As regards corporations the German company law passed in 1884 practically removes all possibility of abuses from stock watering or from secret or fraudulent methods of promoters of companies; so that if the desire to give to the combinations the more compact form of single corporations should become prevalent, there need be little fear of any of these abuses arising in Germany which have been so common in the United States, and to a somewhat less degree in England.

It is expected that property of full value shall represent the paid-up capital of the company. The adequacy of the value of the property is provided for as follows: (a) Matters relating to the history of the formation of the company must be inserted into the articles of incorporation; (b) promoters must make a report on the promotion transaction, for the accuracy and completeness of which they are civilly and criminally liable; (c) certain provisions require the members of both boards of the company to examine into the circumstances of its formation; (d) provisions require an examination in certain cases by independent auditors. Furthermore, the articles give all details regarding persons from whom the company is to buy property and the nature of the consideration for which shares are issued, these facts being given in detail. If a company takes over a whole business, the results of the trading of that business for the 2 preceding years must be given, and all transactions which led to the ultimate sale of the property must be mentioned, with all prices paid within the 2 preceding years for the purchase of any part of such property.

Profits of promoters must be derived from the premium at which the shares are sold to the public. Experience shows that they have not been so high as those of English or American promoters, but they have been enough to stimulate enterprise, and they are perfectly open.

Detailed reports after organization are so provided for that there can be little question as to a sufficient knowledge of the business being given to the stockholders. If on the drawing up of any balance sheet, annual or otherwise, it appears that one-half of the company's capital has been lost, the board of directors must immediately summon a meeting of the stockholders, to whom the state of facts has to be submitted; and if at any time such a balance shows that the liabilities of a company exceed its assets the board must institute bankruptcy proceedings without delay.

These rigid proceedings and others, given in detail in Part II under the German companies' act, do not seem to have hampered enterprise unduly, as the formation of new companies has been progressing in a very rapid way since the passage of the law. In fact, the stringency of the law has apparently favored sound enterprise, although the dishonest or even reckless formation of corporations has been practically stopped.

APPENDIX Ia.

COPY OF THE AGREEMENT BETWEEN THE JOINT STOCK COMPANY, THE RHENISH-WESTPHALIAN COAL SYNDICATE, AND THE MINING COMPANIES BELONGING TO THE SYNDICATE AS WELL AS THE AGREEMENT OF THESE LATTER AMONG THEMSELVES.

[Entered into and unanimously accepted in agreement before a notary the 31st of July and 20th of September, 1895.]

By act before a notary of the 16th to the 19th of February, 1893, the RhenishWestphalian Coal Syndicate on one side and the undersigned mining companies on the other side have come to an agreement, the object of which is to do away with unsound competition upon the coal market.

In the same agreement the mining companies taking part have mutually obligated themselves to come together at the meetings provided by agreement and to be subject to the resolutions of the same as well as to the decisions of the organs placed in authority over the union (council and commission) in cases to be stated definitely later.

This agreement, to which reference is here made, will close on the 1st of March, 1898.

It is now the unanimous will of all taking part in the agreement to lengthen the duration of the union to-day and, holding fast to the above-mentioned general obligation, to give to the agreement now the following altered form:

A.

1. The meetings of the mine owners are to take place as necessity requires; the council of the Rhenish-Westphalian Coal Syndicate decides when such a need exists. Otherwise a meeting of mine owners can be called at once, when mine owners who represent one-fifth of the entire number of votes propose this in writing to the board of directors.

2. In the meetings each mine owner has 1 vote for every complete 10,000 tons assigned to him as his share of the total production.

3. In the meetings of mine owners a quorum is present when three-fourths of all the votes are represented. In case of a meeting at which a quorum is not present, a new meeting must be called in the manner to be designated later, which is then regarded as a quorum without regard to the number of votes represented. This, however, must be especially stated in the invitation (summɔns) to the second meeting. 4. The chairman of the council conducts the meetings of the mine owners, or one of his substitutes, or in the case of the inability of the latter to serve, a chairman is elected by the meeting.

5. In the meetings of mine owners only the legitimate representative of each mining company, or in the case of his inability to serve, an officer of the company accredited, with full power, is permitted to take part. Representation through third parties is not permitted.

6. The meetings of the mine owners are to be appointed by the board of directors of the Rhenish-Westphalian Coal Syndicate, and each member must be invited to the meetings at least 3 days beforehand by registered letter, containing the order of proceedings at the meeting.

7. The day of the sending of the letter is counted as the first day, and the receipt for the registered letter given at the post-office furnishes ample proof therefor.

8. The meetings of the mine owners take place at the seat of the Rhenish-Westphalian Coal Syndicate or at a place to be determined by the council.

9. The chairman opens and closes meetings, names 2 tellers of votes, and conducts proceedings.

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10. Minutes of the proceedings are kept, which are to be signed by the chairman, the tellers of votes, and those members who wish to. To the minutes a duly certified list of the members present and represented, together with the number of their votes, is to be added by the chairman.

11. A copy of the minutes will be furnished to every member.

12. The minutes are to be accepted as highest authority by the members.

13. The powers vested in the meetings of mine owners are, as far as special decisions have not been made in the past or shall not be made in the future, as follows: Appointment of the council.

(2) Choice of the members of the commission whose duty it is to settle the number of shares of production belonging to each member at the foundation of the syndicate.

(3) Decisions concerning possible reduction of production to be made for a shorter or longer time at the motion of the board of directors.

Settlement of the indemnity or premium for excess or shortage of production. (5) Decision in regard to admitting new members.

(6) Settlement of the number of shares owned by each of the mine owners of the company.

B. THE COUNCIL.

1. Every mine owner of each group of mining companies has the right for every share in the production of 1,000,000 tons to name a member of the council as well as a substitute for the same.

2. The members of the council and their representatives must be appointed annually in the first meeting of the mine owners and must be chosen from the members of the administrative forces of the companies.

3. The council chooses annually at its first meeting a chairman and 3 vice chairmen (substitutes).

4. The council has the right to appoint committees for the settlement of particular questions; moreover, it regulates its own proceedings itself.

C. THE COMMISSION FOR THE SETTLEMENT OF THE SHARE OF PRODUCTION ASSIGNED

TO EACH.

1. The commission is to consist of 4 members-2 mining experts, a merchant, and a member of the board of directors of the Rhenish-Westphalian Coal Syndicate; the first are elected annually, in double number, with a term of office lasting until the first meeting of the following calendar year; likewise 2 mining experts and 2 merchants, chosen by the meeting of mine owners. (See A, 2.)

2. If a member withdraw during his period of office, the meeting of mine owners appoints, at the next monthly meeting, another member for the remainder of his term.

3. The council chooses for a given case only such members to take part in a decision as, according to its best judgment, are associated neither as officers, shareholders, nor workmen in the mining company interested.

4. Whenever the members of the commission do not fulfill the above stated conditions in any given case, the council has the right to appoint other members for this

case.

5. A majority of votes of the members of the commission is required to pass a measure; in case of a tie the chairman of the council has the deciding vote.

SECTION 1.-General purchase and exceptions thereto.

1. The undersigned mine owners sell their collective products of coal, coke, and briquets to the Rhenish-Westphalian Coal Syndicate, which in turn takes upon itself the obligation of the disposal and further sale of the same according to the agreements entered into.

2. Excepted from further sale through the syndicate are the following:

(a) The coal, coke, and briquets demanded for their own needs, e. g., for engine fuel as well as for running their own works, such as coke furnaces, briquet factories, tile works, and salt works.

(b) The coal, coke, and briquets needed in the local market (Landdebit) as long as neighboring mines are not regularly supplied therewith.

(c) The coal allowed the mining officials and that used as fuel by the miners, and what is to be given away for benevolent purposes.

3. The quantities of coal, coke, and briquets used for purposes mentioned in (a), (b), and (c) are subject to the limitation of the Rhenish-Westphalian Coal Syndicate. An account in figures of these quantities is to be handed in to them by the 5th

of the month following their disposal, and these quantities are to be counted as part of the quota assigned to the individual mines; the settlement of the price for the coal used in the "land debit" is subject to the acceptance of the board of directors. 4. The contracting mine owners obligate themselves for the duration of this agreement to refrain from all sales of coal, coke, and briquets to third parties as far as is not provided for by expressly stated exceptions, but rather to refer every commission coming to them and every direct request immediately to the Rhenish-Westphalian Coal Syndicate and to leave the settlement to it. The Rhenish-Westphalian Coal Syndicate has the right, however, to lay claim to the cooperation of any mine owner for the closing of an agreement or for the settlement of differences.

5. The mine owners themselves must fulfill the obligations for shipment entered into by the companies independently before the 1st of March, 1893. This concerns also the relation to the coke syndicate and to the briquet selling union as long as these above-mentioned societies exist; however, the mine owners obligate themselves to give an account of the quantities of coal disposed of in the past month before the 5th of each month to the Rhenish-Westphalian Coal Syndicate until these obligations have been satisfied; these accounts are likewise under the control of the RhenishWestphalian Coal Syndicate, and the quantities therein mentioned are charged to the quota of production assigned to each of the independent mines.

6. Moreover, the mine owners are obligated to hand in the statements demanded by the board of directors in regard to the production of coal and the manufacture of coke and briquettes, as well as in regard to their market and consumption at the intervals designated by the board.

7. It shall be permitted to the board of directors of the Rhenish-Westphalian Coal Syndicate to buy and sell coal, coke, and briquettes outside of the syndicate. SECTION 2.-Division of the total product among the mines joining the syndicate and regulation of the output.

1. As the basis for the division of the total product among the mines, that amount is taken which has been assigned heretofore to each company in the syndicate as its quota.

2. If a mine owner wishes to produce a greater quantity of the total product than has been assigned to him, he must present a request to that effect to the RhenishWestphalian Coal Syndicate 6 months in advance.

3. If in the opinion of the board of directors the market conditions are such that an increase of production may be permitted without a general reduction of the quotas of production assigned to other members of the syndicate, the necessary arrangements are to be made by the commission referred to under C.

4. In deciding applications of this sort made by mining plants which have not yet begun production the commission shall take under consideration their general condition and the technical possibility of an increased production; in the case of all other applications it must further consider the condition of the coal market. Each mine has the right before undertaking the opening of a new shaft to obtain the decision of the commission, and also, if need be, the decision of the council on appeal as to the assignment made to the new works. In cases which are not concerned with new shaft workings the commission is obliged before passing upon similar applications of a later date to take up in any subsequent reconsideration all applications for an increased quota of production previously refused where the technical possibility of production had been determined and the refusal to permit the increase was based solely on market conditions. All such applications are to be settled according to their age and the claims for recognition they may possess as a result of the general condition of the mine making them.

5. Within 14 days from the date it is rendered appeal may be made to the council from the decision of the committee either by the mine owner or by the board of directors of the Rhenish-Westphalian Coal Syndicate, said appeal to be made by means of registered letter. The decision of the council is final.

6. The various quotas of the total amount of production thus determined go into effect on the 1st of April or the 1st of October following. Increases of production shall especially always take effect only on the 1st of April or the 1st of October of each year.

7. Each mine owner is obligated to deliver the quota of the total production assigned to him unless application for a reduction of the amount of his quota has been made, giving 4 weeks' warning. The board of directors is to give permission in such cases. 8. Several mining plants (Schachtanlagen) belonging to one company will be considered as a whole in determining the quotas of production.

9. Associations for the sale of products may claim the same right, but must make application to this effect at the first meeting of the mine owners in each business year.

10. In case the condition of the market necessitates a reduction of the collective production, a proportional per cent of reduction must take place, according to the decision of the meeting of mine owners.

11. Whenever the business is not proportionally divided among the associates, those companies which have been allotted a greater proportion of the amount sold have to pay an indemnity to the Rhenish-Westphalian Coal Syndicate upon the excess of production thus occasioned, whereas those companies which have been assigned a smaller proportion of the amount sold are to receive an indemnity from the Rhenish-Westphalian Coal Syndicate for the underproduction occasioned thereby.

12. The board of directors of the Rhenish-Westphalian Coal Syndicate determines each month the under or over production resulting from the general distribution, reckons according to that the part of distribution coming to each company, and communicates to the companies every month in how great an amount they have exceeded or failed to come up to the production assigned to them. The settling of the cash account, on the other hand, takes place only at the close of the calendar year upon the basis of the year's distribution.

13. Premium and indemnity for each ton must always be equal, the amount of these shall be determined annually by the meeting of mine owners.

14. By decision of the mine owners' meeting the board of directors can be given the right to come to agreement with the associates for the purpose of voluntary reduction of the production.

SECTION 3.-Determination of the price and condition of shipment, as well as comparison of the accounts.

1. The Rhenish-Westphalian Coal Syndicate appears in relation to the mine owners as purchaser in its own interest and submits the purchase price in accordance with the agreements of section 5.

2. The losses which may possibly occur must be borne by the syndicate.

SECTION 4.

The board of directors of the Rhenish-Westphalian Coal Syndicate decides the selling price and the conditions of sale, but must, however, observe the general rules as much as possible, which the council has established to guide them in the determination of price as well as of quality and kinds.

SECTION 5.

1. Instead of the normal price fixed by the council, the board of directors shall establish account prices for all qualities and kinds for each mine in the association after giving the same a hearing. These form the purchase price (compare section 3, division 1) of the associated companies and are to form the basis of the monthly accounts with the same.

2. An alteration of the account prices established in this way, as long as the council maintains its normal prices unaltered, can be undertaken or requested only at the beginning of the calendar year, except in those cases in which alterations in qualities or kinds render such a new ruling necessary.

3. The associated mine owners have the right within 14 days after these account prices have been communicated to them by registered letter to lay a motion for the change of the same before the council. The council then decides and from their decision there is no appeal.

4. Whatever the Rhenish-Westphalian Coal Syndicate succeeds in getting in advance of the account price in a market district in which there is no competition belongs to the mine shipping the goods and is added to the latter's account each month.

5. Each mine owner is solely responsible for the good and proper shipment of the quantity and kind bought by the Rhenish-Westphalian Coal Syndicate; he alone bears all charges resulting from the shipment of a bad or unsatisfactory quality, or from any negligence in filling the order.

The board of directors of the Rhenish-Westphalian Coal Syndicate is to decide whether such neglect has occurred, and must obtain reliable information in every case. Recourse to the council against this decision is permitted within 14 days. The decision of the latter can not be appealed.