nition so that it may include most of the private corporations and partnerships in the United States; it does not cover fraudulent securities merely, but reaches and prohibits the sale of securities that are honest, valid and safe; it does not simply protect the unwary citizen against fraudulent misleading, but it prevents the experienced investor from deliberately assisting an enterprise which he thinks gives sufficient promise of gain to offset the risk of loss, or which, from motives of pride, sympathy or charity, he is willing to aid, notwithstanding a probability that his investment will prove unprofitable. The Iowa law in its essential features is similar to the Michigan statute and was condemned upon the same grounds, although the case was decided by the State District Court of Polk County instead of by a Federal court. Briefly stated, the court declared the law unconstitutional in that it deprives persons of liberty and property without due process of law, in that it delegates legislative powers to state officials, and because it discriminates between residents and non-residents and interferes with interstate commerce. Following the rendering of these two opinions the Investment Bankers' Association of America prepared a proposed model blue-sky law which it was felt would meet the Association's original purpose of coöperating with the state officials in an effort to obtain reasonable and effective legislation. In doing this the Investment Bankers' Association succeeded in obtaining the cooperation of the National Association of State Bank Supervisors. The objects of this model bill, a full copy of which may be found in the Commercial and Financial Chronicle for Sept. 19, are summarized by the Chronicle as follows: This proposed act is intended to bear down heavily on so-called "get-richquick" concerns. It is based, primarily, on a penal prohibition against fraud and misrepresentation. It requires the filing with the state official of detailed information as to all speculative offerings. It also requires notification to be given to the state official of all offerings, and gives him power to subject any offering that he deems dangerous to the provi sions of the law relative to speculative securities. All securities sold to yield over 10 per cent. per annum, or with the representation that they will double in value, are declared to be speculative, and are subjected absolutely to the requirements of the act. There is no power in the state official to prohibit the sale of any security, but if he finds that the promotion involves a violation of the law, he is required to notify the promoter and also the district attorney of the county in which he is doing business, and the promoter is then required to advise the district attorney of any further steps taken by him in the promotion of the security. The purpose of the law is to put suspected offerings directly up to the prosecuting official, giving broad powers of investigation to uncover fraud. The Foreign Trade Council.-With a view to enlarging the nation's foreign trade a Foreign Trade Council was created in May by the National Foreign Trade Convention. The purpose of the Council is to coördinate the nation's foreign-trade activities in an aggressive and systematic extension of American over-sea commerce. Practically all branches of industry, commerce, transportation and finance, representing all sections of the country, are represented in the membership of the Council. According to reports one of the first objects of the Council will be the appointment of a committee to coöperate with a committee of the Chamber of Commerce of the United States of America. Information and advice will be sought from manufacturers' associations and commercial organizations throughout the country. Another purpose is to make arrangements for another National Foreign Trade Convention in Washington during the early part of 1915 for a systematic and practical discussion of foreign-trade problems. Commercial Attachés.-The Legislative, Executive and Judicial Appropriation Act contained an appropriation to create a new service of trade promotion abroad by the appointment by the Department of Commerce of commercial attachés accredited to the embassies and legations of the United States in foreign capitals. Appointments to this service have been made as follows: London, Albertus H. Baldwin; Paris, Dr. C. W. A. Veditz; Berin, Erwin W. Thompson; Peking, Julean H. Arnold; Buenos Aires, Dr. Albert Hale; Rio de Janeiro, Lin coln Hutchinson; Lima, A. I. Har- | Interstate Commerce Commission only rington; Petrograd, Russia, Henry D. where action by the state results in Baker; Santiago, Verne L. Havens. Leading Decisions of Courts and Commissions.-The year witnessed the rendering of numerous decisions of momentous consequences to the business community. In addition to the two decisions declaring blue-sky laws of the prevailing type unconstitutional, the following decisions deserve special mention: interference with the rates and action of the Commission in its exercise over interstate commerce. A decision to the contrary would have rendered the Interstate Commerce Commission helpless as against undesirable interference by the several states. (Ibid.) (3.) The U. S. Supreme Court decision in the Tap Line Cases upheld the Commerce Court and reversed the Interstate Commerce Commission. Socalled tap lines (short railroads serving industries) are declared to be common carriers, and, therefore, entitled to divisions of joint through rates. The Interstate Commerce Commission, on the contrary, had taken the view that such divisions of rates were to be regarded as concessions to favored shippers. The Supreme Court decision is of special significance at this date in that it removes the basis from the argument of those who have been contending that railroads should be refused an advance in freight rates, and that, instead of receiving such an advance, payments to tap lines on joint rates should be discontinued. (Ibid.) (1.) The U. S. Supreme Court decision in the Inter-Mountain cases upheld the action of the Interstate Commerce Commission. The significance of the decision can hardly be overestimated. The Interstate Commerce Commission had interpreted its powers, as obtained under the law of 1910, as extending to anything it might consider necessary to do in the fixing and regulating of rates, such as making and unmaking traffic centers, decreeing whether natural advantages should be overcome by the prescribing of rates, etc. In this particular instance the cases involved the interpretation and application of the long-and-short-haul clause, as amended by the Act of 1910, and the question at issue was: Should the carriers be allowed to charge more for (4.) The U. S. Supreme Court dethe shorter haul to inter-mountain cision on the power of a state over territory in certain states than for insurance. A Kansas statute, adopted the long haul to the Pacific Coast? in 1909, provided that "when the SuThe Commission ordered a readjust-perintendent shall determine any rate ment of existing rates, but the Com- in excess or unreasonably high or inmerce Court, since abolished, over- adequate to the safety or soundness ruled the Commission. Now the Su- of the company [fire-insurance compreme Court reverses the Commerce pany], he is authorized to direct the Court, and in its opinion declares company to publish and file a higher that the Commission possesses the or a lower rate, which shall be compowers assumed by it. The general mensurate with the character of the interpretation of the decision is to risk; but in every case the rate shall the effect that the Interstate Com- be reasonable." The constitutionality merce Commission now possesses su- of this law was contested, and in May preme control with full liberty to reg- the Supreme Court affirmed the power ulate rate making in accord with its of a state to fix rates for fire own views as to what any particular insurance. The case was awaited situation may demand. (See also XX, with much interest and is expected Railroads.) to have a powerful effect upon legislation of this character. (See also XIV, Property and Casualty Insurance.) (2.) The U. S. Supreme Court decision in the Shreveport Rate Cases is to the effect that, where the two are in conflict, Federal control is supreme over state control. The states, however, retain control over rates within their own borders, their control being subordinate to that of the (5.) By a decision in the Federal District Court at New York, in the government suit to dissolve the combination known as the North Atlantic Steamship Conference, such confer cerned in the several stock deals condemned in the report. The Government also brought suit for dissolution against the Company, and the decree of dissolution in this suit was filed before Judge Mayer, in the U. S. District Court at New York on Oct. 17. According to the decree three sets of trustees are provided for. The first set has charge of the Boston & Maine Railroad Co.'s stock held by the New Haven, and the decree provides that there shall be immediately transferred to these trustees all of the common and nearly all of the preferred stock held by the New Haven in the Boston & Maine Railroad. Furthermore, the New Haven is to transfer the shares of a considerable number of railroad lines, which were leased to the company, to these trustees. The second set of trustees is ences were held to be legal if the combination is not an unreasonable one. In this particular instance the court found that the arrangement complained of "is a reasonable one which, so far from restraining, really fosters and protects it [trade] by giving it a stability which insures more satisfactory public service for all concerned." The court took a view in favor of a regulated as contrasted with a "cut-throat" competition, and Justice Lacombe quoted the report by the Committee on the Merchant Marine and Fisheries to the House of Representatives on "Steamship Agreements and Affiliations in the American Foreign and Domestic Trade" (see XX, Merchant Marine), to the effect that the only alternative to a conference would be either rate wars which would eliminate the weak, "or, to avoid a costly struggle, they would consolidate to have charge of the New Haven's through common ownership, which would mean monopoly fully as effective, and it is believed, more so, than can exist by virtue of (this) agreement." Other important court decisions and rulings of the Interstate Commerce Commission of the year, including the decision in the Advance Rate Case, are recorded in Depart ment XX, Trade, Transportation, and Communication. (6.) Report of Interstate Commerce Commission and decree of dissolution relative to the New York, New Haven & Hartford Railroad Co. In response to a resolution adopted by the Senate on Feb. 7, the Interstate Commerce Commission made a report on July 11 severely criticising the financial management of the New Haven Railroad, which is reviewed on another page (see XX, Railroads). The Commission recommended civil and criminal prosecution of the responsible directors of the road, and also of the persons who were con holdings of trolley lines in New Hampshire, and the third set the trolley holdings in Rhode Island. The decree also states fully the duties of each set of trustees. On Nov. 2 an indictment was handed down in the Federal District Court at New York, charging a criminal conspiracy to monopolize transportation in favor of the New Haven. Twenty-one of the accused men have been directors, and five are still in the Company's directorate. Forty-eight other men, former directors, are charged with having been "co-conspirators." indictment relates to conduct extending back many years, in fact, to nearly the date of the Sherman law, which wrongful conduct, it is claimed, has continued almost to the present time. The general charge is that a conspiracy was entered into by the accused to drive other carriers from the field, and to substantiate this charge nearly every purchase or acquisition over a long series of years is set forth in the indictment. The The original estimate of the number of persons subject to the income tax was 425,000. The following table, taken from the preliminary report of the Commissioner of Internal Revenue, shows the income tax collections by states: Alabama Alaska. Illinois. The Income Tax.-The yield of the income tax has fallen far short of the Treasury's estimate of $45,000,000 for the first year. It should not be forgotten, however, that the $28,000,000 collected represents only ten months of 1913, and some allowance must also be made for the fact that collections for the first year are likely to be sub-normal. As the provisions of the law become better understood and administrative methods are improved, the amount collected will be increased. Kentucky. Less than $13,000,000, and therefore considerably less than half, of the revenue produced by the income tax on individuals, was derived from the "normal" tax of one per cent. on incomes up to $20,000. The balance, or about 15 millions, came from the "additional tax" levied on the larger incomes. The figures for each class of incomes created by the income tax law are as follows: .$12,728,038 Louisiana. Maryland. Mississippi. Missouri. Nevada. $62,102.89 2,427.83 28,672.14 North Carolina New Hampshire. 1,645,639 Oregon.. Normal tax at 1 per cent. Classification $2,500 to $3,333.33.. Texas.. Vermont Returns Wisconsin. 79,426 Wyoming. 46,566.55 20,645.38 904,508.22 93,082.15 90,054.36 3,176,095.38 324,221.74 25,811.11 12,351.62 98,274.54 360,965.21 27,375.04 89,356.77 103,449.30 122,474.56 94,627.97 220,642.58 114,484 101,718 Total. 7,533.49 $28,253,534.80 |