The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1911-12-12
More Fife ctive Than
Laws in Regulating
Railroad Securities.
FEDERAL CONTROL
is NOT APPROVED
Commission, Headed by Presi,
dent Arthur T. Hadley, of Yale,
Makes Its Responsibilities
That for the Present All
Regulation Should be
Left to the States.

Washington. December 1.-THE Rail-
road Securities Commission. headed By
President Arthur T. Hadlcy. OF Yale.
has reported that It would BIO practi-
cally impossible at this time TO place
Issues OF railroad securities under
Federal control. The commission re-
commends that enforced publicity for
oil railroad financing Is the most ef-
fective weapon against stock watering
which the government has at dts com
mand.
A distinguished group OF invcstiga-
tors YVES named BY President Taft TO
cooperate with Professor Hadlcy.
They were Frederick n. Judson. of ST.
Louis; Frederick Strauss, OF New
York: Walter r. Fisher, Secretary OF
the Interior. and Balthasar IL. Meyer,
a member OF the Interstate Commerce
Commission.
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
sue OF stocks and railroad securities
be placed under the control OF the In,
terstate Commerce Commission. Many
OF the Senate Democrats opposed II as
an Invasion of States rights. Prcsi-
dent Taft at the time told Republican
leaders the party WAS committed TO
such Il measure. but when IL appear
cd impossible to pass 1t, the President
agreed to have the clauee eliminated.
with the understanding that com
mission 10 study the subject would be
allowed. This was done and the com
mission began work In the autumn OF
1910. Public hearings were held ard
Chairman Hadley studied the problem
abroad.
The commissions report is dis.
tinctly adverse TO the legislation pro-
posed In tho ruIfroad bill.
Cancellations of Commission.
President Taft. In transmitting the
report 10 Congress to-day, declared
that he heartily coucurred in-the rec.
concentrations. The commissions prin-
cipal conclusions are:
That any attempt by Congress to
adopt the policy OF Federal regulation
to the exclusion OF State regulatio
would be premature.
That for the present State authori-
ties should make concerted effort TO
larmonIze existing requirements.
That Congress should prepare Tor the
future By giving consideration TO a
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
a condition exists. to superimpose Fed.
eral regulation upon State regulation
would add to the conflicts and COM
plex!ties,, which, In the public inter-
Ist, should rather be diminished than
increased.
nf
Congress to regulate securities OF in
ierEtate railroads is definitely estab-
ished as being exclusive OF State con-
troll either tho Federal government
and the States will come to u general
understanding as TO the principles to
be adopted. In the control of security
Issues. or the railroad systems Will be
given the opportunity to exchange
their State charters for Federal ones"
says the report.
Not Expedient or Economical.
Until such exclusive Jurisdiction
can be established the creation OF a
Eeparatlve administrative body sub
Jecting the railroads to new system
of concurrent supervision, I'm addition
TO the meny old ones which now exist.
does not seem just. expcdent or
economical"
For the present, the commission re.
commends that full publicity be re-
CURED to surround all Issues of securi.
ties and that any interstate railroad
Issuing stocks and bonds be REQUIRED
to furnish to tho Interstate Commerce
Commission n full statement of the
details of the issue. the purposes fol
which the proceeds are to be used ant
an accounting for the expenditure oi
such proceeds.
Accurate knowledge of the facts
surrounding the issue OF securities
and the expenditure or the proceeds /.
the matter of most Importance" tbs
commission says. 1T Is the one thing
upon which the Federal government
can effectively insist to-day; ii is tn,
as basis por whatever regulation ma,
be desirable in the future
IF full publicity be given we shall
also lessen the fraudulent creation Of
debt. 1t is the degree Of publicity
rather than the stringency of the law
which gives TO the people any rea
protection. 4 stringent law made.
Gnately enforced and secretly evadct
Is the worst thing that can be pos
Fibly offered to the public. because II
gives color to claims which have nc
foundation iii fact"
In determining the physical value Of
railroads in relation to their securities
now outstanding. tho commission puts
aside as entirely out of the question
any attempt to scale down outstand.
Ing securities on the ground that con.
stitutional difficulties. public expend
iency and confidence in American rail
road investments would forbid 1t.
A Complex Question.
"a Tho commission feels that railroad
development has gone SO far. and suci
rfS H. A.
( issued that tho only questions Of rea
Importance, arc whether 1t .is desirable