The aegis & intelligencer. [volume] (Bel Air, Md.) 1864-1923, 1903-08-14

ing assisted in the organization Of Il
number nfthesc leading aggrcgations
of capital, has recently made a speech
on this interesting subject. He has
been candid enough to criticise the
the conduct of some of the lusty in
iants who have been created under
the patronage ola favoring tariff and
his remarks are of an interesting
nature.
In recent address before a con-
vention of lawyers he defended the
law of New Jersey against the conf
plants that have been made against
it and insisted that the popularity of
New Jersey as birth place Of corpo-
rations was due to the wholesome
and conservative provisions Of law.
His remarks are open to debate, but
undoubtedly in some particulars are
true. The chief charge against the
laws of the State of New Jersey is al
lowing over-capitalization, which is
the handspring of these industrial
combinations, and a factor without
which they would have no existence.
Under the laws of this State stock
can be issued in exchange for pro-
perty acquired, at any value that the
board of directors chose to put upon
it, unless it could be clearly shown
that they were guilty offraud. This
opened the way for the issuance of
stock many times in excess to the
true value of the enterprise; for in
stance corporation which has an
actual money value of one million,
frequently has stock issued to the
amount of five millions of dollars.
The trusts went to New Jersey to be
incorporated because in no other
State, with the exception Of Della
ware, had they such facilities for or
ganizing with fictitious capital. The
little State ofDelaware, envious ofthe
immense income derived by her sister
Commonwealth, has recently enacted
still looser laws which will allow the
issuance of stock upon very slight
pretext. The requirements of resi-
dence, accessibility of books &c. are
reduced to the very lowest terms.
On this and other grounds Mr..
Dill has frankly and judiciously criti-
cised the management of some of the
trusts but he insists that there are
others as equally sound. In meas
ure this is correct so far as their SOL
vency goes, but all are based upon
the principle of inflated capital and
of the production of securities which
have no tangible relations to the
value of the property. Within a
short while, one of the largest con-
Germs in the United States, the Ship
building Company, was compelled to
go in the hands of a receiver as the
result of an unsuccessful effort to
reorganize it with very little more
than half Of the former capital. Re-
cent disclosures have shown that a
number of corporations have been
formed not on the value of the plant
but on the estimated earnings that
the corporation is expected to make.
That this is wrong i'll principle no
one can gainsay, and it is only
question of time before those who
have invested will learn, to their
sorrow, is a bad business proposition.
The only manner in which a legiti-
mate business enterprise can be
viewed is from the standpoint of the
actual value of the tangible assets iii
an open market. All other values
are of apurely speculative nature and
cannot be depended upon. The pres
ent timidity of capital regarding any
new enterprise is largely due to the
fact that change in the tariff is
anticipated in the near future. What
these changes will be no one can fore
tell; consequently those who have
money to invest prefer to wait until
the country adjusts itself to differ
ent basis Of valuation. Despite as
surances to the contrary, it is an APP
parent fact that the moneycd inter-
ests recognize the fact that politicians
cannot much longer refuse the people
their demand for a reduction of the
tariff. The first to suffer will be these
corporations who must
have an enormous protection in order
to give their watered stock a shade
of value by the way of paying divi-
dends. Much, in fact nearly all, of
the so-called prosperity" of this
country during the past six years
has been upon a fictitious basis which
sooner or later will come to grief.
1t is not the desire of the Demo.
cratic party to injure any legitimate
business enterprise, but no matter
the result, it is apparent that the
people themselves will demand an
of the tariff, which will
bring articles of manufacture down
to something like their true value
In other words seventy million peo-
pie feel that they have been support
ng the other five million in laziness
and idleness long enough and steps
will be taken to lop off the dividends
which have heretofore been earned
oy stocks that have no value except
the foundation of tariff protection,