406 Jones—Relation of Economic Crises to Legislation. 
So far as the principles governing the general management 
and organization of joint-stock companies permits of being ex¬ 
pressed in a few words, the evils of mismanagement seem to 
originate from a more or less complete abandonment of the 
democratic principle. The concentration of very considerable 
discretionary power in the hands of directors, without an easy 
means of appeal and investigation being open to the stock¬ 
holders, diminishes the feeling of accountability' in the former, 
and hence their general efficiency. Private interests of those in 
control then inevitable assert themselves. Experience seems to 
show that a general active control of a large corporation by 
its stockholders is difficult, both to put in operation, and to 
maintain, and even when secured is only purchased through a 
great loss of flexibility and initiative enterprise to the business. * 1 
Because of the difficulty of controlling a business by means of 
concurrence in an assembly, it has been strongly urged that the 
joint-stock organization should be limited to such businesses as 
require a large proportion of fixed capital, and in which the 
profits do not depend upon speedy adaptation to changing cir¬ 
cumstances, and thus upon more or less speculative ventures. 
The best results are attained when the business, once being 
founded, is in its management largely automatic. 2 
of truth but no material fact, in the knowledge of the promoter, which 
would modify the character of the inducement offered may be omitted.— 
Vice-Chancellor Kindersly, 1 Dr. & Sm., p. 381. Differences between the 
memorandum and the prospectuses is a ground for throwing up shares 
and demanding a return of money. Campbell “Prin. of Mercantile Law,” 
pp. 218-243. 
1 Oechelhauser notices the tendencies to recklessness “JNicht alle 
Direktoren wirthshaften so sparsam undgewissenhaft fur die Actionare, 
als die Compagnons einer Handelsgesellschaft, als der private Gewerb- 
treibende, fur die eigene Tasche. Eine gewisse Atmosphare des Leicht- 
sinns ist in der Leitung der Geschafte durch die Direktoren (in deren 
Hand das Schicksal der Gesellschaften ruht) und in der Controle dersel- 
ben durch die Aufsichtsrathe vielfach unverkennbar. Leider ist dabei 
das Organ der Gesammtheit der Actionare, die General-Versammlung, 
erfahrungsmassig wenig geeignet, kraftig und rechtzeitig einzugreifen.” 
“Die wirthschaftliche Krisis” p. 33. Cf. Neuwirth’s proposed amend¬ 
ments to Austrian law of joint-stock companies. “Speculationskrisis 
von 1873;” p. 335. 
2 Dr. Meyer op. cit. thus explains: “Kurzum, das Anlage-Kapital einer 
