3 months prior to the annual general meeting to examine the books and control the transactions of the company. They have the further privilege of calling a meeting of stockholders in cases of urgency. The directors are required to prepare every 6 months a summary statement of the assets and liabilities of the company, and to place it at the disposal of the auditors; and the inventory, the balance sheet, and the profit and loss account, which are to be presented at the annual meeting, must be placed at the disposal of the auditors on the fortieth day at latest before the day fixed for the meeting.

Fifteen days at least before the meeting any stockholder may examine at the office of the company the inventory and the list of stockholders and obtain a copy of the balance sheet and of the report of the auditors. It is customary to print these latter documents at the expense of the company. There is a special provision of the law applicable both to "commandites" and "sociétés anonymes," providing that stockholders representing one-twentieth at least of the capital of the company may appoint one or more representatives in their common interest to act for them either as plaintiff or defendant in actions at law brought by or against the directors or "gérants." This privilege is without prejudice to the individual rights of action of the shareholders. In the case of a "commandite" the stockholders control the management of the gérants" through a committee of supervision, known as the "conseil de surveillance." This committee consists of 3 stockholders at least, and is appointed by the general meeting of stockholders immediately after the final constitution of the company and before the transaction of any business. The first committee is appointed for 1 year only, and the period and the method of its renewal is determined by the by-laws. Its first duty is to ascertain that the requirements in regard to the constitution of the company have been fully fulfilled. It is the general duty of the committee of supervision to check the books of accounts, the cash, and the securities and investments of the company. It makes an annual report to the general meeting in which it is its duty to point out the irregularities and inaccuracies which may have been found in the inventories, and to state any objections, if any, to the distribution of dividends proposed by the management. In fact the committee of supervision exercises the same functions in regard to a "commandite" as the "commissaires" or auditors do in regard to a "société anonyme," but the functions of a committee of supervision are wider by reason of the fact that the powers of the management in a "commandite " are more extensive.

M.-METHOD OF TAXATION OF CORPORATIONS.

Upon the constitution of a company the taxes imposed take the form of droits d'enregistrement" or duties collected upon the recording of the documents in the fiscal office of the Government. In case the deed contains neither obligation, liberation, nor transmission of property, real or personal, as between the parties interested in the company or other parties-in other words, in case the conveyance by which the company orginally acquires its property takes the form of subscriptions or "apports" (or transmission of property in consideration of fully-paid stock), the duty is one-fourth of 1 per cent or 25 centimes per 100 francs of the capital. But if the deed reveals a sale of realty for cash, the duty is between 6 and 7 per cent-more accurately, 6.875 per cent.

This figure is arrived at by taking account of the provision of law which requires that to the principal of every tax, in this case of 5 per cent, shall be added twotenths, or "decimes," and one-half tenth.

In case of the sale of personalty, the duty is 2 per cent, including decimes (3.125). Each certificate of shares in the company must bear a stamp of 60 centimes per hundred francs in the case of companies formed for a duration not exceeding 10 years, and 1 franc 20 centimes per hundred francs for those whose duration exceeds 10 years. This tax is based upon the nominal capital. In the case of founders' shares, this tax is based upon their real value, if obtainable, and if not, upon an assessment made by the company and subject to control by the fiscal authorities. Companies may arrange to compound for the payment of stamp duty for the whole duration of their company. In such case the single duty of 60 centimes or 1 franc 20 centimes per hundred francs, as the case may be, is replaced by an annual duty reduced to 6 per cent of the nominal capital and payable quarterly. Bonds or "obligations" issued by a company are subject to a stamp duty of 1 franc 20 centimes per hundred francs of the. value of the certificate. This duty may also be compounded for.

Transfer duty.-Independently of the stamp duty, there is a tax on every transfer of shares of 50 centimes per hundred francs, inclusive of decimes. It is assessed, not on the nominal value of the share, but upon the last average quotation on the day before the transfer in the case of listed stock; for unlisted stock upon a valuation

declared by the company and subject to governmental control. This tax could obviously not apply to bearer stock, which is transferable by mere delivery, the transfers of which can not, therefore, be traced. In the case of bearer stock, therefore, it has been converted into an annual and obligatory tax of 20 centimes per hundred francs, net of decimes, assessed on the real value of the shares or bonds estimated according to their average quotation during the preceding year, or in case they have not been quoted in the preceding year, upon a declared value which is liable to control by the administration.

Revenue tax. Share companies are also liable to a revenue tax established by the law of June 29, 1872. The tax is annual, and payable upon interest, dividend, revenue, and every other kind of income resulting from shares of every kind upon the annual interest on loans and bonds issued. The tax originally of 3 per cent on income as above stated has been raised to 4 per cent by the law of December 26, 1890; it is payable quarterly.

N. SPECIAL METHODS OF CONTROL BY THE GOVERNMENT.

Existing methods of control are fiscal merely, and do not aim at executive control over the operations of the company. By the laws of June 5, 1850, and June 23, 1857, modified by the laws of August 25, 1871, and June 21, 1875, all stock companies are bound to make a declaration of existence at the fiscal office of the Government (bureau d'enregistrement) of their principal place of business. This declaration must be made within a month of their constitution and must contain: (1) The object, the address, and the duration of the company; (2) the date of the deed of constitution and of its recording; (3) the names of the managers or directors; (4) the numbers and nature of the shares or bonds issued. The penalty for failure to make this declaration is a fine of 100 to 5,000 francs. They are furthermore bound, whenever required by the authorities of the "enregistrement," to allow the Government officers to inspect the stub books of the certificates of shares and bonds, the registers of transfers and conversions, all documents relating to transfers and conversions, all documents and writings relating to lottery bonds and bonuses on reimbursement, their books of account, registers, documents, cash vouchers, etc., and must permit them to take any copies required in the interest of the public treasury. The courts have held that this right extends even to the minutes of the board of directors, a fortiori to the minutes, of the stockholders' meetings.

Companies with variable capital.—The law of 1867 also contains special provisions with regard to what are known as companies with variable capital, which were designed with the object of fostering cooperative societies. These societies do not form a separate class, but constitute a variety of the different classes above described, and they must in the first place organize either as a partnership ("société en nom collectif"), a "commandite," or a "société anonyme." In case it is desired to organize a company of the kind, the by-laws contain a special stipulation to the effect that the share capital may be increased by successive payments made by the shareholders or the admission of new shareholders, or decreased by the complete or partial withdrawal of the shares paid in. The initial capital can not exceed 200,000 francs. It may be increased by resolutions of the general meeting from year to year; each increase can not exceed 200,000 francs. The shares are registered in the name of the owner and can not be issued in the form of bearer stock. The by-laws may lay down a minimum below which the capital can not be reduced, which minimum can not be less than one-tenth of the initial capital. The company is only finally constituted when one-tenth of the capital is paid in. Any shareholder may withdraw from the company when he thinks fit, unless the contrary is expressly stipulated and unless his withdrawal would effect the reduction of the capital below the statutory minimum. It may be stipulated that the general meeting shall have the right to decide by the same majority as that required for a modification of the by-laws that one or more of the shareholders shall cease to form part of the company.

The shareholder who ceases to belong to the company either of his own accord or under a decision of the general meeting, is liable for a period of 5 years toward the shareholders and third parties for all the undertakings of the company existing at the time of his withdrawal.

O.-REGULATIONS REGARDING PRICES OF PRODUCTS AND LAWS COVERING MONOPOLIES OR TRUSTS.1

Combinations and manoeuvres to raise prices were dealt with in the Roman law, upon which the French codes are founded. The Lex Julia de Annona punished attempts at cornering the market by a fine, and the law de monopolis et conventu

1 By Edmond Kelly. See also Part I, pp. 86-88.

negotiatorum illicito prohibited every combination for the purpose of increasing the price of foodstuffs by confiscation and perpetual exile.

As early as Charlemagne, royal edicts are found prohibiting such proceedings, and the subject is dealt with in a large number of royal decrees and parliamentary decisions.

Combinations, however, between employers and employees for the purpose of maintaining the price not only of articles manufactured, but also of wages, were not prohibited during the Middle Ages in France; indeed, the powers exercised by the guilds or corporations to this end are too well-known to require comment or explanation.

The first effort to break down the tyranny of the guild in France was due to Turgot in the reign of Louis XVI. The guilds, however, were too powerful in Paris to permit of the execution of the decree abolishing them, and the corporation was not effectually destroyed in France until the French revolution.

The theory of industrial as well as political liberty which prevailed at the period of the French revolution caused the enactment of a series of laws, of which the first was that of the 2d-17th of May, 1791, which abolished all guilds or corporations. This was immediately followed by a law of the 14th of June, of the same year, which • punished all combinations for the purpose of raising prices as misdemeanors. In endeavoring to impose liberty of industry by legislation, the convention enacted a law which prohibited workmen from stopping work except on the ground of illness or infirmity. This legislation was soon followed by the law of Germinal, An XI, which prohibited all combinations between employers and all combinations between workmen, and punished such combinations by imprisonment for not more than 3 months. These combinations were not confined to industrial employers and employees. Farmers and farm laborers were also included within the prohibition.2

Emile Olivier, in the report he made to the Corps Legislatif when proposing the law which was to put an end to these prohibitions, pointed out that the foregoing legislation was inspired by a double motive: (1) The fear of the reorganization of corporations; (2) a fear of collective action of any kind outside of the State. This legislation was summed up in the penal code of 1810, sections 414, 415.

Section 414 punished all combinations between employers the object of which was unjustly and abusively to effect a diminution in wages, followed by an attempt to carry the same into execution, by an imprisonment of 6 days to 1 month, and by a fine of from 200 to 3,000 francs.

Section 415 punished all combinations on the part of workmen for the purpose of stopping work or of arresting it during certain hours of the day, or generally for the purpose of increasing the price of wages, with imprisonment of from 1 to 3 months. The leaders were punished by an imprisonment of from 2 to 5 years. It is interesting to observe that combinations of employers were only punished in case the combination was unjust and abusive, whereas no such qualification was put to the punishment in the case of workmen. This inequality between the penalties inflicted on employers and employees was put an end to by the revolution of 1848, and the law enacted on the 27th of November, 1849.

The courts construed this last law harshly for workmen, punishing every kind of combination amongst them, however legitimate were the motives thereof. Napoleon III, anxious to maintain his popularity with the workingmen, referred this question to the conseil d'état, and on the 25th of May, 1864, the sections of the code heretofore referred to were abrogated and replaced by the following:

SEC. 415. Whoever shall, by means of violence, assault, threat, or fraudulent manoeuvres bring about or maintain or seek to bring about or maintain a concerted abandonment of work with a view of forcing a rise or a reduction in wages, or of attacking the free exercise of industry or labor, shall be punished by an imprisonment of from 6 days to 3 years, and by a fine of from 16 to 3,000 francs, or by one of these two penalties only.

SEC. 416. When the acts punished by the preceding section shall have been committed under a concerted plan, those guilty thereof may be put under the surveilance of the police during a period of from 2 to 5 years.

While, however, these sections punish only combinations accompanied by violence, threats, and fraudulent manoeuvres, the right to combine was limited by section 291 of the penal code, which prohibited any association of more than 20 persons without having obtained the authorization of the Government, so that while the law of 1864 permitted spontaneous combinations for the purpose of raising wages provided they were not effected by violence or fraud, it did not allow permanent

121 Nivose, An II.

2 Code rural, Oct. 6, 1791, Title II, arts. 19 and 20.

3 Dalloz, 64, 4, 58.

4 Cassation, Feb. 24, 1859; Sirey, 59, 1, 630.

combinations such as are now known under the name of trade unions. This right was not granted until the 21st of March, 1884. This law provides that in case of all such combinations, the articles of association shall be deposited at the town hall with a list of the names of the managers, under penalty of a fine of from 16 to 500 francs in case of false declarations; the managers must be French and in the enjoyment of their civil rights.

Such is the present condition of law as regards the right of workmen to combine for the purpose of raising wages and the right of employers to combine for the purpose of keeping wages down.

Combinations for the purpose of effecting a rise or fall in the price of merchandise or foodstuffs are still prohibited in France under sections 419 and 420 of the penal code, which date back to the passage of this code in 1810. They have been interpreted by the courts, which show a tendency of late to limit the application thereof. The articles in question read as follows:

SEC. 419. All those who, by deliberately spreading abroad false or slanderous facts, by offering a higher price than that asked by the vendors themselves, by association or coalition between the principal holders of the same merchandise or foodstuffs, whether with a view to not selling the same, or with a view to selling it only at a certain price, and all those who, by any fraudulent means, shall effect a rise or diminution in the price of foodstuffs or merchandise or public securities above or below the price determined by natural and free commercial competition, shall be punished by an imprisonment of 1 month to 1 year, and by a fine of from 500 to 2,000 francs. Those guilty of the foregoing may be also put under the surveillance of the police during from 2 to 5 years.

SEC. 420. The penalty for the foregoing shall be an imprisonment of from 2 months to 2 years, and a fine of from 1,000 to 20,000 francs if these manoeuvres have been practiced on grain, flour, bread, wine, or any other drink. A surveillance by the police, if ordered, shall in such case be during from 5 to 10 years.

In 1851 the court of cassation declared null and void an agreement on the part of a few persons to purchase a large quantity of salt, with a view of raising the price thereof.1 Quite lately the court decided that a combination of manufacturers or dealers in mineral waters came within section 419 because the combination was effectual in preventing the sale of these waters by those who were not members of the syndicate, and by securing control of the entire industry imposed higher prices upon the public. But a combination made between a large number of dealers in phosphates for the purpose of raising the price of phosphates was not held to be illegal, because it did not include absolutely all the dealers in phosphates in France, but only those confined to a certain district in France, and because it was the object of the coalition to contend against French and foreign competition under the "best possible economic conditions."3

And in a case where a number of manufacturers of pottery at Grenoble and its neighborhood had made a similar arrangement not to sell except at certain prices, the effort to have this association pronounced unlawful under section 419 failed, the court holding that in this particular case the syndicate did not include the whole trade. but only a minority of the trade, and that the price upon which the syndicate agreed did not seem to be an exaggerated price.*

It may be said generally, therefore, that the tendency in France to-day is to permit the combinations which the legislation of the revolutionary period attempted to prevent. As regards combinations of employers to keep wages down, and those of employees to keep wages up, the prohibitions imposed by the convention have been abolished by direct legislation. As regards combinations to raise prices, the rule has been mitigated by judicial interpretation. In other words, experience has demonstrated that the so-called "liberty of industry," which had such attractions for the convention, was diminished rather than enhanced by the prohibition of combinations, for it is only by collective bargaining that workmen can secure wages consistent with a high standard of living, and it is only by combination that industries can rescue themselves from the perpetual tendency of competition to reduce prices below the margin of profit.

CORPORATION LAW OF THE 24TH OF JULY, 1867.1

I. "COMMANDITE" COMPANIES.

ARTICLE 1. "Commandite" companies may not divide their capital into shares or fractions of shares of less than 25 francs when the capital does not exceed 200,000 francs, nor of less than 100 francs when the capital exceeds 200,000 francs.

They can not be finally constituted before the subscription of the whole of the share capital and the payment in cash by each shareholder of the amount of the shares or fractions of shares subscribed by him when they do not exceed 25 francs, and of one-fourth at least of the shares when they are of 100 francs or more.

This subscription and these payments are placed on record by a declaration of the manager ("gérant") in a notarial deed.

To this declaration are annexed the list of subscribers, a statement of the payment made, one of the originals of the deed of formation of the company if it is under private signatures, and a certified copy thereof if it is a notarial deed and if it has been executed before a notary other than the one who received the declaration. The deed under private signature, whatever be the number of the shareholders, shall be executed in two originals, one of which shall be annexed, as stated in the preceding paragraph, to the declaration of subscription of the capital and of the payment of one-fourth, and the other shall remain on file at the offices of the company. ART. 2. The shares or subdivisions of shares are negotiable after payment of onefourth.

ART. 3. The shares are registered in the name of the holder until they are fully paid up. The shares representing vendors' interest ("apport") must always be fully paid up at the time of the constitution of the company.

These shares can not be detached from the stub book, and are not negotiable until 2 years after the constitution of the company.

During this time it is the duty of the directors to have them marked with a stamp, indicating their nature and the date of their constitution.

The registered holders, the intermediate transferees, and the subscribers are liable jointly and severally for the amount of the share.

Every subscriber or shareholder who has transferred his stock ceases, after 2 years from the transfer, to be liable for the uncalled balance.

ART. 4. When a shareholder has made an "apport" which does not consist of cash, or has stipulated for his own benefit special advantages, the first general meeting appraises the value of the "apport" on the ground of the advantages stipulated. The company is only definitively constituted after the approval of the "apport" or of the advantages, voted by another general meeting after fresh notice.

The second general meeting shall only decide upon the approval of the contribution or of the advantages after a report, which shall be printed and placed at the disposal of the shareholders 5 days at least before the general meeting.

Resolutions are voted by the majority of shareholders present. This majority shall comprise one-fourth of the shareholders and represent one-fourth of the cash-share capital.

Shareholders who have made an "apport" or stipulated particular advantages, subject to the approval of the meeting, are not entitled to vote.

In default of approval the company is without effect in regard to all the parties. The approval is without prejudice to subsequent action which may be instituted by reason of deceit or fraud.

The provisions of the present article relating to the verification of the "apport" not consisting of cash are not applicable to a case where the company to which the said "apport" is made is formed only between persons who are undivided owners. ART. 5. A committee of supervision composed of 3 shareholders at least is organized in every "commandite" stock company.

This committee is appointed by the general meeting of stockholders immediately after the final constitution of the company and before the transaction of any corporate business.

Its members are subject to reelection at the periods and according to the conditions laid down in the by-laws.

The first committee is, however, appointed for 1 year only.

ART. 6. This first committee shall, immediately after its appointment, verify the fulfillment of the provisions contained in the articles which precede.

ART. 7. Every "commandite" stock company constituted in contravention of the prescriptions of articles 1, 2, 3, 4, and 5 of the present law is void and of no effect as regards the interested parties.

1 Translated at the embassy of the United States, Paris.