3 24 THE POPULAR SCIENCE MONTHLY, 



example of this. Its stringent requirements do not hamper the 

 companies of that State, but are, on the other hand, an introduc- 

 tion and a guarantee that distinctly aid the Massachusetts com- 

 panies when they carry their operations into other common- 

 wealths. The same influence is apparently at work in the case of 

 mortgage investment companies ; a few of the "best established 

 among them priding themselves on complete and ostentatious 

 compliance with the rigid but wise laws regarding publicity of 

 accounts. 



The second effect of the diverse rules regarding corporations 

 in the different States operates in an exactly opposite direction. 

 Since it is quite well established that a corporation may incor- 

 porate in one State and do all its business in another or others, 

 there is a tendency for dishonest companies to take out charters 

 in that State which bothers them with the fewest restrictions. A 

 charter granted by the Legislature of Pennsylvania incorporating 

 a company to do business in any State except Pennsylvania was 

 held to be void; the Kansas court holding that no interstate 

 comity permitted one commonwealth "to spawn corporations" 

 upon other States which it would not allow to operate within its 

 own borders. But the same thing is accomplished if a State, by 

 a general act, permits companies to organize without specifying 

 the place of business. Under some laws one corporation is not 

 allowed to hold the stock of another ; but, on the other hand, there 

 are States that will willingly incorporate a company for the ex- 

 press purpose of holding the stocks of other companies. This is 

 a very convenient fact when a " trust " is to be formed. A State 

 noted for the laxity of its laws in this regard can serve as the 

 birthplace of any number of companies. At present, according 

 to Mr. W. W. Cook, " the snug harbor of roaming and piratical 

 corporations is the little State of West Virginia. Under its laws 

 a corporation may be created for any purpose for which a part- 

 nership may be formed, except speculation in land ; the capital 

 stock may be five millions of dollars or less ; there is no tax ex- 

 cept fifty dollars annually ; residents or non-residents, aliens or 

 citizens, may be directors; the principal place of business and 

 directors' or stockholders' meetings may be in or out of the State ; 

 there is no liability of directors or stockholders except on unpaid 

 subscriptions, and no public reports are required. . . . The incor- 

 poration of companies for the purpose of enabling them to do all 

 their business in other States seems to be one of the chief indus- 

 tries of West Virginia." States can only guard themselves against 

 the invasion of hordes of these irresponsible artificial persons by 

 strict statutory regulation of " foreign corporations," but for the 

 most part they have not taken any general precautions of this 

 character. 



