Los Angeles herald., 1910-02-18
RAILROAD BILL
CARRIESCHANGES
SAYS NO STOCK SHALL BE is
SUED BELOW PAR
Measure Introduced by Representa-
tive Townsend Tends to Stop
Epidemic of Taking Too
Much Water
Associated Pressl


WASHINGTON, Feb. 1.-THE ad-
ministradon railroad bill, amending the
Interstate commerce act, originally IN
troduced in the house by Representa-
tive Townsend of Michigan, was rein
troduced by him today with number
of important amendments drawn by
Attorney Wlckersham. These change
the bill in the matter of the creation OF
the court of commerce. in the regula-
tion of stocks and bonds, and in the
inclusion of electric railroads.
The amendment relating to the COM
merce court limits its power to that
of federal circuit court. This amend
ment was drafted to meet the objection
made to the original provision that the
court would have more extensive jur1s-
diction than the existing circuit courts
of the United states.
The stock and bond provision is
amended so as to permit the reorgani-
zation of railroads and the merger of
roads not directly prohibited.
Must Issue Stock at Par
The act establishes the general prin-
ciple that no stock shall be issued by
railroads expect at par, and no bonds
except at their reasonable market or
calling value ascertained by the inter-
state commerce commission, and where
either stock or bonds are paid for in
property, its fair value must be ascer-
tanned by the commission.
One section deals specifically with
the issue of stocks and bonds in re-
organization of existing companies and
authorizes the issue of stock to an
amount not exceeding the aggregate
of the stock of the company reorSan-
lied and bonds to an amount not eX-
ceeding the outstanding bonds and
other obligations, including new money
paid in, provided the aggregate interest
charges to be paid by the reorganized
company do not exceed the aggregate
existing interest charges.
In the case OF the merger of two or
more railroads, the stock and bonds
of the consolidated company is not TO
exceed the aggregate amount of stock
and bonds of the constituent COM
panies nor be in excess of the fair es-
timated value of the properties of the
consolidated company ascertained by
the commission.
A railroad company is left free to
acquire stock and bonds of another
non-competing railroad, provided the
aggregate amount of stock and bonds
issued for such acquisition shall not
exceed the fair value of the property
as ascertained by the commission, or
the aggregate par value of the stock
and bonds acquired without increase
in the aggregate interest payable on
such bonds.
These provisions, it is believed, will
prevent the bill from interfering with
any legitimate financing, while effec-
tually preventing the issue of stock
and bonds without proper safeguards.
The bill further provides that any
officer of a railroad corporation who
violates the law may be punished by
a fine of $4,000, or three years imprison-
ment, or both.
The amended bill further provides
that, where notes or other obligations
made in conformity with the act are
secured in the pledge of bonds,
sale of the pledged bonds to enforce
the loan must be had at public auction.
and notes may be made convertible
into pledged bonds on the basis of
the reasonable market or selling value
of the bonds as approved by the COM
mission.
The amendment are so framed that
the new act shall not operate to i'm
pair any contract, mortgage or other
instrument made prior to the pas
sage of the act
Electric railroads are granted the
concession they desired at the recent
hearings, when it was complained that
the bill was a discrimination in favor
of steam lines to the financial detri-
ment of electric roads.