The Providence news. (Providence [R.I.]) 1891-1906, 1906-02-03
Buncoed Under Stringent Laws as
Well as Lax Ones, Crafts Says
ON CORPORATION REGULATION
Sponsor Of Bill 10 Encourage Outside Con.
Germs Incorporating Here Tells Of Ad.
vantages Of Measure 10 State

With two voluminous bills for the regi-
lation OF corporations in this state before
the house OF representatives this session
IL is fair TO assume that this important
subject will attract at least a measure of
the attention It deserves. and In the bill
which is frankly stated TO be for the in
crease of the revenues OF the state thers
Is an incentive for outside concerns 10
locate in Rhode Island
The sponsor of this bill Is Albert p.
Crafts OF Westerly. who says that II haJ
been carefully drawn and consolidated
the corporation laws for outside concerns
I'm one place. tho ones at present being
scattered all through the statute books.
In an interview with a News man ho
stated:
"One OF the objects OF the law Is TO In
crease the revenue OF the state. Our
revenue last year amounted TO S2on0.000.
New Jersey receives about 100000 each
year from franchise taxes OF corporations
The amount OF business done in incor-
porating does not depend at all upon the
size OF the state.
Just many corporations could hs
formed in Rhode Island as in New Jersey.
The taxes provided for in this act arc
much lower than those of many states.
II not all. and very much lower than
those OF New Jersey our state Is very
much nearer New York city. the great
business centre, than all other states
inviting this kind OF business, except New
Jersey.
LIKE SELF ROBBERY.
''In one small town OF this state know
that there are taxes paid TO New Jersey
on corporate franchises amounting 10
5000 or $4,000 each year. This money IL
taken from this state and added TO the
wealth OF New Jersey. and used for school
purposes. This seems almost like volun-
tary self-rohbery.
CONSERVATIVE PROPOSITIONS.
THE proposed act applies only 10 cor
porations organized for the purpose OF do
ing business out OF the state.
Criticism is made that this encourages
yellow dog corporations. In the pro-
posed act there are two very conservative
provisions Every corporation organized
Hereunder must have an attorney at-law
to receive service of process I'm this state
class of men who are generally perma-
nent residents OF this state. They natu-
rally remain where their business reputa-
tion r. established. and furthermore, they
are accountable TO the court.
I'm addition the corporation must have
a state bank or state trust company as
registrar. The attorney or registrar can
decline nj any time to act No bank would
allow its name To he associated with wild
cat companies as II would create distrust
and deTtroy the confidence OF the COM
munity. II the corporation fails to have
both an attorney and a registrar their
charters are forfeited by proclamation OF
the governor.
GIVE AWAY BONDS.
There is a difference between theoreti-
cal protection ard practical protection for
the public Theoretically the farm house
is under full protection Of all the laws.
but practically there Is little prevention.
II the house is burgla rlzed there ia
punishment afterwards
"A policeman on the ground to prevent
is worth much more than punishment
afterwards. Theoretically our laws have
been quite strict with reference 20 cor
porations. but practically there has been
very little protection.
1T is a common, everyday occurrence
for corporations in this state to sell their
stock, certify that it is full paid and
give away the bonds, which gives the
stockhodcr absolute security for the full
amount. or more than the amount paid in.
instead of creating a fund for the bene-
fit OF creditors
Rhode Island to build school houses ami
highways ana add to the wealth OF other
states. many consider II better that char
fly should commence at home. In this pro-
posed act the one aim has been To make
the law perfectly simple as applicable 20
corporations organized Hereunder 10 do
business out OF the state so that every
part Of the Law should appear In one act
without Incorporating I'm II references To
other statues OF the state and making
them a part thereof
CANT PROTECT EASY MARKS"
The aim has been TO make 1t simple.
short. condensed and absolutely complete
on the subject There Is no need OF any
apprehension that corporations will be or
ganized here 10 prey upon the inhabitants
OF other states.
THE other states have a right TO make
as stringent laws as they sec ht as to all
corporations doing business therein, and
many OF them have done SO They have
ample power to protect their citizens.
They can require all foreign corpora
tlons doing business within their terri
tory. TO deposit any fixed amount I'm tho
treasury of the state to file all requisite
statements. to submit 20 any examina-
ton and to require all stockholders OF the
foreign corporation TO accept such lnbill-
ties as stockholders as the state may de-
mand
Notwithstanding the most stringent
laws, there Ia only one protection, and
that is. for every investor 10 investigate
carefully and protect hmself The easy
marks are Just as smoothly swindled un-
der the strictest laws as under the most
lax
Both bills are before the house COM
mittee on judiciary which has many i'm
portant measures before Il and the MEM
bers OF the house are interested 10 see
which will be considered by the commit
tee for II seems a general opinion OF tho
members that both will not get thorough
~ looked into this season. Both the spon-
sors for the pending measures are mem
bers OF this committee and will Go what
they can TO get their pet bills reported
back and some interesting hearings may
result
II is understood that - number OF local
people who have been worrying over the
needs OF providing for the increasing cost
OF maintaining the state have favored
this matter as means 20 that end. and