The Calumet news. [volume] (Calumet, Mich.) 1907-1938, 1910-06-24
Wickersham Defends Right Of
Government to Regulate
Stocks and Bonds.
RAILROAD LAW BASIS OF TALK
In Address Before Illinois State Bar
Association, Attorney General AS
serts New Bill is Within
Scope of Constitution.

NHi0ht 10 lesisidte on lne SUBJECT o.
the issuance of stocks and bonds b,
railroad corporations subject to tn,
interstate commerce act, Attorne,
General George w. Wickersham spoke
for an hour this morning before the
Illinois state Bar association The
basis for his talk was the provision in
the new railroad law authorizing the
president TO investigate questions per-
tanning to the issuance OF stocks and
bonds by railroad corporations and the
power OF congress to regulate them.
The enactment of such a law he con-
tended was not nearly so radical a
step as was the enactment OF the per-
missive act of 1866 which gave TO a
railroad corporation of one state the
right to carry on interstate commerce.
on the interstate commerce act OF 1887
Congress May Make Rules.
Numerous legal authorities were
cited by the attorney general from
which he declared il may confidently
] be asserted that while congress may
itself create corporations for the pur-
pose of carrying on interstate com
merce, 1t may also prescribe rules and
regulations under which a corporation
created by the laws of state may
conduct such commerce, and that when
ii does so, such state corporation
might engage only in such commerce
in conformity with the rules and regu-
lations so laid down by congress-: and
that these rules may have reference
not only yetosthe exchange of goods and
commodities, but to the subject, the
vehicle and the agent of such COM
merce, and their various operations.
Reference was made by Mr.. Wicker
sham to the condemnation, both by
courts and economists, of the reckless |
issue of stocks and bonds by railroad |
companies without adequate consider
alton, which. he declared, had come to |
be generally regarded as an evil. cer-
tainly as demoralizlng i'm its effect on
the public as the carriage of lottery |
tickets from one state to another.
Too Much Speculation.
receiverships and foreclosures. testi-
fled eloquently, he declared. TO the |
practical effect of such unwarranted |
issues of securities upon the ability OF |
railroad companies to properly per-
form their functions as instrumental
ties of interstate commerce. while the
utterance of stock for inadequate or
fictitious consideration had furnished
the opportunity for the most irrespon-
sibls and speculative control OF those
highways Of commerce and had result
ed In the injury which always followed
a control of property by those who had
no real investment in il. Such control.
Mr.. Wickersham continued. all expert
ence demonstrated, would not be gem
orally exercised i'm the interest OF the
road and to secure the safe conserva-
tive management necessary to meet
the requirements of the public and the
proper discharge of the obligations
imposed upon the carrier by law.
IL was this public aspect which lent
force to the conviction that "watered"
and bonus stock" was one of the
greatest abuses connected with the
management Of corporations and IL
was this effect upon the fitness of the
carriers to perform their duties under
national legislation that required and
justified federal supervision and con-
troll of the subject.
Must Not Conflict With State.
The attorney general admitted that
the federal government could not con-
fer on a state corporation power to
borrow money and issue obligations
therefore, nor to create and issue
shares OF stock. Only the power whicf,t
erected the corporation could vest it
with authority for those purposes
But" he continued. under all the
rules and analogies, to which refer
ence has been made. congress assured
ly may regulate and restrain the state
in the exercise of these as
well as Of other corporate powers. and ,
may prohibit it from issuing obliga-
tions or stock for purpose relating ,
to interstate or foreign commerce ex-
cept in accordance with rules and re-
strictions prescribed by 1t for the pur- :
pose of preventing the evils above re- =
'erred to- $
Are Subject to Limitations. {
1t was contended that a state cor
availing of the powers con- 7
'erred by congress became thereby r
subject in these respects I'm which con- r
yress had legislated to all the condi- 4
ions and limitations imposed by con- I
yress on the exercise of those powers. y
Is completely as though they were o
written into the charter OF such cor 2
,oration. @
The enactment OF n law regulating b
he issue of stocks and bonds by rail- !