Perth Amboy evening news., 1913-01-20
HOT FIGHT ON
THIS CLAUSE
Paragraph In Corporation
Law Condemned by Wilson.
(From the NEWS Correspondent,

Trenton, Jan. 20:-Here is the
holding company" section of the
New Jersey corporation law which is
the subject of attack by Governor
| Wilson and that. beginning this
week. will be the object of one OF
the bitterest controversies in the
legislature:
ANY corporation may purchase,
hold. sell, assign. transfer, mort
gage, pledge or otherwise dispose of
the shares of the capital stock of, or
any bonds, securities or evidences of
Indebtedness created by any other
corporation or corporations OF this
or any other state, and while owner
of such stock may exercise all the
rights, powers and privileges of own
ership, including the right to vote
thereon"
1t is section No. 81 of the law on
corporations. One of the governors
corporation bills to be introduced
this evening will be aimed at this
provision. This provision, the gov
ernor pointed out In his message,
provides the very method of forming
vast combinations and creating mon
opoly, against which the whole
country has set its face"
1t was through this license that
the Standard Oil Company, through
the Standard Oil Company of New
Jersey, could get control of all the
independent oil producing and refin-
ing companies of the country and
effect the absolute monopoly that 1t
now enjoys. The Standard Company
of New Jersey was formed for this
explicit purpose. In like manner
the United States Steel Corporation,
the United States Leather Company,
the American Tobacco Company, the
International Harvester Company,
and many others, were Incorporated
in this state in order to avail them
selves Of the corporation holding pro-
visions of our law. 1t was in this
way that New Jersey became known
as the mother of trusts.
AS soon as these big companies got
their Jersey charters they began ac-
quiring the capital stock of their
smaller competitors, and having ac-
CURED a majority of the shares of
the stock and holding the voting
power OF the stock, by express pro-
vision of the New Jersey legislature,
it was perfectly easy TO get control
of the entire production of a COM
modify, whatever it might be, and
with it the power to enjoy an exclu-
sive market and to fix prices.
Governor Wilson said in his mes
sage that he was sure that the people
of New Jersey do not dissent from
the common Judgment that our law
must prevent these things 'and pre-
vent them very effectually."
An interesting question has been
raised as to just what effect would
follow the repeal of the "holding
company" section. Laws cannot be
retroactive, and the mere repeal of
this section, therefore. would not
abolish the existing trusts that have
their homes in this state, though it
would, of course, prevent the forma-
ton of others.
vides that 1.-The charter of every cor
poration, or any supplement thereto
or amendment thereof shall be sub
.ject to alteration, suspension and re-
peal, in the discretion of the legis-
lature, and the legislature may at
pleasure dissolve any corporation"
This section has been upheld in the
courts.
Well known corporation lawyers
of the state differ on the question
whether a law repeating the charters
of the holding companies would be
valid. The state courts have held
that the holding by one company of
stock of another corporation ia a
property right and 1t is maintained
by some that although the legisla-
ture could repeal the charters of the
big trust corporations, it could not
take away their property rights.
1t Is the general opinion around
the State House that the only effect
of repeating the charters of the big
companies would be to drive them
into re-incorporating in another
state. Delaware. West Virginia and
Maine now all have liberal corpora
ton laws and get a share Of the in
cooperating business that formerly
| came to this state. One reason why
the big companies have remained in
New Jersey is that the corporation
laws of this state. in most of their
essential points, have been tested in
the courts, giving the companies a
well-settled legal status as their
guide.