The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-09-19
In Stopping Law Violation by
Heads of Corporations.
LANDIS ACT A FARCE.
There Never Was a Chance to
Collect That Fine
But Its Imposition Nearly Gre
ated General Panic.

100000 fine against the Standard OIL
company OF Indiana, a s1.OO0.0oO cor
poration, so suggestive Of opera
bouHe." although there was no prob
ability or possibility of the fine being
collected. even if affirmed on appeal"
caused the recent enormous losses on
the New York Stock exchange and
disturbed business conditions. was de-
clared here by Henry Clews of New
York, a banker of international re-
pute. and a recognized financial auth
oriry-
Mr.. CIews addressed the Kentucky
Bankers association now in session
here. He favors the punishment by
Imprisonment Of dishonest corpora
ton officials, instead of assessing a
fine against the corporation. to the
great detriment of innocent stock
holders
Mr.. Clews in the opening portion Of
his remarks reviewed the events in
the stock market during the past six
months A crisis had been impending
for long time, he said. but the trou-
BILE did not become acute until the
fine of s29.24O. 900 was imposed on
the Standard Oil company of Indiana
Then the speculative miIlionaires who
had been trying to engineer an up
ward movement in stocks found them
selves overloaded and they began to
sell out al whatever prices they could
obtain Thus with support withdrawn,
there was Snarp QGCnne IN OF
securities the chief sufferers being the
best and highest priced stocks
Fine Furnishes the Innocent.
The apprehension excited among
investors and spectators by that
s2S.24O.0OO fine" said Mr. Clews.
did an immense amount of harm
through the enormous losses to which
II led In combination with the pros
ecution of the Southern railway by
southern states. involving the con-
fict between North Carolina and Ala
bama and the United States courts,
that extravagant fine. so suggestive OF
opera boufe- was the Immediate
cause OF the heavy liquidation that
produced the August crisis and turn
ed the New York stock market into
a storm center
although there was no probability
or even possibility OF this fine ever be-
ing collected from a million-dollar cor
poratfon. even il affirmed on appeal,
public sentiment was ABOUT as much
disturbed as if it were ultimately col
lectible. BY creating, although with
out sufficient reason, fear OF confSca-
ton. it led TO those enormous sales and
sacrifices Of stocks by investors, as
we'll as by spectators. and the virtual
panic that lasted those two long and
The innocent thus suffered with the
guilty. and the evil effect OF such fine
was clearly demonstrated by very Sc
we're and disastrous object lesson The
wfIful violations OF law is not to be
found In the in1iction of heavy penal
ties on the guilty corporations. but on
the responsible and guilty officers OF
those corporations, and not alone by
fine, but by imprisonment Heavy fines
inflicted on corporations fall finally on
their stockholders. through a CORE
spending loss OF dividend-paying pow
er, and the lowering OF market prices
for their stocks. The proper remedy Is
punishment behind iron bars
Stockholders Not Guilty.
LAS the stockholders are in no way
responsible for deIinquencies IN man |
agement. it is unjust TO make them |
suffer the consequences of these. 1t
should. therefore. be the future policy |
Of both the federal government and the |
states to punish corporations for illegal /
practices by criminal proceedings |
against those in their employ who are |
found to be responsible for them Thus |
punishments will be confined to the /
guilty, and confidence will be restored |
among investors. for such prosecutions |
would in no way tend to depreciate the /
value OF stocks and bonds of the cor /
poratfons concerned, but on the contrary /
they would tend 10 enhance their value |
by promoting honest management
stimulated by the country's enor- |
nous prosperity during the last few I
years. we have gone ahead too fast in /
ell kinds of new and costly construction /
work and improvements We have. in
and railway and manufacturing eOrpor-
ations have stretched their credit. in too
many Instances, almost to the breaking
point Meanwhile the railways have
been overtaxed with traffic and manu-
factories overrun with orders for their
product and they still are so nOtwith-
standing all the much discussed and |
confidently predicted falling of i'll
trade
ESxonerates Roosevelt.
Through overtaxing their capacity.
their working capital and their credit,
10 keep I'D with il, the national pros
perity has proved a two-edged sword
to many corporations as well as indi-
vidual firms. and the greed for exces-
sfve profits among them led to much
OF the corporate dishonesty illegal
acts and methods, and wholesale graft
in high places. which We have seen
exposed These excesses and frrexu-
larfties are now being corrected
NO wonder that their exposure !
from time to time, gave blow after
blow TO public confidence. and kept
Investors from buying stocks and
turned their attention and speculative
enterprise in other directions. and into
other channels. These exposures and |
violations of law naturally aroused Sc
we're public criticism and Indignation |
and called for investigation by the
federal government
The righting and correction of
wrongs practiced in violation of the
interstate and antitrust laws of con-
Kress would have had no disturbing
effect upon investors. and the public |
mind. II properly viewed. and it re-