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Governor, Lieutenant-Governor and State Comptroller and requires this Board to appoint an examiner of securities and such deputies and assistants as may be necessary:

The word company is so defined as to include every corporation, association and firm(except banks, trust companies, insurance companies, certain real estate companies, building and loan associations and corporations whose securities are required to be approved by a Public Service Commission) which shall sell or offer for sale to any person in this state any securities, except United States bonds and New York State and Municipal Bonds. The bill requires that every such company shall file with the State Securities Board a statement showing in full detail the plan upon which it proposes to transact business, copies of all contracts, bonds or other instruments which it proposes to make with or sell to its contributors, an itemized account of its actual financial condition and the amount of its property and liabilities, and such other information touching its affairs as the Securities Board may require, together with a copy of its Articles of Co-partnership, Incorporation or Association, Constitution, By-Laws and all other papers pertaining to its organization, and if organized under the laws of any other state, territory or government, a copy of such laws. Every foreign company is to file its written consent to be sued in any county of this state by service of process upon the examiner.

Further provisions are that the examiner shall examine the papers so filed and may make a detailed examination of the affairs of any company at its expense; and if he finds that the papers filed contain any provision that is unfair, unjust, inequitable or oppressive to any class of purchasers or contributors, or if he decides that the company is not solvent and does not intend to do a fair and honest business and, in his judgment, does not promise a fair return on the securities offered, it shall be unlawful for such company to do any further business in this state, until it shall so change its constitution, by-laws, articles of incorporation or association, charter, proposed plan of business and proposed contracts and its general financial condition, in such manner as to satisfy the examiner, unless the findings of the examiner be annulled or, modified by the State Securities Board on appeal.

In addition, it is provided that every company shall file twice a year in the office of the examiner for public inspection and information, and at such other times as may be required, a statement giving details of its financial condition and such other information, concerning its affairs, as the Board may require.

Monthly Trial Balances are to be made, which with all other books and accounts are at all times during business hours, except on Sundays and legal holidays, to be open to the inspection of the examiner and his deputies; and any stock holder and investor in any company, or investor in securities by it offered for sale may request the examiner to make such examination. Whenever it shall appear to the examiner that the assets of any company do not equal its liabilities, or that it is conducting its business in unsafe, inequitable or unauthorized

manner, or is jeopardizing the interest of its stockholders or investors in securities by it offered for sale, or whenever it shall fail or refuse to file any papers without giving satisfactory reasons, the examiner shall at once communicate such facts to the Attorney General, who shall thereupon apply for the appointment of a receiver (who shall be the examiner) if it is a company organized under the laws of this state, to take charge of and wind up its business; and if it is a foreign company, it shall be excluded from doing business in this state.

It is further provided that any person who shall sell, or attempt to sell securities of any company without having complied with these requirements, and any company which shall do, or offer to do any business without having complied with the provisions of the bill is guilty of a misdemeanor, for which the maximum penalty is $5,000 and imprisonment for ninety days.

The fundamental vice of this bill is that it undertakes to give to an officer or board the power to determine whether a company has a fair, just and equitable plan for the transaction of business and promises a fair return on securities by it offered for sale. It seems to this committee that this may be left with safety to the judgment and conscience of business men, subject to the existing laws against fraud and unfair dealing. Surely no board or examiner can form a judgment upon these matters which will be of more value than that of business men who have themselves in vested in such securities and put their good names behind them. That the author of this bill realizes this is shown by the provision in the bill that the examiner in giving his approval to any company shall state in bold type that he in nowise recommends its securities.

This committee is of the opinion that the provisions of the bill in so far as they relate to companies offering for sale securities issued by others are not appropriate to the purpose of the bill either in form or substance. A very solvent company might in a given case offer speculative securities, and a very weak one might have among its assets some first inortgage railroad bonds, which it desired to sell. If the securities in themselves are good there ought to be no restrictions as to who should sell them. As the bill undertakes in the first place to provide mechanism by which the question whether the securities themselves are good can be ascertained, it seems quite unnecessary to examine the private affairs of the vendors of these securities. The bill extends not only to companies which issue securities and to companies and co-partnerships which make a business of dealing in them, but also to every company which may at any time sell or offer for sale any securities. Thus if a grocery company invested some of its surplus funds in first mortgage railroad bonds having a wide market and subsequently wished to sell them, it would have to file all the papers specified in the law and obtain the approval of the examiner of its methods of doing business and of its solvency before it could sell them.

Io so far as it relates to private and unincorporated firms dealing in securities this bill discriminates unfairly against a certain kind of business and imposes unreasonable burdens and restrictions upon those engaged in it. No good purpose can be served by compelling such firms to disclose their private affairs, which can have no possible bearing upon the value of the securities sold or offered for sale by them.

One of the most dangerous features of the bill is the lack of provision of adequate instrumentality for the exercise of these immense paternalistic powers. Though purporting to create a State Securities Board, its members, already overburdened by the duties of their respective offices, would find it wholly impossible to give due attention to the matters which this bill would subject to their supervision and control. Accordingly in practice this bill will vest in a single person, namely the examiner, autocratic power over a large proportion of the vast financial interests of this state. Even were this power intelligently and fairly exercised it would not be effective in protecting the interests of investors. Sound securities would be sold on their merits but the distributors of the lowest grade securities, to the sale of which the consent of the examiner had been obtained, would give the fact of the approval of all publicity possible. The marketing of the weakest securities approved, particularly among the small and inexperienced investors, would be materially facilitated.

The proposed legislation is practically untried. It is true it is somewhat similar to a law which was enacted in Kansas in 1911, which proved so unworkable, that a law has recently been enacted by the Kansas Legislature repealing five of its sections and substituting others still quite different from the present New York Bill. Whether the law so amended will work in Kansas remains to be seen. (It is, however, a novel situation that New York, the financial centre of the country, should base financial legislation of fundamental importance on that of Kansas.) It is understood that a similar bill introduced in Indiana this year and passed by the legislature was vetoed by the governor because he considered it badly drawn and oppressive to legitimate business interests.

While this committee is in full harmony with any suggestion which will prevent the sale or offer for sale in this state of securities of wildcat companies, or in any way protect investors against fraud, it is of the opinion that this bill in its present form should be opposed, as a crude, impracticable measure which, enacted into law, would surround all transactions in securities with useless expense and infinite annoyance, and have the result of driving financial business away from New York.

This committee therefore recommends to the Chamber the passage of the following resolutions :

Whereas, Assembly Bill No. 1865, to amend the Stock Corporation Law in relation to the regulation and supervision of investment companies, appears to subject financial business in this state to undue burdens, which must result in driving such business from this state ; and

Whereas, There are contained in this bill certain inquisitorial and other provisions which appear to be injurious to the maintenance of the financial supremacy of this state ; therefore, be it

Resolved, That the Chamber of Commerce of the State of New York voice its disapproval of this bill and oppose the enactment of the same into law; and be it further

Resolved, That a copy of the committee's report and these resolutions be sent to the Governor of the State of New York and the members of the Legislature.

FRANK A. VANDERLIP,
JOSEPH FRENCH JOHNSON,
FRANCIS L. HINE,
ALBERT H. WIGGIN.
MORTIMER L. SCHIFF,

of the

Committee on Finance and Currency.

NEW YORK,' March 28, 1913.

THE PRESIDENT.—Gentlemen, you have heard the excellent report of the Committee on Finance and Currency. What is your pleasure ? The bill which the Committee opposes seems to be paternalism run wild. By and by, unless a halt is called to these innovations, the government will be doing everything for us and doing pretty nearly all of it badly.

The report and accompanying resolutions were unanimously adopted.

REAL ESTATE OF THE CHAMBER.

The following report by JAMES G. CANNON, Treasurer of the Board of Trustees of the Real Estate, was submitted, and read by the Secretary :

To the Chamber of Commerce :

The Board of Trustees of the Real Estate which under the provisions of Article VII. of the By-laws “ have the custody, control and management of all real estate of the Corporation and of all funds and other property appropriated or received for the purchase, improvement or any other purpose affecting real estate," respectfully report that they have arranged with the holders of the $500,000 45 per cent. first lien bonds of the Chamber which matured April 1, for an extension for three years, to April 1, 1916 at the same rate of interest.

Of these $500,000 bonds, $50,000 are now owned by the Chamber, the interest thereon being applied to the Sinking Fund. This leaves $450,000 outstanding.

The Board also reports that of the $1,011,500 income bonds originally issued by the Chamber to subscribers to the building fund, $410,150 have been surrendered to the Chamber by their holders and are now held by it. This reduces the amount outstanding to $601,350.

The Board also reports that during the past eight months extensive repairs have been made on the building including the construction of a new elevator.

The bronze tablet of the building which was formerly on the wall in the entrance hall where the new elevator now is, will in a few days be placed on the wall directly opposite.

The preservation of our building, which is the most beautiful structure of its kind in the world, is now one of the most important duties of your Board, and the fact that after a life of eleven years, there are few, if any, signs of depreciation, is due to the measures of conservation which have been adopted. A large part of the income of the Chamber is necessarily devoted to the maintenance of the building and the payment of the interest on its debt; but the building is such a splendid representative of the commercial life of this city, and so completely answers to the needs of our organization, that the money could be expended to no more useful purpose.

THE PRESIDENT.—This report will take the usual course and be placed on file. It is a very gratifying report in all respects except that we have to regret that the physical restrictions imposed by the architect in the construction of this building rendered it impossible for us to make an elevator that was satisfactory in size. The agchitect did the best that he could under the circumstances, and nothing else could be done. I mention it so that the members

that the elevator was not made of its present size because we wished it to be so small, but only because no other space was available.

may under

HYDRO-ELECTRIC PLANTS.

CHARLES N. CHADWICK, Chairman of the Special Committee on Conservation, presented the following report and moved its adoption:

To the Chamber of Commerce :

Your Special Committee on Conservation, in pursuance of instructions to investigate the problem of conservation of state waters, lands, forests, parks and hydraulic power, and to report from time to time to the Chamber, submits the following report:

There is now pending in the Legislature a bill introduced in the

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