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Page 28
How many of the eighty-eight thousand stockholders in the Pennsylvania
Railroad, for instance, have ever attended a meeting? For that matter, how
many of them have ever studied the report of the railroad? Not one in ten
could spare the time to read it, perhaps not one in a hundred could master
it. The report may be read in a few hours; it would take as many months,
if not years to verify it. Very nearly half these stockholders are women;
the average holding is 120 shares, (par $50), and one-sixth of the
stockholders own less than 10 shares each. Ten thousand of them are
abroad. Much stock is held by trustees, whose beneficiaries are probably
very numerous, and totally incompetent to understand railroad management.
There are also more than twenty thousand holders of stock in subsidiary
corporations controlled by the Pennsylvania Railroad. No one can tell the
number of bondholders; perhaps there are as many as there are employees,
making an aggregate of almost half a million.
* * * * *
Sometimes trustees abuse their office; but on the whole they have done
pretty well, and whether they have or not, there is no other way in which
large capitals can be managed. All civilization rests on confidence. Such
a vast fabric could not be built on confidence unless confidence was
deserved. As a matter of fact, a man invests his money just as he invests
in a surgeon. He does not think of directing the surgeon how to operate.
If the operation does not succeed, he tries another surgeon next time--if
there is a next time.
Of course all this applies chiefly to the large corporations. There are
many thousands of small ones, having few stockholders, who reside where
the business is established. These stockholders know more or less of the
details of the business; they can judge to some extent how it is carried
on, they are often acquainted with the managers, or are the managers
themselves, and if not, they are able sometimes to combine and change the
management. And I will anticipate a little and say here that the property
of such a corporation located in a small town is often to some extent not
politically disfranchised, because the people of the town understand that
they are directly interested in the prosperity of the business. But it
seems almost impossible for the stockholders to change the management of a
large corporation. It has been done a few times. Mr. Harriman notoriously
did it by using the money of one concern to buy the stock of another, and
that is almost the only way in which it has been done. No doubt there has
been an immense deal of combination which has resulted in change of
management, but this has not been because the stockholders combined to
oust their trustees, but because they thought they saw a good chance to
sell their stock to those who would pay high for the control, or to
participate in these combinations. There have been a good many cases where
an enterprising speculator has managed to get hold of a majority of the
stock and change the control, and powerful bankers can sometimes get
proxies enough to put a stop to bad management; but spontaneous movements
of this kind on the part of the mass of the stockholders are extremely
rare.
Beyond dispute then, the great mass of wealth held by corporations is
almost wholly under the control of their managers, and not the mass of the
owners. Mr. Hill has recently testified that he never knew a stockholder
to attend a meeting except to make trouble; by which he perhaps meant that
when a single stockholder appeared, it was to get paid for not making
trouble.
* * * * *
It need hardly be said that no such thing as legitimate representation of
corporate wealth is known in our politics, and the representation of
individual wealth is very limited. The theory of government by manhood
suffrage, so far as there is any theory, is now entirely personal. In
early times the freemen of the town, or little commune, met and legislated
according to their needs. To be a freeman one had to own property; to
"have a stake in the country." Nowadays nearly all the men who have no
property can vote, and some that have property cannot. In England, they
are doing away with "plural voters." Heretofore it was thought just, when
a man owned land in more than one place, that he should have his say in
the government of all; but this is now forbidden. The right was never
recognized in this country, partly because formerly men seldom owned
property in two places, but as transportation improved the conditions
changed. The "commuters" are legion. Their business and their capital are
under one jurisdiction and their dwellings and families under another; but
they can vote in only one. Many thousands of men own houses in both city
and country. They could help in the government of both, but are
disfranchised in one or the other. Under our complicated systems of
registration, they are often disfranchised at both.
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