change as possible, while seeming to be in the general interest. But a real trouble may also lie in the intricacy of a half-comprehended problem.

Concerning this class of legislation, so far as it has yet gone, it may not be unfair to say of it, whether national or state, that "owing to the emasculation and restriction these statutes have experienced at the hands of jurists, most of them have practically become dead letters." Some of the difficulty, however, is inherent in the subject-matter. These enactments aim to deal with new conditions of life, the scope and nature of which are not yet clearly discerned. For example, under the terms of the Anti-Trust Law, it is immaterial whether the combination in restraint of trade is made by corporations or by individuals. In point of fact, and this is material to the present argument, these combinations are usually made by incorporations. But of this the law takes no notice. Now here is a statute that distinctly impairs the right of free contract. How far can legislation carry such a restriction? Any formidable use of it would revolutionize our system of government.

Again, the interference by law with private contracts, not fraudulent, tends directly to government control of trade, and it was out of such control that the old despotic system of monopolies arose. Once more, can the courts enforce laws which seriously restrain the right of contract? Would not men go on and build up a system of trade outside of the statutes, until, in the general acceptance of such a system, the courts would be paralyzed, either from inability to secure a conviction, or from dread of a business catastrophe ruinous to the country? Interference with the liberty of citizens to do business as they may find it best, is a question both complicated and hazardous, and very few know under what limitations it is either wise or practicable.

We are now confronted with two questions on which clearness of thought is needed: First, are there any evils arising out of combinations and manipulations of capital that ought to be removed? Second, how is it practicable to legislate their extirpation? Undoubtedly there are very serious and also removable evils, but it is possible their real seat and nature are not rightly discerned. It is socially monstrous that

men in a single lifetime should from poverty grow into the possession of scores of millions of dollars worth of property. To the end of all time the people will kick at that phenomenon, even if they are not able to tell why it is monstrous. There is an instinct deep in the soul of every reflecting man, that such estates cannot be honestly accumulated, and that they are prima facie evidence that the people have been defrauded to build them up.

It is possible, of course, for men to discover some natural wealth, as the Kimberly diamond mines, a coal deposit, an Alaskan lake of petroleum or asphalt, or a Comstock lode of the noble metals, that legitimately make them millionaires. Some have become very rich, and deservedly so, by inventions that have greatly increased the productiveness of labor, as the sewing-machine, the telephone, the dynamo, the steam-engine. Some have also become wealthy in a way not exposed to envy or denunciation, through enterprise, as by creating new outlets for traffic, or by introducing economies and stopping waste of administration, or by finding mercantile uses for by-products. But none of these natural sources of wealth ever made their discoverer or inventor many times a millionaire through their legitimate industrial applications. Handsome, but not gigantic, estates have become accumulated by royalties and plain, pure trade. A new function is required to raise a man above the plane of abundant competence and make him a conspicuous plutocrat. That is the function of the "promoter,"-the man who does the financing of jobs, the entrepreneur who handles other peoples' inventions and property, either to exploit them, or the multitude which has need of them.

In this process the first step is to incorporate a company to control the new industry. We may well stop to ask why this step is necessary. Why cannot the individual just as well manage his own property and make all there is out of it? Simply because a private person has to transact business in a more responsible way than a corporation. He cannot double and quadruple his nominal capital by watered stock; he cannot borrow money to depreciate his own estate, as a railroad does when it issues bonds to make its stock worthless; he can

not, without a charter, restrict his liability for contracted debts to such amount as he is willing to risk in business. If he commits a fraud he has to pay the penalty with his purse and his body, as a corporation does not. The only frauds a member of a corporation is likely to be punished for are those he commits against the company.

On account of these qualities conferred by a charter, it comes about that there are few huge modern fortunes, either in America or Europe, that have not been made by the manipulation of corporate property. There is not an inventor of large estate who does not owe the bulk of his wealth to the corporations to which he has transferred his patents. It was not mining in the Comstock lode that made its owners millionaires, but inside speculation in its securities. It was not dividends that enriched the managers of Pacific Railroads, but plundering the roads and their creditors with impunity.

There is no reason why a corporate body cannot do business as honorably as a private individual. There are some chartered institutions that do so, especially the national banks, whose operations the government prescribes and scrutinizes. There are trust companies that thrive and do not speculate, although these make their greatest profits as receivers and reorganizers of corporations.

Well-established manufacturing companies do an honest business, though they are sometimes sold out by the sheriff. It is possible for men acting under charters to do business on the same lines as a private person; but in fact some do not, and hence the individual acting by himself seldom accumulates so large a fortune as can gathered through the misuse of corporate powers.

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These facts are pretty widely understood and they give rise to the conviction that great wealth, such as, in these days, overwhelms the imagination, are the products of dishonesty. An ingenuous man could not contemplate doing many things done in some lines of corporate business without compunctions of conscience. It is necessary to sophisticate him first. For to take money without rendering any return for it— without adding to the world's wealth or performing any useful service-is not

honest. To take it merely by juggling with securities and changing their values, is not honest. John Ruskin has somewhere said that no man was worth to the world $30,000 a year, because no man has the capacity to earn it. The sum is arbitrary, but, double or treble it, if a man is entitled only to what he can earn by real service rendered, then it would take a long life of exceptional ability and frugality to put by a million dollars. Nor are these great fortunes originally made by speculation. The amassing of millions is done by a deliberate contrivance.

The anecdote is told of Jay Gould, that, when once solicited to embark in speculation on the London Exchange, he told the advocate of such a scheme this: "Your plan is very plausible. I have only one objection to it. I never speculate." He operated in stocks only when he had a sure thing, or when he could control them. Take a very common operation to illustrate one method. The managers of a solvent dividend-paying railroad conclude to acquire by lease a tributary line that is not solvent. To do this they guarantee a six per cent. dividend on the stock of the tributary road to be paid out of the earnings of the solvent road. The moment the transaction comes to light in the market, the stock of the main line sinks in value, while that of the tributary line rises to or above par. In the process the manipulators in advance "sell short" all their holdings in the solvent company and buy all they can get of the poorer road. They even borrow all the money they can to carry their contracts on a margin, and they do this work before announcing the deal. When the facts are bruited about, and these securities have settled to their changed values, the operators deliver the stock they bought short, and sell the stock they were long on, making money in both ways. There are thousands of men, who, by thus violating their trust, have found themselves in a few days richer by hundreds of thousands of dollars, and all they have done is to change, by votes in directors' meetings, the relative values of securities entrusted to them.

What has happened in the process to the public? No wealth really has been made. The world is not a penny richer. Those who owned stock in the solvent

road find themselves poorer by the fall in its market value; those who sold out their holdings in the insolvent road have parted with property which they would never have given up at the price, if they had known the facts. What has been thus lost to them goes to make the fortunes the managers of the deal have taken to themselves. In a word, their gains have been "hocus pocussed" out of other men. Where else could it have come from? The men who have negotiated these deals did not operate with their own property; they were trustees for the company they wrecked; they dealt in the investments of people whom they impoverished. Surely it takes a sophisticated man to do this; doubly sophisticated if on the next Sunday he passes the collection plate at a communion service.

This is only one of the least gross filchings of corporate management, and it is common,- very common. Add to it the practice of declaring and withholding dividends in order to trade in stocks on 'change; the watering of stock, or increasing the capitalization of a company beyond its power to earn interest and dividends; the paying of exorbitant and speculative prices for the good-will of some concern that is to be bought out; and the methods by which money is taken from small investors and piled into the estates of promoters are not hard to understand.

Says J. P. Meany, in a recent publication, after computing that $750,000,000 of the railroad stock in existence is duplicated in the estimates of the total investment, "how much of the remainder was issued without cash consideration it is impossible to ascertain, but it is within the bounds of safety to say that of the $3,250,000,000 stock now outstanding not more than $1,250,000,000 is full paid stock." The result of such baseless capitalization is bankruptcy to the overloaded companies, and a menace of insolvency to their competitors. As "Poor's Manual" said a dozen years ago: "The stoppage or reduction of dividends on these great lines created profound apprehension and distrust as to the value of all railroad properties. The earnings of other great trunk lines suffered in like manner, if not to the same extent. A general disruption of the relations previously existing between the companies

was the inevitable result. . . . Railroads, unfortunately, seem to reverse the rule of the survival of the fittest' to the 'survival of the unfittest.' They can be used for but one purpose, and when they go into the hands of receivers, they are to be run so long as the operating expenses can be paid."

Under such an over-capitalization there is only this alternative: the companies must go into bankruptcy, or they must make enough on their passenger and freight traffic to pay dividends and interest on immense sums of money that never were furnished. Either they must defraud the holders of stock and bonds, or they must extort unfair remuneration from the public which uses the road. Meanwhile, the ingenious promoters of the scheme, always aware of the impending crash, manipulate the market and get rid of their holdings by unloading them on ignorant investors.

The process now described is by no means confined to transportation. Railroads have been cited simply because their affairs are better understood and the facts are more authentic. The same thing goes on, as it has long gone on, in scores of different interests. To make such management lucrative to the promoters, it seems necessary that the interests in question, and this is important to bear in mind for several reasons, shall be susceptible of being monopolized. In these days a very large part of our industry is carried on by corporations because these limit the liability of the capitalists engaged in them to the amount of their stock, or in some instances, as banks, to twice that amount. The investor is able to calculate in advance just what he is willing to risk, and, if the corporation becomes insolvent, he can have something reserved to live upon. With private partnerships this is not so. Here a man has to give up his last cent to his creditors.

Equity would seem to demand that the same liability should follow a man into a corporation, which is, after all, nothing else than a form of partnership. Why is it that a legislative provision should confer upon a company a right to contract debts that it need not pay, when an individual is permitted no such immunity? The usual answers to this question are, first, that a corporation, since its capital and its liabilities are known to

the world, only enjoys a corresponding credit, and society is protected against it in everything but its own imprudence or bad judgment. This argument amounts to but little, since those who do business with a corporation do not know, until too late, when it has transcended the safety line of debt, and, further, in point of fact, the credit of individuals is more circumscribed than that of a chartered body. A second argument is that the limited liability of the investor greatly promotes enterprise, thus creating new taxable wealth, new conveniences and developments, and new demands for labor. Hence it is good public policy.

Under this system, which is constantly expanding to embrace new interests, there is a large field of corporate activity that is sound. As has already been stated, our banks and financial institutions are exceptionally safe. Our large textile mills, our great printing houses, many of our factories, indeed most of the corporations engaged in production, are normal and without offense. They do not over-capitalize and then issue bonds to kill the stock. If they desired to do so, they have not sufficient credit; their securities are not listed on stock exchanges to become the shuttle-cocks of speculators; they as yet are incapable of combining all industries of their class into one trust; if they are very lucrative new capital seeks the same sort of investment, in order to share the profits, and the fear of this restrains industrial corporations from trifling with their credit.

There is a line where safe methods begin to disappear. It is the line of practical monopolization. Monopoly inflames the imagination of avarice. There are no bounds to its speculative profits. The absolute control of a product or a convenience seems capable of unrestricted extortion. As a matter of fact, these dreams are seldom realized, because the insatiate greed of monopoly promoters leads them to miscalculations that end in bankruptcy; or, what is worse, these promoters are in such eager haste to awake in the morning millionaires, that they do not care whether their schemes are sound or not. They expect to complete their deal and clean out before the crash comes, leaving a bankrupt concern in the hands of their misled dupes. Their reliance is on the credulity and greed of those who, equally with

themselves, wish something for nothing, but who are not "let in on the ground floor." We have the failed whiskey, cordage, rubber, gas, and kindred trusts, as well as railroads in receivers' hands, for examples.

Those great combinations that suc ceed in floating vast amounts of watered stock rest, as a rule, upon some public franchise, or some patent, or upon some production limited as to its sources. They control railways and street tramways, telegraphs and gas works, which have for their basis rights of way and construction granted by law; they control telephones, electric lights, and motors, as they once did sewing machines, founded upon patents; they control oil and anthracite because the areas of production are restricted, whiskey and sugar because the distilleries and refineries are few, and because, as objects of heavy taxation, the government pressure unites them in interest; they control tobacco for a like reason; and for obvious reasons, as the fewness of the factories and plants necessary to supply the market, they control the production of cordage, biscuit, matches, wire, etc. In nearly every case the ingredients of extortion and dishonor are misuse of corporate powers, monopoly, and indebtedness for which there is no value received.

Not long since a certain trust was summoned into a United States Court to answer why it should not be put into the hands of receivers. The petitioners averred that the plants turned into the trust had only a capital of $5,000,000, against which the trustees had issued certificates for $30,000,000. This tremendous increase of capitalization was defended on the ground that heavy premiums were paid for good-will, and the court held that this was legitimate. If what has gone for good-will, as it may be called, in the consolidation of the great trusts, as in oil, coal, sugar, tobacco, gas, cordage, whiskey, breweries, electric contrivances, street railways, telegraphs, etc., were computed, it would probably be found that of them, as of railways, hardly forty cents on a dollar has ever been paid up on their stock and that they too have a billion of dollars on the market either in worthless securities or in securities that must be kept profitable by an unnecessary mulct