Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1911-12-11
BLOW 70 FEDERAL
CONTROL Of ROADS
SECURITIES COMMISSION MAKES
ADVERSE REPORT ON PRO-
POSED PLAN.
BOARD OF NOTED THEORISTS
FINDS DANGER IN SCHEME
Holds That Federal Regulation Over
States Rights Would 30 Immature
E Constitutional Questions Yet to es
termined-Jurisdietion Must 3
Defined.

Washington, Dec. 1.-THE railroad
securities commission, headed by Pres
ident Arthur T. Hadley, Of Yale, has
reported that 1t would be practically
impossible at this time to place issues
of railroad securities under federal
control. The commission recommends
that enforced publicity for all railroad
financing is the most effective weapon
against stock watering which the gov
ernment has at Its command.
A distinguished group of inVestlga :
tors was named by President TAFT to
co operate with Professor Hadley.
They were Frederick y. J"as1H. C! 81.
Louis: Frederick Strauss. of New
York: Walter l.. Fisher, secretary OF
the interior. and Baltasar II. Meyer
member Of the interstate commerce
commission.
Commission a Compromise.
The commission was created In 1910
when the senate refused to accept a
house amendment to the pending rail-
road bill. providing that all future is
sues of stocks and railroad securities
be placed under the control OF the
of the senate democrats opposed II as
an invasion of states rights.
The commissions report is distinct
ly adverse to the legislation proposed
in the railroad bill.
President Taft in transmitting the
report to congress today. declared that
he heartily concurred In the recon-
mendations.
The Commissions Conclusions.
The commissions principal con-
clusions are:
That any attempt by congress to
ADOPT the policy of federal regulation
to the exclusion Of state regulation
would be premature.
That for the present. state author
tiles should make q concerted teNoF'
to harmonize existing requirements.
That congress should prepare for the
future by giving consideration to q
federal incorporation act which would
permit interstate railroads to exchange
their state charters for national ones
The commission takes the ground
that constitutional questions involving
the scope and extent of federal au
thority are unsettled and will remain
so for some time; and that while such
n condition exists. to superimpose led
oral regulation upon state regulation
would add to the conflicts and complex
tiles which in the public interest
should rather be diminished than In
creased.
until such exclusive jurisdiction car
he established, the creation Of n sepa-
rate administrative body subjecting the
railroads to a new system OF concurrent
supervision. In addition to the many o'o
ones which now exist does not seem
lust. expedient or economical.
For the present. the commission rec
ommends that complete publicity Dc
required to surround all issues OF Sc
curities and that any interstate rail-
road Issuing stocks and bonds he re-
o,,ired TO furnish to the Interstate COM
n,erce commission q full statement ol
tho details nf the issue, the purposes
for which the proceeds are TO be usso
and an accounting for the expenditures
Of such proceeds.
In determining the physical value OF
railroads in relation to their securities
now outstanding, the commission puts
aside as entirely out of the questio'
any attempt to scale down outstanding
securities on the ground that constitu'
tlonal difficulties, public expedieney
and confidence in American railroad in
yestments would forbid it.
Question Beyond Roach.
Tho commission feels that railroad
DEVELOPMENT has gone so far ana suct
a volume OF securities has ALREADY peer
issued that the only questions or rea
importance are whether 1t Is deslrapi'
for the federal government to regulate
the issue of future securities, ana, a
so TO what extent and In what manner
The complex relations between secur'
tiles already outstanding has mace
,mpossible to treat the question or fu'
ture regulation as II might have beer
treated IL those securities were not al
ready in existence.
In cases where it Is found that the
issued securities exceed the physica
valuation. the commission Is not IN IA
vor of forbidding further issue until thu
deficiency Is made up, because th'
principle IL generally applied nigh
prevent railroads from securing capita
necessary for the service Of com
munlty.
A. to Mergers.
The commission does not approve o
any UNQUALIFIED proposition to prohibt
ownership of stock Of one road by an
other. To do so, the report says, woult
involve too much disturbance of exist
ing relations whatever may be the evil
attendant upon such holdings. 1t u
recommended. however, that wherever
q group OF men or companies ha!
bought majority Of stock in roat
thev may be properly required to bua
the minority at the same price.