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 THE GREEN BAG

FEDERAL REGULATION OF CORPORATIONS A PUBLIC NECESSITY BY WILLIAM J. CURTIS MODERN business methods and con ditions require the organization of corporations in order that the capital neces sary may be readily obtained, and also concentration in the management of the business. This is not a new or novel propo sition; but it is nevertheless especially emphasized at the present time. The true public policy should therefore be to encourage these aggregations of capital and this modern business agency; otherwise business progress and commercial develop ment will be retarded and our industrial growth embarrassed. The corporation as a business agency is becoming the recognized, and, in fact, the only method for the conduct of business enterprise requiring large capital. This is true, whether the business is confined to the borders of a state, or (as is almost in variably the case) extends into other states and territories, and, not infrequently, into foreign countries. The enormous development of our country has brought about a condition which justifies the encouragement of every proper agency for the extension and development of our internal and interstate commerce. In every state laws have been passed permitting the organization of corporations for all classes of business. Among some, great rivalry has been shown; while in others retaliatory laws have been passed, so as to exclude foreign corporations from the ben efits derived by domestic corporations with the intention of offering a premium to com panies to organize under local laws. Com panies organized under the laws of the various states may engage in business in foreign states only at the will of the foreign state, or, as it is expressed, as a result of its comity. Under this rule it is the practice to require the performance of certain con

ditions precedent to engaging in business, such as filing of copies of charters, making of reports, etc. In several states attempts have been made to prevent foreign corpora tions from resorting to the Federal courts in litigation. In almost all states corpora tions are required to file reports with some public officer, stating facts relating to their financial condition or corporate manage ment. These requirements are more or less stringent, according to the purposes to be accomplished; most information being re quired for purposes of taxation. Under the present system a corporation engaged in commerce between the states is subject not only to regulation of the kinds above in dicated, but also to an additional and op pressive burden of taxation on its property located within the state as well as upon its business and franchise. If an individual were to transact the same business, with the same capital, and in the same places, he would escape the regulations and burdens referred to. There seems to be a spirit prevailing in our country, which is on the increase, to pursue, oppress and obstruct companies, good, bad and indifferent; and this spirit finds expression in some form, at least bien nially, in nearly forty-eight legislatures, so that conducting business under corporate organization is subject to innumerable an noyances, restrictions and burdens, all under the guise of regulation. That many of these companies are en gaged in commerce between the states is manifest. They are organized in one state have their principal office in another, thei manufacturing establishments in still an other, and sell and transport their goods in all, as well as in foreign countries. The regulation of companies thus doing business between the states and foreign