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THE GREEN BAG

which a client who has retained him is interested, is bound by sheer elementary considerations of honor to frankly state his professional relation to the client. It is his plain duty scrupulously to abstain from any attempt to influence public sentiment in favor of or against any public measure in which his client is interested or upon which he cannot as comfortably differ from his client as he can agree with him, except when he speaks openly and confessedly for his client as a retained advocate. There is a further duty upon us. Gov ernmental problems related to corporations are of enormous present and future impor tance to the American people. They in volve far-reaching considerations of mo nopoly and of taxation, a share, oftentimes a dangerous share, in the control of the sources of political power and a share, also a dangerous share, in the control of public administration. It is for lawyers as it is for no other body, and, among them, for those who earn any part of their living by serving corporate interests, to be courage ously independent in dealing with ques tions of corporate reform. I think suffi ciently well of the good sense, if not the patriotism of many, perhaps most, of those who control important corporate interests, to believe that they will think no worse of their counsel who, in public relations, advo cate reforms and regulations which they, perhaps, may not approve. At any rate, a lawyer who cannot exercise this liberty ought to exclude himself from all partici pation in public life, or, if he do not, then he ought by his fellow-citizens to be peremp torily excluded from any hearing upon public affairs. It is by way of an attempt to myself perform some small part of the duty which I thus enforce upon my profession, that I invite you to my second and principal topic. I ask you to consider one feature of American corporation law, its abuses, and the injury it does corporations in public esteem. I refer to the legal requirement of

specific capitalization in the incorporation of companies, and the tendency of such capitalization to become nominal or ficti tious. I propose for your consideration whether it may not be wise to abolish alto gether our requirement of a charter or technical capitalization of corporations. I would permit the creation by a company of as many shares of its capital stock as it sees fit; but I would not have the law require for the shares any money denomination, that is to say, any par value. I would not have the law prescribe a fixed money capi tal, except, of course, as the law may, in the case of banks or insurance, or railroad or other companies, require that a specific net money capital be on hand as the condi tions of doing business. In your state and in mine, and in all the American states with hardly an exception, the law does not permit the incorporation of a company for transportation, banking, insurance, industrial, or other business pur pose unless in the certificate or articles of incorporation the total capital be prescribed and also the number of shares into which such capital is to be divided and the par value of each share. Why should the total capital be prescribed? Why should the par value of each share be prescribed? What purpose do these statements in the instru ment of incorporation serve? Do they not lead, and lead very commonly, to fictitious capitalization, to statements by corpora tions and by those who promote them that are misleading, to an unreasonable and sometimes oppressive or even dangerous effort in the result to justify a capitaliza tion which originally was unjustified? Do they not oftentimes lead to absurd and even immoral discrepancies between the nominal money valuation of the assets of corpora tions and the valuation made for purposes of public taxation? If our system of cor porate capitalization produces, as I think it does, these and other evils, is it neverthe less necessary? Is it useful from the stand point of sound public policy? Does it serve