Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1913-06-05
A FAR-REACHING ACT.
Minor interests to Control Electric
Light and Power Companies.

(From the Boston Americana
No one can read the Governors message
accompanying his veto OF an act relative
to the issue of stock and bonds by electric
power and light companies. etc" with
out feeling that the Governor. in this in
stance, stood as a vigilant guardian Of
the public interest
This bill would have given these cor
porations the right to issue twice as
much bonds as they have capital stock
and twice as much preferred stock as they
have common stock.
one of the principal objections which
the Governor makes to this bill is that it
would allow very small interest in tho
corporations to control them. since only
the common stock would have a right to
vote. The bondholders and the preferred
stockholders may have no vitng power.
Therefore, as the Governor says, a cor
poratiOn might issue securities to the
amount of 100000 of which 100000 could
be issued in bonds $4,000 in preferred
stock, without voting power, and slO0o00
in common stock, and those who own the
common stock or only one-nnth of the
entire interest of the corporation, could
control it, and those who own one share
more than one-half of the common stock
could control the common stock and
hence control the corporation. Thus,
sol 900 in interest could control a corpora
ton with 100000 Of securities outstanding.
THIS is called pyramiding control and 1t
has all the vices of the new universally
condemned holding companies
our laws and our public policy have al
ways demanded that the control of our
IL, It,
the hands men who have 90 large a per.
sonnl stake In the success of the corpora
ton tina: their interests must always be
identical with the interests OF the cor
poration and never inconsistent with It,
The danger to the public and the danger
to the honest investors arises when the
control OF corporation falls into the
hands OF men who have small personal
interest in it and a larger interest In some
other enterprise. The history OF railroad
wrecking, which has ruined stockholders
and injured the community that the rail-
roads have served. is largely a history OF
the misconduct OF men who control the
railroad without having n sufficiently
large personal ownership OF its stock to
make the sacrifice of their interest in the
! railroad too costly for them to betray It.
III the Morgan and the Rockefeller IN
| terests in the stock OF the New Haven
railroad had been as great as their power
! in the railroad. that road would never
have fallen into its present miserable con-
dition What investors require for safety
10 their property and what the public re-
qures for honest and economical manage
ment. which means good and cheap ser
vice. is management OF the corporation
by men who cannot do anything incon'
sistent with the interest OF their corpora
| tion which will not he inconsistent with
their own greatest interests.
Under the bill which the Governor has
vetoed, n man having only SOL, 900 in a
corporation can control a property ir
which others have $4,000 invested, or @
man having Sl0l coo OF stock can control G
corporation in which others have invest
ed one million and six hundred and nine
| ty-nine thousand dollars.