The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1906-03-04

LIVELY DEBATE
ON VOTING TRUSTS.
Continued From First Page)
that the Legislature should keep hands
off instead of stepping between the It'll
giants and holding out an undue advan-
tage to one OF them. Seaboard matters
were aired to some extent and more
Will. In all likelihood come tomorrow
when Mr.. Sears will begin to speak.
Defined Voting Trust.
In opening his argument Judge Phlegar
defined the voting trust and then briefly
! outlined its status under the law. Prior
to May 81. 1908, when what has since
become known commonly as the Cation
bill was enacted, the State of Virginia
had never declared Its policy with re-
ference TO voting trusts Courts In other
States had occasionally held that voting
trust agreements are void per sc, others
that tho period for which certain OF them
were formed was too long, and still 9TH
ers that some particular provisions in
particular trust agreements were sub
Hersve OF the public good. But In Yir-
glnia there had been no declaration and
the question was stir open until In
1903 the Cation act established voting
trusts In the eyes of tho Virginia law.
This act validated trusts then In exist
ence, authorized the creation of others
thereafter.' and placed practically no re-
strictions upon their operations The full
effect OF the bill was not realized at
the time 1t was enacted. Since 1903 the
voting trust problem has engaged the
| attention Of many and 1t had come to
be generally recognized that something
must be done to restrict the trusts. With
view to accomplishing this Judge
Phlegar introduced the bill under dis
cussion for which Mr.. Sears had of
fered substitute rejected by the Com
nittee for Courts Of Justice.
Limited Their Operations.
The precise difference between the
two measures was pointed out by the
Montgomery Senator. Both bills he show
ed limit the operations of voting trusts
to five year periods
minor difference az to the terms OF
proxies was passed over with a bare
mention. SO as not to co1iplicate the main
issue. In every other Particular the bills
were In precise accord except as to one
point. and it was on this point tina,
the trouble came-the status of the trus
existing before the enactment of the Ca
ton law validating them. The Phlegar
bill made no reference to these trusts,
but left them precisely in their present
condition, leaving the question of va
ldty in general to he determined by the
courts as the law stands to-day. On the
other hand the Sears substitute reached
back behind the Cation law and opened
the way to an assault upon trusts dating
before that law, although they hsr. been
formally validated and Notwithstanding
the fact that relying upon the act of
1903 important interests had engaged In
1arv cfio Il, ba
which they felt sure. were safe from
any attack.
But two voting trusts affecting Viz
ginia interests. Judge Phlegar said. ex-
listed prior to the Cation law. One of
these was the Southern Railway five
year trust. renewal of former five
year trust, the new trust to run until
1907. Tho other was the Seaboard Air
Line Trust, which was formed for term
of ten years and which still has several
years to run. When the Phlegar bill.
limiting the trusts, was introduced prac-
tically every railroad with the excep-
tion OF the Chesapeake and Ohio and the
Atlantic Coast Line. including the Rich
mond. Fredericksburg and Potomac. OBJ
jected.
The Montgomery senator was urged to
let the matter drop butt refused. He WAS
then given the benefit of many suggestions,
some of which he accepted but the ma
jority of which he could not entertain.
Finally. after much consideration. all the
railroads had agreed to accept the bill
IAN act of wisdom. showing that they
have learned something within the last
few years, and when they see remedial
legislation coming are willing to submit
rather than fight and arouse spirit of
antagonism." All the railroads were OPP
posed to the Sears substitute.
And now, gentlemen" continued Judge
Phlegar. 81 want to call your attention to
the effect of this substitute. Relying upon
the Cation act. important interests have
engaged in very large financial transac-
tons, the stability of which would be
upset by an attac!: on the voting trusts
validated by the law OF 1903. There are.
as have shown, but two of these
trusts. No objection is made to the
Southern Railway trust. and the Southern
Railway protested against the Sears sub
stitute, because 1t would throw a doubt
upon the trust which does not now exist.
This, therefore, leaves only the Seaboard
Air Line Railway. and In this connection
will direct the consideration of the Sen
ate to the matter as it developed before
the Committee for Courts of Justice
I'VE are all aware, through publications
lii newspapers, pamphlets and otherwise,
of a controversy over the control of the
Seaboard Air Line Railway between
Thomas r. Ryan. of New York. and Jotl,
Shelton Williams, of Richmond. Mr.. Will.
liams appeared before the committee as
an advocate of the Sears substitute. He
stated that he had himself before the
Cation law was enacted formed the Sea-
board Air Line a 10-year voting trust for
the purpose Of getting money for the
road, then seriously embarrassed for
funds.
Condition of Loan.
an November, 1903, after the Cation law
was enacted, the trust according to the
statement Of Mr.. Williams, went into
the hands Of Thomas F. Ryan apd Ais
associates. who advanced 100000 TO tho
road This money was paid back In the
middle of 1904. but Mr.. Williams admitted
that. in the meantime, the Ryan party
had loaned "a still larger sun,-we will