New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-11-23
FOR BLUE SKY LICENSES
Investment Bankers Hear Leg
isIation Is Unsatisfactory Now.
TOO MUCH PATeRNALlSm
Association in First Convention
Bars Use of Name by Mem
bers on Letter Heads.

Blue sky legislation and the question as
to whether the members should be al
lowed to use letter-heads bearing the
name of the association we're the prin-
cipa matters discussed yesterday at fhe
first annual convention OF the Investment
Bankers Association OF America, at the
Waldorf The situation in the various
states az regards the blue sky laws was
covered in an address by Warren 8. Hay
den, Of Cleveland, and the convention de-
cided to give its committee on legislation
authority 30 frame law embodying Mr..
Haydens views on the subject. He de-
cared the Kansas law was unsausfac-
tory.
The question as to the use Of associa-
ton letter-heads by the members was not
disposed of until about twenty delegates
had expressed their ideas as TO the ad-
visibility Of the proposed plan. II was
finally unanimously agreed that for the
present at least it would be unwise for
the members to use the association name
in their business communications.
The convention was called to order by
the president George B. Caldwell Of Chi
cage, And it was found that 800 delegates
from all parts OF the country were pres
ent. Mr.. Caldwell, i'm a brief address,
called attention to the rapidly of growth
the association had experienced since Its
organization three months ago In OK
planning the purposes of the association
he said:
we have been widely advertised as or
ganized to fight get-rich-quick schemes.
While this is a worthy object, II Is, how
ever, incidental to the field Of usefulness
we hope to occupy We are not expecting
to publish a blacklist nor to act in an ad-
visory capacity on questions as 10 what
the investor should or should not buy.
The individual houses must continue TO
do this work The furthest that we can
go is first to keep our membership Of the
highest character and our own skirts
clean and to give such moral and active
support In roofing out of the field such
get-rich-quick schemes as our meanscof
investigation may warrant"
Mr. Hayden in his address first out
lined the meaning of the term blue sky
legislation AS aiming to destroy the bust
ness Of those who sell fraudulent or
Probably the expression blue sky" is
used, he said, because the makers Of bad
securities are conceived as capitalizins
the blue sky and selling shares therein.
He continued: .tc'
ANY blue sky law follows one Of two
theories whose opposition in principle Is
as old as representative government. and
is especially familiar to Americans IN
these times These opposing principles
are paternalism and democracy. In the
present application one would make gov
eminent regulate business by passing in
advance on the merits Of concrete trans
actlons-the other by Furnishing trans
erosion of a prescribed general rule.
Kansas Is the only state, Mr.. Hayden
said, to have in force blue sky law, and
this measure, he maintained, was OF the
paternalistic type and unsatisfactory. He
went on:
II thought / knew what the Kansas
law meant, but wishing 10 be sure | sent
TO Topeka a typical general circular Of
well established bond house and asked
whether the bonds described therein were
within the purview OF the blue sky Law.
The Banking Department repnea lhat
these securities could not lawfully De sold
I'm Kansas without the departments ad-
vance approval. Some houses have as
many as two hundred issues represented
on their lists AS to each Of these issues
except domestic municipals, advance sub
mission OF data and approval thereof
would be necessary. The factor OF delay
must be considered"
Mr.. Hayden said his own State Of Ohio
was trying to solve the question by bring
ing the democratic principle into pia5.
The clements of fair and just measure.
he declared, would be the licensing OF the
distributors of securities, the publicity Or
data relative 10 the merits OF securities
and the penalties for fraud or other un'
Law full conduct. f.i