The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-06-19

aE GIVES A STATEMENT To THE
CODIFYING CONFESSION.
Man That Drew the City Charter Tells
the Commissioner What They
Ought to Do.

Augustus L. Mason, of this city, was in
yited by Judges NJ. A Chapman and Timo-
thy E. Howard and Secretary Daniel E.
Storms, OF the codification commission, to
present his views on the codifcation and re-
vision of Indiana corporation statutes. He
has complied with the request by address,
ing the following communication to the
commission:
There are two opposite tendencies OBJ
servable in recent changes in the laws re-
Iating TO private corporations in this eoun-
try. One is shown in the movement for the
limitation Of powers and governmental reg
ulation OF corporations; illustrated by the
national banking act, the interstate-com-
merce law, the federal antitrust act and
other recent congressional enactments. The
other appears in the NOV ement to enlarge
the powers and remove restrictions from
private corporations TO such an extent as
TO give them practically all of the powers
of a natural person. This latter tendency
under which most of the so-called trusts
are formed.
For convenience / will call the first the
federal model and the second the New Jer-
sey model.
MY Judgment is that the New Jersey
model should be absolutely repudiated in
Indiana and that the federal model should
be your standard. Corporations are Of great
utility, but their grants OF privileges from
the State should be surrounded with guar
antees which insure the fact that they will
be helpful to the whole people and shall not
be perverted TO the injury of our citizens.
Why Is 1t that at common law a private
corporation cannot be formed by contract,
just as individuals form a partnership? II
this were desirable, a brief statute to that
effect might be enacted. enabling individ-
the powers which its organizers desire, for
any lawful undertaking In which a natural
person might engage The New Jersey stat
utes, in substance, really amount to this.
The adoption Of such a statute would
greatly simplify your labors If you are in
clined to adopt the New Jersey model
But the New Jersey model subverts the
fundamental principles which have hereto
fore governed the Anglo-Saxon race in the
creation of corporations. Those principles
Il. Corporation franchises. even when
granted by general laws, are, in their es-
sence. special privileges OF great impor-
lance. enjoyed by a few persons and not
possessed by the many. The many advan-
tages Of Incorporation. among which are
perpetual succession. ease in transfer of in
~terests. exemption of members from Iiabil-
ity, canTot be enjoyed by the masses of
mankind. The laborer, the clerk. the me-
chanic, the farmer-the great majority OF
men and w-omen-cannot organize their
daily labor into the form of a corporation
and cannot enjoy such benefits.
'2. Therefore, those who want corpora
ton privileges and immunities should OBJ
tain them only upon application to the
State, granted upon conditions and limita-
tons which insure that the corporation
shall not become harmful TO the people and
their interests.
applying these principles to Indiana cor
pOrations. / respectfully submit the follow
ing suggestions:
THE RAILROADS.
"A statute closely modelled on the inter
s-tate-commerce law. embodying. however,
the proposed amendments which the Inter
s-tate-commerce Commission has repeatedly
asked Congress to enact. and embracing the
provisions of the Elkins rebate law, should
be made the law in Indiana, in order to
prevent discrimination in freight and pas
senger rates between individuals and locali-
ties. as we'll as excessive charges and other
~well-known evils which have grown. up in
the rapid development of railroads. In the
long run such a policy will be a benefit and
protection to railroad companies as we'll as
TO their patrons and the public generally.
THE federal antitrust law should be sub
stantially followed in a statute of this State
as being at once the most conservative and
effective device yet known to prevent the
suppression of competition.
The consolidation, lease, combination
and perhaps even removal of location on
the part of ordinary business corporations
should be permitted only when it is made to
appear TO a tribunal of suitable jurisdiction
that the transaction is not intended for and
will not probably promote the suppression
of competition.
"(a) watered Securities.-The issue OF
stocks and bonds by any private corpora
ton In the State should be surrounded with
such guarantees and restrictions as viii
prevent the watering OF securities, with al
the attendant evils to investors and TO the
public generally, from such transactions
value: capitalization on the basis or earn
ings should be forbidden; the issue or Sc.
or franchises should be made under the su,
pervisiOn OF the courts, upon a finding
after judicial investigation. that the pro-
posed issue does not exceed In par value
that which is 10 be received IN exchange.
while 1t is not the duty of the State to
act as the guardian of individuals in their
business affairs, Ii Is the duty or the state
TO abstain from assisting promoters AND
spectators to separate the unwary and IN
experienced from their money by creating
corporations without suitable restrictions
on their powers to issue stock and bonds.
in the long run, such measures as these
would enure TO the beneft or all classes OF
"(b) Publicity.-An corporations having q
stock or bond issue above a certain limll
should be subjected to the requirements OF
s. law following the well-knoWn puoflclty
statute OF the last Congress
a DISTINCTION.
"A distinction should be drawn between
foreign corporations organized In good faitf
under the laws of other States, and carry
ing on their principal business in the State
of their Incorporation, and foreign corpora
tons which, though formed under the laws
of one State, are really organized for the
purpose of carrying on their business out
side of the State of organization. The lat
ter class of corporations should not be per
mitted TO do business in Indiana except un'
der conditions which will make them con
form substantially TO the requirements pro
posed for our domestic corporations.
THE proposals might be regarded as
harmful to the business of promoters anC
spectators. There would perhaps be fewer
colossal fortunes as a result, but there
would be great benefits widely distributed
among the whole people. The securities o.
Indiana corporations would stand higher II
the markets OF the world. The hostility o.
the people TO corporations, deprived of ii:
reasonable basis. would be immeasurablN
reduced. The late Judge Woods once sai1
10 me I'm his wise way: The corporations u
this country are their own worst enemies.
Ny own Judgment is that if our corpora
tons would help to bring about these re
forms they would prove to have been theil
own best friends"