Fifty years in Wall Street

at the expense of the stockholders whom it was their duty to faithfully serve and protect. That many dishonest acts by men controlling corporations have gone unpunished is greatly to be regretted, and looks very much like a miscarriage of justice. But let us believe that dishonesty was exceptional and honesty the rule in corporate management. Where punishment is inflicted for infractions of the law involving larceny, it should be the same as for giving or receiving railway rebates. Fines have no terrors for wealthy evildoers who violate the law for their own sinister ends at the expense of others. The popular hostility to the Trusts however, was often too indiscriminate. It made little or no distinction between the good and the bad. The Trusts were, as enlarged corporations with large capital, a national trade development of our time. Aiming at greater production, economy and efficiency, through their large means and modern improvements, than had been possible with small concerns, they marked a forward step in that progressive industrial, commercial and financial march which has created our vast national wealth and made this country the Wonder of the World. But of course it was inevitable that these Trusts, with their large capital, and new and improved methods and machinery, should supersede to a great extent the old order of things, and take away from them the business of others that they competed with. It is only natural that the stronger competitors should more or less dominate or destroy the weaker, and the success of the Trusts was merely another illustration of the survival of the fittest. This is a law of Nature which it is useless to resist. It is therefore not against the creation of Trusts, but against injustice, lawlessness, misrepresentation, looting and other evil practices in the management of Trusts that we have a good right to complain, and against which the strong arm of the law should be always raised. A well and honestly managed Trust can do business as legitimately, and with as much or more, advantage to the public, as any individual, any firm, or any small corporation can. But there is constantly greater temptation to wrongdoing by those in control of large corporations than is the case in small ones. We have seen many instances of the abuse of power in these, not only in forcing the allowance of rebates from the railways, but in other unjustifiable ways calculated to get the upper hand of competitors, or kill them off entirely, as well as in the misuse of corporate funds for speculative purposes, to say nothing of appropriations through that too common form of dishonesty called graft. Men in high positions in corporations have often done in secret, in the way of chicanery what they would have been both ashamed and afraid to do openly. But now that the old practices have been exposed and the new laws require publicity of accounts, and have closed the door to the many opportunities for fraud and graft that were before open, through severe penalties, we have a purer business atmosphere and a higher moral tone in our business life. So some good has come out of our corporation scandals, and public sentiment has been aroused against corporate corruption and all abuses of power. Corporations no less than individuals of course have rights which should be scrupulously respected by both our Federal and State legislators. But one defect in corporation legislation by Congress, as well as the States, has often been that it failed to make a sufficient distinction between what may be called private and public corporations. It stands to reason that railway and industrial corporations, and all public utility companies, that have sold their stocks and bonds to the public, and had them admitted to dealings on the stock exchanges should have their condition subjected to stated periodical examinations and publicity which would be uncalled for in the case of smaller corporations that had not marketed any of their securities, and whose earnings and affairs had no interest for the general public. The railway companies are now required by law to keep their books and accounts in a certain prescribed form under the supervision of the Interstate Commerce Commissioners, and this is the right kind of publicity, for it permits of no cheating, nor of any neglect to comply with the law. The record of each day’s business tells the story and these books and accounts are all the time open to Government inspection. But such regulations would be unreasonable if applied to the small private industrial corporations. Honestly managed and solvent corporations have nothing to fear from publicity as to their financial condition, although they have a perfect right to guard their trade secrets from publicity, provided they are free from any dishonest or illegal taint. Well and honestly managed public utility corporations are our best protection against municipal ownership, which in this country would be sure to involve political corruption, and probably poor service. It would be a step towards socialism, and socialism in this country would be antagonistic to our government, our institutions and our national progress, and should be resolutely resisted and frowned upon by all Americans. It is a weed transplanted from the hotbeds of European despotism that can never flourish here, for our soil is entirely unsuited to it. Publicity at regular intervals of earnings and conditions by railway, industrial and other corporations creates confidence where confidence is merited, while exposing weakness where weakness exists. By eliminating that which is unsound and dangerous, it benefits the sound and the safe, and removes grounds of suspicion injurious to all. Secrecy is the defense of the weak, and they naturally shirk the light; but the public interests demand that all the large corporations submit to it, and stand or fall according to their merits. This applies to banking and insurance as well as manufacturing, trading and transportation corporations, all, in this respect being in the same class. To facilitate this publicity and ensure simplicity and accuracy the books and statistics of corporations should be kept in a clear and systematic manner that any examiner could easily understand. I say this because in some large corporation failures that have occurred much irregularity and confusion of accounts was found. This not only delayed the receivers in ascertaining the amount of the assets and liabilities, but showed that the officers of the failed concerns could not have been very closely conversant with their precise condition when they suspended. Bad, or careless book keeping, accounting and office management has led to many important corporation failures that good work in that department might have averted. Corporations should therefore, be careful to supervise their clerical forces closely, and also employ accountants to make periodical examinations and audits of their books, for accounting and statistics in these days have been raised to the importance of a science. Old fogyism, wherever it still exists, should be made to give place to improved and time saving modern methods. These may be small matters to dwell upon, but a close observance of them is necessary to good corporate management in this age of close competition and aggressive enterprise. All that is out of date, or needless, or a drag upon progress, or which handicaps business development should be promptly discarded. The political influence of large corporations has so far not received as much consideration as it deserves. But it is a factor in our State and national business life that is more and more making itself felt in an unobtrusive but none the less effective way. We have seen this manifested in the strong and numerous protests, emanating from this source, against the national government and the interstate commerce commission consenting to the general rise of freight rates conditionally agreed upon by the Eastern and other railways. In making these protests to President Roosevelt the corporations are well aware that he can control the action of the interstate commissioners in the matter, and by a word cause them to either give or refuse permission to raise railway rates. They know too that his keen political observation and insight will cause him to weigh and consider with the greatest care the effect of the administration’s course in consenting, or refusing to consent, to this inconsistent proposal to raise railway freight rates in such a period of trade depression as this, when more than 413,000 cars are idle. In view of the Presidential Campaign, and the issue to be decided at the polls next November, not merely by the politicians, but by the people, he will not underrate the importance of the railway corporation question as a political factor. We saw that the President’s communication to the interstate commissioners a short time ago directing an investigation by them in relation to the need of the proposal of the Southern railways to reduce wages, resulted in an immediate abandonment of their announced plan to reduce them, and in fact all the railways were similarly influenced by that act of his. He knew that the reduction in one section would be the entering wedge for a general reduction, and perhaps a strike. So the railways switched off the reduced wages line to the increased freight line, thinking that the President, from what he had said, as he surveyed the situation from his political observatory, would prefer the alternative of higher freight rates to lower wages. Here comes the rub. It is a two-edged political sword that President Roosevelt, above all others, will see requires to be very cautiously handled. Without great care in this difficulty the administration might find itself between the upper and the nether millstone of a very ugly question, and in active antagonism with either the large corporations and the whole mercantile community, on the one hand, or the railways, on the other, with both sides bringing all their political influence and artillery into play. Here would be an acrimonious contest that could not fail to affect political results in November. The President would very naturally be anxious to avert it, but how to reconcile the two opposite courses of saying yea or nay to the railways, and secure harmony between them and Labor, is a problem hard to solve. In connection with the proposition agreed to by the officers of the Eastern trunk railways to advance freight rates from ten to fourteen per cent, it is well to consider that the gross earnings of all reporting lines in February showed a decrease of twelve and one half per cent from those of last year, and that in March the decrease was 14⅜ per cent, the result of the prevailing industrial depression, particularly in the iron, steel and coal trade and the New England cotton and woolen milling industry. The proposed increase would, of course, have to be added to the cost of the commodities carried, and saddled upon the consumers. It was therefore to be expected that a flood of indignant protests would come from these, as well as from large shippers and the rank and file of the mercantile community. They have urged the injustice of such an advance in these hard times, and in the teeth of an average contraction of fully twenty-five per cent in the demand for goods. But the railways in reply point to the refusal of the U. S. Steel Corporation and other large trade combinations to lower their prices for railway materials, as well as to the political and other work of the Labor Unions, at Washington and elsewhere, in support of their determination to keep wages up to the