sonable, that there shall be no discrimination between persons and localities; it provides that there shall be proper facilities for the interchange of traffic between connecting lines; it forbids the issuance of free interstate passes; it requires that railroads print and make public their freight and passenger rates. A supplemental law (the Elkins law, passed in 1903) forbids rebates and provides that rates lower than those published shall not be charged. It is the duty of the Interstate Commerce Commission to carry these provisions into effect.

In 1906 Congress gave the Commission, upon the complaint of an interstate shipper (or passenger), the power to do away with a rate which it regards as unjust or unreasonable, and to fix a new rate which it regards as just and reasonable. In 1910 Congress went a step further and empowered the Commission to make investigations of its own motion, and when it finds certain rates unreasonable and unjust, to change them, even though there has been no complaint whatever. Moreover, by the law of 1910 new rates may be suspended in their operation by the order of the Commission, and if upon investigation they are found by that body to be unjust and unreasonable they cannot go into operation at all. The railroads, however, have the right to appeal to the federal courts where the decisions of the Commission may be overruled. The control which the Interstate Commerce Commission exercises over railroad rates makes it an agency of vast importance and power.

In 1916 Congress created a Shipping Board for the

purpose of encouraging, developing and creating a naval auxiliary and reserve and a merchant marine to meet the requirements of the commerce of the United States. The Board is composed of five commissioners appointed by the President. The Board is authorized to purchase, lease, or charter vessels suitable for marine trade and it may operate such vessels itself or lease them to be operated by others. It has large powers in respect to the regulation of the rates and fares charged by vessels engaged in foreign or interstate commerce.

CHAPTER XIX

CORPORATIONS

I. Individual Enterprise. The great private corporation of to-day is the outcome of changes which have been occurring in commerce and industry during the last two centuries. Before the eighteenth century commerce and industry were organized on the basis of individual effort. Cloth was woven in a shop in which there was but one loom, and the operator of the loom was its owner. The man who ground the grain was the owner of the mill. Shoes were made by the owner of the shop. Passengers were veyed from town to town in a coach owned by its driver. And so it was in all the trades and occupations: they were all organized and conducted on the basis of individual enterprise.

About the middle of the eighteenth century a great change began to come over the face of industry. In 1733 John Kay invented the flying shuttle and thereby doubled the efficiency of the loom. A few years later water power was applied to the loom. One man could now operate two looms, and could weave four times as much cloth as could be woven before. In 1769 Arkwright brought out his wonderful spinning-machine, and in the same year Watt patented his condensing

steam-engine. These inventions reorganized the textile industry. Instead of the little shop with its single loom and weaver, there appeared the great factory with its hundreds of looms and scores of operators. As it was with weaving, so it was with other industries: inventions and improved machinery caused nearly all of them to be conducted on a new plan.

II. The Partnership. How was this reorganization accomplished? How were the humble shops of the seventeenth century transformed into the huge factories of the eighteenth century? By a combination of the wealth and services of individuals. The single craftsman did not have enough money to build a factory and equip it with machinery, so several persons combined their capital and formed a partnership. The partnership as a legal form of business association is almost as old as recorded history, yet it had never before been brought into such frequent use as during the industrial revolution of the eighteenth century. The two important legal characteristics of a partnership are: (1) the partners are individually liable for the debts of the partnership; (2) the death of one of the partners brings the partnership to an end. A partner is liable, therefore, to lose his entire fortune in paying the debts of the partnership, and the partnership is liable to be brought to an end at any moment.

III. The Corporation. The colossal enterprises which were inspired by the appearance of the steamboat and the locomotive and the telegraph in the first half of the nineteenth century could not be satisfac

torily conducted under the partnership form of association. Here was a railroad to be built at a cost of five million dollars. The people of the region through which the road was to pass favored the enterprise and were ready to invest their funds in it, but men with money were loath to enter into a partnership for building the road because they feared that the enterprise might fail and that they might be ruined by the debts of the partnership. Besides they could not tell when the enterprise would be brought to an end by the death of a partner. To meet these objections of investors the corporation was brought into use. The corporation does not die with the death of a member but lives on for the period given to it by law, if that is for a thousand years. This immortality of the corporation gives time for the accomplishment of great things. Another advantage of the corporation over the partnership is that the shareholders in a corporation are not individually liable for the entire debt of the company. Furthermore, the shares in a corporation can be easily and quickly transferred and sold when the holder wishes to dispose of them. Through the agency of the corporation the building of the coveted railroad was made possible. To raise the money fifty thousand shares of one hundred dollars each were offered to the farmers and merchants and mechanics and capitalists of the communities to be benefited by the road, and shares were taken according to each one's ability and willingness to invest, some taking a single share, others ten shares, others a hundred shares. In this way