The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1899-11-01
THE STATES AND TRUSTS.
Legislatures Have Complete Power
ot Res ula ton.

Seattle. Wash. Oct IS
To the Editor: II is not generally
known that most 81 the corporations
known as trusts arc formed under the
laws Of the state ot New Jersey. In
1915 the legislature of the state of New
Jersey enacted a statute providing express
IL that IL should be lawful for any cor
poration of the state Of New Jersey To
purchase. hold and sell the stock or
bonds az any other corporation in tho
same manner as an individual might do.
Il; vas this power 10 acquire and bold
the stock or other corporations that
made II possible for corporations to be
organised In New Jersey for the pur-
pose OF acquiring the stock OF other COM
panies Of a similar character. and SO 10
control their property and business and
TO bring about. under the form OF cor
porate ownership. the great combinations
which. when produced by means of con-
tracts. had been declared In other states
to be In restraint of trade ana contrary
to public policy"
The supreme court OF the state %
Washington. In the case Of Denny Hotel
Company vs. Schram. Washington, 1874.
has decided that one corporation. or
ganixed under the laws Of the state Of
Washington, cannot subscribe 10 the
capital stock Of another corporation.
The court says: "A corporation cam
not. In the absence of express statutory
authority, become an incorporation by
subscribing for shares In n new corpora
ton: nor can IT do this indirectly through
persons acting as it's agents or tools
This. II seems Ia as. for manifet and
manifold reasons is In accordance with
public policy and we therefore decide
that under the existing laws OF this state
one corporation cannot subscribe to the
capital stock Of another corporation
IL Will be seen from the decision Of the
supreme court of this state that unless
the statute expressly provides that one
corporation may subscribe for shares OF
stock in another corporation. that "a SUBJ
scription made by one corporation To the
capital stock OF another corporation IL
illegal and void
Ii Is not necessary for the people Of
the state Of Washington to pass resolu-
tons opposing the formation Of technical
trusts which are formed under the
statutes Of New Jersey. by one corpora
ton subscribing TO the capital stock of
a similar corporation. because the policy
AS settled by the decision Of the highest
court Of the state is that the formation
Of trusts In the manner provided under
the statute Of New Jersey Is illegal and
void
There rs no danger Of the legislature
OF this state enacting statute similar
TO the statute of New Jersey; II has been
sey to enact statute enabling great
trusts 10 he formed by the combination
OF large corporations
Under the constitution OF the United
States each state has the right TO rezu-
late rs internal affairs, which embraces
making such laws az II may deem proper
for the formation Of corporation within
the state. The state OF Washington
cannot control the legislature Of the state
Of New Jersey. II has no more power
to control the making 81 the laws I'm the
state of New Jersey than II has the MAX
ine of the laws In the state ~ Miseissip-
pa, or the enforcement 81 the laws in the
state ~ Utah against poiygamy.
Each state has the right 20 enact such
laws ~ tho legislature. IN Its dlscYe-
ton. deems proper. 40 long those laws
DO not conflict with the constitution Of
tn. United States. The legislature az
the state 81 New Jersey saw 1T To enact
the statute which permit. the forming
~ great combinations ~ corporations de-
nominated trusts. II I'll becomes tho
Democratic party 20 make an attack up
on the Republican party for allowing the
great combinations 1f capital called
trusts 20 hs formed under the laws of the
state ~ New Jersey. H.