The times. [volume] (Richmond, Va.) 1890-1903, 1895-02-08
FRIDAY FEBRUARY s. 1895.
CORPORATE EVILS AND THEIR CURE.

CORPORATE EVILS AND THEIR tUhG'
Judge Gsynor, of Brooklyn. has writ
ten letter TO the State Board or Media
tion and Arbitration. i'm New York. re-
garding the Brooklyn strike, In which ne
makes some very interesting statements.
lie says that the Brooklyn city railroad
up 10 three years ago, was healthy
enterprise. paying large dividends 10 its
stockholders and giving entire 5atiSfac-
ton to the community, although its obli-
cations of 100000 of bonds ana S3VO'vVo
of stock were out OF proportion 10 me
money that the enterprise had reaily
cost. But within the past three years the
bonded debt OF this company has been
raised to six millions Of dollars ana us
sock has been increased 10 twelve mil
lions. 1t is true that coinc!dent with TINS
increase the company ceased using morse
power and resortcd to electricity, but the
Improvement TO the plant represents NOUN
ing Ike the twelve millions OF additional
obligations that il has incurred. But the
case has proven much more scandalous
than this. The next step was 10 lease
This immense property TO little street
railway company owning less than
nile Of track and having capital of
100000. This second company was to pay
the interest on the bonded debt OF the
Brooklyn city railroad and 10 per cent.
dividends on the twelve millions Of dol
lars of it's watered stock. and TO keep
Tor Itself AL over that that was earned.
But the case was carried sun further.
70 escape the incorporation tax OF New
York. the parties interested went down
10 West Virginia and got Il charter under
the laws of that state for company
called the Long Island Traction Com
pany with the immense paper capital OF
s20.Oo0.OJ0 that had not a day of labor or
a dollar of money behind its capital stock.
~ DID not own a steel rail or stick OF
40 r. g. ~ a"y e.nsr pr2psrlE' All that X
had wask1i 1t was brought up 10
BROOKLYN and those who owned the little
mile road turned over all it's rights and
contracts to it. so that the upshot Of the
business is that the Brooklyn city rail
road is now expected &c earn interest on
s.x millions of dollars Of bonds. div-
dend Of 10 per cent. on twelve millions of
dollars of preferred stock, and a further
dividend on $0.0O00OO of the West Viz
ginia stock that represents rothing. OF
course. il is compelled to cut the wages
of its employees down TO the lowest posi-
bic point to do this
1t is impossible for any fair-minded
man TO read these facts without being
outraged at them They do not excite IN
our mind the smallest disposition 10 fol-
low Judge Gayhors course and make the
courts part Of the mob. nor do they
In, M. IN
done the action of the mob in destroying
the railroads property and beating men
Who take the places that others once had.
The question raised in our MIND IS
what measures should the law-making
powers Of the land resort 10 10 make
such acts as these impossible in the tu-
fure? We admit that the subject is sur
rounded on all sides with the greatest
difficulties. We viii not hear, upon the
one hand Of abr,dgments and limitations
being put upon the formation and freedom
% Joint stock companies that would tend
TO deprive the public of any OF these
that legitimate business demands. The
principle which they bring into business
OF the limited liability of those who 80
into them is the spring from which the
greater part of modern prosperity has
flowed At the same time we admit that
the case is one which requires the intelli-
gent attention of the law-makng power
SO far as the evil IiOws out OF such
action al this concern took In securing
PAPER company under the laws of West
Virginia although the public mind thinks
his is one which cannot be guarded
against, our institutions, Ia fact, permit
each State to take any safeguard against
that that II may think wise. 1t is true
that the Supreme Court of the United
States established 1t as the law of the
Union more than fifty years ago, in the
famous case OF the Bank of Augusta VS..
Earle. IS Peters, r.. that a corporation
chartered In one State had the right TO
pursue the objects Of is Incorporation by
doing business in another state This was
held TO be part OF the comfy OF the
law of nations as applied TO the States
OF our Union. Afterwards corporations
insisted that this right was secured 10
them beyond the power OF state TO deny
Il 10 them by the provision of the Con-
stitution of the United States. which de-
clares that "the citizens Of each State
shall be entitled TO all the privileges and
!mmunities OF citizens In the several
States" But the Supreme Court OF the
United States held in 1869. In the case OF
Paul vs.. Virginia. 8 Wallace. les. that cor
porations were not citizens within the
meaning Of this provision OF the Constitu-
fion. and that one state could permit
corporation chartered by another State
10 come into Its borders to transact busi-
ness on such terms as suited II. IL is
clearly within the power Of each State,
therefore, 10 make laws that Will effetu-
ally protect its citizens against bogus
corporations like the West Virginia one.
What are the measures though that a
State shall enact 10 protect itself against
these outrageous waterings OF its stock
b. rs own and foreign corporations as
well? That Is the point OF difficulty.
The thing Is usually accomplished by
false valuations OF property or contract
rights, and the issue OF stock upon this
false bass Upon the one hand IL Is a
DANGEROUS interference with the right OF
Stockholders " value their property at