|Cohan as Wallingford|
National Commission on Corporation Reform Needed
The detailed form that the work of corporate reconstruction should take would be best performed, perhaps, by a national commission, and such a commission would have for precedent the work done by Germany thirty years ago — a corporate reform that has almost disarmed German Socialism, except as an agitation, against the unjust land laws of that country. I shall not go into details now, but will confine myself to those fundamental principles that in their nature must be at the foundation of the new corporate structure.
In this country the corporation is a creature of the executive department of the several states, and issues out of such department almost as a matter of course. Neither the object for which the corporation is formed, nor the amount of its capitalization, nor the character of the securities issued commands any preliminary attention other than such as is merely perfunctory. Put your nickel in the slot and take out a charter, is the invitation that the states extend; and in line before the slot machine, entitled, too, to an equal place in the line, are the corporate projects conceived to defraud, as well as those that have an honest purpose. Neither is detained by so much as an inquiry. For indifference such as that I would substitute at the very threshold of the corporation’s application for existence an honest, careful inquiry by some tribunal of government — a tribunal that will act only after it has heard; a hearing in which the public is represented by a District Attorney on whom is thus devolved the duty not merely of pursuing the horse after it is stolen, but of seeing to it that the door is locked before the horse is stolen. And what honest project, I ask, can object to such an inquiry?
Origin of False Capitalization
|A fraudulent security: counterfeit money|
Incorporated enterprise, just as private enterprise, should be given room to grow. A dollar turned into two, ten, twenty, if turned honestly, wrongs no one. Go forth, increase and multiply, is a command without which economic progress would not be. But in all this there is no need that the corporation should initially capitalize a projected success that, if it exists at all, exists only in the future. Let the securities issued on account of success be issued only when success is established; and let them be fairly related, as the enterprise grows, to the increased value of the actual earning power developed. And I can see no reason why in any honest enterprise the question whether additional securities shall be issued should not be made the subject of judicial inquiry.
|Chicago Elevated Train, "The L"|
(Tomorrow: “Workers Should Be Owners”)