individuals. And the exercise of the police power of the State shall never be abridged or so construed as to permit corporations to conduct their business in such a manner as to infringe upon the equal right of individuals or the general well being of the State.

The section was agreed to.

aware that either of these modes has been very unsatisfactory, but I am inclined to think that the last named is far the most fair, and is more generally accepted by our Legislature in latter times. Is there any good reason why we should not adhere to it? Whether they be the owners of a railroad, or a canal, or a bank, or any

SECTION 4. In all elections for the managing officers of a corporation each member or shareholder shall have as many votes as he has shares, multiplied by the number of officers to be elected, and he may cast the whole number of his votes for one candidale or distribute them upon two or more candidates as he may prefer.

Mr. ANDREW REED. I move to amend, by striking out all after the word "shares," in the third line.

Mr. DARLINGTON. I do not think we are voting understandingly on this important proposition. Are we prepared to adopt the principle that in the election of the officers of a corporation one man shall cast the whole of the votes to which his stock entitles him for a single individual, or shall he vote for the whole body that composes the board of direction? This applies to all corporations, if I understand it, whether it be a church corporation, a cemetery, a bank, a railroad, or any other. Now it is, I think, very well understood in the community everywhere that the fairest mode of representation in all matters relating to corporations which are styled money corporations is to allow the proprietors, the owners, to vote in proportion to the interest they possess. And if there be two or a dozen directors or managers to be elected, the fairest way is to allow every man to vote for the whole number of officers to be elected the number of votes to which his interest in the institution entitles him. I am very well aware that it has been a general rule in all corporations to restrict the power of the large stockholders by graduating the votes in proportion to the number of shares held up to a certain number, so that no man, be his interest what it might, should be allowed to have more than a certain number of votes. In latter times, however, a different system seems to have prevailed to a very large extent. Under many charters the stockholders are entitled to vote for the direction as many votes as they have shares, thus giving a fair representation in proportion to the amount of capital involved. I am not

largest interest in their good management ought to have the largest say in the choice of those who are to manage them, in my judgment.

I do not like this notion of introducing the minority principle, or worse, the cumulative principle, in the election of officers of every corporation, because it puts it in the power of any one man who chooses to cast all the votes he may be entitled to in favor of one individual, and thus, in a church corporation, if you please, where a number of trustees are to be elected, one man having an axe to grind, would cast all his votes in favor of a single individual, to carry in, possibly, an obnoxious man into the direction; and it might occur in every other kind of corporation. Now, why should this be? Why should one man in a corporation, having ten votes, be allowed to cast those ten votes for one individual, when I can conscientiously cast but one vote against him? He thus has a power of nine over me. He is entitled to the same number of votes that I am, ten votes, if you please. He votes ten times for one man, while I want other good men there and can vote only once for that man. A combination of men could easily be formed for the worst purposes in any corporation to carry in an individual who might have an object in view detrimental to the interests of the whole body.

I think it is unwise to introduce into the Constitution any scheme of this kind which would tie the hands of the Legislature in the organization of all manner of corporations. It would be far better to allow the Legislature in organizing a corporation, of whatever character, to prescribe the mode which those getting it up should think best for its management, and it might be varied, so that if any gentleman wishes the corporation of a church, or anything else in a particular way, he can have it so, and he may have it without any power to change its members or officers at all. He may make it like this Convention if he chooses, a perpetual corporation, with power to fill all vacancies. Nobody is concerned but the members of

the corporation, the church itself. Let the Legislature do for a community what they want done if there be no harm in it, and I do not see any. I therefore am opposed to prescribing in the fundamental law that the hands of the Legislature shall be tied in that manner, so that they shall make it a provisison in every charter, of every kind, that one man shall have the right to cast all his votes for one individual if he chooses, and not distribute them over all the offices. I am opposed to it.

Mr. ANDREW REED. Having made this motion to strike out all after the word "shares," it is proper that I should state my reason for so doing. As has been said by the delegate from Chester who has just taken his seat, this section, will prevent the Legislature, in the case of all companies now formed or hereafter created, from providing that they may, if they desire, so constitute themselves as to require a majority of all the shares, or twothirds or three-fifths or any proportion whatever to elect all their officers, but the Legislature must prescribe that the onetwelfth of the stockholders of a company to be formed can place a man in that corporation who shall be a spy to look at and see the manner in which it does its business. Sir, the officers or directors of any corporation should be those who have the greatest interest in it. They are the most affected by its management, and they will conduct the business of the corporation to the best interests of the stockholders or those who should be benefited thereby.

Now, look at the effect that this section will have. Take the case of a bank or a railroad, and suppose there is a rival corporation with opposing interests. All such corporation has to do is to go into the market and buy one-twelfth of the shares of that company, and they can place a person in the board of directors, in spite of the eleven-twelfths of the stockholders, who will be there as a spy to give information to such rival interest. In the election of twelve directors of a bank, one-twelfth of the stockholders of that bank can elect as a director a man who goes there to let out the secrets or the policy of that bank to those who are unfriendly to it.

For these reasons I am opposed to this provision. I agree with the argument of the gentleman from Chester, that it will prohibit men who do not desire such a regulation as this from forming corporations. Under this section, even if every

stockholder in a corporation was opposed to this arrangement, they would be unable to organize a company unless the charter contained this provision. I trust, therefore, that the latter portion of this section will be stricken out, and let every share have a vote.

Mr. BUCKALEW. Mr. President: During the last three years in which substantially this provision has been in force as to several thousand incorporated companies in Illinois, from railroads down to gas companies, not a single word of complaint, so far as I know, has been heard of its practical operation. Even in the Legislature of that State last winter when the constitutional arrangement with reference to the election of members of the lower House of the Legislature was discussed, so far as I understand not a member referred in the way of complaint to the arrangement as to corporate bodies.

The gentleman from Mifflin says that this takes away the power from the Legislature. Yes, sir, it does take away the power from the Legislature to give undue power to dominating men or cliques who undertake to run corporations in their own special interests and to the disadvantage of the stockholders. It is a check upon the Fisks and the Vanderbilts of the country in manipulating Legislatures to the injury of the general stockholders of a company; and that is all the effect that it has. The Legislature ought not to have this subject in charge. It ought to be settled as one of the fundamental arrangements concerning these corporate bodies.

Then, again, the majority of the stock will control at every election and will elect a majority of the board of management. The apprehension that the gentleman from Philadelphia (Mr. Cuyler) expressed on a former occasion was quite unfounded. It requires now a combination of a majority of the stock to elect a board of directors in any of these companies, and it will require a combination of the majority of the stock to elect under the new plan. It makes no difference at all with regard to the power of the persons holding a majority of the stock to control the corporation.

But the gentleman says that a hostile interest, some hostile company will, under some extraordinary state of circumstances, get control of some stock and will elect a director in one of these companies to watch its proceedings. All I have to say about that is that the corporation thus

operated upon can return the compliment; can choose a director in the corporation that wants to watch them and return the watching; and I take it for granted that the public interests will not suffer at all. These bodies are all of a quasi public char acter, and the more of reasonable publicity that attends upon their proceedings, the better for the general and common interests of all the people of the State.

I shall refrain from entering into the general argument which was submitted on a former occasion when the Convention in committee of the whole, after debate, agreed to this proposition. All that I have said now is with reference to the particular objection, freshly presented, leaving the former irresistible and overwhelming argument in favor of this arrangement as to corporate bodies to stand as it was left when the Convention agreed to this section. All I have to say, in conclusion, is that this section will be worth more to prevent abuses and wrongs in corporate management and to protect the people of the State generally against corporate abuses than all the other sections in the railroad article and in this corporation article put together; while at the same time it will not embarrass any corporation in the State in the performance of its proper functions. It does not impair the powers of any corporation. It does not limit, contract, or hamper them in the honest and proper pursuit of any of the purposes for which they were incorporated. In this respect it differs from the other provisions which we have in this article and in the article on railroads, because those do constrict and limit the powers of corporate bodies, and hence may in some sense be offensive to them, and so far as they do so restrict them may be objected to by those corpo

rations for one reason or another. But

this section does not effect the general

powers of any corporate body; it does not limit any one in the performance of its corporate duties; it is simply an arrangement by which the corporators themselves who have money invested in these corporations shall be fairly represented in their management to protect their own interests, and at the same time to prevent the corporation from doing injury to the people. The PRESIDENT pro tem. The question is on the amendment of the delegate from Mifflin (Mr. Andrew Reed.)

Mr. T. H. B. PATTERSON. Before the yeas and nays are called I should like to remind delegates simply of one matter, and that is that this section embodies one of the restrictions and one of the provisions which the late delegate from Philadelphia, (Mr. Gowen,) as the representative of corporations, said was a useful provision, and one that he recommended should be adopted by this Convention in one of his arguments on the railroad article.

Mr. BUCKALEW. I hope the friends of the section will vote "nay."

Mr. BIGLER. I hope the gentleman will withdraw the motion to strike out. It is simply the question of the whole section. If the amendment prevails, what is left of the section is of no consequence.

The PRESIDENT pro tem. The Clerk will call the names of members on the amendment of the delegate from Mifflin (Mr. Andrew Reed.)

The yeas and nays were taken, and resulted as follows:

YEAS.

Messrs. Addicks, Barclay, Bowman, Boyd, Craig, Cuyler, Darlington, Edwards, Ewing, Fell, Finney, Knight, Lamberton, Lawrence, MacConnell, MacVeagh, M'Culloch, Mann, Mantor, Minor, Palmer, H. W., Patterson, D. W., Porter, Purviance, John N., Read, John R., Reed, Andrew, Reynolds, Runk, Stanton, Struthers, Turrell, Walker, Wetherill, John Price and White, David N.-34.

NAYS.

Messrs. Achenbach, Alricks, Baer, Baily, (Perry,) Bailey, (Huntingdon,) A., Brown, Buckalew, Calvin, Campbell, Bardsley, Biddle, Bigler, Black, Charles Carey, Carter, Cassidy, Church, Clark,

Cochran, Corbett, Corson, Cronmiller, Curry, Davis, De France, Dodd, Elliott, Ellis, Fulton, Gilpin, Guthrie, Hall, Hanna, Hay, Hemphill, Howard, Hunsicker, Palmer, G. W., Patterson, T. H. B., PatKaine, Lilly, Littleton, M'Clean, Mott, ton, Purman, Purviance, Samuel A., Ross, Russell, Simpson, Smith, H. G., Smith, Henry W., Temple, Van Reed, Wherry, White, Harry, Woodward, Worrell and Wright-59.

So the amendment was rejected. ABSENT.-Messrs. Ainey, Andrews,

Mr. HUNSICKER.

I second the call.

Beebe, Black, J. S., Brodhead, Broomall, Bullitt, Collins, Curtin, Dallas, Dunning,

Funck, Gibson, Green, Harvey, Hazzard, Heverin, Horton, Landis, Lear, Long, M'Camant, M'Murray, Metzger, Mitchell, Newlin, Niles, Parsons, Pughe, Rooke, Sharpe, Smith, Wm. H., Stewart, Wetherill, J. M., White, J. W. F. and Meredith, President-40.

The PRESIDENT pro tem. The question recurs on the section.

Mr. LEAR. Mr. President: I move to amend the section, by striking out the words after "shareholder," in the second line, to the word “may,” in the third line The PRESIDENT pro tem. The words proposed to be stricken out will be read. The CLERK. The words proposed to be stricken out are "shall have as many votes as he has shares, multiplied by the number of officers to be elected, and he;" so as to make the section read:

"In all elections for the managing officers of a corporation each member or shareholder may cast the whole number of his votes for one candidate or distribute them upon two or more candidates as he may prefer."

Mr. LEAR. The object of that is to give the stockholders of corporations the right to vote just as many shares as they vote now by the terms of their several acts of incorporation, reserving the power to cumulate as is provided for in this section. It is for the purpose of providing for those corporations which diminish the power of voting for the number of shares which the stockholders hold as the large stockholders may increase in their number of shares. There are many such provisions now. I moved this once before, and I move it again now for the purpose of effecting what I suppose this is really designed to do-to protect the small stockholders against those who have large numbers of shares. This section is to multiply the number of shares by the number of officers to be voted for. My amendment, in effect, simply multiplies the number of votes which a man has by the number of officers, and this term about multiplying by the number of officers means nothing. It simply preserves the cumulative power of voting, which I am willing to support for the purpose of electing managing officers in corporations, but not for political officers. While I am willing to go for it for the purpose of protecting small shareholders of coporations, I do not believe it should be carried into political offices. My amendment will preserve the cumulative vote, but will confine it to the number of votes

which a man is now entitled to for his shares multiplied by the number of officers. It does not necessarily give a vote for every share, but allows a shareholder to cumulate so many votes as the company in which he is a stockholder gives him.

Mr. CUYLER. It seems to me that there is no form in which this section could pass without infinite danger to the corporate interests of the State, and I see nothing but unmixed evil in it. I perceive nothing in it whatever that could be beneficial. In the first place, it must weaken and almost paralyze corporate administration. Firm and consistent policy, and enduring representation on the part of the direction of the company of its interests, never could exist. Next it would subject our strongest corporations to foreign influences highly detrimental. I can carry myself back but a few years ago when if this had been the constitutional law of Pennsylvania, the Pennsylvania railroad would have passed to the manageinent of the infamous and corrupt ring that controlled the Erie railroad in New York-Mr. Fisk and that party of men. Things were then "set up" and were absolutely in that position, and the stock was held that if this had been the constitutional law of Pennsylvania at that time it would have passed that corporation, with all its interests, into the control of the Erie ring.

Or look at it in another point of view, taking the same illustration. Here is a corporation with twelve directors, three of whom are elected by the councils of the city of Philadelphia, who of course are selected from the dominant political party. A concentration of votes upon four more added to those three would convert the direction of that company into a political machine at any period of time, and inevitably lead to such a result.

Now in return for these risks and perils, I do not see what advantages are proposed, and I pause to hear from gentlemen who advocate the section which is now before the Convention a statement of any good reason which can countervail the dangers and perils that must necessarily result from the section as it stands.

Mr. KNIGHT. From the experience I have had in corporations, I take this opportunity to fully confirm and endorse all that has been said by my colleague (Mr. Cuyler.)

Mr. WOODWARD. Mr. President : This part of the report of the committee is the result of a resolution that was brought into this body at an early day and referred to the committee and there very attentively considered. And allow me to say that this Committee on Private Corporations, whose work, perhaps, has had less explanation than that of any other committee of this body, suppose that this Convention was very much in earnest in raising such a committee. The Committee on Private Corporations were trying to devise such check or curbs as would destroy the naturally aggressive character of corporations, protect the people and at the same time not cripple or disable corporations, because this committee understood that the business of Pennsylvania could not be carried on without corporations. They had no prejudice against corporations; they did not intend to embarrass them. They only intended to put in every possible form what the gentleman on the other side has called "a spy"-and I thank him for that word; it is exactly what the people want inside of all these corporations and if this section results in that which has been urged as an objection against it, I shall consider that the Convention has done the people a good turn in doing just that thing. Of course, sir, I am not for handing over these corporations to spies. The gentleman who puts me that question (Mr. Cuyler) knows that, and he need not have asked such a question. I do not like the word "spy" which has been used against this section on the other side of the House. But, sir, what is the objection to the stockholders in a corporation combining to put some competent man there to watch their interests against the majority who are running it in their own interest? Where is the objection? What is there wrong about that?

The gentleman (Mr. Cuyler) has talked about Fisk and the sacrifice of the Pennsylvania railroad company. Why, we hear that every time there is any proposition brought into this Convention to put a bridle on any corporation. The Pennsylvania railroad comes here to protest and object to it. Now, I do not think the Pennsylvania railroad company would be harmed by having a few representatives of combined stockholders in the board to watch the majority, to see what was done. The managers of that company have an immense power; they use it in the dark; they give the people

no more information than they choose to give them. I say this without any prejudice against the Pennsylvania railroad company. I say it is true of all companies. Wherein is the evil and danger of putting some competent man there whom several stockholders could put there by uniting their votes if it be for the purpose of watching them? Whose interests are to be sacrificed by watching them? Not the corporation's; on the contrary, I believe the corporation would be benefited.

Mr. President, I wish my friend from Philadelphia would familiarize to his mind a truth that the gentleman who used to occupy a seat here, the president of the Reading railroad company, (Mr. Gowen,) acknowledged while he was with us that everything that popularizes these corporations improves them. The more you commend them to the public confidence, the better for them, and that for a reason which I indicated on one occasion here before, that they are borrowers of money. They live by borrowing. They never had any other form of life, and they never will have. They live upon credit, faith, confidence; and whatever tends to strengthen public confidence in them strengthens the corporations. This measure does that thing. It enables stockholders to have a representative in the direction.

Why, sir, the gentleman says that the city of Philadelphia has some representatives in the board of directors of the Pennsylvania railroad company. The city of Philadelphia is a large stockholder of the Pennsylvania Central and it is right that she should be represented there. When the United States government owned a portion of the stock of the old United States Bank, the government always had some directors there; and when Henry Horn was a director for the Government, whom General Jackson said could not tell a lie, Mr. Horn's reports of what was going on in the inside of the Bank of the United States were extremely valuable to the people of this country, and by the use General Jackson made of them the people of the United States were relieved of that monster. There was no harm done to the people of this country by the fact that they had what the gentleman from Mifflin calls a spy at the board.

Now, sir, these corporations exist necessarily; I agree that they are necessary. I am not disposed to attempt to dispense with them. That were impossible. But