generally the articles or addresses in the report for 1910, by Hon. Elihu Root, Hon. Henry B. Brown, Frederick D. McKenny, Alpheus H. Snow, Professor Eugene Wambaugh, Hon. Jackson H. Ralston, Hon. Andrew J. Montague, Hon. Simeon E. Baldwin, President Charles W. Eliot, and Hon. William Dudley Foulke. Mr. Theodore Marburg wrote a valuable summary of the thought of that conference, which should be consulted in order to get a consensus of American opinion. The pamphlets by the Judicial Settlement Society reproduce some of the addresses already referred to, but "An International Court of Justice the Next Step", by George Grafton Wilson, is newly printed. This is useful as marking the state of contemporary thought on the subject. For another article which brings the subject up to date see in No. 10 of the same series, "The Court of Arbitral Justice", by Dr. Scott. This contains an extract from the Proces-Verbal of the afternoon session of the Institute of International Law of August 28, 1912, showing the approval by that body and by Professor Lammasch of the proposed judicial court.

Other articles referred to in the text are as follows: "Compromise, the Great Defect of Arbitration", by Hon. William Cullen Dennis, II Columbia Law Review, p. 509; (Mr. Dennis thinks that, for the present, a code of procedure in international arbitration is an even more imperative need than a code of substantive law.) William Cullen Dennis, 5 American Journal of International Law, pp. 59-63; Thomas Raeburn White, "The Underlying Principles Which Should Govern the Method of Appointing Judges of the International Court of Arbitral Justice", Mohonk Arbitration Report, 1911, p. 102; Alpheus Henry Snow, “Legal Limitation of Arbitral Tribunals", 60 University of Pennsylvania Law Review, December, 1911. This article should be carefully compared with Mr. Snow's article on the "Development of the American Doctrine of the Jurisdiction of Courts Over States", I Judicial Settlement of International Disputes, 100.

For discussions of the problem of an international court of justice by delegates of The Hague Conferences, the best original sources are the proceedings which are in French. Brief resumes of these discussions in English will be found in 1 Scott's "Hague Peace Conferences", Higgins' "Hague Peace Conferences", and Frederick W. Holls' "The Peace Conference at The Hague".

For an official discussion of the problem of the relation of the Court of Arbitral Justice to the International Prize Court, see

identic circular note by Hon. Philander C. Knox, Secretary of State, in 4 American Journal of International Law, p. 102. The combination of these courts in one, which is suggested by the present writer, is also proposed by Secretary Knox with this difference, however, that the foundation of the plan of the Secretary of State is the International Prize Court, as that institution is already in a more advanced state of acceptance than the Court · of Arbitral Justice, while the present writer's scheme makes the Court of Arbitral Justice the foundation. The plans further dif

fer in that he first utilizes the scheme of judges already accepted for cases of prize, which permits nations to have individual representatives on the tribunal, while the second proposes that the judiciary be chosen from the nations at large, none of them to have the right to claim territorial representation by an individual judge.

THE EVIL OF SPECIAL PRIVILEGE*

By J. Newton Baker, LL.M., J.D., Washington, D. C.

A corporation is styled as a "person" in the Constitution of the United States and created for a public purpose. The dominion of corporate power is greater than the general public comprehend, also the evils which infest these creatures of the law are skilfully and secretly destroying the inalienable rights of personal liberty while the people are lingering. States have created these corporations by special acts of their legislatures tinged deeply with the stain of corruption. Special charters of power were broad and dangerous, irresponsible and destructive in many instances. These charters have nearly ceased to exist and many of the unlimited powers are now conferred, or permitted by general incorporation laws. These legal provisions of authority in State charters, by some expressive or permissive force, evidently, are the sources of the prevailing evils and proper subject for reform. issue of charters to organizations has been promiscuous. this charter of corporate power that many of the great evils of monopoly existing in interstate commerce are attributable. Government and business have been united by laws of incorporation which authorize, permit or make possible, unfair and oppressive methods. Originally charters had no special privileges for power to own stock in other corporations or the power of transferability of shares of stock. When the right to transfer shares of stock

began the evil of special privilege had its birth.

Even the

It is to

Early records show that in 1587 the Portuguese government granted a charter to a trading company. The East India Company, authorized in 1600, during the reign of Edward VI was the first corporate organization to possess this capability to transfer stock in England, which was a monopoly created by royal grant. This special privilege was immediately utilized in other countries. The Dutch India Company was organized in Holland on the same basis as the English company. France was next in line to create similar corporations. These corporations were

*This is the second of a series of three articles on "The Regulation of Industrial Corporations" by the author. The first article on "The American Federation of Labor," appeared in the December, 1912, issue. The last article will appear in the February issue.

formed to conduct trade between Europe and the Indies and yielded immense profits. The duration of their charters was limited in years and renewed for periods of twenty years. The government shared in the profits as the purposes of the corporation were in nature of public corporations. The Bank of England obtained its first charter in 1694. Eventually the evils of corporate power appeared in the first quarter of the eighteenth century in both England and France, all caused by the development of numerous fraudulent stock companies. At this period the great South Sea bubble in England grew and burst. In England the prohibitory act of 1720 was passed and few corporations were created till 1741, when the provisions of the act were extended to the American colonies. Between 1741 and the American Revolution very few corporations appeared till the adoption of the Constitution. Nearly all the corporations prior to 1850 were public in their nature such as banking, railroad, and bridge companies. At this time there were no general incorporation laws for purely private purposes in this country. Probably the first charter having private privileges was granted by England in 1688, incorporating a trading company in Massachusetts which had power to open and operate mines. The people protested against this special privilege, arguing that such grant of power tended to produce a monopoly and enhance prices of mining products resulting in oppression upon the general public. The view of monopolistic power and restraint is not a modern complaint as shown by the prejudice widespread among the people against grants of corporate power and the creation of artificial persons in commerce. This same hatred towards corporate power is manifested in the public press, verdicts of juries, and even in some judicial opinions have not failed to voice a warning or reprimand.

A review of the inception, history, and growth of corporate legislation in the various States gives the impression that the tendency of legislatures in the matter of privilege is diversity rather than uniformity for the rivalry in the corporate business; and creates a legislative policy to protect domestic corporations and at the same time exercise a feeling of antagonism or belligerent feeling against foreign corporations. Some States have charters for sale and look for the initial fees of organization and the yearly return of taxes to be assessed. By proceeding on this basis to procure money returns they obviate sound principles of government and measure legislation by monetary and political

scales. Special legislation for the benefit of a particular corporation is always open to the charge of being legislation for expected revenues to the State, especially if the character of such legislation is manifestly unsound in principle. Granting charters with unusual privileges and immunities arouses a public distrust. against the integrity of the members who compose the corporation.

To demonstrate that the people themselves are responsible for the evils of corporate power obtained through the actions of their legislatures, which power is frequently used for indirect and selfish private gain, a glimpse at the following may be convincing:

Forty-two States permit the organization of corporations for any lawful business or purpose.

Forty-three States have no superior limit on the capital stock of the corporation.

Twenty-four States issue perpetual charters and in most of the other States charters are limited as to time but may be renewed again and again.

Eighteen States permit the merger and consolidation of corporations and they are specially prohibited in only two States. Nineteen States sanction holding of stock in other corporations; it is prohibited in two States and qualified in seven States.

Forty States have no provision that any part of the capital stock shall be paid in money, either before organization or at any period in its existence. One State provides for the payment of $1,000 in money, three provide that ten per cent, one twenty per cent, one twenty-five per cent, and one fifty per cent of the capital stock shall be so paid.

Thirty-eight States by statute, and three by jurisprudence, provide that stock may be issued for property, and in most of them for labor or services as well. Fourteen States declare the issue

of fictitious stock void. In nine States the judgment of the board of directors as to the value of the property for which the stock is issued is declared conclusive except in the case of fraud, but the stock is not declared void. Montana permits any arbitrary value whatever to be placed on mining property for which the stock is issued. Massachusetts, Virginia, Iowa and Texas exercise State supervision over the issuance of stock for property. Twenty-four States permit corporate meetings to be held either within or without the State of incorporation.