Evening star. [volume] (Washington, D.C.) 1854-1972, 1899-10-19
FEDERAL STEEL co.
It's Affairs Explained by Counsel
and President.
new JERSEYS INCORPORATION LAWS
Why Organizers Prefer That
State.
THEINDUSTRIAL COMMISSION

sion meeting in the Bliss building, oppo-
site the Capitol. The Federal Steel Com
pany was organized in September, 1898.
He was asked to explain the organization
and charter Of the company, and replied
that he thought the charter was self-ex-
planatory, and didn't know how to begin
an explanation of it.
Us there nothing unusual about the
amount of stock of this company issued?'
asked Mr.. c. j. Harris.
TT probably bears close relation to its
value as any other company's stock re-
piled the witness.
He said the capital stock of the Federal
Steel Company was 100000 900 preferred
and 500 600. 900 common. the amount Is
sued originally, he thought, being inside or
sos, 900 600. He had had nothing to do with
the company since he acted as counsel in
its organization and could give no Informal
ton since that time. SSe Federal Steel
Company was composed Of three steel COM
panies, the stock of which had been bought.
and he thought practically all the stock OF
these companies had been secured.
Prof. jerks, leading in the examination,
wanted to know why the Federal Steel
Company went to New Jersey for It's
charter, and inquired particularly as to the
advantages the company got there that 1t
could not get elsewhere.
Laws In Various States.
THE laws of Pennsylvania" said Mr..
Stetson. "do not permit the ownership OK
real property by foreign corporation, and
the rate of taxation upon domestic corpo-
rations is very high. The laws of Ohio,
under the constitution of the state, impose
a double liability on all stockholders, what
ever the conditions may be. The laws OF
Illinois. as they have been administered
and interpreted there, and the same applies
to Ohio, are exceedingly inhospitable for
the development of industrial enterprises
The laws of Minnesota also impose double
liability on stockholders. The attention OF
the incorpOrators was directed to West Viz
ginia and New Jersey. West Virginia places
d limit on the capital which a company
may have, and until this year PennsylVa-
MIA did the same thing. There was no rea-
son why we should not go to New Jersey
as well as to New York, as neither of those
states was the home of the corporation
Advantages of New Jersey.
Speaking again of the advantages of an
incorporation in New Jersey, Mr.. StetsOn
said:
Taxation of an Incorporated company
in New Jersey IS lower than in New York,
but there are other reasons perhaps more
important that have caused these cOmpa-
MES to go to the former state. These other
reasons concern the liabilities and tmmun-
tiles of stockholders and directors in New
Jersey.
IN New Jersey there is no personal liza
Ellly OIL STOCKHOLDERS, anu lII' tLliioullI "
be paid in for capital stock must be paid
in There is a mistaken idea that laws of
New Jersey allow stock to be issued as
fully paid when it Is not fully paid.
Then, too, there is no limitation In the
New Jersey law of the amount of indebted
Eess a company may incur, while IN some
other states a corporation cannot incur in
debtedness in excess of certain per cent
of its capital stock.
He said the railroads of this country are
today Differed by the best business man
ayers that can be found in any business,
whether private or governmental He
thought this country should be proud of
the class of men engaged in the manage
ment of its railroads.
Cause of Bankrupt Railways.
| The roads that had become bankrupt In
| this country had been forced into that con-
| dition because of low rates that had been
| brought about by legislation in some cases
| and by senseless competition among the
| railroads themselves. He favored publicity
| in the affairs of railroads, and such cOrpo-
| rations as insurance companies that are
| public affairs, but not in the case of cor
| poratiOns engaged in industries. In the
| latter case it would result in great hard
| ship TO corporations that should have to
| make their affairs public while their indl-
| vidual competitors would have the adVan-
| tage of such information without disclosing
| their own business.
| He favored a system for the conduct OF
| the interstate commerce commission Wncf
contemplated judges appointed for life who
| could could decide questions and their de-
| cisions hold until action by the regular
courts if an appeal IS made. They should
have power to decide whether rates are ex-
| cessive not. but not to make rates. The
| plan of England today, he thought, was
| good one for this country to adopt.
| He considered the American Sugar Re
| filming Company as one that should not bt
compelled to publish it's private affairs. He
| believed that natural methods of compe
| tition would control prices in such case.
| and prevent abuses.
He did not believe in any national in
| corporation law, he regarded it useless
and therefore harmful. Such a law, h.
thought, could not be passed under tn
present Constitution. He did not thinl
the general welfare clause of the Constitu
ton would cover such an incorporation
law.
President Gary Testihes.
Mr.. Ebert H Gary, president of tn
Federal Steel Company, corporation witt
a capital of $500, 100000, was the next wit
ness. MIR. Gary explained that his com
| pany is composed of the Minnesota Irol
| Company, the Illinois Steel Company, tn
| Lorraine Steel Company and the Elgin
| Joliet and Eastern railroad. He recounte
the properties that are owned by each 0
these companies. These companies in com
| binatiOn take iron ore from the ground an
| turn IT out finally as a finished steel pro
| duct. By means of railroads and steam
ship lines owned by the companies thes
companies do large part Of their trans
portation. They have no monopoly, bu
| depend for success upon the economic
their combination allows them to practice
How Consolidation Was Effected.
! He explained at length the manner 4
which the combination of these companie
was effected and said that Mr.. ]. Pierpon
; Morgan had made the consolidation b
turning over to the Federal Steel Com
pany a majority Of the stock Of the con
stituent companies for consideration. Flo
that he got 5000, 900 or 5000 600, out @
which he paid his expenses. The stock @
the Federal Steel Company, organized
, was made Of an amount to equal the actus
{ value of the stock purchased. The Fedora
q Steel Company was composed of compane
doing different lines of business and did nc
purchase companies in the same bushes
in order to affect competition. 1t had bee
| offered such business, but had not entel
] | tanned the offers He said that while eac
e | of the constituent companies of the Feders
| Steel Company operated separately, officer
of each of them are in constant confereno
. / with him the president of the parer
j | company. So far as his company was cor
| cerned, he said they were willing to Civ
| any information to the public concernin
| their books or their profits.