This is the largest number of incorporations ever filed in this office. Beginning with 1851, the number has been as follows:

The authorized capital stock of the corporations formed with a capital stock during the past year, as compared with the two previous years has been as follows:

Eight agreements of consolidation between railroad and bridge companies have been filed during the year; the authorized capital of the eight new consolidated companies aggregating $59,615,000, as compared with the $48 547,000 capital of seven companies formed by consolidation in 1886. One hundred and thirteen companies have increased their aggregate capital stock from $61,072,775 to $158,376,750, as compared with an increase from $20,792 375 to $57,576,000 by 58 companies in 1886. Eight companies, as compared with 12 in 1886, have reduced their capital stock. The names of 24 corporations have been changed during the year, as compared with 14 in 1886. Forty miscellaneous. certificates have been filed, as compared with 15 in 1886. Five hundred

and eighty seven certificates of subscription have been filed, as compared with 385 in 1836. Fourteen railway equipment contracts have been filed, as compared with 11 in 1886. In short, the corporation. business of the office has been fully one-third larger than ever before, and may be taken as a clear indication of the earnest business effort of our people during the past year. The popularity of corporate enterprises in Ohio is also shown, almost every class of corporations being represented in the list for 1887. While there has been an increase in the number of almost every kind of corporation, the most noticeable increase has been in the number of gas companies, most of them natural gas companies. In 1883 but 8 of these companies were formed; in 1884 but 10, among them the Findlay Natural Gas Company. This company was the pioneer company in the discovery of natural gas in Northwestern Ohio. It drilled in its first well in December, 1884, and the discovery was followed by the incorporation of a large number of gas companies throughout the state. In 1885, 37 were formed, as compared with 10 during the previous year; 89 such companies were organized in 1886; whilst during 1887, 183 gas companies, with an aggregate capital of $12,788,575, have been incorporated. The increase in building and loan associations is also noteworthy, the number incorporated in 1887 being 84, with an aggregate capital of $53,731,000, as compared with 62 companies with an aggregate capital of $35,292,000 incorporated in 1886. Two hundred and fifty-seven manufacturing corporations have been. organized during the year, as compared with 205 in 1886. But these manufacturing corporations have as a rule been small as compared with those formed in 1886, the aggregate capital stock of the 205 corporations organized during the latter year exceeding that of the 257 incorporated during the past year by $8,249,000. The increase in the number of colleges, literary societies, churches, political, benevolent, social and mutual societies, and corporations of a miscellaneous character incorporated, is likewise remarkable, and evidences the popular appreciation of corporate privileges in Ohio. For a wealthy commercial state like Ohio the number of banks and savings institutions organized each year is small, the number in 1883, 1884, 1885, 1886 and 1857 being but 11, 10, 2, 6 and 11 respectively. This is due to no lack of riches or want of business enterprise among our people, but is owing solely to the need of a proper law, conferring corporate banking privileges free from harsh restrictions.

FORMATION OF BANKING CORPORATIONS.

Articles of incorporation are constantly being presented at this department, of banking corporations, which parties propose to form

under sections 3235 and 3236 of the Revised Statutes. These sections permit the formation of corporations for any lawful purpose, except dealing in real estate and carrying on pro:essional business, and if banking corporations can be organized thereunder, such corporations would be practically free from all governmental inspection or other restriction, being placed on the same footing as manufacturing and other corporations. Whilst the language of these sections is undoubtedly broad enough to allow of the creation of almost any kind of corporation under the same, I have nevertheless had doubts as to whether banking corporations could be organized under their provisions, owing to the fact that the General Assembly has made special provision for the creation of corporations authorized to carry on the business of free banking, taken in connection with the decision of the Supreme Court in The State vs. Stock Company, 38 Ohio State, 347. These doubts have been strengthened by a recent opinion of the Attorney-General, in which he declines to approve the articles of incorporation of a bank proposed to be formed under sections 3235 and 3236 aforesaid, In this opinion he says:

"It is well understod that the business of banking, in a commercial sense, authorizes the exercise of and includes other powers than that of issuing notes to circulate as money, such as receiving deposits, loaning money, etc. And while the phrase 'banking powers' has been held to have the restricted meaning, namely, the power to issue notes to circulate as money, or in other words, a bank of issue, nevertheless the business of banking in the commercial sense referred to, such as the right to receive deposits, discount paper, make loans, deal in exchange, etc., has been specially provided for by legislation in this state. In short, the formation of banking companies, exercising the powers and transacting the business which this company proposes to exercise and engage in, is provided for by special statutes, to wit: the act of 1851, entitled 'An act to authorize free banking.' Section 1 of that act provides 'that any number of natural persons, not less than three, may engage in the business of banking, with all the rights, privileges and powers conferred by and subject to the restrictions of this act.' The certificate to be made in such cases, where to be deposited, capital stock, per cent. to be paid in, who may vote at elections, eligibility of officers, and liability of stockholders, are matters carefully and minutely set forth in that act, as well as the prohibition not to circulate evidences of debt as money. Another act found upon the subject of banking is that relating to savings and loan associations (sections 3797-3821, Revised Statutes), in which the organization of such banks, their powers and duties are minutely and carefully set forth. The nature of the business of banking, the large amount of capital frequently employed, and the trusts necessarily imposed are such, that it seems to have been the settled policy of the state, from an early period, not to permit the formation of banking corporations to be carried on under general laws, but to make special provision for banking corporations dealing in money, making loans, and having the custody in the aggregate of large sums of money. To disregard the special statutes relating to the organization and incorporation of banking companies, and allow such associations to organize under the general provisions of section 3235, Revised Statutes, is, in my judgment, wholly inadmissible. In the case of an insurance company in this state, organized under this last section, an action in quo warranto was instituted, and in the decision of the case the court (Judge McIlvaine) held: "That

inasmuch as the subject of insurance was regulated in this state by special laws on that subject, no insurance company could be incorporated under the general provisions of section 3235.' I think, therefore, that the application should be, for the reasons stated, rejected. If the persons named in this certificate desire to engage in the business set forth, ample provision is made on that subject, and they have only to follow the steps marked out."

There has been much inquiry made at this department during the year as to the means provided by law for the formation of banking corporations. This has been caused, to some extent, by the rapid decrease in the National debt, and the consequent taking away from the National banks of the bonds which they have owned and the Government has held as security for their circulation. As these bonds are gradually taken up and paid, it is becoming more and more difficult for National banks to provide the necessary security for their circulation. As a result many of them desire to surrender their charters and incorporate under state laws. And again, there are private bankers in Ohio, not desiring a circulation, to whom articles of incorporation would secure many advantages, but who have not incorporated under state laws for the reason that there is no law on the statute books providing satisfactorily for the incorporation of banks of loan, discount, deposit and exchange. Under the constitution of 1802 the Ohio banks were organized under special acts of the Legislature. The last General Assembly, under that constitution, on the 21st day of March, 1851, passed the general act authorizing free banking. Following this in September came the constitution of 1851, section 1 of the schedule, and section 7 of article XIII, of which provided, respectively, that "all laws of this State in force on the first day of September, 1851, not inconsistent with this constitution, shall continue in force until amended or repealed"; and "No act of the General Assembly authorizing associations with banking powers shall take effect until it shall be submitted to the people, at the general election next succeeding the passage thereof, and be approved by a majority of all the electors voting at such election." Said act of March 21, 1851, was thought by many to be in conflict with said section 7 of article XIII, and therefore void under section 1 of the schedule above referred to. However, this question was settled to the contrary in 1856 by the Supreme Court, the Judges holding in the case of Citizens' Bank of Steubenville v. Wright, Auditor, 6 Ohio State, 319, that "the act of March 21, 1851, 'to regulate free banking,' is not inconsistent with the constitution of 1851, and is not therefore by implication repealed by it." Supported by this decision, the act authorizing free banking, with important amendments in 1873 and 1879, has remained in force to the present day. This act, however, is not in harmony with chapter 1, title

2, part 2 of the Revised Statutes, "Creation of Corporations." The methods provided therein for the creation of banking companies are complex and difficult. Many of its provisions are unreasonable and inapplicable to the business of banking as now carried on. Yet this law, the statute authorizing the formation of savings and loan associations, and the obsolete act to incorporate the State Bank of Ohio and other banking companies, are the only three laws under which a banking corporation can be formed in Ohio. Until the year 1885, it was a mooted question in Ohio, whether or not the words "associations with banking powers," above quoted, included banks of loan, disccunt, deposit and exchange, as well as banks of issue. February 26th, 1873, the General Assembly passed the act to incorporate savings and loan associations. In 1880 this statute was revised and consolidated with other general corporation laws of Ohio, and became Chapter 16 of Title 2, Part 2 of the Revised Statutes. The unconstitutionality of this statute was affirmed from its passage, the same having never been submitted to a vote of the people. In 1885 the question of its constitutionality came before the Supreme Court in the case of Dearborn v. Northwestern Savings Bank, reported in 42 Ohic State, page 617, and the court held, that the "phrase 'associations with banking powers,' as used in section 7, article XIII of the constitution, relates only to banks of issue." This decision disposed of any question which may have previously existed as to the power of the General Assembly absolutely to provide for the creation of banks of loan, discount, deposit and exchange; and in view of the defects contained in existing legislation upon the subject of banks, it is important that some proper provision should be made for their creation and regulation, and that the free banking law of 1851 and the other unrepealed and obsolete banking laws of Ohio, should be revised in the same manner as was done with the act authorizing the incorporation of savings and loan associations. This free banking law is the only law under which corporations can be formed to do general banking. It does not provide convenient, popular, or reasonable methods for banking. Private individuals desiring to do a general banking business, and National banks surrendering their National franchises will not incorporate under it. As a rule, they choose rather to do business as individuals or as partnerships, in preference to being governed by a law whose provisions are largely unreasonable, in part inapplicable to their business, and which would subject them to unfair exactions. As a result of this, in some instances, savings and loan associations are stretching their franchises to do a general banking 1usiness, whilst in many other cases individuals and partnerships are acting as general bankers, subject to no state inspection, and to no restrictions whatever. In my judgment,