The Calumet news., 1911-12-11
Declares R abroad Securities
Should Not be Put Under
Federal Control
NO CONSTITUTIONAL POWER
Publicity is Best Weapon Against
Stock Watering
Constitutional Questions Involving
Scope Of Federal Regulation
Are Too Unsettled.

Washington, Dec. 1.-THE Railroad
Securities Commission, headed by
President Arthur II. Hadley. of Yale,
whose report was submitted to Con
grcss today, declares that il would be
practically impossible at this time TO
place issues of railroad securities un-
der Federal control. The commission
recommends that enforced publicity
effective weapon against stock water
ing which the government has at its
command.
A distinguished group of investiga-
tors was named by President Taft to
cooperate with Prof. Hadley. They
were Frederick n. Judson, st. Louis; (;
Frederick Strauss, New York; Walter
l.. Fisher, secretary of the interior and
Balthasar II. Meyer, member of the
interstate commerce commission.
The commission was created i'm 1910,
when the Senate refused to accept IA
house amendment to the pending rail-
road BILL providing that all future is
sues of railroad securities be placed
under the control of the Interstate
Commerce Commission. Many of the
Senate Democrats opposed it as an in
vasion of states rights. President Taft
at the time told Republican leaders the
party was committed To such a meas
ure but when il appeared impossible
to pass II, the president agreed To have
the clause eliminated, with the under
standing that a commission to study
the subject would be allowed. This was
done and the commission began work
in the autumn of 1910. sPublic hear
ings were held and Chairman Hadley
studied the problem abroad.
The commissions report is distinctly
adverse to the legislation proposed in
the railroad bill.
President Taft Concurs.
President Taft in transmitting the
report to Congress today. declared that
he heartily concurred in the recon-
The Commissions principal conclu
sions 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 authori-
ties should make concerted effort to
harmonize existing requirements.
That Congress should prepare for
the future by giving consideration to
a federal incorporation act which
would permit interstate railroads to
exchange their state charters for ma
tional 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
a condition exists, to superimpose fed
eral regulation upon state regulation
would add to the conflicts and COM
plexlties, which in the public interest
should rather be diminished than in
creased.
Unless the constitutional power of
Congress to regulate securities OF in
Ierstate railroads is definitely estab-
ished as being exclusive of state con-
irol either the federaLgovernment and
he states will come to n general un-
as to the principles To be
adopted i'm the control of security is
sues, or the railroad systems will be
given the opportunity to exchange
heir state charters for federal ones"
says the report.
Until such exclusive jurisdiction
,an be established the creation of a
separate administrative body subject
ng the railroads to n new system of
concurrent supervision, i'm addition to
he many old ones which now exist
loes not seem just, expedient or econ
lmical."
Favors Complete Publicity.
For the present. the commission rec
,mmends that complete publicity be
required to surround all issues of Sc
,urities and that any interstate rail-
road Issuing stocks and bonds be re-
luired to furnish to the Interstate
commerce AoulinlSSiOH a. luil SNdi'-
nent of the details of the issue, the
purposes for which the proceeds are to
be used, and an accounting for the ex-
Denditures of such proceeds.
Accurate knowledge of the facts
the issue of securities, and
he expenditure of the proceeds is the
matter of most Importance" the com
mission says. ut is the one thing up
IN which the federal government can
effectively insist today; II is the fun
lamental thing which must serve as
,asis for whatever regulation may be
desirable i'm the future.
IF full publicity be given we shall
llso lessen the fraudulent creation of
iebt. II is the degree of publicity
'ather than the stringency OF the law
which gives TO the people any real pro-