Miscellaneous Legislative Provisions. 
405 
The growth of legislation has, in most countries been toward 
fixing by legislative enactment, the general conditions which 
must control all joint-stock businesses, leaving then the estab¬ 
lishment of particular enterprises to take place by registration 
under provision normal for all. * 1 Such laws may restrict the 
joint-stock form to those businesses in which experience has 
proven it to be useful, and can provide such safe-guards as may 
be found necessary to protect against dishonesty on the part of 
promoters, or in the general conduct of business. As far as 
possible, it is desirable to remove any interest which would arise 
from the mere act of founding a company, unless that interest, 
whatever it may be, is clearly understood and formally stipulated 
between those who organize a company and those who invest 
their money in it. When an organizer is able to contribute 
valuable knowledge by the use of which profitable investments 
may be made, a compensation is of course legitimate, whether 
it is in the form of a single payment from the company at or¬ 
ganization, in money or shares, or is a permanent interest in 
in the business, secured by means of royalties, etc. It is un¬ 
deniable however that the latter course of proceedure has the 
effect to make organization rest more exclusively upon the pros¬ 
pects of a legitimate and continuous trade than does the for¬ 
mer. 2 
mous increase in the speculative grounding of stock companies, and 
even greater greed in swindling the public occurred under the system 
of special concessions in England in 1720, at the time of the “South Sea 
Company” and the “Bubble” mania. Cf. Mackay, “ Popular Delusions,” 
vol. I, pp. 51-62. 
1 Schulze-Delitzsch in the eleventh “Kongress deutscher Volkswirthe,” 
1869. 
2 According to the English “Companies Act 1862 to 1890,” a memoran¬ 
dum must be filed by each company organized, stating its location, 
general purposes, capital and number of shares. Changes in this can 
only be made under the control of the court. Promoters may be sued 
for any profits gained by them in founding the company and not speci¬ 
fied to the stockholders. And to prevent such profits being covered up 
in sub- and supplimentary contracts, promoters must specify in all cir¬ 
culars and prospectuses the names of the parties and the dates of any 
contract entered into by the company or its promoters or trustees. The 
prospectuses must not only contain a strict and scrupulous statement 
