holding a man who takes charge of other people's money strictly responsible to them as their trustee. Seeing that he voluntarily undertakes the trust, he should be held answerable, not for his honesty merely, but for competence and diligence. If he does not understand his business, he has no more right to become the paid servant of a company than to engage himself on false pretences to a private employer. Above all, he should have such a substantial interest in the concern that he cannot possibly benefit, as directors may easily do now, at the expense of his fellow-shareholders. Complimentary fees might have to be converted into regular salaries, as in the case of managing directors of railways, but the additional expense would be true economy.
A well-paid director could not object to being required to hold permanently a solid amount of stock; nor should he be allowed to sell his qualifying shares, or deal in them under any pretence. A simple provision of this kind in an amending Joint-Stock Companies Act would frighten every amateur manager and guinea-pig director out of the field. It might fix the director's holdings on a sliding scale according to the amount of capital. For the first £100,000 of paid-up capital it might be 2½ per cent, and from £100,000 to £500,000, 1 per cent for each director. On a board with a quarter million of capital to administer, the qualification would thus be £4000 for each director, – not an oppressive condition to attach to a suitably paid office. Beyond £5000 it would be hardly necessary to go, even in the case of larger companies. The chief point to secure would be the bona fides of these directorial holdings. The share or stock certificates should be issued in the name of the director, and deposited by him in a public office for safe keeping, he, of course, drawing the dividends. Such qualifying shares or stock should not be saleable while the owner remained a director, but any additional stock or shares he might hold he should be free to deal with as he pleased. There are not many men who could go in on these terms for a score, or even a modest dozen, of directorships, as is quite an ordinary practice now. Two, or at most three, companies would be enough for the most ubiquitous of financiers, but they might, being better paid, yield as good an income as twice or three times the number do at present. The work, in proportion as it was better paid, and performed under a stricter sense of responsibility, would be improved, and rendered far more valuable to shareholders. There are already a few classes of joint-stock undertakings, banks and home railways for instance, in which management has become a science. They have fixed rules and tests which effectually shut out the amateur; but our trading companies, our finance companies, and, worst of all, our mining companies, are run for the most part by persons who have their business to learn at the expense of their employers. A very small percentage of directors in those departments have either a sufficient stake in the enterprise, or sufficient brains to give to it, and hence the ghastly work they provide for the financial gravedigger.
But killing a company is not the worst that can be done to it by incompetent or unscrupulous management. It may be kept in a state of protracted suicide by
