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On the plausible ground of excessive charges and enormous profits from an illegitimate monopoly, the then Mayor of Boston attacked, in 1893, the Bay State Gas Trust before the legislature and the gas commission, simultaneously, charging besides excessive prices, violation, or evasion of the law, in virtually consolidating the companies, and especially in issuing the four and a half million income bond for little or no consideration.

To compel favorable action on his petition by the legislature and the commission, the mayor, by a shrewd interpretation of the complex statutory powers of the municipality— an interpretation which technicalities have prevented the courts from passing upon-permitted a suburban company, the Brookline, then under control of the Standard Oil interests, to parallel all the gas pipes in Boston at its discretion. The Brookline Company agreed to furnish gas for both public and private use at prices much below those charged by the Bay State companies, and presumably much below actual cost to the Brookline Company itself.

This was a telling stroke, one that could not be successfully resisted by any department of government. The result of this attack was that the commission ordered a large reduction in the price of gas furnished by the Addicks' companies, while the legislature, under threat of forfeiture, squeezed $3,000,000 out of the capitalization of the Bay State Company of Massachusetts-causing the cancellation of the $4,500,000 obligation, or bond. Could the reduction of price and of capitalization have been effected without admitting the Brookline Company to Boston, the results might have been wholesome. As soon after the admission of the Brookline Company to Boston (February 27, 1893) as pipes could be laid, the first actual competition between gas companies in Boston began. This competition went on till May, 1896, when the Brookline Company had nearly two hundred miles of pipes in the best portions of Boston. The contest more than destroyed all dividends of the Brookline Company and

required the holders of the equity in the Bay State companies to raise large sums from outside sources to maintain the trust.

The agitation and investigations of 1893 convinced every one that the possibility of issuing the $4,500,000 obligation had opened the way to manipulate the Boston Company. Therefore, the legislature was not satisfied with merely destroying that obligation, but wished, also, to make such issues impossible in the future. Until the entrance of Mr. Addicks to the Boston field, it was supposed that the statutes against stock watering effectively prevented such issues. By two acts of 1894, known as the anti-stock-watering acts, it is made illegal for any gas company to issue any stocks or bonds for any purpose except on conditions and for purposes approved by the commission, after a public hearing. While there are some grave dangers in these acts, they are, probably, taken all in all, the two most effective acts ever passed in this country to check corporate abuses. They, perhaps, place a greater burden on the commission, both as to work and discretion, than our government organs have usually proved themselves able to bear.

The commission has from its origin had complete powers of inspection over all the companies in the state-powers that can be delegated to experts. It also compels companies to keep their books and make their reports on a uniform system prescribed by the board. It has also had complete power over the price and quality of gas, save that initiative in regard to price and quality rests exclusively with consumers or the local public authorities.

As the desire to introduce a new process was the prime motive of Mr. Addicks in going to Boston in 1884, so in 1896, the possessors of patents for the so-called coke-oven process entered upon a remarkable struggle for admission to the Boston gas field. The appeal was made direct to the legislature for privileges by special act and for permission to consolidate all the existing companies and to contract with them at will for the sale of gas to them.

If the campaign of Mr. Addicks, from 1884 to 1893, changed the whole character of the Massachusetts Legislature, the appeal of Mr. H. M. Whitney and his friends for an opening for coke-oven gas in 1896 revolutionized legislative methods. This struggle took place during the most bitter competitive strife of the existing companies.

In spite of the advice of the gas commission (which had long before come to consider itself the expert arm of the legislature) and in spite of the united opposition of all the old companies, the charter of the Massachusetts Pipe Line Company was granted to the promoters of coke-oven gas in June, 1896.

Although it was impossible to prevent the granting of this charter, the opponents of the measure succeeded in amending the bill in such a manner as to make it seem inexpedient for the incorporators to undertake directly either consolidation or stock watering under it. Presumably Mr. Whitney believed that the new processes would work a genuine progress in the manufacture and sale of gas, but the facts show that his faith did not extend to the point of making him willing to undertake the experiment with his own capital. For, whatever the outcome may be, the venture was and is a hazardous experiment. Furthermore, with the limitation of dividend on actual investment to 10 per cent the possible gains were not a fair compensation for the risk involved. The Massachusetts Pipe Line Company was, much against the will of its promoters, placed under the jurisdiction of the gas commission, and especially under the anti-stock-watering acts of 1894.

It seemed for the moment as if the laws of Massachusetts against consolidation of corporations, leasing or selling of franchises and stock-watering had put a stop to industrial experiment with other people's money, and as if the world would have to wait longer for coke-oven gas. The owners of the new charter did not organize the company for more than a year. Meantime, they combined their forces with the Standard Oil holdings in the Brookline Company.

In May, 1896, the competition between the active companies ceased, by an agreement of the Addicks interest to buy out the opposition. But upon the failure of Mr. Addicks to raise the purchase money he was obliged to permit the management of all the Bay State companies to pass to his great rival in November, 1896. Those in control of the Brookline Company had already bought substantially all the shares of the Dorchester and Jamaica Plain companies.

These united forces then worked out what seems to me the most unique scheme to evade the corporation laws of a state, which can be found in all industrial history. They organized the New England Gas and Coke Company, a voluntary association. The articles of association embody all the essential provisions of limited liability found in the corporation laws. The association thus has the advantages of a corporation and escapes the dangers of partnership liability, the exclusive management of the property being in the hands of trustees. The ownership is represented by shares of the nominal value of $100 each. These shares were authorized at once to the nominal amount of $17,500,000 and a loan of $17,500,000 was also authorized. Of course, there can be no limit to the capitalization of such a voluntary association in the shape of either bonds or shares, except the refusal of the public to advance money on them. Furthermore, the financial and industrial management of the enterprise are both placed substantially outside of the supervision or control of the public authority until legislation is radically changed. For tradition and legislation have been directed against corporations on the ground that they are artificial bodies, with special privileges, created for the public good, and therefore subject to regulation in the public interest. But let us return to the financial operations of the Coke1 Company. With the proceeds of the $17,500,000 loan,'

1 I shall for the sake of brevity refer to this voluntary organization, The New England Gas and Coke Company, simply as the "Coke Company."

2 $3,500,000 par value of this loan was reserved to raise working capital, and $14,000,000 par value used for the purposes indicated here.

substantially all the stock ($2,000,000) of the Brookline Company, the Dorchester Company ($519,000), Jamaica Plain Company ($250,000), and the Massachusetts Pipe Line Company ($1,000,000), $1,615,000 of the debt of the Brookline Company and $1,000,000 (par value) of Boston United Gas bonds were purchased.

In addition to this, from the same source, the owners bought the land for and built the mammoth coke and gas plant at Everett. All these stocks ($3,505,800 par value and bonds ($2,615,000 par value), and all the manufacturing plant and other property of the association, were placed in trust to secure the loan of $17,500,000 from which the purchase money for all the property put in trust was raised.

The Coke Company not being a corporation, and being virtually exempt from supervision, nobody but the trustees of the association know how much investment the plant represents. Interested parties wish the public to believe that the combined plants of the Pipe Line and Coke companies cost $5,000,000. The Pipe Line Company is merely a gobetween, being neither a manufacturer of gas nor a seller of gas to consumers. It merely furnishes a means of legal connection between the manufacturing plant of the Coke Company, which has no franchise or license, and the holders of the gas companies. On the one hand, the Coke Company makes contracts for the sale of gas to the Pipe Line Company, which is all owned by it; on the other hand, the Pipe Line Company sells gas to the old gas companies controlled by the same parties that control both the Coke Company and the Pipe Line Company. These old companies which are corporations subject to supervision become simply distributers.

The Coke Company is actually delivering gas under these peculiar circumstances-the same persons representing both sides in each of these contracts.

This statement shows how difficult control is, and that the theory of control breaks down at a point to which

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