New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1891-07-02
DUTIES OF DIRECTORS.
Mr.. DEPEw TELLS WHAT THEY ARE.
THE PHILOSOPHY OF THE RECENT TRIAL or
yEw-HAvEN aREoroRs-wHar WOULD
FOLLOW IF THEY WE'RE HELD
PERSONALLY RESPONSIBLE

Cbaunccy NJ. Depew did not sail for Europe yes
terday in consequence Of the Illness OF Mrs william
Hegeman, his wife's mother. Mrs. Hegeman is not
seriously sck and though Mr.. Depew's plans ar,
NJ present chaotic 10 use his word he viii
probably her recovery for his usual summer trim
abroad.
a Tribune reporter asGed Mr.. Depew for a state
ment Of his opinions about the responsibility Of the
directors Of the railroad and other oorpoauons in
view Of the president Of the Centraps recent OK
periences as director Of the New-York and New.
Haven Railroad and the discussion which the TRIAL
aroused throughout tho country. Mr.. Depew con.
sented TO give bis views on the subject and did 50
In the following words:
Probably no question ia receiving at present 50
much attention the how far shoud the director
Of corporation dire.t and be held personally re-
sponsble for the acts omissions Of his company.
"The indictment and trial Of the directors Of the
New-York NewHaven and Hartford Railroad Com
psny has called universal attention to the subject
II Is not only matter OF discussion in the press and
among the people generally, but IS very seriously
considered in all Its aspects by the directors and
stockholders OF large corporations.
The popular theory is that the directors should be
held personally responsible for everything which the
corporation does or Omts 10 do. II this should be-
the rule and be adopted by the courts it would
change entirely the character OF the present directo
rate. The directors then would be necessarily alarcd
officials, giving their whole time to the affairs Of their
respective companies.
In the infancy Of corporations the directors were
at the same time the owners and gave to the bust.
ness most Of their time end attention. But the
corporations have expanded with the growth OF the
country and most Of all the great carrying companies
II would not be possible for the Board Of Directors
Of Of the transcontinental lines. even Il they
gave their whole time to the business, to meet the
requirements Of this demand. 1t would b
equally difficult in the Of the Lake shore road,
which through seven States, with conflicting
Jurisdictions and with laws constantly enacted by
the Legislatures Of these several commonwealths 10
be compiled with ltigated on account Of their
interfering with the interstate obligations Of the corpo
ration
1.-THE New-Yofk Central Is wholly within one State,
with the exception Of a small part Of its West Shore
line. It's road includes the New-York Central, tho
West Shore the Harlem, and the Rome WATERFOWL and
Ogdensburg. The direct mileage is over 1000 miles,
Il will earn about 800 100000 and pay out S26 100000
I'm wages, material and maintenance. IL has
$4,000 employees, carries over 20000,00O OF people
nually and has many millions Of separate business
transactions SO long the directors selected be-
cause Of their business reputation and standing and
are less absorbed in the occupations which have
given them their regulations and their fortunes, 1t will
be absurd to expect OF them anything more than
general supervision OF the operations Of the company
They cannot be expected to follow the nnumers
BILE changes which are constantly taking place in the
laws relating 70 railways ana cOipOihOlOnS
But the critic Immediately says These gentlemen
have no right to assume such places unless they
willing to fulfil all the requirements Of the place.
and to be practical managers Of the property
In this view have at once before US the problem oil
a radical change In existing conditions. The stock
holders elect from among their number those VINO nave
the best established regulations for integrity and bust
ness judgment They expect these representatives to
select the best talent for the executive and other
officers to act upon the recommendations and sugges
tons which may be brought to them from the various
departments through the president, as to maintain
the efficiency OF the road and prevent extravaganza or
wastefuness In expenditures. In other words. the d.
reotOrs appoint the president vicepresdents, general
superintendent chief engineers and heads OF the
freight passenger and mot1ve-power departments and
then are the check governor upon the machinery
thus created.
"The practical management Of each department Of
this vast and complicated busine takes the time
strength and ability Of expert and bis assistants
Through them the president in contact with and
Is enabled to direct and keep in harmony all branches
OF the service But the directors can be Informed OF
the operations OF the company, Of its needs and obga
lions only through the president In the reports which
he makes from time to tme and the acquisitions which
he lays before them.
II they met every day they would know little more
The result is that In all of these great corporations the
meeting Of the directors is nfrcquent and formal The
directors serve most useful purpose. They arc tie
court Of last The fact that they have the power
OF approval and refusal OF appointment and dismissal
keeps the executive alert for himself ana exacung
with suborinates and especially careful about violating
the law or the charter But the stockholders more
Immediately are benefited by this reserve force and
supervision. The real responsibility of the cor
noration In its contact with the public
rests with the president and ofncers OF
the company. Ii is for them TO know what the laws
are what changes made in them BY the Legislatures
Of the different States and by Congress 10 see that
they are properly obeyed, or TO ascertain on inter
state questions the relation Of the corporation 10 them
The duty devolves upon them TO give the public tle
hest service and the fullest protection to know the
condition of their property and to maintain its ef'
eciency and serviceabity. All the directors can do
in these matters is punish ineciency or dishonesty
by the discharge of unworthy officers and the selection
OF competent successors.
/" the officers bring 70 the attention Of the directors
defect Of roadway, BRIDGE tunnel or equipment which
must be remedied to preserve the safety OF travel
on the line, and law 10 be carried into enect-then
the directors refuse account of the expense. to
carry ont the recommendations, they assume the re-
sponsblHty and are directly liable for the conse
QuenCes.
But s,lppose II should be held that thu directors
must be all that this new requirement calls Tor Inc
affairs Of one of these great corporations are SO vast
that the directors would have 10 abandon their In
business
the interests of the company. The company then
woud he governed not by a president, but by COM
mttee in perpetual session. There would be virtually
thirteen presidents. 1t is wellknown rule IN the
command Of armleswhch are very analogous TO these
great corporatonsthat success is In proportion b
The concentration Of authority and responsibility
aResides. a dictatorship Of this sort would defeat
every uurpose for which board Of directors IS now
elected Now they are check upon the officers
They prevent the officers running away with the stock
holders money. They keep them from using the
corporation other purposes than those for when
WAS organized They hold them to the rigid performance
Of the duties for which they are appointed ana their
power of removal keeps the officers up 10 the mara
Of giving their best service 70 the public ana patrons
of the road. .,.ios om.a-s
But II they were all active and salaried omeers
their representative character would be gone ana tho
whole theory upon which our corporations are .I Nv
conducted 80 completely changed that there wouiu Oe
no directors, in the present sense, in existence a.,
The more closely this question is studied oY IN