Evening star. [volume] (Washington, D.C.) 1854-1972, 1899-10-18
Regulations fer the Corporations in
the State.
TESTIMONY or JAMES 4. DILL
Points Opt the Evils of Over
Capitalization.
FUNCTIONS OF AN AGENT

| state commission to revise the corporation
| laws of New Jersey relating to financial
| institutions and is the author of the official
| edition of the corporation statutes of New
| Jersey and of Dill on New Jersey Corpora
| tons"
| He stated that the New Jersey corpora
| ton law requires all meetings to be held in
| that state, and if office is not maintained
| ia the state all the directors are directly
! liable for all uebis of the company. If any
action of the stockholders Is taken at a
| meeting held outside the state it is void.
| Officers are required to make certain pub
| lie statements and to post the same in
| their New Jersey office and failure to do
this he is rendered liable to a fine, and in
| the opinion of the witness is also liable
| to be convicted for q msdemeanor, and to
| be imprisoned. The difference between the
| New Jersey and the West Virginia corpo-
ration laws is that the latter allows the
stockholders to keep their books wherever
| they please The bad feature Of this West
Virginia law Is that the books may be
| taken out of that state and placed IN some
state where the law does not make 1t OBJ
ligatory to exhibit them.
Delaware law, he said is a cross between
| that of New Jersey and West Virginia, and
does not provide for such degree or pup
licity as does the New Jersey law
Laws Strict, but Ignored.
It was his impression that while the laws
Of New Jersey are more stringent In regard
| to the officials of corporations than those
of any other states, these laws are honored
more in the breach than in the observance.
The publication of information regarding
the companies chartered in New Jersey was
not lived up to in his opinion Out Of 10000
corporations there he thought not more
that 1900 make public reports in accordance
with the law in New Jersey.
Gross MISREPRESENTATION
He assumed there are corporations gross
| ~ overcapitalized, and any such corpora
| ton, in getting the stock to the public,
must be disappearing or concealing
facts. He cited one company, the name of
| which he did not give, in which case he
had considered that proper capitalizat ton
would be $H0,0O0a but had actually been
capitalized for $S,90D,O00. The frauduently
capl taIlzed company resulted in causing the
management1to seek to pay dividends on
the capitalization, to the detriment of
the property ITSELF or by putting up the
price OF what they deal in and putting
down the price OF labor.
FOR these reasons he considers oyercap-
ltalizatiOn a.great evil.
When asked why so many corporations
seek New jersey for their charters If the
laws are so strict in that state in regard
10 honesty, statements, etc, he said that
the tax in that state is fixed and cannot be
Il subject for discussion. The tax is one
IeHIH % oHS. per cent ON the pald-ln stock
annually. That is all. there is to it and
tfefe is no question to be discussed with
men who have TO fix the amount of taxes
as IN some other states.
In some states he said, men, whose
duty, 1t is TO fix the amount of taxes for
corporations, prefer to see their representa-
ives in their own room rather than in their
office"
He cited the case of a New Yorker, who
said he felt safe in New Jersey because
mat state had a surplus in it's treasury and
IFS officlais We're not obliged to set up at
night trying to think how they would pro-
VIDE for deficit in the treasury, in which
case they were very liable to turn to the
corporation for relief.
Mr.. Dill said he was satisfied that event
uaiIy the United States Supreme Court
would hold that tramp corporations those
which do not keep the books and stock
holders meeting in the state in which char
tered, are simply partnerships.
Tendency to Greater Publicity.
The witness cited the tendency in Eng
land today toward greater publicity in the
affairs Of corporations, and said he believed
this country would rapidly go in the same
direction
AS a matter of practice there Is a fre-
Quent inspection of books Of the companies
the witness is interested IN at the New Jer-
sey office on the part of the stockholders
Speaking Of oyercaptalization of COM
worth more than the plants OF companies
In one case he knew of a company that had
been sold out under bankruptcy proceed
lng5 and all its material goods had been
sold out, and 1t had still left only its good
Will Although it was a defunct CORPORA
ton, 100000 had been offered for its good
will.
He believed if the laws of New Jersey. are
carried out they are as restrictive as those
Of any state Of the Union. as far as the
corporations are concerned.
High capitalization Favored.
When reference was made to the fact that
the New Jer corporation law provides
for less tax on all excess of $3,0OO,00O
capitalization than on the first 3.eO0,ooN
! the witness said that when the New Jersey
law was passed they didn't dream that
there would be corporations with more than
50, 100000.
Two years ago." he said, when 1 went
down TO the office of the secretary of state
in New Jersey with a million dollars CAPT
| tai | was proud. Today l would feel like
sneaking in the back door with such a cor
pOration because it is so small"
He said New Jersey had never dreamed
Of such corporation as the Federal Steel
Company, with capital of S20000OOO0
Mr.. Dill favored federal corporation law
so that the great corporations of the coun-
try could get their Incorporation by Com
gress. He thought the general welfare
clause of the Constitution of the United
States gave authority for the incorporation
of such companies. AS the large banks
w,
he thought the big industria corporations
would come under the federal charter act
if such Is Provided.
Agent for Over 600 Companies
After accessible commission heard the
testimony of witnesses who are employed
as agents OF big corporations chartered In
New Jersey. Mr.. Howard K. Wood Of
Jersey City, assistant secretary Of the Cor
pcration and Trust Company. was the first
witness. The Corporation and Trust Com
pany, he said. represents between 600 and
700 trust Companies their New Jersey
agent. Th5se cUmpanies, he said, repre-
scented capital ofDover thousand million Of
dollars. Mr.. Wood explained in detail the
system by ovhichptransfers of stock of COM
panies represented by his company in New
Jersey keeps as record of stock transfers
Their work, was simply to record transfers
as they We're informed they were made.
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