The daily Gate City. [volume] (Keokuk, Iowa) 1855-1916, 1910-06-24
VICkERSEAN !!
ANlE2AlLR0ADS
Attorney 9 ; raj Declares Reckless
Issue iailroad Stocks and
Bonds Are Demor-
aizing.
ADDRESSED STATE BAR
Watered and Bonus Stock Is One of
the Greatest Abuses Connect
ed With Corpora
tlons.

Cf1lCAGO, ILL.,, June Z4.-Declar1nS
that the reckless issue of railroad |
stocks and bonds is as demoralizing
to the public as lotteries, Attorney
General Wickersham made an argu.
ment in favor of federal regulation and |
control of all railroad issues, In an
address before the state bar associa-
tion here today. He contended that |
such federal control was an essential
part of the governments supervision
of interstate commerce and present
ed numerous quotations from supreme
court decisions, to support his argu-
ments. He discussed at length the
technical legal phases of the PROPOSE
tion.
Economists and courts alike he
said, "have condemned the reckless
issue of stock and bonds by railroad
companies without adequate consider
alton, which has become to be gen.
orally regarded as an evil, certainly as
demoralizing in it's effect upon the
public as the carriage of lottery
/ tickets from one state to another. The
twenty years period of railroad re-
ceiverships and foreclosures, the re-
ports of which fill many volumes of
reports of decisions of the federal
4 tical effect of such unwarranted issues
of securities upon the ability of rail.
! road companies to properly perform
their functions as instrumentalities of
4 Interstate commerce; while the ut
A terance of stock for inadequate on
ficticious consideration has furnished
the opportunity for the most ire
sponsible and speculative control Of
these highways of commerce, and has
resulted in the injury which always
follows a controi of property by those
A who have no real investment in it.
"Such control, all experience dem
onstrates, will not be generally exer.
to insure safe conservative manage,
ment as necessary to meet the re-
quirement of the public by the proper
discharge OF the obligations imposed
upon the carrier by law. On the con
trary it is almost inevitable that such
control be employed for purely specu
Iative purposes and to secure immed
late profit to those in temporary con
troll. 1t is this public aspect which
lends force to the conviction thai
'watered' and bonus stock is one O
the greatest abuses connected witt
the management of corporations ane
it is this effect upon lie fitness of the
S carriers to perform their duties undel
q national legislation that requires ant
justifies federal supervision and con
b troll of the subject
n The attorney general argued tha
legislation to secure such control wa
j. plainly within the constitutional pow
q er of congress. He pointed out tha
b. the extent of the obligations which
J. carrier might incur had direct etfec
upon the determination of the re lso1
ableness Of transportation rates, an
that the work of the interstate con
merce commission would be greatl
l facilitated, if before stocks and bond
were issued the consideration there
g for were ascertained by the commits
sion to be full and adequate. "Th
great arteries of communication, h
concluded, "can be properly regulate
u in the public interest by central nj
d, tional power; which should be exc
m cised to correct every evil of publ
I'd character"