separate constituent companies deals largely with outsiders, this perfect union in management enables them to be secure at all times as regards the supply of raw material on the one hand, and a proper sale of the raw product on the other, advantages that can by no means be lost sight of.

Some other companies without any formal organization are managed in largely the same way. For example, the American Tin Plate Company, the National Steel Company, and the American Steel Hoop Company, while entirely independent in their organization, have nevertheless to a considerable extent the same men as large stockholders and as directors. While each one can thus work independently, and while legally each one does so work, there is to a considerable extent the same knowledge on the part of each of the business of the other and the same harmonious working that is found among the constituent companies of the Federal Steel Company, of the Distilling Company of America, and of others that have united through the holding of the stock of the constituent companies by one parent company.

Whatever the form of organization, however,

the one essential requirement is efficiency and an opportunity for saving any of the waste that might come if the different corporations or companies were working independently. It is desirable, of course, from the one point of view that this efficiency be used to serve the public in the way of better goods and lower prices. On the other hand, from the standpoint of the combination itself, the efficiency points simply to the cheaper cost of production and the more efficient control of the process of manufacture, whereas the service to the public in the way of cheaper prices is of course a secondary consideration, and is sometimes even contrary to the wish of the corporation.

The form of organization will naturally determine to a considerable extent the method of management of one of these combinations. Ordinarily there is no difference in appearance between the management of a large corporation called a Trust and any ordinary corporation. Any student of corporation law, upon reading the charter and by-laws, can readily tell from the power that is put into the hands of the directors whether they are in a position to manage the corporation in their own interests as against

those of the stockholders, or whether the stockholders are given power of control.

If one may judge from the fluctuations of the shares of several of these larger corporations on the Stock Exchange, it would seem that the power at any rate is given to the directors so to manipulate the stock that they as individuals, by buying and selling at suitable times, may make large individual profits at the expense of the majority of the stockholders—a most dangerous power.

In the first place, the stockholders in many cases are prevented by the by-laws from having access to the books of the corporations, except under the most extreme circumstances. The directors make no reports to the stockholders that give them any clear insight into the methods of management of the business, and the public who may be intending to invest in the stock have no means of judging what the financial condition of the corporation is. When the charter and by-laws thus enable a board of directors to conceal absolutely from the stockholders the condition of the business, one may at least be justified in the opinion that if the affairs of the corporation are not managed for

speculative purposes by the directors, it is because they are men above temptation of that kind.

In some instances, also, the Boards of Directors are so classified and the terms of their office so arranged that those who are first put into control as directors by the organizers of the company may keep that control for a period of years without any possibility of being ousted by the shareholders, unless their methods of management are so palpably fraudulent that the courts will order their removal. Under those circumstances the directors and officers are in a position of strong temptation to manage business in their own interests with comparatively little danger of being found out for a considerable length of time. Here, again, an investor who sees in the articles of incorporation and by-laws provisions which deprive him and his fellow shareholders of all effective power over the directors for a period of years, buys the stock knowing his own risk.

It is not intended, of course, to overlook the fact that too great power given to the shareholders, or too close a knowledge of the interior management of a corporation by the share

holders, may easily result in injury to the interests of the great majority of them. It is not desirable for a corporation to have its competitors know the details of its management. If any shareholder were at liberty to examine the books of the corporation at any time, or if the directors were compelled to give to the shareholders the privilege of examining closely the details of their management, it would be a comparatively easy matter for the manager of a rival company to buy a few shares of stock in order that the lawful and proper secrets of the corporation might become his. It would also be possible for an individual shareholder practically to levy a blackmail upon the corporation, which it will promptly, however unwillingly, pay, in order to prevent proper secrets of management from

becoming public property. While one may readily grant that these dangers to the real welfare of a corporation exist if too great power is given to the shareholder, one must not overlook the fact that the other extreme is no less dangerous.

It would be very desirable if more careful study were made of the forms of organization, as shown in the charter and by-laws of corpo