The problem of corporation control. in Annals Am. Acad. Pol. Sci., 32 (1908), 235-239. INDUSTRY AND LABOR 141. The Control of Corporations1 may be said to constitute, in many States, the great administrative problem of the state governments. The national Constitution does not give the national government the right to control industrial Hoyt, A. M., corporations, except so far as they are also engaged in interstate commerce (§ 262). The whole task of controlling ordinary corporations is therefore left to the States. This has proved to be serious, because most of the important corporations of the present day are engaged in business in several States and obtain their charters, i.e. take out incorporation papers, in the State which will give them the greatest number of privileges and require the least from them in return. A corporation is allowed, then, to transact business in any part of the Union under its liberal charter, and the other States in which it transacts business find difficulty in protecting the interests of their people, because the privileges possessed by the corporation give it unusual powers. If the control of one State is more lenient than that of others, large companies will take out their incorporation papers and maintain offices in that State, although most or all of their business may be in other States. This makes it possible for a corporation to evade a strict incorporation law, and makes it impossible for any State properly to enforce a reasonably severe corporation law, much to the loss not only of the State, but of the entire country. Regulations tions. Comparatively little control is exercised over corporations for corpora- but most of the States now compel every corporation to make an annual report showing the amount of its capital stock, the volume of the business done, the debt of the company, and many other details. Opportunity is ordinarily given for any stockholder to examine the corporation's books at stated periods. Frequently, stockholders of a Ford, Am. 1 A corporation is a set of persons legally associated and empowered to act or to transact business as one person, an artificial person. corporation are made liable for its debts to the par value of their stock. commercial banks and Funds and their Uses, 209-229, 240-264. Kilburn, F. D., in Am. Acad. 142. Regulation of Savings Corporations. - Special regu- Savings and lations are provided for those corporations which are devoted especially to the care of the people's savings. These trust include the savings banks, trust companies, and insurance companies. companies, similar regulations being established for the Cleveland, commercial state banks, which receive checking deposits and loan money on short-time notes. Banks are not allowed to take out incorporation papers unless they have a reasonable amount of paid-up capital. In most States they cannot buy stocks or speculate in other ways. They are required to Annals keep a certain percentage of all their deposits as a reserve, and are permitted to loan money only on certain securities. 24 (1904), The savings banks are well restricted in most States, but 29-42. the laws regarding trust companies have been alarmingly Bolles, lax. Those for the commercial state banks have been none Money, too strict, although vastly more severe than the laws under and which banking was permitted before the Civil War.1 A Finance, plan tried by Oklahoma of government guarantee of bank 256-262, deposits has been considered by a number of other States. 287-294. Life insurance companies are a form of savings institutions Insurance which the state laws are supposed to regulate carefully. companies. The danger from lenient laws, carelessly administered, New Encyc was shown by the extravagance, speculation, and corof Social ruption brought to light by the insurance investigations in Reform, New York and other States in 1905. Most of the States 632-635. in which large insurance companies have their headquarters have revised their laws carefully since 1906, but constant Funds and vigilance is required to insure the protection of savings their Uses, which have been intrusted to insurance companies or 282-297. banks. Banking, 231-234, Cleveland, 143. The Control of Trusts. The real problem of con- Nature of trolling corporations, aside from railway companies, lies in trusts. the regulation of the great industrial companies called 1 See Dewey, Financial History of United States, § 112. Clark, J. B., in Century, 68 (1904), 954-959. Proposed methods of control. Hadley, Labor bureaus. Stimson, to Law, Hours of labor. trusts. Combinations of capital have been found so much more profitable than attempts to do business under competition, that in more than one line of activity a single trust has gained control of almost all of the output of the article which it manufactures. As it has almost a monopoly, it can raise prices, discriminate with impunity against individuals or cities, and crush small competitors by the use of unfair means. To protect the people from a trust which charges exorbitant rates, or otherwise controls business for its own interests, is not easy. The different States have attempted to solve this problem in one of three ways. (1) Many States by declaring trusts illegal have sought to destroy them. (2) Other States have tried to keep the trusts within bounds by compelling them to publish complete accounts of their expenses and earnings. (3) Some of the States have done nothing, either from fear that no law against the trusts could be enforced, or because they believed a trust to be a distinct public benefit, since it abolishes the wastes of competition. Judging from our experience in this matter, the attempt to control trusts by very radical legislation is likely to do more harm than good, as harsh laws will injure ordinary corporations and cannot easily be enforced against the more powerful companies. The best methods of control will undoubtedly be found only after years of patient study and experiment. 144. The State Labor Laws. - Most States have laws for the benefit and protection of the laboring classes, since employees cannot easily protect themselves. These are administered by labor bureaus or special officers such as factory inspectors. Among the laws are those regulating the hours of labor, and others compelling employers to provide for the health and safety of their employees, or making employers liable for injuries received by employees. Many of the States limit the number of hours required for a day's labor on public work to eight or ten, and assert that the same number shall be a legal day's work for private Handbook of Labor Law, 43–65. New Encyc parties, but by contract any employee may agree to work Stimson, any number of hours he chooses. In the case of minors and of women, however, the laws are more strict, most States prescribing a minimum age limit-usually fourteen, but sometimes twelve-at which children shall be employed in factories, and fixing the maximum hour limit per week for 170-181, which women and children may be employed. of Social Reform, 429-438. Stimson, Very few of the commonwealths where manufacturing is Factory prominent have failed to demand that every company shall regulation. do certain things in order to protect the health and safety of Handbook, factory employees. Overcrowding is prohibited, fire escapes 146–153. are required, and boiler inspection is made obligatory. In Encyc. of those cities where sweat shops are common, statutes seek Social to prohibit them entirely or reduce their disadvantages as far as possible. Reform, 461-464. A., in Annals A partially successful crusade has been waged against Child labor. the use of child labor in factories or mines, because of the Beveridge, serious evils which follow the employment of children in these injurious occupations. Many advocate the enactment of a national law forbidding the shipment from one State to another of child-made goods. Am. Acad. Pol. Sci., 29 (1907), 115-124. While we have not done as much as some of the States of Europe Liability of in holding employers responsible for accidents to those in their charge, employers. the law ordinarily requires that every precaution must be taken to prevent accidents to employees whose work entails risk to life or limb. Wright, This is especially true of railways; but, as a rule, the provisions for Industrial Evolution, compensation of persons injured in the performance of their duties are 278-282. very imperfect; and frequently, as in the case of the railway couplingpin, corporations have refused or neglected to adopt life-saving devices on account of the expense entailed. resources. 145. Supervision of other Economic Interests. Most of Natural the States have endeavored to protect their natural resources to some extent. In very few instances has the water power remained in state control, but many States have established forest reserves, especially where these will protect the head waters of important streams. Some help Game and fish laws. Peixotto, E. D., in Sunset, 12 (1903), 66-71. Bache, R., in Outing, 47 (1905), 182-191. has been given to the agricultural interests through the state departments of agriculture, which have supervision of the pure food laws (§ 121), encourage the development of special products like fruits or sugar beets, and aid farmers' institutes by showing better methods of cultivation. More has been done to protect game and keep up a stock of fish. Very few kinds of game can be shot at any time, for in the majority of the States the close season, when hunting is prohibited, covers most of the year, the time varying for different animals or birds. Many States have also fish hatcheries from which the streams are kept supplied with trout and other native fishes. This work is aided by the national fish commission, which has made special effort to develop supplies of cod, salmon, and shad. General References Hart, Actual Government, pp. 481-527. Hendrick, Railway Control by Commissions. Dixon, State Railway Control. Jenks, The Trust Problem. Clark, The Control of Trusts. Wright, Industrial Evolution of the United States. Stimson, Handbook of the Labor Law. Topics 1. IMPROVEMENT OF CITY STREETS: Fairlie, Municipal Administration, pp. 227-238; Fortune, W., in Century, 46 (1893), 894–910; Lewis, N. P., in Popular Science Monthly, 56 (1900), 524-539; Peckham, S. F., in Popular Science Monthly, 61 (1902), 212–221; symposium in Annals of American Academy of Political Science, 29 (1907), 559-600. 2. METHODS OF STATE RAILWAY COMMISSIONS: Hadley, Railroad Transportation, pp. 134-145; Dixon, State Railroad Control, pp. 201-211; Hendrick, Railway Control by Commissions, pp. 92-119; Dixon, F. H., in Political Science Quarterly, 20 (1905), 612–624 ; Hutson, E., in Reader, 8 (1906), 245–256. 3. ANTI-TRUST LEGISLATION: Hadley, A. T., in Scribner's Magazine, 26 (1899), 604–610; Walker, A. F., in Forum, 27 (1899), |