The Washington herald., 1909-07-11
Mr. wickershsm on Corporation LegislatiO

Attorney General Wickersham's address
before the Kentucky State Bar Associa-
tion points out two ways of dealing with
the trust problem -o one by Federal
incorporation Of corporations engag-
ing in interstate commerce. and the
other by State legislation. which would
make impracticable the holding company
form Of combination His remarks on the
latter phase of the subject go TO con-
firm what has been repeatedly said in
these columns as to the responsibilities
and duties OF the States respecting the
corporation problem So far as Industrial
corporations are. concerned. the States
have hardly begun 70 employ their full
powers over these creations Of their own
statutes. Four States have an adequate
law OF incorporation to begin with. so that
IN the very creation Of corporations most
Of the States are derelict. Moreover, cor
poretion legislation still falls far short
Of putting forth the whole power Of State
sovereignty 10 prevent the evils Of COM
binations in restraint OF trade.
Much Of this legislation. as Mr.. Wicker
sham intimates, abounds in damnatory
language. but Is ineffective IN practice,
especially as II relates TO corporations
created in other States. As to these cor
porstions. the power Of the States is
such that they could strike down the
largest trusts by simply vacatiag the
license Of any corporation 80 per cent or
more Of whose stock was held by another
corporation A favorite method Of COM
binatinn nowadays is the holding com
pany. 10 which is delivered a controlling
interest In a series OF allied corporations,
or a parent corporation may itself acquire
a majority Of the stock Of scattered cor
porations- This could be prevented If a
suhicient number Of States should agree
upon the legislation recommended by the
Attorney General.
Mr.. wickersham declares that the hold
ing company has made possible the rapid
growth OF trusts and monopolies. So
far as this growth may be attributed 10
holding companies. the States are solely
responsible for 1t, for the holding com
pany could not exist at al, nor could
one corporation absorb another. but for
the liberalfty Of certain OF the States IN
granting charters permitting the very
combinations which public policy should
aim TO prevent. The responsibility OF
STATE LEGISLATION for 4ba bor7i-,c- -
is well stated in the address Of Wade
II. Ellis. now assistant 10 the Attorney
General, al the Chicago trust conference
Of 1907 wherein he described corporate
rations as a new corporate power. only
recently granted by express statutes In
q number Of American CommonweaIths.
These statutes" says Mr.. Ellis. "are
the sole source Of the power Of one corpo-
ration to own the stock Of another" What
power the States have given they can
take away. or limit, as Mr.. wickersham
suggests
The trouble, Of course. is 20 obtain the
requisite uniformity Of State legislation.
To remedy this difficulty a Federal in
corporation law IS favored by many. in
cludins the Attorney General. who re-
CARDS it as "the inevitable result OF eco
nomic conditions" A Federal law could
place such restrictions upon the issue
Of corporate securities and upon the ex-
ercise Of corporate powers as would
prevent combination altogether, OF at all
events confne II within rigid limits In
ssmuch as the States cannot regulate
or interfere with Interstate commerce.
Federal legislation must round out that
Of the States in order that the corpora
ton situation may be controlled at all
points, leaving no twilight zone where
in predatory wealth may work injury
10 the public.