Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1910-06-25
Of Congress to Regulate
Railroad Stock Issues.
Atty. Gen. WIckersham Talks
To Illinois Bar Assn.


Government to legiSlate on the sub
Ject Of the issuance of stocks and bonds
by railroad corporations subject to the
Interstate Commerce act, Attorney
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 law he con-
tended was not nearly so radical
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.
The Attorney General pointed out that
opposition had been made to every
progressive measure of commerce reg
,ilation. But" he declared, in closing
his speech the centralizing tendency
has gone steadily on. and the control
of Congress over interstate railroad
companies has been exercised in an in
creasingly comprehensive manner.
SUCH p'OEleoS IL lISCpdl DIt IL Jill
growth. The great arteries of COM
munication between different parts of
the country and the instrumentalites
which control their operation can only
be properly regulated in the public in
terest by the central national power;
a power which is sovereign, which Is
exclusive when exercised; and which
should he exercised to correct every
vii Of a public character which expert
ence demonstrates to be susceptible of
correction only by nationa! legislation"
Numerous legal authorities were cit
ed by the Attorney General from which
he declared it may confidently be as
serted that while Congress may itself
create corporations for the purpose of
carrying on interstate commerce. 1t
may also prescribe rules and regula-
tions under which corporation Great
ed by the laws of state may conduct
such commerce, and that when it does
so, such state corporation might en-
gage only in such commerce in con-
formity with the rules and regulations
so laid down by Congress; and that
these rules may have reference not
only to the 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 md economists, of the reckless
issue of stocks and bonds by railroad
companies without adequate consider
alton, which. he declared. have come to
he generally regarded as an evil. GER
tainly as remoralizing in it's effect on
the public az the carriage of lottery
tickets from one state to another.
The twenty years period of railroad
receiverships and foreclosures testified
eloauently, he declared. to the practi-
cal effect of such unwarranted issues
of securities upon the ability of rail-
road companies to properly perform
their functions as instrumentalities of
Interstate commerce: while the utter
ance of stock for inadequate or ficti-
tious consideration had furnished the
opportunity for the most irresponsible
and speculative control of these high
ways of commerce and had resulted in
the injury which always followed a
control of property by those who had
no real investment in it, Such control,
Mr. Wickersham continued. all expert
ence demonstrated. would not be gen.
orally exercised in the interest of the
road and to insure the safe conservative
management necessary to meet the re-
quirements of the public and the prop.
err discharge. of the obligations imposed
upon the carrier by law, On the con-
trary 1t was almost inevitable that
such control would be employed for
nd IN
cure immediate profit to those in tenn
porary control.
II 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 ii
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.
The Attorney General admitted that
the Federal Government could not con-
fer on state corporation power to
borrow money and issue obligations
therefor. nor to create and issue shares
Of stock. Only the power which erect
ed the corporation could vest it with
authority for those purposes.
But" ne contended. under all the
rules ard analogies. to which reference
has been made. Congress assuredly
may regulate and restrain the State
corporation in the exercise of these as
we'll as Of other corporate powers, and
may prohibit it from issuing obliga-
lions or stock for any purpose relating
to interstate or foreign commerce eX-
cept in accordance with rules and re-
stric.ions prescribed by it for the pur-
pose of preventing the evils above re-
ferred to.
I'm that respect the national Govern
ment having adopted the state corpor-
alton as an agency of interstate COM
merce, may subject it to the same reg
ulations with respect to the means of
raising money for the purpose of car
rying on such commerce as 1t could i'm
pose upon corporation of its own
creation. The end is legitimate. viz,
the regulation of interstate commerce;
it Is within the scope of the Constltu-
ton.
1.-The means suggested are appropri-
ate to correct an evil which has had In
the past a very real effect upon the
ability of these instrumentalities to
carry on commerce among the states III
conformity with the rules and reguia-