New-York tribune., 1910-11-26
PRESIDENT TAFT WOULD
. PROTECT THE INVESTORS
Publicity for Affairs of Corpora
tions Which Offer Securi-
ties for Sale.
THE RECORDS MAY BE SEEN
Secretary MacVeagh Prescribes.
Regulations for Their Inspec-
tIon-Chance for Minor
ity Stockholders.
tFrom The Tribune Bureau !


accurate Information regarding the in
ternal affairs Of every corporation which
offers its securities for sale or which ia
listed on any recognized stock exchange
seems certain to become public as g re-
suit OF the sweeping order issued to-
day, with the approval Of the President
regarding the returns made to the Com
missioner of Internal Revenue under the
corporation tax law. It is said that
investors IN securities need no longer
buy "a pig in g poke nor depend on un-
official and untrustworthy information
regarding the internal economy of the
concern whose securities they contem-
plate purchasing. Officials believe that
minority stockholders will obtain valu-
able protection as a result of the Presi-
dents order
| When it is recalled that every corpora
tion is compelled. under heavy penalty.
in connection with the provisions of the
Payne tariff bill, to submit to the Com
missioner Of Internal Revenue an accu
rate and complete statement of its gross
receipts, its expenses, bonded debt, etc,
and to show it's net profits, it will be
realized how farreaching is the inforIna-
ton made available by the order issued
to-day. which became operative with its
PRONUNCIATION at 6:45 o'clock this even-
| ing.
May Be Surprising Discrepancies.
! It is assumed, of course, that all cor
porations, joint stock companies, etc.
which list their securities on the regular
exchanges annually issue complete state
ments giving all the Information they
are required to submit to the Commis-
| sioner of Internal Revenue. but there
are those who intimate that some sur
prising discrepancies may be found to
exist between the published statements
and those certified under penalty to the
commissioner.
In the case Of q corporation, joint
stock company, etc, which does not offer
its securities for sale to the general
| public, any stOckholder may obtain ac-
cess to the records by satisfying the
Secretary of the Treasury that he Is a
| stockhoIder.
(! In order to obtain the Information
| available under this order II is necessary
only to apply TO the Secretary Of the
| Treasury and to satisfy him that the
conditions come within the provisions
| here enumerated. No provision is made
in the law for preparing copies Of the re
turns on file with the Commissioner OF
| Internal Revenue, however, so that those
entitled to examine them must appear in
| NaaVRaOhfS order
provides that, except IN the case of cor
porations which are listed on a regular
exchange, or which offer their securities
| for sale where the desired Information
| is ito be used in any manner by which
information contained in the return
could be made public" the application
for permission to inspect such return
| shall be referred to the Attorney Gen
| eraI and the same provision applies IN
! the case of information desired as q part
Of legal proceedings.
Two Orders Issued.
! There are actually two orders, both
dated to-day, which deal with this sub
| iect. The first, signed by the President,
merely provides that al returns under
/ that section Of the law which deals with
| the corporation tax shall be made pubic
on compliance with such rules as may be
prescribed by the Secretary OF the
Treasury. This is signed by the Execu-
tive. The second is signed by FRANKLIN
MacVeagh. as Secretary of the Treas
urv. and is approved by President Tart
It provides the conditions which snail
attend publicity, as herein outlined. The
Secretarv's order is issued in accordance
with the publicity provisions contained
in The legislative. executive and judicial
appropriation bill Of the last session Of
Congress.
When he devised the corporation tax
il was the chief purpose Of the President
to provide a record which could be used
by him and his subordinates as check
on the representations made to the tariff
committees Of Congress by corporations
urging their need of protection, and
further as an assistance to the proposed
tariff board in its efforts to determine
the precise measure of protection re-
ou,red by the various industries AS the
idea developed. however, Mr. Taft |
concluded that the returns under a |
CORPORATION tax law COuIQ properly De |
utilized for the protection OF would be |
investors and minority stockholders. AS /
originally passed the law provided for
entire publicity for all returns, but il /
became obvious that this would work I
needless hardship TO certain Of the !
smaller corporations through the con-
,-evance of information which could be /
ueed TO their detriment by their COM
natitors. President Taft accordingly /
consented to legislation at the last ses-
sion of Congress which imposed Iimta-
+ions on the proposed publicity. and in
MANY quarters these limitations were
assumed completely TO have nullitied the
,,,blicitv feature Of the law That they
did not do so is evident from the order
iae,ed to-day by Secretary MacVeagh
NTH the approval Of the President.
In order that the regulations promul-
rated to-day might not affect the stock
rlet. all information concerning them
,.-as withheld until a late hour this even
ing Whether the order has any direct /
.efecf o, the stock market to-morrow
reiIg probably depend largely on the com
,leteness and accuracy of the annual re-
,,orts those corporations which are listed
-, the public exchanges or which adver-
rise their securities Tor sale have been
L.t,if If issI1juar