The evening times., 1899-10-19

At the session OF the Industrial Commits
sion today Francis Lynde Stetson, law
yer and member OF the ]. p Morgan Com
pany OF New York, and E. II. Gary, Presi-
dent Of the Federal Steel Company, gave
testimony Mr. Stetson was called first
and among other things said:
Il was familiar with the organization of
the Federal Steel Company. 1t was formed
in September 1898. The capital stock
bears clearer relation to its values than
that of most companies. Ii was capitalized
for 500. 600 600, preferred stock, and $780,
OOO, 600. common stock The company is
the outcome Of an amalga.nation Of the
Minnesota Iron Company, Illinois Steel
Company, and the Elgin Railroad Compa-
NY"
Mr.. Stetson said the J. p. Morgan Com
pany never held the certificates Of stock,
but acted as an agent for the stockholders
OF the amalgamated companies and the
present holders of the stock. He did not
know how the Federal Steel Company re-
sembled the Standard Oil Company, for he
had no information concerning the latter.
The laws Of New Jersey, he said, were
better suited for the incorporation OF the
steel company because under them prop
erty in other States could be held by the
company with fewer restrictions; stock
holders have only the right to examine
The books OF the company, as the statutes
of New Jersey provide. The witness said
that it was, in his judgment the wisest
possible thing for stockholders to give di-
rectors OF corporations the greatest power
POSSIBLE for the transaction Of business. He
denied that directors had undue power,
because the power was derived from the
stockholders by agreement.
He said that if the stockholders required
more protection than that afforded by the
agreement the Legislature can provide It;
he thought ii good public policy to permit
boards of directors to increase their MEM
bership without consultation with stock
holders In financial troubles 1t is the di-
rectors who have to take the risks and
not the stockholders. He believed that
every stockholder or judgment creditor
should have the right 10 examine the stock
books.
Mr.. Stetson said he would put into every
constitution a clause providing against in
diyidual liability for corporation debts.
The reasons why so much capital has left
New York to go to New Jersey, he said,
is because of taxation, and also that there
is no individual liability for the corpora
tion indebtedness, and also because in New
Jersey there is no Limitation as TO the
amount of indebtedness a corporation may
assume.
He said that the theory Of every State
is that a corporation created is a benefit
or il would not be incorporated and act
ing on this theory, New Jersey, after call
ing - creature into existence. permits il
TO live. Fake companies are no more liza
bic to be incorporated in New Jersey thar
in any other State.
In respect TO the issuing of stock. the
witness said that capitalization had moth
ing TO do with fixing valuations. A com
pany may be Incorporated with sl0e, ,000,-
900 capital, but when this stock is place.
on the market next day and sells for 81
a share no one believes il TO be worn
SlO0, 900. 00O The people pass judgment
and that makes the value.
Ruinous traffic rates, the witness said
caused the greater portion of the railroad
foreclosures If rates in this countr,
were fraction higher the most OF the fail
ures would not have taken place, he said
Railroads have never been so well officer
ed as today; they represent the best bust
ness men in the country. He believed that
publicity is absolutely desirable, as applied
to public corporations. such as banks, rail-
roads, insurance companies, etc
Mr.. Stetson said he believed the Inter-
state Commerce Commission should have
power to break contracts betweeen rail-
roads for reasons. With such power as
check he favored railroad pooling. He
believed that there should be power to
abolish unreasonable rates. He would
make the Interstate Commerce Commits
sioners judges for life with power to de-
termine absolutely all questions relating
TO railroad rates.