Montana labor news., 1934-06-07
Burns's Sophistry

A fair sample of the deceptive statements re-
sorted to by public utility officials in the attempt
to Justify policies which are unqestionably
against the general welfare is the one made by
Robert Burns, counsel of Cities Service Com
pany, in reply to the testimony by A. +. Lund-
vail, investigator for the Federal Trade Com
mission, that through the purchase in 1929 of
one million shares of Cities Service stock at one
dollor per share Henry L. Doherty, president of
the company, increased his voting strength from
per cent to POO per cent, which enabled him to
control the company owing to the widespread
distribution of the rest of the capital stock. The
sale OF the big block of stock was authorized by
the board Of directors, of which Mr.. Doherty was
a member.
In his reply to Mr.. Lundvall's revelation Mr..
Burns stated that at the annual meeting of the
stockholders, held shortly after the directors
sanctioned the sale, 'the vote was 1,713, 1896 to
715.2" in favor of the deal. This statement was
intended to show that an overwhelming majority
of the stockholders approved this transaction.
The fact is, the stockholders never voted on
the sale of the stock. Indeed, the officers of
the company did not give them an opportunity
to vote, but simply accorded them the general
and valueless right to confer on the officers the
blanket authority to vote the stock in favor Of
any policy, good, bad, or Indifferent, which pleas
ed the officers.
Here is the way the scheme was worked. In
sending out notices Of the annual meeting the
officers, including Mr.. Doherty, followed the
usual practice of requesting stockholders to sign
proxies authorizing a proxy committee, selected
by the officers, to vote each stockholders stock.
When the annual meeting convened, besides the
directors and officers of the company, there were
few stockholders present. So that and this
is the usual practice at SO called annual meet
ings of stockholders" - the directors and Of
ficers, including Mr.. Doherty, their pockets fill
ed with proxies of absent stockholders, voted
overwhelming approval of all of their own Of
ficial acts, including the sale of one million shares
of stock to Mr.. Doherty, the vote being, as Mr..
Burns stated, 1,713,189.6 shares in favor of the
deal to 715.2 shares against it.
This action by Mr.. Doherty and his official
associates - this scheme of securing blanket
proxies from thousands of stockholders to vote
their stock at the annual meeting and then us
ing that authority to approve the officials own
proposal to sell the stock to Mr.. Doherty is
blazoned to the world by Mr.. Burns as indorse-
ment by the stockholders of the questionable
transaction.
1t would he decidedly interesting if Mr.. Burns
would consult the minutes of the annual meet
ing and inform the public just how many stock
holders in addition to the officers and directors
were present, how many were absent, how many
shares the officers and directors who were pre-
sent owned and voted, and how many shares
the officers and directors voted by proxy.
1t is time to call a halt on this palpably sophis-
teal practice of corporation officials loading
themselves with hundreds of thousands of prox-
les to vote the stock of absent stockholders and
then h~eralding their action in voting the prox-
les to approve their W antisocial stunts as the
approval of their acts by the stockholders who
do not even know the specious purposes for
which the proxies are secured.