Company K

“ The holding corporation can itself be controlled by the ownership of 50 or 51 per cent of its stock, and the control of its subsidiaries is obtained with stock ownership in the same ratio. Thus a relatively small capital investment may exercise a far-reaching control.
A holding company as a rule buys up the controlling stock interest of the companies in which it is interested, and elects its own men on the board of directors of the subsidiaries. Frequently the larger stockholders of competing corporations get together and form the holding company. ”

“ The industrial factory was soon followed by the industrial corporation, which is really an industrial union of dollars. It was necessary that the small craft owner, displaced by the industrial factory, be taken into the industrial union, so the joint stock company was created. This was a most important development in the evolution of modern, capitalism. In the early stages when capital was scarce it made it possible for people with small means to become share-holders in big corporations. ”

“ A very usual occasion for increase in the capital stock [Pg 187] of a mill company has been the enlargement of the plant. Thus the Enterprise Factory, Augusta, Georgia, declared a 10 per cent. dividend and decided to increase its capacity by 125 per cent. or more. [258] In this case the entire $350,000 extra capital stock was being negotiated for by M. J. Verdery & Co., brokers of Augusta; it was understood that one man and his friends would take stock to the amount of $140,000. ”

“ Three manufacturers, each having an independent business and wishing to effect a consolidation of their respective interests, organize the United States Manufacturing Corporation, with an authorized capital stock of $1,500,000, consisting of 7,500 shares of preferred stock and 7,500 shares of common stock, of $100 each. ”

“ Suppose that five hundred men shall desire to establish a co-operative foundry. They will make a preliminary organization and apply to the officers of the Lorin French Labor Aid Company for the capital necessary to conduct the enterprise. Those officers will—after careful inquiry—ascertain that the buildings, land, machinery, and plant of such a foundry will cost $900,000, and that it will require a cash capital of 178$100,000 to carry the current business. ”

“ The English copper company of London, the lead-smelting company, the glass-grinding company, have not even the pretext of any great or singular utility in the object which they pursue; nor does the pursuit of that object seem to require any expense unsuitable to the fortunes of many private men. Whether the trade which those companies carry on, is reducible to such strict rule and method as to render it fit for the management of a joint-stock company, or whether they have any reason to boast of their extraordinary profits, I do not pretend to know. ”

“ Another of the dangers that beset the path of the new Corporation lay in the fact that it was not an operating company with a number of plants controlled by one central management, but a holding company controlling by stock ownership a number of industrial units which had previously been owned by utterly conflicting interests and each of which continued necessarily to operate under a separate management. ”

“ An [Pg 3] open corporation is one in which ownership of the stock is not held closely but is being passed about, traded in, or transferred from one owner to a new. A close corporation is one in which the stock is held very closely in order to retain control and keep profits and trade secrets within a small compass of ownership. Thus some corporations are strictly family affairs; others are held by a few families or a small group.
What is known as a corporation “sole,” while little known now, virtually exists in some close corporations, as where one man holds all but two shares of stock. ”

“ The establishment of the factory altered completely the relation between employer and employee. Indeed in the modern sense these relations were then first established. Labor became a commodity which the master manufacturer, who was also the capitalist, bought and which the workingman sold. When in the year 1785 Arkwright’s patents were set aside and the use of his perfected spinning machinery became free to all manufacturers, a great extension of the cotton industry followed. ”

“ The Badische Anilin and Soda Fabrik, with a capital of fifty-four million marks has paid dividends in the ten years from 1903 to 1913, averaging over twenty-six per cent.
The Farbwerke Meister Lucius und Bruning at Hoeckst, near Frankfort, during the same period, with a capital of fifty million marks, has paid dividends averaging over twenty-seven per cent; and the chemical works of Bayer and Company, near Cologne, during the same period with a capital of fifty-four millions of marks has paid dividends averaging over thirty per cent. ”

“ The collective capital of a corporation is divided into shares of equal value. Ownership of a share or shares in a corporation is evidenced by formal certificates of stock. Each share carries with it the same privileges, powers, and duties of ownership as every other share of the same class. It represents a pro rata share of the total interest of its class. There may be several different kinds or classes of ownership within the corporation, these classes will have different privileges, and there may be other points of differentiation. ”

“ F. Walker, Monopolistic Combinations in the German Coal Industry (American Economic Association) , 1904. COMBINATIONS: Growing magnitude of companies. Industrial concentration. "The tendency to industrial concentration is shown by the returns of public companies, which point to the growing domination of large undertakings. Of 4,749 registered public companies in 1895, 13.6 per cent. had a share capital not exceeding £5,000, but in 1906, of 5,000 such companies, only 9.6 per cent. ”

“ The nonstock type of co-operative is not adapted to enterprises, which like gins require large investment in plant, and hence considerable fixed capital. [22] For this reason it was a common practice for marketing co-operatives, which had been organized as nonstock co-operatives in order to comply with the requirements of the Clayton Act above described, to form a subsidiary co-operative corporation with capital stock to carry on the incidental business of warehousing or processing which requires a large investment in plant. ”

“ The Co-operative Wholesale Society, Limited, is a trading federation of the great majority of the English stores. Founded in 1863 on a small scale, it now counts its employees by thousands, its capital by millions, and its yearly sales by tens of millions. Besides its merchant trade, it manufactures to the value of £4,500,000, owning factories, warehouses and land in many districts. ”

“ The Corporation’s vast capitalization, a billion and a half of dollars, its yearly turnover exceeding its capital, its payroll of 275,000 workers, or, with their families, enough to populate a large city, its productive capacity of more than 16,000,000 tons of finished steel annually—to say nothing of other products—the volume of freight carried in its fleet of ore boats, several times the tonnage passing through the Suez Canal, its foreign trade of two hundred million dollars—these alone might make the Corporation’s history worth the telling. ”

“ Warehouse Co. v. Tobacco Growers, 273 U.S. 71, 48 S.C.t. 291, 72 L. Ed. 473. A corporation organized under the act of 1919, however, has capital stock, which, up to a certain amount, may be subscribed for by any person, firm or corporation; is allowed to do business for others; to make profits and declare dividends, not exceeding eight per cent. per annum; and to apportion the remainder of its earnings among it members ratably upon the amount of products sold by them to the corporation. Such a corporation is in no sense a mutual association. ”

“ The real question is whether combining in a single corporation the ownership of all of the stock of a carrier and of all of the stock of a coal company results in such community of interest or title in the product of the latter as to bring the case within the scope of the provisions of the act. ”

“ I can't take you in with me and have it said around town you were one of the fellows who sold out the small investors. I've got a hundred thousand dollars of stock in the company. You can have half of it. I'll take your note for the fifty thousand. You won't ever have to pay it. The earnings of the new factory will clean you up. You got to come clean, though. Of course you can go get John Clark and come out and make an open fight to get the factory yourselves, if you want to. I own the rights to the corn-cutting machine and will take it somewhere else and manufacture it. ”

“ The new cotton factories which have been called co-operative, and which, under that name, have brought together large numbers of shareholders of the wage classes, are all now in reality common joint-stock companies, with limited liability. ”

“ Between the journeymen and apprentices, and the employer, there frequently intervened persons such as the “undertakers” mentioned [Page 55] in connection with the smallware trade, but these men were essentially employees, even though in many cases, no doubt, they might own three or four looms. In the factory, the workpeople, who previously had been scattered over a more or less wide area, were drawn together under one roof, and their operations supervised by foremen and managers; the capital of the employers was now embodied in materials, buildings, plant and machinery ”

“ The steady progress of this manufacturing industry over a period of forty-two years; the recognition by trade unionist management of the right of capital to receive an annual dividend of 5 per cent., and the resolute way in which they have written down the capital of £44,300 invested in land, buildings and machinery to £14,800, notwithstanding that a less conservative policy would have increased the sum available for bonus to wages, all go to show how practicable are co-partnership principles when they are applied by all concerned to productive enterprise in the right spirit. ”

“ Our next enterprise was the establishing of a woolen factory, following the same course as in putting up the tannery—procuring the building materials, doing the mason and carpenter work in the season when laborers would otherwise have been unemployed. This, also, added to our capital—increasing the number of our stockholders without interrupting any man's business. The profits of the mercantile department, with some additional capital, purchased the machinery. ”

“ It should be noted that the factory was, in the beginning, not the creation of capital, but of labor. The early master manufacturers were risen workingmen. Sir Richard Arkwright, the creator of the factory, the man who dominated industrial activities in the first great period of expansion, was a penny barber; but he died a Knight Bachelor with an income greater than that [Pg 54] of many a prince. The process of social elevation by means of trade began back in the fifteenth century with the first extension of manufactures. ”

“ All classes appear to have forgotten that the profits of the kelp manufacture were not the legitimate produce of the land, on which they could depend as proprietors and tenants, but that they were in fact engaged in a manufacture subject to the fluctuations of trade arising from the state of the market, and might be placed in the same position as a manufacturing population during one of the periodical stagnations of trade. ”

“ Almost invariably some finished stock is on hand and goods are in process of manufacture. Where interest is added, the result is to inflate the value at which the goods must be carried on the inventory—a very undesirable procedure from an accounting and financial viewpoint. By such means it is conceivable that a factory might be made to show a handsome profit even before any of the product had been sold. ”

“ The manufacture being a strictly private enterprise, its owners find it advantageous to have all the branches of a given industry under their own management; they thus cumulate the profits of the successive transformations of the raw material. And when several thousand power-looms are combined in one factory, the owner finds his advantage in being able to hold the command of the market. ”

“ In 1899 a syndicate of Eastern capitalists bought control, and the following year reorganized the property by forming a holding company, which issued $22,000,000 in 31⁄2 per cent bonds, $19,489,000 in preferred and $19,542,800 in common stock to exchange for the $22,230,600 old common and preferred shares outstanding. ”

“ It is upon these various expectations that the amount of employment which the firms offer will depend. The actually realised results of the production and sale of output will only be relevant to employment in so far as they cause a modification of subsequent expectations. Nor, on the other hand, are the original expectations relevant, which led the firm to acquire the capital equipment and the stock of intermediate products and half-finished materials with which it finds itself at the time when it has to decide the next day's output. ”

“ Said corporation is formed for the purpose of conducting a general cotton business, and may buy and sell cotton, and may transact a cotton factorage business, may advance money or supplies for the purpose of controlling shipments of cotton, may take and receive mortgages or deeds of trust upon property to secure said advances, and generally may have all powers conferred by chapter 25 of the Annotated Code of 1892 necessary and requisite to carry out the purpose of said corporation. ”

“ Of the old incorporated trading associations, the only one the history of which offers much matter of interest during the present period, is the East India Company. This Company underwent a complete re-organisation in consequence of measures that were taken respecting it in the reign of William. We have seen that for some time previous to the Revolution the exclusive privilege of the Company had been extensively invaded by numbers of private traders. ”