The Denison review. [volume] (Denison, Iowa) 1867-current, 1907-01-10

made up mainly of votes of approval
md confirmation of things previously
lone by Mr.. Hartman. In one glar
ng instance of subordination the
BOARD of directors passed a formal re
authorizing President Harri-
man to borrow money without limit
and to pledge all the assets of the
company as security for loans. In
this resolution the board Of directors
virtually wiped itself out of existence
and gave Mr.. Hartman free hand
to use the company's assets as he
might see fit. From Mr.. Hartman
viewpoint the resolution may have
looked like very gratifying vote of
confidence. but from the stockholders
viewpoint it must have look very much
like Modification of the principle
upon which the business of a corpora
toin is supposed to be conducted. It
is not of record that Mr.. Hartman
used the mower vested in him to the
detriment of any stockholders in
terest. but the fact remains that he
was given opportunity to do so in a
way not contemplated by the law
governing corporations.
Under the law the board of di-
rectors is the responsible government
of the corporation. The corporation
is made up of individuals whose in
terests are supposed to be reflected in
the board of directors. The presi-
dent is supposed to be the creature
of the board of directors. He is Sc
lected in the first place because of his
assumed ability to carry out the
policies of the board. and his contin-
uance in Office is supposed to depend
on the measure in which his work is
satisfactory to the board. In all cor
porations the executive is allowed
authority over details. but in the
larger matters Of policy it usually is
his function to make recommendations
to the boards of directors. If the
is acceptable the
president is authorized to carry out
the policy originated by him and
approved by the directors. There is
purpose in this system. 1t assures the
various stockholding interests that
nothing will be done to their preju-
dice without having received the APP
prevail of their Representatives in the
government of the corporation. In
brief, it is supposed to do away with
one man power andestablish represen
tative government in corporate bust
ness.
As rule. Of course, the board Of
directors must have pretty complete
confidence in the executive. He is
an expert in the BUSINESS. and the
presumption is that in large as we'll
as in small matters his judgment is
sound. But that does not excuse dis
regard of the safe guards with which
the law has surrounded corporate
organization. The directors of every
corporation should familiarize them
selves with the work of the corpora
tion and their combined judgment
should be an important factor in dir
Getting the work of the corporation.
The people of the United States,
which is practically corporation OF
a large scale. have great confidence
in the wisdom and direction of Presi
dent Roosevelt. but they would no
listen to suggestion that the func
tions of congress should consist mere
ly of confirming and ratifying wha
the president in the exercise of hi
own best judgment might do for tn
common veal.
Mr.. Harriman's corporations ar
by no means the only ones in which
one man rule has superseded repres
entative government. The mischie
of the system is brought to min
nearly every time there is an exten
sive bank failure. Almost invariabl
it is found that the board of directors
on which responsibility to the stock
holders and depositors rests. has ali
dictated it's function in favor OF tn
executive officers. through whose mis-
management the business is above
to go on to ruin.
| The board of directors which reall
directs is crying need in our moder
commercial system. Perhaps the bes
way of achieving it is to make thing
very unpleasant for directors who q
not direct. Sioux City Journal.
Miss Beatrice Lallv returned to hi
aaLool