THE NEW PLACE OF THE STOCKHOLDER.
By John H. Sears, Harper & Bros. New York, 1929.
In the writing of this book the author was apparently prompted by two outstanding motives: first, to further impress the public with the fact, already widely known, that stockholders' rights are waning; second, to challenge his own professional group, the corporation lawyers, to turn their legal inventive genius towards improving the position of the real owners of corporate bodies, viz., the stockholders.
Mr. Sears, after presenting some fundamental principles of corporation law, points out that the real need at the present time is "a new positive attitude of cultivating the stockholder, of setting up new safeguards for him and of arousing and of sustaining his active interest." -This result may be achieved through closer contact between the corporation and the stockholder. Pride of ownership in a corporation must be stimulated by something more than a finely engraved stock certificate, entitling the owner to draw dividends, if any.
This era of widespread ownership of securities is characterized by a growing apathy among stockholders with respect to their legal rights. This condition is accentuated by the complexity of corporate organization and the increasing tendency to use high sounding, confusing, descriptive terms for the increasing variety of securities on the market. This presents a particularly fertile field for the cultivation of corporate abuses by the unscrupulous, legal barriers notwithstanding. To offset this the author recommends not further legislation but simplicity in corporate set-up and corporate terminology.
Emphasis is placed on the fact that the corporation is a very successful means of aggregating the contributions of numerous investors. It is implied further that by maintenance of closer contacts with the stockholder the corporate device may become a clearing house of improving ideas that will more than repay the corporation for any trouble involved.
Mr. Sears' book is interestingly written. To that ever growing body of security holders it should present clearly the possibilities involved in stock ownership; to those interested primarily in the study of corporate finance it opens up vistas encouraging further examination along particular lines.
Department of Economics.
