example of this. Its stringent requirements do not hamper the companies of that State, but are, on the other hand, an introduction and a guarantee that distinctly aid the Massachusetts companies when they carry their operations into other commonwealths. The same influence is apparently at work in the case of mortgage investment companies; a few of the best established among them priding themselves on complete and ostentatious compliance with the rigid but wise laws regarding publicity of accounts.
The second effect of the diverse rules regarding corporations in the different States operates in an exactly opposite direction. Since it is quite well established that a corporation may incorporate in one State and do all its business in another or others, there is a tendency for dishonest companies to take out charters in that State which bothers them with the fewest restrictions. A charter granted by the Legislature of Pennsylvania incorporating a company to do business in any State except Pennsylvania was held to be void; the Kansas court holding that no interstate comity permitted one commonwealth "to spawn corporations" upon other States which it would not allow to operate within its own borders. But the same thing is accomplished if a State, by a general act, permits companies to organize without specifying the place of business. Under some laws one corporation is not allowed to hold the stock of another; but, on the other hand, there are States that will willingly incorporate a company for the express purpose of holding the stocks of other companies. This is a very convenient fact when a "trust" is to be formed. A State noted for the laxity of its laws in this regard can serve as the birthplace of any number of companies. At present, according to Mr. W. W. Cook, "the snug harbor of roaming and piratical corporations is the little State of West Virginia. Under its laws a corporation may be created for any purpose for which a partnership may be formed, except speculation in land; the capital stock may be five millions of dollars or less; there is no tax except fifty dollars annually; residents or non-residents, aliens or citizens, may be directors; the principal place of business and directors' or stockholders' meetings may be in or out of the State; there is no liability of directors or stockholders except on unpaid subscriptions, and no public reports are required. . . . The incorporation of companies for the purpose of enabling them to do all their business in other States seems to be one of the chief industries of West Virginia." States can only guard themselves against the invasion of hordes of these irresponsible artificial persons by strict statutory regulation of "foreign corporations," but for the most part they have not taken any general precautions of this character.
