404 Jones—Relation of Economic Crises to Legislation. 
The attention of economists and statesmen was especially 
drawn to the abuses of joint-stock organization arising in Ger¬ 
many and Austria at the close of the war of 1870-71,. and culmi¬ 
nating in the Vienna crash of 1873. In Germany, at the middle 
of 1870, there were 410 join-tstock companies with a capital of 
3,078 million marks. Four and one-half years from that time, 
at the close of 1874, the number had been increased by 857 new 
companies with a capital of 4,290 million marks. That the 
growth was abnormal was amply shown by the insolvencies of 
the following years. * 1 One of the chief results of this crisis was 
to show the necessity of a reform in the laws controlling the 
conditions of joint-stock business. 2 The system in existence, 
of granting charters by special legislative enactments, proved 
to be inadequate, open to favoritism, and without proper uni¬ 
formity in its operation. 3 
Thus numerous enterprises were permitted which had no other 
aim than the speculative one of throwing a quantity of stock 
upon the market for sale. Such companies were abandoned by 
their promoters who took good care to sever their financial con¬ 
nection with them at the most opportune moment. 4 
were merely transferred to the sphere of private actions and relations. 
Cf. Keport of Eleventh “Kongress deutscher Volkswirthe,” 1869. 
1 Neumann-Spallart, “Uebersichten der Weltwirthsehaften,” 1879, p. 
16. Cf. Herkner, op. cit. 
2 Neuwirth, “Speculationskrisis von 1873.” Schaffle, “Zeitschrift fur 
die gesammte Staatswissenschaft,” Bd. 30, 1871, p. 2. Oechelhauser in 
“Die Wirthschaftliche Krises,” gives three reasons for the overtrading 
of 1873 The causes he finds are: 1, “in dem Missbrauch der neuen 
Actiengesetzgebung;” 2, “in der bisherigen Banknoten-Politik,” and 3, 
“in den sozialen Bewegungen der Neuzeit.” A new corporation law was 
passed in Germany June 28th, 1884. 
3 Upon this system Dr. Alexander Meyer wrote: “Das Erforderniss 
staatlicher Konzession zur Bildung einer Aktien-Gesellschaft is zu ver- 
werfen, weil der Staat weder die Bediirfnissfrage, noch die Vertrauens- 
frage in ausreichender Weise zu priifen vermag. Soweit die gesetz- 
lichen Normativbedingungen nicht ausreichen, ist die Zuruckfuhrung 
der Bildung von Aktien-Gesellschaften auf das wirthschaftlich zulas- 
sige Maass lediglich der wachsenden wirthschaftlichen Einsicht anzu- 
vertrauen.” “Deutsche Vierteljahrsschrift,” 1869, vol. 3 for that year, 
pp. 116-117. 
4 Oechelhauser, op. cit., p. 34. It will be remembered that an enor- 
