CONCLUSION.

I have endeavored to show that disrespect for law exists. That as a result of disrespect crime has increased in a ratio much greater than the ratio of increase in our population. That a criminal instinct

or passion, is not a natural element in the constitution of man, but is probably the result of environment. That whatever conduces to squalor and destitution, must necessarily contribute to crime; and that so long as the number of our people living in a criminal environment increases, so long will crime correspondingly increase. That the wisdom of our laws respecting the acquisition of property, trade regulations, and the prohibition of crime, judged by their results, may be seriously questioned. I suggest that the time may, and perhaps will come, when our jails, penitentiaries and reformatories, will be looked upon as monuments of the savagery and ignorance of the age in which we lived.

LEGISLATION CONCERNING THE ORGANIZATION

OF CORPORATIONS IN SOUTH

A. E. HITCHCOCK

OF MITCHELL

DAKOTA

The inspiration of this hour is that of ideals. I stand before representatives of that profession in our civilization whose advocates (quoting from high authority), "are the depositaries of the confidence, and the defenders of the lives and liberties, the reputation and fortunes of their fellow citizens, and who form the links of a chain, extending from the highest pinnacle to which a subject can be raised, through the different gradations of the social scale, down to the humblest station."

It has been stated that "twenty-five out of fifty-six signers of the Declaration of Independence, fifty out of fifty-five members of the convention which framed our Federal Constitution, nineteen out of twenty-four presidents, seventeen out of twenty-three vice presidents of the United States, and two hundred and nineteen out of two hundred and thirty-four cabinet officers, were lawyers; that more than twothirds of the United States senators, and about one-half ur reprezentatives in congress, governors of the several states, and the majority of our diplomats and representatives in foreign countries have been lawyers."

Observation of the controlling influences of our state and former territory shows that such honorable mention of our profession is meriti, and that no occasion is more appropriate than the present to consid any subject of legislation which effects the welfare of society.

Probably there is no other live subject before our country for adjustment, which has been more frequently discussed for the past decade than that of corporate control through legislative enactment. Individual political leaders, political parties through their platforms, economic reform associations, academic instructors, bankers, lawyers, and manufacturers, in assembly, all have their say upon the evils and proposed remedies of the phase of our industrial system known as corporative wealth. A lawyer, having to any degree the habit of reflection as to the effect of statutory law upon social welfare, will approach subjects of this class from two standpoints:

1. He may have radical views as to present laws and advocate

fundamental revision upon a theory of government quite diverse from that now existing. To secure legislation through such a channel demands a complete change of public opinion, by means of which, entirely new laws may be exacted, and constitutions amended to enable such innovations. This leads into the field of political agitation, or purely scientific economic discussion, and I take it, would be foreign to the things permitted by the courtesy of this association.

2. The other view recognizes the order, sometimes just, other times unjust, of society maintained through established laws; that radical changes are brought about gradually through long periods of time; that much good can be accomplished by adopting the program of an opportunist, that is, to aid and accept any legislation tending to improve present conditions even though ideal laws cannot be immediately secured. An opportunist may be a radical thinker assisting to propagate a more just system of social order and in this work associate with a minority and at the same time co-operate with the majority in remedial legislation. For the purpose of this brief discussion I shall classify myself with the opportunist.

We are at this time probably at the height of a wave period, growing gradually in volume during the past twenty-five years, in which a great number of enterprises of commercial, mining, manufacturing or speculative nature have been placed in the form of corporations. An examination of the records of our secretary of state, for the past five years, will disclose a very rapid increase in this form of business organization.

It would be an interesting feature of this discussion to take up in detail the various laws of our sister states which permit the granting of corporation charters and trace the cause of non-resident concerns, turning toward this state for a charter by which our state treasury is enriched by a few thousand dollars each year from such organizations. in cases where business is to be wholly transacted without the state. But these comparisons would occupy much time. The cause of our prosperity from this source may be suggested by recalling the form of advertisements to be read in the city newspapers not many years ago, something like this: "Divorces promptly secured, with slight expense and without publicity." South Dakota is not without competition in this field. From the circulars which reach my table I am informed that Arizona, West Virginia and some others are bidding for certificate fees.

It was not many years ago that the word corporation represented the idea of magnitude in commercial concerns. But the organizations have become so common that in our own state every county has its small sheep ranch covering a few tracts of land, governed by its board of

directors and attesting its contract by the use of a corporate seal. The average country merchant who now deals in ironware, food, boots and shoes, clothing and the numerous articles of every day home consumption and use, in obtaining his supplies, transacts business with corporations in the larger number of cases, when formerly his list of wholesale dealers was comprised chiefly of individuals and partnerships. Not only has this form of business organization been imitated throughout the country by small concerns, but what a few years ago were termed "trusts," that is a combination of coroporations, and also called "combines,'' have reorganized into the one corporation, simple in form but ponderous in capital.

This new alignment of the trade and commerce of the entire country has given the same comparative standing of the small concern with its $5,000 capital to the extensive plant with its millions of stock that existed thirty years ago between the cross-road grocery store having its Nasby in one corner and the then mammoth store of A. T. Stewart & Co. of New York City. It is a comparison of capital, business capacity, opportunity by location, the consequent profits and honest and dishonest methods.

President Roosevelt's recent message to congress merely recognizes this present condition when it states: "This is an age of combination, and any effort to prevent all combinations, will be not only useless, but in the end vicious, because of the contempt for law which the failure to enforce law inevitably produces. The corporation has come to stay."

By reason of the corporation becoming commonplace and touching the business sphere of all citizens, it is a moral obligation, resting upon state legislatures to enact such reasonable regulations and restrictions as will protect the average citizen from the evils growing out of the change from individual to corporate control of commercial transactions.

The discussion of the question from a national standpoint deals particularly with interstate commerce, and yet, it will be readily observed that there is common ground in the study of the larger subject and the one before us today. The evils alleged to be incident to the general management of large organization of interstate application, exist alike in the smaller concerns, the transactions of which are of more local extent and I find that the discussion of the two questions run along similar lines.

This change of our commercial life has a strong tendency to also change and destroy one of the ideal conditions of the fundamental institutions of the nation. A condition under which private property is largely owned by individuals conduces to the highest welfare of society. This element of American life has been one of the chief causes

of the nation's development and prosperity. Any policy or custom of society which tends to place property under the management of a few tends to lessen the independence and thift of the individual. From the start our country has been one of small holdings in private property in all forms of trade and industries. This continually increasing change from private to corporate control has gradually brought about a decided change in the ownership of property. The day of small industrial concerns is rapidly passing. In many sections the agricultural lands are in the hands of a few. Mining, manufacturing, railroads, handling of grain, coal, lumber and agricultural tools, the distribution of merchandise is conducted chiefly by large concerns. The employer class is increasing in wealth but diminishing in number. The employees class is rapidly increasing in number. While the element of increasing immigration from foreign countries has much to do with this condition, the enlargement of corporate influence is an important factor.

Among other wise provisions placed in our state constitution is Section XVII which reads as follows: "No corporation shall engage in any business other than that expressly authorized in its charter, nor shall it take or hold any real estate except such as may be necessary and proper for its legitimate business." No doubt it was the original intent of this section to restrict the ownership in lands by corporations.

This question has been raised in two cases brought to the attention of our supreme court: Gilbert vs. Hole, 2 S. D., 167; State Ex Rel Gilbert vs. Union Investment company, 7 S. D., 61. It was held not necessary to place a construction upon this provision under these decisions, and the question is still unsettled in the minds of many as to the real significance of the constitutional provision. Heretofore the conditions of our state have been such that the application of this constitutional enactment apparently has not been of material importance to the state at large. Under the extensive new settlement of our lands in that great expanse west of the Missouri river there appears to be a tendency for corporations to gather large tracts under one management. If conditions are favorable to this tendency, unless restricted by legislation, there is a prospect that, in the future, considerable portions of this part of our state will be controlled and owned by corporations. A decided majority of our citizens would desire to place upon this provision the construction that corporations are prohibited from entering a business in buying and selling real property for the purpose of speculation. In order to accomplish this result Section 407 of the Civil Code should be amended so as to clearly indicate the purposes for which corporations may be created with reference to this proposition and also additional legislation enacted providing for a remedial penalty in case the laws were violated.