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same skill or care in management that their fathers or grandfathers possessed. The result is that there creep in very many items of added cost in connection with the wages, which would not be found in any new industry. In one special case which has been cited it was found that an hereditary business of this kind which employed 1,500 men, and which had not been very profitable for some years, needed to be thoroughly reorganized after it had sold out to the combination. The new manager found that by a proper readjustment and the introduction of some machinery hu was able to accomplish the work, formerly done by 1,500 men, with the assistance of only 600. Some of the men formerly employed afterwards said that they knew that they had not been really needed in the old establishment, and that they had to a considerable extent fooled away their time, but that having fair wages in a place where the manager seemed to want them, they naturally had made no complaint of lack of opportunity for effort.

This doubtless extreme case has also another side which affects the formation of the combinations. One of the chief producers in a line of industry which has since been organized into a combination held out for a long time before selling his establishment. The business had been in the family for generations, and he had two sons whom he wished to succeed him. He said that he realized that if his business went into the hands of the combination his sons would in all probability have to look elsewhere for employment, and it had been his intention to set them up for life in their father's business. Occasionally a similar instance is found in this country, but in no case probably is the sentiment in favor of continuing a business in the same family so strong, nor on the other hand will a parent here take the same care to provide a position for his son in a specific line of business. An American father, speaking generally, would much more readily take the money and set his son up in any other line that seemed to furnish equal opportunities.

The Brass Bedstead Association, in July, 1900, had in the combination 50 out of 56 manufacturing establishments in the country. It will be recalled that since that time there has been a withdrawal of several more establishments, so that some report the combination as broken up. The Bradford Dyers control a very large proportion of the industry in their section of the country, in most lines of the industry having as high as 90 per cent in their combination, and in certain specialties having really the absolute control of the industry. The Fine Cotton Spinners have fully 80 per cent of the entire English production, and in certain lines doubtless have as much as 90 per cent.


In practice in all these establishments, as well as in others in which combinations have been formed, there has been something of an increase in prices, although in many instances, doubtless, if not in nearly all of them, this increase in prices has been due in good part to the increase in the prices of the raw materials. During the past 2 years this increase has been a very general one. Take, first, the increase in the prices of the products of the Fine Cotton Spinners. This has not been much, except as the prices on the raw material have forced the prices of the finished products up. Apparently owing chiefly to the saving in the cost of manufacture, there seems to have been a slight increase in the margin between the prices of the raw and the finished product. It is questionable, however, whether when the price of the raw material falls the finished product will fall in proportion. In most cases, if one may judge from the experience in the United States, it is somewhat easier for a manufacturer, especially if he controls a large proportion of the market, to hold the price of the finished product proportionately higher after a fall in the raw material, thus increasing his profit, than to increase the price of the finished product more than proportionately to an increase in the price of the raw material.

The Bradford Dyers in a somewhat similar way have found the cost of their raw material gradually forcing the prices up, especially in certain lines. The price of their coal, for example, had increased very materially, and the prices of most other materials had also increased. Their prices in certain lines have not been raised at all, but in other lines their rates have increased a little, perhaps 5 per cent. It should be noted that the work of the Bradford Dyers is somewhat different from that of regular manufacturers, inasmuch as their business is to take the manufactured fabric from the mills and dye and finish it.

The English Sewing Cotton Company also seems to have been able to increase the prices of their goods somewhat, apparently as a result of the combination. Here again the chief factor in the rise of prices seems to have been scarcity as compared with the demand, and the dearness of their raw material. The production has undoubtedly increased and the combination has undoubtedly been able to stop some cutting in prices, at any rate.

The Wall Papers Manufacturers have increased prices on low grades of paper from 10 to 20 per cent.

Mr. E. J. Smith says that in his rather peculiar combinations he never considers that the combination is successfully established until it is able to raise prices. It will be recalled that his combinations, according to his claim, have been made as a result of ruinous competition, and that it is the intention to give to each manufacturer a fair profit over the cost of production, the cost being accurately and absolutely calculated. In consequence it is essential to the success of the combination that they be able, if conditions have been unfavorable before the formation of the combination, to increase the price somewhat. It is not felt that this power to increase prices has been abused. The workmen would not permit that. Prices in those combinations can not be increased without the consent of the workingmen, who are also standing members of the combination. In the bedstead association, during the period of its existence, the workingmen twice refused to let prices be raised although their wages would have increased proportionately to the profits of the employers, provided that greater profits had been made. The reason for their refusal was their fear, in the first place, of public opinion, and secondly the fear that an increase in prices would result in a reduction of sales, and in consequence in a lessening of the amount of work. Naturally the workingmen prefer good steady wages to somewhat higher wages with at times a complete lack of employment.

As a whole we may say that the combinations in England have already shown that they have the power to increase wages slightly above what they have been under conditions of free competition; that at any rate owing to their savings they have been able to increase the margin somewhat between the cost of the raw material and the finished product; and that, speaking generally, they are probably able to hold prices slightly higher than they would be under a period of free competition. On the other hand, it must be noted, that the actual increase in prices which has taken place is in most instances due chiefly to the increase in the cost of the raw material and of the materials of manufacture.

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Naturally in England, inasmuch as there is no tariff of a protective nature on any of the articles manufactured by the combinations, no claim has been made that the combinations are created by the tariff, a claim so usual in protectionist countries. It may be worth while to observe, however, that many powerful combinations have been formed in England within the last few years, and that in those lines the causes for the formation seemed to be substantially the same as those given in other countries, and the results of the combination upon prices and wages do not materially differ.

THE ENGLISH LAW REGARDING COMBINATIONS AND CORPORATIONS. (a) Combinations.—There has been in England no direct legislation regarding the modern combinations in industry, but as will appear from Part II, where the report on the corporation laws of England is made in detail, the following one or two points should be noted:

In the first place, if a company is incorporated by an act of Parliament and is not by its active incorporation given power to hold stock in another corporation the purchase of such stock is ultra vires, and the public by the attorney-general can interpose and prevent it. If the constitution of a corporation authorizes it to hold stock in another corporation, it may do so.

The common law of England holds illegal all contracts in restraint of trade in the same manner as does the common law in the United States. The interpretation of the law, however, is probably somewhat more liberal than it has been in the United States since the passage of the later laws against industrial combinations, and since the combinations have become in the popular mind so detrimental to the public interest. Two leading cases may perhaps be referred to.2 In Mitchel v. Reynolds, decided in 1711, Reynolds having assigned a lease of a bakery for 5 years to Mitchel and having agreed not to enter the bakery business in that parish during that time under a forfeit of £50 as damages, did reenter the business contrary to the contract, claiming that the contract was void because it was in restraint of trade. The court held that if a promise in restraint of trade is founded upon a good consideration, partial as to territory, and reasonable, it will be enforced, but not so if it is general

1 Great Eastern Railway Company y. Turner and L. R., Ch. App., 149; Attorney-General v. Great
Northern Railway Company, 1 Dr. and Sm., 15.
2 Ex parte Contract Corp., 3 Ch. 105; Royal Bank of India Case, 4 Ch. 252. 1 P. Wms., 181.

not to exercise a trade throughout the kingdom, because such a contract could be of no benefit to either party, and they awarded damages to the plaintiff.

The leading case in the later days seems to uphold contracts that, under the antitrust act of the United States, would quite probably be held void. The principal opinion, delivered by Lord Halsbury, says: “I am of opinion

that the whole matter comes around to the original proposition, whether a combination to trade and to offer, in respect of prices, discounts and other trade facilities, such terms as will win so large an amount of custom as to render it unprofitable for rival customers to pursue the same trade is unlawful, and I am clearly of opinion that it is not.”

Probably no exactly similar case has come up in the United States, and the general principles laid down by our judges seem to follow those of the English judges. The interpretation, however, seems to have been in a good many cases rather less liberal here than in England.

(6) Corporations.-As regards the English corporation law, however, that is found in most particulars to be considerably stricter than the corporation laws in our States, and in addition to that fact the one law obtains throughout the whole country, and there is not the possibility for evasion of the spirit of the law that is readily found here, owing to the conflicting laws of our different States.

The general spirit of the English law is covered by the one word “publicity.” The basis of the present law is found in the Companies Act of 1862 and the acts amending the same, especially the Companies Act of 1867 and the new act of 1900. For a good many years there has been a feeling in England that the spirit of these acts was being evaded by devices which had been invented by corporation lawyers to enable their clients (promoters and directors of companies chiefly) to secure large profits through the watering of stock, and the concealment of their methods of doing business. It was desired to prevent these practices without at the same time checking the proper spirit of enterprise among business men. The reports of the inspectorgeneral on the winding up of bankrupt companies from year to year had called attention to very many of the abuses that had arisen under the law. As long ago as 1894, when the Right Hon. James Bryce was the president of the Board of Trade, a committee was appointed to inquire what amendments were necessary in the acts relating to joint stock companies with a view to the better prevention of fraud in relation to the formation and management of companies, and to consider a report upon a draft bill to be laid before them. This committee was composed of some of the leading judges and lawyers of England, together with business men and representatives of the Government. They took the opinions of the leading stock exchanges, had reports upon the corporation laws of France, Germany, and some of the States in the United States, and as a result of their investigation made suggestions for amendment to the law presented in the form of a draft bill. The companies bill was referred to a select committee of the House of Lords; it was considered by them in detail, and a minute of the evidence was printed in 1896. The same procedure was followed in 1897, 1898, and 1899, when they finally ordered the bill to be reported to the House of Lords, with some amendments. On the basis of this bill and the preceding investigation a companies bill was introduced in the House of Commons and was referred to the standing committee on trade, which went through it again, made further amendments, and finally presented it to the House, where it was fully considered and finally passed on the 8th of August, 1900.

It will be noticed, therefore, that the latest amendments giving the present law of England are the result of some 6 years' study by, in the first place, a special committee appointed by the Board of Trade (an executive department of the English Government), by a special committee of the House of Lords, and by the regular standing committee on trade in the House of Commons, with opportunity for full discussion throughout. The earlier law of 1862 made quite full provision for publicity regarding the acts of promoters and the work of directors of companies. Later amendments of 1900 are simply directed toward preventing evasion of these earlier provisions, and toward making them somewhat more complete. During all this period, until within the last year or two at any rate England has been the leading commercial country of the world and her industrial progress does not seem to have been stopped by these provisions of her law. These later amendments have also been made with due regard to the fact that England seemed just at present to be falling somewhat behind in the race for industrial supremacy, and especial care was taken to put in no provisions that should hamper industrial enterprise.

The leading points given in detail in Part II are these:

(1) Capital must be paid in in cash unless the matter has been otherwise determined in a contract made in writing and filed with the registrar of joint stock companies, where it may be inspected by the public.

1 Mogul Steamship Company v. McGregor Gow & Co., Appeal cases, 25, decided in 1892.

(2) Prospectuses issued in behalf of companies must disclose fully the conditions under which the companies are formed, including the names and addresses of those subscribing, the memorandum of association, the number of founder's shares, the nature of the interest of the holders in the property and profits of the company, the qualifications of directors, the number and amount of shares and debentures to be issued as fully or partly paid up otherwise than in cash, the extent to which they are so paid up, the consideration for which they have been issued, the names and addresses of the vendors of any property purchased to be paid for out of the proceeds of the sale of shares, the amount payable to the vendor, the amount paid for good will, the amount payable as commissions for procuring subscriptions, the estimated amount of preliminary expense, the amount to be paid to any promoter, the dates and parties to every material contract, and the time and place where such contract may be inspected, the nature and extent of the interest of every director in the promotion or in the property proposed to be acquired for the company, together with a clause forbidding any plan for shares or debentures to waive compliance with any of the above requirements.

(3) The promoters and directors are held strictly liable for the careful carrying out of the above provisions.

(4) Directors are held strictly responsible for the truthfulness of statements made in all their reports concerning the business, unless they can show that they were in no sense responsible for such misstatement.

(5) Careful accounts must be kept, and a balance sheet, in not too great detail, must be furnished to the stockholders, but directors are not restrained from dealing in the shares of the company nor from acting as directors of rival companies, provided there is no undue concealment of the facts.

(6) Reports must be made regularly to the Government, giving the leading provisions as to the capitalization, the amounts paid in on shares, the details regarding transfers of shares during the preceding year, lists of the stockholders, etc. All of these reports of various kinds are to be duly filed with the registrar of companies.

(?) Each company must have a registry office to which all communications and notices may be addressed, otherwise it is subject to a severe penalty, and any misstatement in

any of these reports is a misdemeanor subject to penalty of imprisonment. (8) Auditors, being neither directors nor officers of the company, are to have full right of investigation of the affairs of the company in detail, and are to certify to the accuracy of the annual report and balance sheet as representing accurately the general condition of business of the company.

(9) Under the law of 1862, in the case of companies limited by shares, books of account were to be kept at the registry office open to the inspection of stockholders, subject to any reasonable restrictions as to time and manner of inspection. This, however, might be changed by the articles of association, and of course has regularly been so changed. The registrar-general of companies is to have the right upon applicatiou of a sufficient proportion of the shareholders of any company in number not less than one-fifth of the whole number, with due evidence furnished as to the necessity of such investigation, to look into the affairs of any joint stock company, and make due report to the stockholders regarding such examination. Of course, the applicants must give security for the payment of the costs of the inquiry and must show that they are not actuated by malicious motives, and that the inquiry is needed. The main difference between that custom and ours is, of course, that the order comes through an executive department of the Board of Trade and not through a court.

It will be noted that stockholders are as well protected, perhaps, in cases of fraud which they can themselves establish in this country as under these laws in England; but that in England there is more publicity regarding the acts of the promoter, and there are provisions forfairly detailed reports from thedirectors, which have a tendency to check the formation of purely speculative companies and to enable stockholders to be rather more secure, if they wish to be, regarding these investments.

It is thought by some of the promoters of the great combinations formed within the last two years and by some lawyers who have been concerned in their organization, that had these amendments, passed in August, 1900, been adopted two years before, they would have hindered somewhat the formation of some of the later large combinations in England. The sounder companies, which seemed to be called for imperatively by business conditions, would have been organized substantially as at present, but those organized more particularly at the instance of a speculative promoter, and somewhat probably at the expense of the public, who have been persuaded to buy their shares, would have been postponed until conditions more imperatively demanded combination, when the owners and managers of the various establishments would themselves have taken the initiative, and would have been willing to pay a legitimate promoter of the higher type a just and full equivalent for business services actually performed.



In allotting shares favorable consideration will be given to those applicants who apply for both debenture stock and shares.

The list of applications will open on Thursday, December 14, and will close the following day, Friday, December 15, at 4 o'clock in the afternoon or earlier, for both town and country.


[Incorporated under the companies acts, 1862 to 1898.]

SHARE CAPITAL, £6,000,000.

Divided into 6,000,000 shares of £1 each, 5,000,000 of which are now to be issued as ordinary shares, and the remainder may be issued hereafter either as 5 per cent cumulative preference shares or as ordinary shares, 4 per cent perpetual first-mortgage debenture stock, £3,200,000.


4 per cent perpetual first-mortgage debenture stock, which will be issued

in multiples of £1... Ordinary shares of £1 each

£3, 200,000 5,000,000

8, 200,000 Of the above issue £1,066,666 debenture stock and £1,595,170 ordinary shares will be issued to the vendors in part payment of purchase money, and the remainder, viz, £2,133,334 debenture stock, £3,404,830 ordinary shares, are now offered for public subscription at par, payable as follows:

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The debenture stock will be registered in the books of the company, and the interest will be paid half yearly on February 1 and August 1 in each year, the first payment (calculated from the due date of each instalment) being made on August 1, 1900.

Interest at 5 per cent per annum will be charged on instalments in arrear.

The debenture stock and the interest thereon will be secured by a specific first mortgage to the trustees for the debenture stockholders of the freehold, copyhold, and heritable properties, now purchased by the company and (subject to necessary consents of landlords) the leasehold properties so purchased held in England for terms having more than twenty-one years to run, or in Scotland for terms of thirtyone years or upwards from the date of the lease, and of the company's beneficial interest in the French works now purchased by it, which will, for convenience, be retained in the French registry in the name of a trustee for the company, and by a

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