The Washington herald., 1912-01-15
TRUST CURB URGED
In ROBERTS BILL
Measure to Be Introduced To-day
Answers Financiers' ''How Far
Can We Go" Query.
~ GEoReE L. KDMUNDs.

Constructive legislation looking to Fed
eraI control of the great corporations en-
gagged in the manufacture OF goods Of all
kinds for purposes Of interstate commerce
is the object Of the bin which will be in
troduced IN the House to-day by Repre-
sentative Ernest W. Roberts, OF Massa-
chusetts. The bill is framed to form the
basis of the administrations campaign
for Federal control OF the trusts. rue
first draft OF the bill has been submitted
by fits author TO members OF the United
States Commerce Court and other court
justices and members OF the Interstate
Commerce Commission. besides having
previously received the appreciation Of
Commissioner of Corporations Herbert
Knox Smith, who In the event OF the
enactment OF the measure will become its
chief administrative oficer.
The Roberts bill in its phraseoloEy, as
well as its intent. is constructive rather
than punitive. In this IL IS not supple
mental to the Sherman antitrust law,
now on the statute books, nor does II
repeal In any particular that enactment
The new corporation bill Is well supplied
with punitive paragraphs looking TO the
discouragement Of efforts to defeat its
object, and these paragraphs in almost
every case carry with them penalties OF
law, but they are likewise Of construe-
tive nature.
Aimed at Big Corporations.
The bill is applicable to all corporations.
exclusive Of national banks and insur-
ance companies, all of which now have
what appears TO be sufficient Federal or
State regulation. In scope It aims to
control through the medium OF the
Bureau Of Corporations, all corporations
Of a valuation greater than 100000 In
explanation OF this limitation Mr.. Roberts
said to-day: TT Will be noted that
have framed the bill to include all cor
porations the value OF whose assets, real,
personal, and accrued. equals or exceeds
IS, ,0OO,0 There is no opportunity for
evasion OF the law by corporations Of
huge size and restricted capitalization
Should the new bill pass Congress its
approval will mark the end OF the un-
restricted exploitation OF the national re-
sources and national industries. BY rea-
son Of the inhibition OF stock watering
new corporations cannot be organized,
except with all OF their capital actually
full paid" Under penalty Of dissolu-
tion a corporation subject to the pro-
visions of the Roberts bill may not issue
new stock or bonds except for purposes
of actual extension or betterment, and
u
proval OF the Commissioner OF Corpora
ton.
The total sum Of the outstanding stock,
existing debts and franchise value of
all corporations is provided as the limit
for the issuance Of bonds or coupon notes
by any corporation coming under the
act. II II be the desire of a corporation
to mortgage all or portion Of its plant
for the payment Of current or funded
indebtedness Il may SO mortgage, but
that mortgage must secure all pre-exist-
ing issues and debts. II a corporation
shall sell such bonds or mortgage notes
at less than par value the difference be-
tween the selling price and par becomes
automatically an Indebtedness of the cor
poration coIIectible at law. It Is be-
Iieved that by this requirement watered
bonds will become a thing Of the past
In the same manner as watered stock
will be hereafter prohibited by the ear
lier sections Of the bill.
Where absolute Federal control OF cor
porations is provided by the Roberts
sioners approval well and good; II he
provision for the authoritative yalua-
ton Of all corporate franchises by the
Commissioner Of Corporations When II
is desired to use such franchise for the
purpose OF figuring the basis OF the
amount of a bond issue the corporation
must submit to the Commissioner its
idea of the valuation OF Its franchise.
II his valuation meets with the Commits
sioner's approval well and good; II he
deems Il too great he may then use the
power delegated to him and arbitrarily
fix the figure at which such franchise
may be capitalized for the bond issue.
Answers FinancIers' Question.
The measure, according to its author,
answers the question SO frequently pro-
pounded by Messrs. Morgan, Perkins,
Schiff, and others: Tell US how far we
can 60 legally, and We will strive to keep
within the limits OF the law" For It pro-
vides that the charter shall state clearly
and distinctly Just what every corpora
tion is organizedf 10 do. Having that
statement in his files, II then becomes
the duty of the commissioner to see that
it does Just that and no more. Finding
the corporation exceeding this charter
authority, the commissioner proceeds to
serve notice upon 1t that the transgres-
sion of fits powers must cease. He waits
for six months, and II the forbidden ac-
tivities still continue he cites the corpor-
alton into court, where It Is dissolved at
once It Is distinctly provided that no
more than thirty days shall elapse be-
tween the citation and the hearing. And
when the order of dissolution is issued
that corporation ceases to be as complete
" as If II never was or II It expired by
limitation Of fits charter.
Publicity for every detail of the busi-
ness of all corporations coming under the
provisions Of the bill is also provided.