The Birmingham age-herald., 1914-01-21

The only caes of general interest decided
by the supreme court today was that en-
titled. state ex rel. German Baker VS.. Il.
S. Nichols. from the circuit court of De-
Soto county.
The sheriff of the county had died, and
the deputy sheriff, Mr.. Nichols, assumed
charge of the office. Later Governor
Brewer appointed German Baker as sher-
iff of the county, pending an eiection' at
which Nichols was elected. He demanded
the office, but was refused, Baker claim
ing that Nichols was not eligible, that he
was not a qualified elector, as he had
failed to register in his new home. The
case was reversed and remanded.
Thomas s. Owen. special justice, who
...........................
has never had unpleasant experience
In it's banking relations by reason of the
fact that strong interlocking directorates
have been established which represent
on the one hand the great corporations
and on the other hand some of the banks.
There are many who believe that the
public gains more from community of
association of this kind than 1t loses.
although there is good understanding of
the danger which turks behind such COM
munity of interests as is represented by
interlockng directorates. However, 1t is
thought to be good thing that the coun-
try is now to have experimental tests of
conditions which will be established after
interlocking directorates are abolished.
Not of Great Consequence
This legislation is regarded here as not
1t cannot prevent the friendly cooperation
which is essential at least in large finan-
cial operations. A good deal of discus
sion is heard here about the effect of the
new Legislation including that which
will forbid interlocking directorates,
upon the underwriting syndicates. That
method of financing large undertakings
was in operation before the establishment
of the great industrial corporations. But
it was chiefly utilized for the financing
of railroads 1t is tradition in this city
that the first large underwriting syndi-
cate which undertook to finance a corr
poration was the one which was organ
lied at the time of the incorporation of
the so-called sugar trust" about Is
years ago.
II was very prOItaDle ana SucctSs-
full experiment in corporation financing
by means of the underwriting syndicate.
How successful it was may be Illus
trated by statement of the common un-
derstanding that one of the lawyers who
drew up the Incorporation papers pre-
ferred to receive his fee in the certifi-
Gates of the so-called trust at their par
value. His wisdom was afterward demon
strated when there came great apprecia-
ioY, in ba NM rat nf thaSp
Gates. 1t has been the tradition in this
city that this lawyer who used to say
that he had the finest practice at the Eng
lish speaking bar, found himself in pos
session of some 100000 through the ap-
probation in market value of these GER
tificates which he took as a fee. Another
distinguished lawyer who participated in
the legal work which the organization OF
this corporation entailed preferred to take
his fee in money and was paid 100000
in cash.
A Work of Reorganization
Although the courts declared invalid
this particular organization, so that 1t
was necessary to reorganize in sympathy
with the law, yet the success of the un-
derwriting by which the corporation was
financed led to many limitations, cul-
minating in the gigantic underwriting by
means of which the United States Steel
fully financed
The method of the managers of the
underwriting syndicate was TO parcel
out allotments to insurance companies,
to savings banks to banks and bankers,
sometimes to men of capital. If the
credit of the managers of these syndi-
Gates was high the allotments We're ac-
cepted not reluctantly, but gladly. 1t
was often said by bankers that all they
had to do was to accept allotments.
since somebody else had done the think
ing upon which this underwriting was
based. They were not compelled to give
any more heed to a notice that an allot-
ment of so much had been made to them
than they were to the deposit through
the tellers windows that was made by
their companies.
Under the New Law
But the new banking law may inter-
heretofore have characterized the 1nder-
here tofore have characterized the under
writing syndicates.
1t may be that operations of that kind
will be exclusively confined to private
bankers, the national banks having no
part in them 1t may be that very heavy