The midland journal. (Rising Sun, Md.) 1885-1947, 1899-06-16
Artificial Persons.

nations of capital to destroy competition
and restrict trade, is the popular theme of
the day by political party leaders. trust
is formed by all association and conlbi-
nation of several corporations Through
corporate legislation trusts exist. If there
were no combinations of capital under
incorporating laws there could exist no
trusts. The only sensible way to destroy
trusts is to repeal all laws which create
corporations or artificial persons. These
law-made persons form themselves into
trusts and by virtue of the legalized priv
ileges they enjoy prey upon the public
without fear or favor.
In order to control incorporated bust
ness it would not be necessary to abolish
entirely, wipe from the statute books, all
present Incorporating laws and replace
them with none others The State has
created these artificial persons and placed
no safeguard about them for the protec-
ton of its citizens. The power of the
State to create includes the power to
| restrict, regulate and control. When the
| law creates one of these artificial persons
known as corporation it should provide
1.-THE same time against abuse of power
it grants, and insure protection to the
citizen. Every grant of such dangerous
franchise as the ungarded corporation is
liable to become, should carry with it
supervising clause which required pub
tic statement of the business by an officer
of the State quarterly or seni-annually,
and forbid the power Of issuing stock TO
exceed the value of the plant employed in
the business, the actual invested capital,
and no watered stock allowed to be issued.
Any concern whose business extended
beyond the State es-railroads, tele-
phones, coal, coal oil, sugar and like cor
general government, and not be per-
nitted to operate under State charters.
The chartering of all sorts of concerns by
New Jersey has become a public scandal
and a public injury, and such abuse
should be abolished by restricting State
charters rigidly to business conducted
within State lines.
III a recent speech William Jennings
Bryan takes this view of the loose system
in vogue of granting charters to all sorts
of schemes without any supervisory clause
in such charters, and condemns our loose
and criminal system OF creating corpora
tons or artificial persons A trust could
not be formed if the necessary safeguards
were provided by the charter and proper
supervision of the business of the cor
poration provided for and enforced.
But the private business ofpeople, their
books, ETC., are sacred, urges the defender
of incorporated abuse. The books and
business of the citizen are and ought to be
exempt from public scrutiny, but the
corporation is not private citizen, but
an artificial person, created by law, while
the citizen is a natural person, and has
rival and competitor i'll every other cit
izen of equal ability. A corporation on
the other hand is a very different kind of
person. 1t is organized by small
number of citizens banding themselves
together and purchasing a charter from
the State, which charter is a grant or
privilege to do business through board
of directors or agents. This artificial
person exists in the form of stock. This
stock is presumed to represent money
andsother capital invested i'll the business,
which is true to limited extent only, in
most cases. The stock OF a corporation
represents the franchise, an intangible
something created by the needs of society.
The Issue and sale of stock depends upon
the earning power of the grant or fran
chise made by the State to the parties
applying for the charter. If the earning
capacity of the franchise which the char.
ter represents is expansive, stock is issued
and sold by the officers of the corporation
to the extent of the dividends it is able to
declare. Railroads, street railways, tele-
graph, telephone, sugar trust, oil, coal
and similar incorporated business, issue
stock and sell it to the public, or hold it
in the company's hands as assets, many
times the amount of the capital invested,
or money value of the plant. These after
issues of stock, stock not issued on capital
| invested but on the earning power of the
franchise, are known as watered stock.
The object in view for issuing this addi-
tional stock is two-fold. The first con
sideration is to secure to the ncorpora-
tors, who are the lucky, or rather cum
ming, shrewd, business" men who
occupy the ground floor" and rake
into their own pockets the shekels
tempted public is induced to pay for the
watered stock. The second object is to
deceive the public by dividing the earn
ings of the corporation into small parts,
that constitute four, five, six per cent or
any moderate earning OH the capital rep
resented by the stock which may be five
and may be ten times the actual capital
invested.
The ground floor men, the Carnagies,
Rockeiellers, Havemeyrs Fricks, Goulds,
Whitneys, Crokers, the millionaires i'll
short, whose fortunes have grown into
millions and multimillions like mush
rooms in night, are the principal bene-
ficiaries of these artificial persons, known