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Federal Control of Corporations. The unfortunate effects of the lack of uniform state requirements in such matters as purposes of incorporation, corporate powers, qualifications and responsibilities of promoters and directors, capitalization, and the like could in large measure be remedied by federal action. The Clayton Act touches only incidentally upon this field. Its provisions relating to incorporate stockholdings and interlocking directorates were framed with reference merely to the problem of the preservation of competitive conditions. What is needed is a federal statute dealing thoroughly and systematically with the promotion, organization, and management of corporations engaged in interstate commerce. Canal, railway, and bridge companies have in the past been chartered by the federal government, just as national banks are now. It would be legally possible and economically advisable to require at least a federal license from all corporations engaging in interstate commerce. Moderate and just requirements as to publicity, capitalization, and other things might very well be imposed as the price of federal license. Aside from the present lack of uniformity in state laws, the mere size of modern business corporations and the interstate scope of their operations make it difficult for any individual state or states to control them efficiently.

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Industrial Combinations in Other Countries. - A movement toward combination in some form has manifested itself in practically every country which has large industries of the modern type. In England, however, the movement has made much less headway than in the United States. This may be attributed in part to the fact that England's "company laws" are not so lax as are the corporation laws of many of our states, in part, possibly, to the absence of a protective tariff, and in part to the highly specialized character of English industries. During the past twenty or thirty years, however, a number of important combinations have been formed in England, but only a few of these have been successful. An English combination, it may be noted, has an international monopoly of sewing cotton. England has no statute forbidding combinations,

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but the contracts by which "combinations in restraint of trade " are formed will not be enforced by the courts.

In Germany and in certain other countries of continental Europe the dominant form of combination is the Kartell. This resembles a pool more than it does the thoroughly centralized industrial combinations of the United States. The Kartell itself is, however, usually organized as a joint-stock company. The individual companies constituting its membership continue as independent producing establishments. The Kartell controls sales, prices, output, and the distribution of orders and of profits. Opinions in Germany with respect to the success of the Kartells is greatly divided. On the one hand it is claimed that they have eliminated many of the wastes of competition and that they have been especially active and successful in securing sales in foreign markets. On the other hand it is charged that they have discriminated against home consumers by selling abroad at lower prices than they charge at home, and that they even go so far as to sell at very different prices in different part of Germany, utilizing, as far as possible, the principle of "charging what the traffic will bear." In 1906, when a government investigation was made, there were 384 Kartells in Germany, and many new ones have been organized in subsequent years. Noteworthy among the German Kartells have been the RhenishWestphalian Coal Syndicate (of which the Prussian government, as a large mine owner, was for a short time a member) and the Steel-works Association.

QUESTIONS AND EXERCISES

1. What are the terms under which corporations are chartered in your own state? What anti-trust laws are in force there?

2. Explain the various items in the published balance sheet of some industrial corporation.

3. What limitations should be attached to the statement that "a corporation is a fictitious person"?

4. Does the word "capital" mean the same thing in accounting and in economics?

5. Report on the history of one of the following: United States Steel Corporation; American Sugar Refining Company; American Tobacco

Company; International Harvester Company; United States Leather Company; Rhenish-Westphalian Coal Syndicate.

6. What advantages has a large plant? a large business unit? a monopoly?

7. What special burdens are imposed upon corporations? Has the corporation any other disadvantages as a form of business organization? 8. In what respects do the Clayton Anti-trust Act and the Federal Trade Commission Act cover the same ground?

REFERENCES

Bureau of Corporations. Special Reports on various industries.
CARTER, G. R. The Tendency towards Industrial Combinations.
CLARK, J. B. and J. M. The Control of Trusts.

DEWING, A. S. Corporate Promotions and Reorganizations.
DURAND, E. D. The Trust Problem.

Federal Trade Commission. Annual and Special Reports.
GERSTENBERG, C. W. (editor). Materials of Corporation Finance.
HANEY, L. H. Business Organization and Combination.

JENKS, J. W. The Trust Problem.

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LYON, W. H. Capitalization, a Handbook of Corporation Finance.
MEADE, E. S. Trust Finance; Corporation Finance.

ORTH, S. P. (compiler). Readings on the Relation of Government to Properly and Industry, Parts iv, viii, ix.

Railroad Securities Commission. Report.

RIPLEY, W. Z. Railroads: Finance and Organization; (editor) Trusts, Pools, and Corporations.

STEVENS, W. S. (editor). Industrial Combinations and Trusts.

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YOUNG, A. A. "The Sherman Act and the New Anti-trust Legislation," Journal of Political Economy, vol. xxiii, pp.210-220, 305–326, 417–436.

CHAPTER XIV

MONEY

THE vast system of exchange, which is the most characteristic single feature of present-day economy, rests upon the use of money. We have seen that some economic writers have pictured an imaginary primitive state of "barter economy "; in which, before the use of money, goods were exchanged directly for goods. But what little definite information there is on this point leads us to the belief that about as soon as men began to exchange things, and consequently to attribute exchange value to them, they began to use some kind of money some commodity or commodities for which things were generally exchanged, and in terms of which the values of other things were generally stated.

The earliest forms of money were crude and simple, but they sufficed to meet simple needs. As exchange economy has advanced to the present complex division of labor, the monetary system has developed pari passu, the most conspicuous feature of this development in modern times being the growing importance of credit as a means of effecting exchanges. Industrial and commercial progress has led to monetary progress, and has, in turn, been stimulated and made possible by it.

Metallic Money. The earliest and simplest forms of money were commodities. Particular commodities came to serve as money, not because they were arbitrarily designated as such by king or chieftain, but because they possessed some properties which made them exceptionally exchangeable. In some cases a primitive community came to use a commodity as money because it was something for which they had a dependable "foreign market "-something, that is, which they customarily sold to other communities in exchange for their products. In other

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cases a commodity which a community did not itself produce, but which it got only in the course of trade with other communities, became the money commodity. Or, if for any reason a particular commodity came to be particularly esteemed as a mark of wealth or a badge of social prestige, it was likely to used as money. But whatever the original ground of the choice, a commodity which a community once began to think of as money had its exchangeability, and consequently its suitability for monetary uses, increased in a cumulative way, just as today most of us are willing to accept anything as money which we think we can use as money.

A great variety of commodities have at one time or another been used as money. Some typical examples are cattle, grain, furs, oil, salt, tobacco, ivory, shells, and tea. But with the advance of political and economic civilization the metals have, through the process of the survival of the fittest, proven themselves everywhere to be preeminently and indisputably the best money commodities. Copper, silver, and gold have each in turn been chosen as the principal money metal of the civilized world, the transition from the cheaper to the dearer metals indicating the growth of exchange and of wealth and the consequent need of larger money units.

Metals, and especially the precious metals, have certain qualities that give them a peculiar fitness to serve as money. They are durable, easily recognized and tested, and may be divided into homogeneous units of convenient form and weight. Moreover, as compared with most other commodities, the precious metals are relatively stable in value. This arises in part from their durability, for any one year's output of the mines makes but a comparatively small addition to the total stock of metallic money, and in part from the nature of their non-monetary uses, for the demand for commodities that minister to our tastes for ornament and display is much more elastic than the demand for necessaries of life.

Coinage. When metals were first used as money, they passed from hand to hand simply by weight, or, in some cases, in the form of ornaments. Coinage speedily developed, however, as

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