Watertown weekly leader. [volume] (Watertown, Jefferson County, Wis.) 1906-1908, 1906-11-23
GIVE PEOPLE HALF
OIL KINGS WEALTH.
HOUSER FOR FIFTY PER CENT. IN
HERITANCE TAX ON ROOKIE
TELLER MILLIONS.
DRASTIC LAWS NEEDED
Great Corporations Deceiving Public by
Floating Enormous Issues OF Watered
Stocks, Says Secretary of State.

MADISON, Wis. Nov. 10 Spe
cial. lin the letter to Gov. Davidson
submitting the biennial report of the
department Of state. Secretary Walter
l.. Houser. recommended. in a general
way, more stringent regulations for cor
porations doing business in Wisconsin.
He commended the Inheritance tax law,
offering some suggestions for Its I'M
provement.
Regarding the inheritance tax law,
Mr. Houser said today:
The law is good. but it needs 10 be
amended in many minor details. l favor
a larger tax on great estates. In my
opinion that the maximum tax in Wis
consin should be raised Immediately
from 3 to 10 per cent. Estates like the
Pabst and Wells estates should be sub
jected to this increase. 1t is menace
to business at large to have these vast
ton to another. Take for instance the
Marshall Field estate. 1t IS held III
trust for fifty years. In the course OF
that time it will accumulate beyond any
Legitimate proportions. An lnherltance
such as Rockefeller will leave should be
taxed fully 30 per cent. The INHERITANCE
tax is the only good means Of which l
know to get a portion of these vast tor
tunes into general circulation without
causing injury to anyone"
Drastic Action Necessary.
When asked as to definite means for
regulation of corpora tons, MIR. Houser
said that it was necessary that some
method be devised, either through a
commission or otherwise. so that the
state would know that stock, when is
SSued, represented its true value i'll actu-
al property, or whether it was fictitious.
These suggestions may sound draS-
TIC" said Mr.. HOuser. as Il prefix to
his remarks, but we have to say soma
drastic things at times when we speak
| the truth. If they are drastic, they are
just, and that is sufficient reason for
their enactment into law.
Stock Watering Wrong.
'"rhe first and most important change
that should be made in our corporation
laws, is an act that will prevent tho
watering of stock. No corporation
state unless it can show that the amount
for which! it incorporates is represented
! by actual property value. The state
should ascertain this either by COM
mission created especially for that pur
pose, or by giving some department,
now i'll existence, power to investigate
with the view of ascertaining the real
value of corporation property. A few
| days ago the Chicago & NOrth-W eStern
railroad incTeaS ed It's capital stock from
800. 100000 to $2OO,O0O,O0O. All we know
in this department is that the stock was
increased. We do not know for what
purpose the increase was made. We do
not know that the railroad added
! single dollar Of value 10 it's possessions.
either in property currency. On this
/ increase the railroad paid the state
! 100000 corporation tax.
State Should Know All
''Some time ago the Chicago. NIilwau-
kee & St Paul railroad increased its
stock by $2J.O0O,OO0, and the Pullman
company added several millions to it's
capitalization. Under the present law
the board of directors of Il company may
increase the capital stock by certifying
that 20 per cent. of the increase repre-
sentS value, but the state has no means
of knowing whether or not this 20 per
cent. has been paid in. 1t may be paid
either in cash, or bonds, or property OF
promissory notes, often the notes of the
board OF directors.
"A corporation is an artificial person,
created by the state, and the state
should know all about it's transa ctions.
1t should know the actual value of all
the property that each corporation owns.
AT present the relation Of the state
to corporations is simply clerical. We
do as the law requires, and that is all.
We have no power to investigate, nor
can we act contrary to statute, even II
our judgment and knowledge tells us
that fraudulent representations are made
and fictitious values claimed.
Wisconsin Has Advanced.
''In the past four years there has been
Il great advance made by the state along
| the lines of corporation control.
This seems to be an era for the in
crease of capital stock. | can explain it
only on one basis, and that is that the
corporations. anticipating the strict rcgl-
lation of the issue Of capital stock that
is bound to come, are taking advantage
! of the present loose laws.
Watering Is a Deception
The purpose of watering the stock IS
| to deceive the public. 1t would not
/ lock well for railroad or other corpora
! ton to pay dividend of say - per
cent. People would then begin to de
mand commodities at Il cheaper price.
! SO the directors simply increase the cap
! itaI stock and distribute the dividends
| over the original as we'll as the in
creased issue. For example, the North
| Western railroad paid last year divi-
| dend of 20 per cent, If tins kept up
! there would be a demand for lower
! freight rates. The st. Paul road paid
! II per cent. Both these roads have in
creased their capital stock so that it
! will appear that their earnings are not
| extraordinary. In some cases Il corpora
| ton has elected to suspend doing bust
ness in Wisconsin rather than give the
! publicity which the statute requires. i
| large Chicago grocery firm threw up its
Wisconsin business this year fo- this
| rea son.
The corporation method presents
many advantages in doing large bust
ness, but it is known that men will do
! things in the name of Il corporation
! that they could not be induced to do an
| individual or in co-partnership. There
fore there is need of the closest regula-
| ton and inspection by the state"
HOUSER FOR SENATOR.