El Paso herald. (El Paso, Tex.) 1901-1931, 1913-01-18
TEXAS TO GET
blue SKY"
MEASURE
Law to Safeguard Invest
ments Is Planned; Will
Resemble Kansas Law.
OTHER STATES ARE
TO TRY EXPERIMENT

Austin, Texas, Jan 1s.-In keeping
with the new policy of throwing pro-
lection around gullible investors which
promises to be adopted by the legisla-
lures of a number OF states this year,
the Texas legislature is practically GER
tain to enact q blue sky law.
While the particular object of blue
sky legislation is to prevent those who
sell fraudulent or Improbable securi-
ties from doing business, 1t is claimed
by men who have investigated the trend
OF public sentiment on the subject that
there is danger of too much radicalism
entering into such law and that what
ever measure is passed finally by the
Texas legislature should first receive the
most careful consideration. Unless this
is done there is grave danger, it is
stated, Of legitimate investment bank
ing interests in and out of Texas, as
well as many business propositions
which might ultimately become sources
Of profit and of benefit to the material
welfare Of the state, being injured, if
not destroyed. The enormous losses that
resulted from the sale of worthless
stocks In oil companies several years
ago should have, it is urged, brought
about the enactment of a blue sky
law, 1t is claimed. The people OF Texas
put millions of dollars into oil compa-
nies that had practically no assets
Other States Plan Similar Laws.
Blue sky legislation is now pending
IN the states of Washington, Oregon,
Massachusetts, and Illinois measures of
this kind failed of passage last year
but the agitation for laws on the sub
1ect In those two states promises to
bring about a favorable action when
the matter is again taken up for con-
Sideration.
The legislature of the state of Kan
sas was the first to enact blue sky
March 10, 1911 Its operation has been
closely watched by Investment inter-
eSts, and while serious objections have
been raised to some features of the act,
1t has proved highly beneficial on the
whole, it is stated.
Kansas Law Is Strict.
The Kansas law makes 1t a severely
punishable offence to attempt to sell Sc
eurities without obtaining from the
bank commissioner a statement that the
vendor is solvent; that his plan of doing
business and proposed contract contain
and provide for a fair, just and equita-
bic plan for the transaction Of business,
and. in the commissioners judgment,
promises a fair return on the security
He must file with the commissioner his
plan of doing business, a copy of all
contracts he proposes to make with or
sell to his customers, an 1temized ac-
count of his financial condition, and if
a corporation or association, copies Of
all papers pertaining to organization.
The name of the agent of the applicant
must be registered in the commission
ers office. He must file semi-annually,
or ottener if called for, his monthly bal
ance sheet, and take a trial balance
monthly for the information of inquir-
ing customers. The Kansas law ex-
empts from its purview banks, real es-
tate and mortgage companies, building
and loan associations and corporations
not organized for profit 1t also ex-
cepts government bonds. bonds of the
state or Kansas and Kansas munich
paHueS and Kansas real estate mort
cages. In effect the law says that
anybody but a bank must satisfy the
commissioner if ne wants to sell private
corporation bonds
In order to simplify the espionage of
the state as to the sale Of securities it
is suggested by some that this could
be done by enactinE a law providing
for the licensing of the distributors of
securities, the publicity of data rela-