New-York tribune., 1922-06-12
Law to Control
Mergers Urged
By Untermyer
Suggests Legislation That
Will Correct Methods of
Marketing Stock and Give
SU.S :. Board More Powers
lgainsiW hen-I n-IssuedDeals
ftiorney Says Testimony in
Steel Inquiry Warrants No
Action Against Companies


htm -Lsckawanna and the Midvals. In
Ind and Republic steel mersers vir-
italy completed before the lockwood
otmmi,tee. Samuel Un;ermyer the
cemmittee's counsel. has drawn certain
Conclusions or the basis Of the facts
dsclosed which he thinks should be
q tYefully weighed By the committee
during The summer FOR possible legis'
lit.on on the subject.
The public sessions OF the committee
ase 20 stop after the coming hearings
On Thursday and Friday. MT. Inter
r4yer will sail FOR Europe on Saturday.
HIe is not expected 20 return until Sep
ttmbcr l3.
Mr.. Untcrmyer pointed out that
While tho testimony on the mergers
and the operations Of the curb market
and stock Exchange did not justify his
Recommending any action. especially in
view ~ the fact that the Federal su-
thorities are checking up on the SUB
je4, certain features were developed
which he thought required legislative
correction.
The Federal Trade Commission. he
suggests. should be given power 20 re-
ject combinations or merger, whenever
% believes they would bring about un-
fair competition, and should bc given
the opportunity 20 scrutnize these
mcfgers before they are consummatci.
II should be made unlawful. nc fg~-
th3r suggests. foT any stock exchange
20 permit dealing. in stocks &C pro-
jecttd pools or syn1Icatcs unless the
full agreement under which tne stock
IS % be marketed has been Red with
the.sxchange foT puolc inspection.
A. third suggestion Of his is that IL
should be made unlawful for any ex-
change 90 deal in securities subject %
their being issued or when issued, or
IN any securities that are not in ex-
istence and represented by property.
Mr. Untermyer regards such operations
as mere gambling.
The general observations Of the
counsel on the mergers and stock OK
change operations as they suggest pos
sible legislative proceedings follow;
whilst tho testimony does not
justify the recommendation Of any ac-
tion on our part with respect 20 these
Two mergers, and no action is neces-
sary in view az the fact that the Fed
cral authorities have promised 70 check
UP the subject. the record has however
developed certain features that ought
20 receive the careful consideration Of
the committee IN ITS recommendations
fir legislation.
Should Assure Competition
FIRST. the law creating the Federal
Trade Comm ssion should be enlarged
so a. % prohibit any person or corpora
tion engaged IN interstate commerce
from acquiring the property Of n COM
petitor likewise engaged without pre-
vious application 20 and approval OF
the commission after public notice. In
that way the commission would be
afforded the opportunity Of discrimi-
mating between mergers that are in
consequential or beneficial and those
that substantially affect competition,
and are therefore in the nature OF un-
fair competition within the meaning Of
the Clayton ac..
"But for the unexpected publicity
given these mergers they would have
slid through. There was no public
authority that had 20 be notified that
they were about % come together, and
in the great variety Of mergers that
are not so stupondous in their size and
that do not therefore challenge public
attention, they 90 through because
there is no authority that has 70 give
permission before they can 90 through.
"The Federal Trade Commission
ought 20 be- given the power TO reject
these combinations or mergers when
ever they believe that they constitute
Il unfair competition; and that they can
not do az present except when they
get their information through the
newspapers or other sources. until the
horses escape. and then they proceed to
try % lock the stable door.
1T SIS a very simple proposition %
have tho Jaw so amended as 20 make II
unlawful for any person in interstate
business 90 buy out q competitor with
out first getting the approval OF the
Federal Trade Commission. have q
very high regard for the work Of that
commission and ! think II has been
doing a splendid service.
Wants Public Protected
"The second suggestion that presents
itself on the face OF this record as now
made s Nat 10 should be made unlaw-
ful for any stock exchange whether II
be q curb exchange, a consolidated eX-
change or any other exchange, 20 per
nit dealings m the securities Of any
existing or impending corporation
where the stock sought 20 be dealt IN is
the subject Of a pool or syndicate
transaction, unless the agreement
under which the stock is being mar
keted has been fled with the exchange,
open FOR public Inspections: nor unless
notice has been given from the rostrum
% the exchange or by publication that
the security thus being marketed IS the
subject OF a syndicate operation.
"The third suggestion Is that Il
should be made unlawful for any eX-
change 10 deal in securities subject 20
their being issued or when issued or
IN any securities that are not IN ex-
istence and represented by property.
That Is a mere gombling operation.
The public IS invited into a blind pool.
No particulars are furnished Of the in
tended Transaction. and yet n the Sc
Curities are subsequently issued the
purchaser is bound 20 take them, how
ever disappointing they may prove
10 be.
az soeurities not then in existence
are 20 be permitted 10 be dealt in under
any circumstances subject 20 their fu-
ture issue. the dealings should be pre-.
eeded by the same detailed statement
as is now required by the Stock Ex-
change for the listing OF securities al
ready issued.
Il would like it. however. clearly
understood that these observations
have no special reference 10 the pro-
posed merger.
Speculation Leads 10 Trusts
Il want 20 say in connection with