Arizona republican. [volume] (Phoenix, Ariz.) 1890-1930, 1911-12-13

rather be diminished than increased.
Unless the constitutional power OF
congress to regulate securities of in
terstate railroads is definitely estab-
! liShed as being exclusive of state con
! troll: either the federal government
and the states will come TO n general
understanding as 10 the principles 70
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.
Until such exclusive jurisdiction
can be established. the creation of 4
separate administrative body subject
ing the railroads to new system Of
concurrent supervision, in addition to
the many old ones which now exist
does not seem just eNpedient or eco
nomicaL"
For the present. the commission rec
ommends that complete publicity be
required to surround all issues of Sc
curities and that any interstate rail-
road issuing stocks and bonds be re-
CURED TO furnish to the interstate
commerce commission a full statement
OF the details of the issue, the pur-
poses for which the proceeds are to
be used. and an accounting for the
expenditures of such proceeds.
Accurate knowledge of the facts
surrounding the issue Of securities.
and the expenditure of the proceeds
is the matter of most Importance" the
commission saws. 1T is the one thing
upon which the federal government
can effectively insist today: it is the
fundamental thing which must serve
as basis for whatever regulation may
be desirable in the future.
IF full publicity be given we shall
also lessen the fraudulent creation OF
debt II is the degree OF publicity
rather than the stringency of the law
which gives TO the people any real
protection. A stringent law made
quately enforced and secretly evade,l
is the worst thing that can be possibly
offered to the public. because it gives
color to claims which have to foun-
ddtion and fact"
In determining the physical value
OF railroads in relation to their Sc
curities now outstanding. the commits
sion puts aside as entirely out of the
question any attempt to scale down
outstanding securities on the groun1
that constitutional difficulties. public
eSpediency, and confidence IN Amer;-
can railroad investments would forbi,.
il
The commission feels that railroad
development has gone so far and such
a volume of securities has already been
issued that the only questions of real
Importance are whether it is desirable
for the federal government to regulate
tn issue of future securities, and. if so,
10 what extent and in what manner.
The complex relations between securi-
ties already outstanding has made it
impossible to treat the question of fu =
ture regulation as it might have been
treated If those securities were not
already in existence.
In cases where it is found that the
issued securities exceed the physical
valuation, the commission is not in
favor of forbidding further issue until
the deficiency is made up. because
the principle if generally applied might
prevent railroads from securing capt.
tai necessary for the service of a COM
munity.
BY empowering the interstate COM
merce commission to enforce publicity
and to make physical valuations. the
commission believes there will be 10
necessity for a law to require approval
in advance for issues OF securities
Advance authorization. the commission
holds. would tend to create on the
part of the investing public. an i'm
preston of a guaranty or official rec
ognition of values which no admin
istrative authority could safely give
The commissioners do not believe that
the cost Of reproducing railroad prop
critics, however carefully computed. Is
the sole element to be considered in
determining the present value of
railroad. or that the outstanding Sc
curities should be made to conform to
any arbitrary standard.
The commission believes that the
amount and face value of outstanding
securities has only an indirect effect
upon the actual making OF rates and
that it should have little if any weight
in their regulation.
The commission does not approve of
any unqualified proposition to prohibit
ownership of stock of one road by an
other. To do so, the report says.
would involve too much disturbance
of existing relations whatever may be
the evils attendant upon such holdings
1t is recommended. however. that
wherever a group of men or companies
has brought majority of stock i'm a
road they may be properly required to
buy the minority at the same price.