sovereign powers to the Federal Government. Over its own domestic affairs, including all intrastate commerce, it has absolute power under the restrictions imposed in the Federal Constitution. A State may arbitrarily exclude from her domestic commerce every foreign corporation, and in the face of such a prohibition such foreign corporations can not enter the borders of the State at all. except when in the conduct of interstate commerce, which is exclusively under the control and regulation of the Federal Congress, or except when in the employment of the Federal Government. Of course this power of exclusion does not extend to the national banking corporations or the Federal railroad corporations which are instrumentalities of the Federal Government. Corporations of the District of Columbia are in the States on the same footing as any other foreign corporation.

If, therefore, the character of the corporations engaged in interstate commerce is unobjectionable, there is no valid reason why they should not be permitted to engage freely in all the States in both interstate and intrastate commerce. These forms of commerce are, in many instances, so intimately connected and so intricately interwoven that it is extremely difficult to draw the line of demarcation where one begins and the other ends, and the advantages of commingling them are manifest. And yet these two branches of commerce are respectively under the control of two separate and distinct sovereign powers, neither of which can intrude upon the sphere of the other, and neither of which can surrender its power and jurisdiction to the other. The corporations of other States and of foreign countries are generally permitted to engage in intrastate commerce in all the States, and this under a rule of comity which is derived from international law, but, as stated above, it is one of those rules which each State may apply, or not, at her pleasure. Nothing would be more hostile to that fraternal feeling which ought to exist between the component parts of this Republic of republics "-"this indissoluble Union of indestructible States "--and nothing more injurious from an economic point of view than a general corporation war between the States by which each State would absolutely exclude all the corporations of the other States from all participation in intrastate commerce. Nothing will more surely tend to provoke such a war than for a number of States to maintain a system of corporation laws under which a pestiferous swarm of criminal corporations will be continually precipitated into all the channels of trade. In the absence of a hotbed in which to grow these vicious forms, there is absolutely no need for the exercise of any regulative Federal action further than to prohibit and to punish unlawful combinations between otherwise unobjectionable corporations in interstate and foreign commerce.

Under section 10 of Article I, of the Constitution of the United States, the States of the Union, with the consent of the Congress, can enter into any agreement or compact with each other not in contravention of the Constitution itself.

This important clause in the Constitution of our country has been seldom used. Omitting certain agreements as to boundaries, the only instance I now recall is one in the acts of the Sixty-first Congress authorizing the States to enter into agreements or compacts to conserve forests and watersheds of navigable streams flowing through their borders. It may be used to round out and settle many questions of interstate character not confided to the Federal Government, such as drainage, irrigation, land reclamation, levee building, sewage disposition, the conservation of forests, and sanitary measures, such as the elimination of the breeding places of disease and damage producing insects and animals. By the wise and beneficent use of this clause will disappear that "sphere of twilight," that supposed "no-man's land, free from any legislative control by State or Nation," which the new nationalism invites the Federal Government to invade and occupy.