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should be given him to compel the attendance of by or through the privilege. After the board of witnesses to be examined under oath. And if he corporate examiners has ascertained the percentage finds that the corporation is overcapitalized or is of actual net profits earned by a corporation for violating any of the laws of the State or of the each and every year of its existence, based upon the United States, he should, after giving the company fair value of its tangible assets for each year, it a thirty days' written notice to rectify the wrong, shall allow a profit of six per cent for each and place the evidence in the hands of the attorney- every year since its incorporation; and if the average general, who shall immediately commence an action of net profits earned does not exceed six per cent to annul its charter. Corporations cannot be con- during its corporate life no tax shall be leytrolled, unless a special department is created, whose ied. Only upon the

of six per

cent sole business shall be to see that the corporation of average net profits earned by a corporation laws are respected and observed.

should a tax be placed. Such tax upon profits Fifth. The State should tax the net profits earned above six per cent should be graded as follows: by every corporation organized under its laws. 1-10 of the first per cent, about six per cent Such a tax would be governed by actual results and b. 1-9 of the second per cent, about six per cent be measured exclusively by the prosperity of the 1-8 of the third per cent, about six per cent corporation taxed. “In adopting such a rule of d. 1-7 of the fourth per cent, about six per cent estimate no one could complain of its being un- 1-6 of the fifth per cent, about six per cent equal in its effects upon different corporations or f. 1-5 of the sixth per cent, about six per cent unjust in its general operation,” declares Mr. Justice g. 1-4 of the seventh per cent, about six per cent Fullerton in Monroe Co. Savings Bank v. Rochester h. 1-3 of the eighth per cent, about six per cent (37 N. Y. 367). A corporation, whether owning a i. 1-2 of the ninth per cent, about six per cent franchise or not, should be permitted to earn a j. 6-10 of the tenth per cent, about six per cent reasonable profit on its assets. If this permission k. 7-10 of the eleventh per cent, about six per cent were taken away, all incentive to doing business 1. 8-10 of the twelfth per cent, about six per cent would be killed, the affairs of corporations would m. 9-10 of all per centum of profits above eighteen be wound up, and the State would be compelled

per cent of net profits. to face the condition of having ninety per cent of its

It is reasonable to assume that corporations will factories closed — thousands of workingmen thrown make all the profits they dare. And if we place a out of employment, and its people made dependent progressive graded tax upon their profits, their inupon other States for the necessaries and the luxu-centive to overcharge and increase their profits ries of life. That the percentage of profits allowed

beyond a fair amount, will be gone and their time, should be liberal, no one would question. While thought and energy will be taken from their calcufour per cent may be the average value of capital, lations as to how much they dare to make, to be we would suggest the allowance of six per cent of bestowed in making better the quality of their proactual net profits on the fair market value of the ductions, in extending their markets and in holding tangible assets of the corporation, as this percentage their place in the business world. Franchises, would be large enough to stimulate business and special privileges and tariff protection will not pronot too large to work injustice as between corpo- duce the valuable monopolies they are doing to-day, rations and individual dealers. We do not mean for then the monopoly will not be allowed to yield the allowance of six per cent of profits only from the the large profits that are now enjoyed by the few, date of the passage of this proposed act, but an

to the injury of the many. If a corporation has to allowance of six per cent profits on the actual

pay as a tax 9-10 of each per centum of profit above tar.gible assets of the corporation for each and every eighteen per cent, it will not risk the losing of its year of its existence. Most corporations make no

trade for the sake of making 1-10 of a per cent, and profits and declare no dividends for some years the people will get the benefit of a cheaper price after their incorporation. And to tax them when

and a better article. they are beginning to make money, without taking into consideration the years when the stockholders' Sixth. In determining the actual net profits of a money was earning nothing, when the stockholders corporation the board of examiners shall annually were devoting their best thought and labor without ascertain the fair market value of the tangible assets any or with small compensation, to make the privi- of the corporation, not taking into consideration lege worth something, would be unfair, unjust and the franchise, the capital stock or its bonds. It shall inequitable. A franchise or a corporate charter is deduct from the total earnings of the corporation worth practically nothing, unless brain and money the necessary and reasonable expense of its manare expended to establish it on a paying basis in the agement, which shall include the cost for renewing business world. The value of a franchise or a cor- the plant, together with the taxes paid on its propporate charter, represents the privilege plus the erty, business or profits, to all municipalities. And brains and money used to develop it. And the having arrived at these amounts it shall by ordinary brains and money expended should be taken into business methods figure the percentage of profits account, when a tax is levied on the profits earned earned in relation to its corporate assets.





Seventh. Every ten years the board of examiners NOTE UPON AMENDMENT VIII shall ascertain the fixed average of profits earned by each corporation for that period, and if the average To ARTICLE III OF THE CONSTITUTION OF THE UNITED of profits does not exceed six per cent per annum,

STATES OF MEXICO, PROHIBITING THE STATES the State shall refund to the corporation such

FROM ISSUING EVIDENCES OF Public INDEBTEDmoneys received during such period as a tax on its

NESS PAYABLE IN FOREIGN MONEY, AND profits above six per cent, or so much thereof as

OTHER PURPOSES. to make the average of profits untaxed equal six per cent; thus allowing to every corporation an

The Constitution of the United States of Mexico average of six per cent profit on its tangible assets during the period of its existence.

confers the right of proposing bills for laws or

initiating laws" upon the president of the Union, Eighth. A detailed report of the examination of

as well as upon the representatives and senators in the property, business, profits and losses of every general congress and the legislatures of the States, corporation shall be made each year and kept on file and requires that when such bills are presented by in the office of the superintendent. A summary the president of the Republic they shall thereupon statement of its assets and liabilities shall be pub- pass to a committee. On April 10, 1901, the secrelished in the State paper and in one newspaper pub- tary of finance accordingly transmitted to the house lished in the county where the principal place of of representatives, with the consent of the president business of such corporation is located.

of the Republic, a bill for an amendment to article The State which gives to a group of citizens a

111 of the federal Constitution. The bill, as transcharter of incorporation or a special privilege, an

mitted to the house, was as follows: advantage which they did not possess as individuals,


The States not, in any has the right to know that the privilege has not been used against public policy. If the corporations are conducting legitimate business, no injury will be

“VIII. Issue evidences of public indebtedness done them by inspection.

payable in foreign money or outside of the Ninth. A tax should be levied on all foreign

national territory; contract, directly or indi

rectly, loans with foreign Governments; or corporations doing business in the State, upon the

contract obligations in favor of companies amount of business done in the State, in the manner

(sociedades] or individuals of foreign nationalprovided by the laws of the State of New York. A

ity, when for this purpose documents payable rate of taxation should be adopted, to make the

to bearer or transferable by endorsement have foreign corporation pay the same proportion of

to be issued." tax that is levied on the domestic corporation, so as not to drive the domestic corporation to wind

The house duly ordered that the bill be referred up its affairs and incorporate in another State, and to the second committee on finance, the first comcome back and do business in their old market.

mittee on constitutional amendments and the second The following checks on such practice may be committee on public credit for consideration and provided:

report. Thereafter these committees presented a (a). The State shall prohibit foreign corporations report, agreeing to the substance of the bill, but from doing business in the State until they have making some modification in the form of it, in order been duly licensed by the corporation department. to avoid the amendment being misunderstood, since

(b). The State shall not permit an unlicensed the bill, as transmitted to the house and referred to foreign corporation to maintain any action in the the committees, embraced all kinds of documents to State upon any contract made by it in the State.

bearer or to order, even those of a merely mercantile Finally. Will not this plan drive the small busi- character, and consequently, in the judgment of the ness corporation out of existence? It probably will. committees, would have prohibited the States from But as most of the small corporations were organ- of the public administration daily require, which

entering into many contracts which the necessities ized solely for the purpose of relieving their members from partnership liability, the general public they considered was not the intention of the execu

tive. will be better protected by compelling them to carry

When the secretary of finance was advised on business by means of a partnership with indi- of the modification proposed by the committees he vidual liabilities, than under the corporate cloak concurred in it, and by agreement with him, and in which now is so often used to mask dishonesty, order to obviate the inconveniences referred to, the fraud and corruption. This effect, however, may be bill was amended as follows: obviated by causing this plan of taxation to apply

“ Art.

The States only to corporations capitalized above a given sum. This would have at least one advantage — it would “VIII. Issue evidences of public indebtedsave the corporation department a large amount of ness, payable in foreign money or outside of labor.

the national territory; contract directly or inHARRY EARL MONTGOMERY. directly loans, with foreign Governments, or BUFFALO. N. Y., Nov.. 1001.

contract obligations in favor of foreign com




in any



* *

panies (sociedades) or individuals, when evi- , amendment, it should be noted that by its terms it dences [of public indebtedness] or bonds to applies only to the States. Under Mexican law it bearer or transferable by endorsement have to is, however, a limitation upon the powers of the be issued.”

in unicipalities, as well. The words " for this purpose documents payable" The amendment contains three principal prohibiin the bill, as referred to the committees, were' tions upon the powers of the States and municistricken out, and in place thereof were inserted in palities. the bill, as amended, the words “evidences (of pub

I. To issue evidences of public indebtedness, paylic indebtedness) or bonds,” thus eliminating from able (a) in foreign money, or (b) outside of the the prohibition of the bill all documents to bearer national territory; or order of a merely mercantile character, and con

II. To contract directly or indirectly loans with fining its terms to evidences of the public debt and

foreign governments, and bonds. Article 127 of the Federal Constitution, concern

III. To contract obligations in favor of foreign ing amendments to the Constitution, provides:

companies (sociedades) or individuals, when evi

dences of public indebtedness or bonds to bearer “The present Constitution may be amended

or transferable by endorsement have to be issued. or modified. In order for amendments to become a part of the Constitution, it is necessary First. The first principal prohibition deals with that the congress of the Union, by a vote of (1) the medium of payment, and (2) the place of two-thirds of the members present, should agree payment of evidences of public debt; and it would upon the additions or amendments, and that seem clear that the States could not issue evidences such additions or amendments should be ap- of public indebtedness (such, for example, as bonds), proved by a majority of the legislatures of the payable (a) in gold, or in any other money, except States. The congress of the Union will make Mexican, or (b) payable in the United States or the count of the votes of the legislatures and the England, or in any other country, except Mexico; declaration of the additions or amendments hav- and this would seem to be true, whether the payee ing been approved.”

be a Mexican or a foreigner. The words “evidences In the house of representatives, on December 2, include coupons, as well as bonds, so that the inter

(títulos) of public indebtedness” would seem to 1901, the second committee on correction of style est on any such bonds could not be payable in gold presented the following minute:

or outside of Mexico, either. The word "evidences “The congress of the United States of (titulos) in Mexican law generally includes all Mexico, in exercise of the power conferred documents evidencing the title of a person to real upon it by article 127 of the Federal Constitution, or personal property. The amendment, in this case, and after the approval of a majority of the however, by its terms, limits the documents to such legislatures of the States, declares article Ini as evidence the title of a person to the "public of said Constitution amended as follows:

debt." "Article 11. The States can not in any

Second. The second principal prohibition would case:

seem, by its terms, to make it unconstitutional for “VIII. Issue evidences of public indebted- the States in any manner to contract loans with ness, payable in foreign money or outside of (that is, to borrow money from) foreign governthe National Territory; contract directly or in

mients. directly loans with foreign Governments, or contract obligations in favor of foreign Companies hibition the States cannot contract obligations in

Third. By the terms of the third principal pro[Sociedades) or individuals, when evidences (of

vor of foreign companies (sociedades) or individPublic Indebtedness) or bonds to bearer, or transferable by endorsement, have to be issued."* bonds to bearer or transferable by endorsement have

uals, when evidences (of public indebtedness) or Put to debate and none ensuing, the minute was

to be issued; and this would seem to be true whatapproved by economic vote. The amendment in this

ever be the medium or place of payment, so long form to article 11 of the Constitution was there

as the payee be a foreigner. Under Mexican law upon ordered to be transmitted to the president (Civ. Code [Fed. Dist., March, 1884), art. 127) "a for promulgation by him.

contract is an agreement by which two or more perIn endeavoring to arrive at a proper understand- sons transfer some right or contract some obligaing of the purpose and effect of the foregoing tion.” Obligations under Mexican law (Id. arts.

1326, 1327) are both personal and real. “A per. * In Spanish as follows:

sonal obligation is that which only binds the person “Artículo 111. Los Estados no pueden en ningún caso:

Pública, pagaderos

who contracts it and his heirs. A real obligation is moneda extranjera 6 fuera del Territorio Nacional; contratar directa that which affects the thing and works against any 6 indirectamente préstamos con Gobiernos extranjeros, 6 contraer possessor of it.” The Mexican law (Com. Code, obligaciones en favor de Sociedades 6 particulares extranjeros, cu- arts. 89, 90) recognizes five forms or kinds of merando hayan de expedirse títulos 6 bonos al portador, ó transmisibles

cantile companies (sociedades): (1) a general por endoso."



Emitir títulos de Deuda


partnership, with special partners (simply); (2) a shall not be contracted in favor of foreign individugeneral partnership; (3) a joint-stock company or als, partnerships, companies, corporations, or govcorporation; (4) a general partnership, with special ernments. In other words, if a State or city make partners (by shares), and (5) co-operative com- any payment by means of negotiable bonds or panies. Every commercial company, in Mexicani other forms of public indebtedness, such payments law, constitutes a person distinct from its individual must be made in Mexican money, in Mexico, to members. The word “companies," therefore, in the Mexicans. Henceforth, neither a State nor a municithird principal prohibition of the amendment would pality can issue or guarantee a gold bond or coupon; seem to be of general application, and to include, neither can issue a bond the principal or interest of among others, corporations and partnerships. By which is made payable in the United States or Eng" bonds to bearer or transferable by endorsement " land; neither can borrow money from foreign govare probably intended negotiable instruments ernments; and, if bonds to bearer or transferable by whereby in the hands of bona fide holders for value endorsement have to be issued, neither the State nor equities are cut off.

the municipality can contract any obligation whatsoIt would seem from the foregoing amendment, as ever with a foreign person, the word “person " inthus understood, that the States and municipalities cluding individuals, partnerships, companies and could not, after the promulgation of the amendment, corporations. for example, guarantee payment of bonds issued Hence, for example, neither a State nor a city by a corporation organized and existing under the could be a party to a contract by which a trust comlaws of the United States in whatever medium and pany organized and existing under the laws of the place they might be payable, provided such bonds United States should be appointed (1) to receive should be to bearer or transferable by endorsement; for deposit and issue bonds to bearer or transferable for to make such a guaranty would be to “contract by endorsement, and (2) to receive funds of the city obligations in favor of foreign companies (socie- or State to be applied in payment for public works; dades) or individuals.” There would seem, on the and this, whether such bonds should be issued by the other hand, to be in the amendment no limitation State, the city, or a private Mexican corporation, and upon the power of the States or municipalities to be made payable in Mexican money in Mexico; for guarantee payment of bonds issued by a corporation by joining in such a contract the State and the city organized and existing under the laws of Mexico, would contract obligations in favor of foreign comwhether they should be made payable to bearer or panies,” to wit, in favor of a foreign trust company. transferalbe by endorsement, or not, provided such. Nor would it be material that the bonds should not bonds should be payable in Mexican money and in be issued directly by the State or city. It is sufficient, Mexico. It is true the first principle prohibition, in in my judgment, to bring the contract within the terms, expressly applies only to the issuance by the prohibition of the amendment for the State or city to States of evidences of public indebtedness; but a assume the mortgage made in favor of the foreign fair and reasonable construction of the whole trust company, and guarantee the bonds issued by amendment would no doubt lead a court to extend the private Mexican corporation. Nor, for the same the meaning of the word issue so as to include the reason, could the foreign trust company, under such word guarantee. If a State be prohibited from issu- circumstances, be empowered to re-enter, take posing bonds, which it undertakes to pay abroad in gold, session of and operate such public works in the case it would seem that they are likewise prohibited from of default by the city or State. If a private Mexiguaranteeing bonds, which they undertake to pay can corporation should desire a municipality or State abroad in gold. It is also true that the first principal in Mexico to assume such private domestic corporaprohibition, in terms, relates to “evidences of public tion's mortgage payable in gold coin, and guarantee indebtedness," and it may be suggested that by this its bonds issued thereunder, also payable in gold is meant only such evidences of indebtedness as are coin, to bearer or transferable by endorsement, the issued in the name of the people or State. But such assumption by the municipality or State of such a an objection would probably be held to be unsound; mortgage and the guaranty of such bonds — where because, if the State is compelled, by virtue of its the mortgage is issued in favor of a trust company guaranty of the bonds of a private corporation to organized and existing under the laws of the United make payment of them on default of the maker, its States, and such trust company is appointed to reobligation to pay them would be none the less a ceive for deposit and from time to time issue the public obligation, and the payment a payment by the bonds, and also to receive the funds of the municipeople. If a State guarantee a bond it is clearly an pality or State and from time to time apply the same evidence of an obligation on the part of the public to in payment for public work — would seem to be pay the bond according to the tenor of its guaranty. (1) the contracting by the municipality or State of It is clearly the intention of the amendment that, an obligation in favor of a foreign company where when the States issue its own or guarantee another's bonds to bearer or transferable by endorsement have bonds, which are payable to bearer or transferable been issued, and (2) an issue by the municipality or by indorsemert, such bonds shall be payavle in Mexi- State of evidences of public indebtedness payable in can money, in Mexico, and that such obligations foreign money - in violation of the first and third principal prohibitions of the amendment. The fair about equal to that of Marks, the lawyer in Uncle intention of the amendment is that, if bonds to bearer Tom's Cabin. Any yawning or gaping in his presor transferable by endorsement have to be issued, ence was considered gross contempt of court, and neither the State nor the municipality can contract the guilty one was instantly reprimanded. His any obligation whatsoever in favor of a foreign per- library consisted of one book, the Holy Scriptures, son; and in no event can the municipality or State which was displayed on a table in the center of our bind itself, either as issuer or as guarantor of any hero's court-room. In deciding cases which came bonds payable in any other medium than Mexican under his jurisdiction the rich man got the law and money, or in any other place than the United States the poor man the justice. His administration of the of Mexico.

law showed that one thing was absolutely necesThis so-called Limantour amendment to the federal sary the appointment of a commission of inquiry Constitution only awaits promulgation by the presi- by the government to determine the qualifications dent of the republic to give it the full force and effect and capabilities of these country squires. Their of a constitutional limitation upon the powers of the investigation would be a right droll one, for not States and municipalities. It has been agreed to only would they find men quite ignorant of the law by a vote of two-thirds of the members present at dealing it our every day, but men, who, if their a session of the federal congress, and has been ap- heads exchanged places with, I won't say where, proved by a majority of the legislatures of the the newly substituted heads would contain as much States. The congress of the Union has counted the brains as the former ones. Any voluntary suggesvotes of the legislatures, and has declared the amend- tion as to procedure volunteered by members of ment to have been approved. As the bill for the the constabulary was always considered by his honor amendment was transmitted to the house of repre- as a reflection on his qualifications, and the accomsentatives by the secretary of finance with the con- modating individual generally received a sharp resent of the president of the republic, it is probable buke for his pains. But when our hero administered that he will duly promulgate it. Any amendment to the oath to an illiterate peasant, how he would swell the amendment, or any repeal of it, could only be with importance! The lord chief justice of the effected by a similar agreement of congress and ap- Queen's Bench did not possess one-half of his proval by the States. Just what effect the amend- dignity. How he would peer through his goldment will have upon the marketability of Mexican bowed spectacles (which, by the way, he didn't State and municipal bonds will best be appreciated need) and look through the innermost soul of the when the endeavor to market such securities is made. half-frightened peasants. He would explain to

LUCIUS Q. C. LAMAR. them that perjury means penal servitude here and Mexico, December 14, 1901.

eternal damnation hereafter.

In those days the unfortunate followers of the THE IRISH MAGISTRATE IN THE Stuarts organized themselves into various secret PENAL DAYS.

societies, which were known by the names of

“Whiteboys," "Ribbonmen," "Molly Maguires," The Irish magistrate of the penal days was, in-'

and the followers of William of Orange formed deed, a curious character. He hardly knew as much ihmeselves into a secret society called the “Hearts law as Coke or Blackstone, but in conceit and of Oak.” Information leading to the prosecution egotism he easily outrivalled them. In the penal

of Whiteboys, Ribbonmen, etc., was always hailed by days the country magistrate was usually one of the his worship with great glee, because a conviction, farming class, who by frugality had amassed a

whether just or unjust, of an unfortunate peasant, small competence. His residence was generally one

he considered would place him in high favor with of those old, heavy-looking buildings which are to be found in country places, and which look rather will show the reader the mental calibre of the

the officers of Dublin Castle. The following instance the worse for wear. From an architectural stand

Irish magistrate of the penal days. This one, if for point our honor's residence would have no recom

nothing but its ingenuity, deserves to be recorded. mendation whatever, being after no particular order,

A worthy magistrate having occasion to write the but a combination of the whole. The rooms were

word “usage,” contrived to spell it without using a small but many, the staircases almost perpendicular single letter of the original word; his improved and the corridors narrow and winding. The furni

orthography was "yowzitch.” When some remarks ture generally consisted of quaint, dark oak, high

were made on similar feats he averred that nobody backed chairs, chests of drawers, elaborately

could spell with pens made from the quills of ornamented bedsteads fashioned after the tastes of by-gone days, and the style of the drear and musty past. His household generally consisted of himself

Happily for Ireland, the magistrate above deand wife and broken-down servant, who answered scribed is no more; but in America the country the door calls, growled at the poor and bent the squire still exists and expounds his lame law upon cringing knee to the “quality.” The magistrate

the suffering public. resembled a Turkish Cadi, where the president is

JOSEPH M. SULLIVAN. at once court and jury. His knowledge of law was OF THE SUFFOLK (Mass.) BAR.

Irish geese.

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