State-owned enterprise

“ In order to demonstrate to private business that it will have the same opportunity in economic undertakings as government entities, I recommend that the Congress make government corporations subject to the same taxes as private enterprise. ”

“ The role of government corporations in the realm of economic development lies essentially in undertaking ventures in new and untried fields where the risks involved may inhibit private enterprise.
In this sense, therefore, government corporations play a pivotal role in the attainment of our development objectives, particularly in the areas of production and industrial development and social amelioration. ”

“ It might distribute it among those objects of private enterprise which called for national patronage, in the form of subscriptions to the capital stock of incorporated companies, such as that of the Delaware and Chesapeake Canal, and other similar institutions. ”

“ They show that size alone gives to giant corporations a social significance not attached ordinarily to smaller units of private enterprise. Through size, corporations, once merely an efficient tool employed by individuals in the conduct of private business have become an institution-an institution which has brought such concentration of economic power that so-called private corporations are sometimes able to dominate the state. ”

“ It is not too much to say that the wealth and business of the country are to a great extent controlled by them. And if, when composed of citizens of one State, their corporate powers and franchises could be exercised in other States without restriction, it is easy to see that, with the advantages thus possessed, the most important business of those States would soon pass into their hands. The principal business of every State would, in fact, be controlled by corporations created by other States. ”

“ It is clear that corporations created for quasi public purposes, clothed for that reason with the ultimate power of the state to take private property against the will of the owner, hold their corporate powers as carriers in trust for the fairly impartial service of all the public. ”

“ If the national, state, or municipal government can in either of the above methods compel him to aid in building up and supporting private corporations, then private corporations are clothed with attributes of sovereignty, and all private citizens own and possess their property subject to the will of these corporations. ”

“ Unquestionably Congress may tax corporations organized under federal laws upon their franchises; any sovereignty may tax the creatures of its creation for the privilege of exercising their franchises; but how about corporations chartered by the states and doing purely an intrastate business? A state confers on John Doe and his associates the privilege or franchise of doing business in a corporate capacity. ”

“ Would it not be as proper to say of such agencies, as it is of the agencies of express companies, that there is an intellectual unity of earnings between the main establishment and all such agencies, and therefore a right to assess goods found in an agency with relation to the capital and wealth of the original house and all the other branches situated in other states? Take the case of a merchant carrying on a general commercial business in one state and having connections of confidence and credit with another merchant of great capital in another state. ”

“ The legislature, however, shall never enact any law permitting any public-service corporation to consolidate with any other public-service corporation organized under the laws of any other state or of the United States owning or controlling a parallel or competing line in the state. ”

“ 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. ”

“ Nor do we question the obvious fact that business corporations, by virtue of their creation by the state and because of the nature and purpose of their activities, differ in many significant respects from unions, religious bodies, trade associations, social clubs and other types of organizations, and accordingly owe different obligations to the federal and state governments. ”

“ In that case the contract is the means employed for carrying into execution the powers of the government, and the contract alone, and not the contractor, is exempt from taxation or other interference by the State government.
But where the General government creates a corporation as a means of carrying out a national object, that corporation and its powers, property, and faculties, employed in accomplishing the service, are the instrumentalities by which the government effects its objects. ”

“ A graduation can be established, moving from statutes lending the power of eminent domain to private enterprise, to those emphasizing government acquisition and lending or leasing, and ultimately to those principally concerned with providing government-owned equipment to private enterprise—the equipment presumably already in the hands of the government or subject to acquisition under other statues. ”

“ Although some closely held corporations, just as some publicly held ones, may not have accumulated significant amounts of wealth, they receive from the State the special benefits conferred by the corporate structure and present the potential for distorting the political process. ”

“ So the National corporation problem is largely one of the railways, and it involves the best way for the Federal Government to regulate these, and all the corporations, in the interest of trade, commerce and the people, and to do this without imposing unnecessary restrictions upon their legitimate operations and development. ”

“ They are owned by private companies—are built and controlled by them; they are of public benefit, but not owned or controlled by the public or by the state, or local authority, as in the case of public highways. Their private owners can sell them, with all their franchises, rights, and privileges. The rules for their operation, rates of charges, and all other matters affecting their government, are exclusively under the control of the parties owning them. ”

“ In most countries, as in England, this form of industrial combination is sufficient for a business co-extensive with the parent country, but it is not so in America. Our Federal form of government making every corporation created by a state foreign to every other state, renders it necessary for persons doing business through corporate agency to organize corporations in some or many of the different states in which their business is located. Instead of doing business through the agency of one corporation they must do business through the agencies of several corporations. ”

“ The very fact, indeed, that the state, as a producer, or a renderer of public services, such as letter-carrying, has thus to protect itself against the competition of private enterprise, is sufficient evidence of the difficulties which a state organisation encounters in securing industrial ability which shall be constantly of the highest kind, and also of its inevitable tendency to hamper, if not to stifle, the development and the practical activity of superior ability elsewhere. ”

“ To make such a company a corporation of another state, the language used must imply creation, or adoption in such form as to confer the power usually exercised over corporations by the state, or by the legislature, and such allegiance as a state corporation owes to its creator. ”

“ To effect this, corporations have been created in most of the states and granted such liberal corporate powers, without respect to the nature of the business to be conducted, and with terms and privileges so favorable, that private enterprise without large capital cannot compete with them. ”

“ They are not by their charters, or the powers derived from legislative grants, made public corporations, and if they are public, they are made so by the decisions of the supreme court, or by some assumed power not visible to the public eye. It is contended by some, that if it is fully established that they are public corporations, the state legislatures and the state courts can regulate and control them. ”

“ For more than a hundred years corporations have been used as agencies for doing work of the government. Congress may create them 'as appropriate means of executing the powers of government, as, for instance, * * * a railroad corporation for the purpose of promoting commerce among the states.' Luxton v. ”

“ To repeat, the people of every state shall first decide whether they want to create a corporation. They shall also decide whether they want any outside corporation to do business in the state; and, if so, upon what conditions; and then Congress shall exercise the right to place upon every corporation doing business outside of the state in which it is organized such limitations and restrictions as may be necessary for the protection of the public. ”

“ The State-and-Federal problem may be called that other difficulty which arises from the clashing jurisdictions of the States among themselves and with the Federal government, their laws and their courts, as to the corporations now created, particularly railroads and corporations "engaged in interstate commerce" which may include all the "trusts," if the mere fact that they do business in many States makes them so. ”

“ Yet no class of corporations since the organization of the government have contributed so largely toward the support of the State and the nation, and no class of corporations have ever been so unmercifully taxed as the banking institutions of this country. ”

“ Over the affairs of each company presided a council appointed by the King, with power to choose its own president, fill vacancies among its own members, and elect a council of thirteen to reside on the company's lands in America. Each company might coin money, raise a revenue by taxing foreign vessels trading at its ports, punish crime, and make laws which, if bad, could be set aside by the King. All property was to be owned in common, and all the products of the soil deposited in a public magazine from which the needs of the settlers were to be supplied. ”

“ Those great corporations containing some tendency to monopoly, which we have grown to speak of rather loosely as trusts, are the creatures of the State, and the State not only has the right to control them, but is in duty bound to control them wherever the need for such control is shown. There is clearly a need of supervision—need to exercise the power of regulation on the part of the representatives of the public, wherever, as in our own country at the present time, business corporations become so very strong, both for beneficent work and for work that is not always beneficent. ”

“ The election has again confirmed the determination of the American people that regulation of private enterprise and not Government ownership or operation is the course rightly to be pursued in our relation to business. ”

“ That gives us a right to take over these corporations through state action. The only preliminary is to elect state administrations which will represent us, instead of representing the corporations. Also, most state constitutions contain the provision that "no corporation shall issue its stocks or bonds, except for money, labor, or property actually received." ”

“ The control reserved by the Government for protection of a governmental program and the public interest is not incompatible with the retention of the status of a private enterprise. See Federal Compress & Warehouse Co. ”

“ It appears necessary, therefore, to consider briefly the relation which these interests bear to one another, to study the causes which have led to mutual misunderstandings, and to note the proper relations which should, if possible, be established and maintained between the people and those corporations organized to perform certain of the functions of the State. ”

“ The extension of state ownership and conduct is entirely a matter of economic efficiency and social welfare. The state should own large natural resources and enterprises, which by the nature of things are monopolies or can most advantageously be conducted as such. The nation should now conduct the telegraph and express service, probably the business of insurance ”

“ Where a state enters the markets of the world and becomes a borrower, she lays aside her sovereignty and takes upon herself the position of an ordinary civil corporation, or of an individual, and is bound accordingly. ”

“ It is equally certain that unless the state, in its sovereign capacity, possesses this power, it cannot delegate it to either counties or cities, and that when the constitution of a state forbids the exercise of a power, it includes the legislature, all the departments of the state government, all counties, cities, and towns, and all the people. All these corporations are agencies in the administration of the affairs of the public. Being political in their nature, they are entirely distinct from private corporations organized for the purpose of pecuniary profit. ”

“ That corporate franchises are legal estates, and not mere naked powers, but powers coupled with an interest which vest in the corporation by virtue of their charter. (7) That private corporations and all trades and avocations by which the citizens acquire a livelihood may be taxed by the State for the support of the State government. (8) That such authority resides in the States independent of the Federal government, and that it is wholly unaffected by the fact that the party, whether corporation or individual, has or has not made investments in Federal securities. ”