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but if there were no transactions to report during any 6 months' period a statement to that effect may be made under oath and filed in lieu of a formal report.
2. Separate report shall be made for each order of authorization, and if the issue of more than one kind of security is authorized by the same order, separate report shall be made for each kind of security. Separate report shall be made for each note (or series of notes) maturing not more than two years after the date thereof, for which authorization is not required.
3. Schedule 2 of this report shall show under the following general headings the purposes to which proceeds were applied:
(a) The acquisition of property other than equipment.
moneys in the treasury of the applicant. (f) Other purposes (specifically stated). 4. The original report shall be signed by an executive officer of the issuing carrier having knowledge of the matters therein set forth and shall be made under oath.
5. Each copy of the rt shall bear the dates and signatures that appear in the original and shall be complete in itself; the signatures in the copies may be stamped or typed, and notarial seal be omitted.
6. The report shall be on paper approximately 842 by 11 inches. A margin of 172 inches shall be left on the left side for binding,
INSTRUCTIONS APPENDIX B
Amount actually expended
Location and description of
For use of 1.0.C. only
amounts of ad-
1. If the order authorized issuance of securities to capitalize proposed expenditures the A.F.E. numbers to be entered in column (c) of this report should correspond with those shown in the application and included by the terms of the order.
2. The totals of columns (e), (f), (g), and (h), shall be shown for each page of this report and shall be carried forward to a grand
3. The original report shall be signed on behalf of the applicant by its president, vice president, auditor, comptroller, or other execu-
4. The original report and two copies thereof shall be made and filed with the secretary of the Interstate Commerce Commission, Washington, D.C., within 30 days after each 6 months' period ended June 30 and December 31, and shall accompany report Form D-1.
5. The report shall be on paper approximately 17 inches: by 22 inches. A margin of 142 inches shall be left on the left side for binding.
PARAGRAPHS 1 TO 11, INCLUSIVE, OF SECTION 20A OF THE INTERSTATE COMMERCE
SEC. 20a. (Added February 28, 1920.) (1) That as used in this section the term “carrier” means a common carrier by railroad (except a street, suburban, or interurban electric railway which is not operated as a part of a general steam railroad system of transportation, which is subject to this act, or any corporation organized for the purpose of engaging in transportation by railroad subject to this act.
(2) From and after one hundred and twenty days after this section takes effect it shall be unlawful for any carrier to issue any share of capital stock or any bond or other evidence of interest in or indebtedness of the carrier (hereinafter in this section collectively termed “securities”) or to assume any obligation or liability as lessor, lessee, guarantor, indorser, surety, or otherwise, in respect of the securities of any other person, natural or artificial, even though 'permitted by the authority creating the carrier corporation, unless and until, and then only to the extent that, upon application by the carrier, and after investigation by the Commission of the purposes and uses of the proposed issue and the proceeds thereof, or of the proposed assumption of obligation or liability in respect of the securities of any other person, natural or artificial, the Commission by order authorizes such issue or assumption. The Commission shall make such order only if it finds that such issue or assumption: (a) is for some lawful object within its corporate purposes, and compatible with the public interest, which is necessary or appropriate for or consistent with the proper performance by the carrier of service to the public as a common carrier, and which will not impair its ability to perform that service, and (b) is reasonably necessary and appropriate for such purpose.
(3) The Commission shall have power by its order to grant or deny the application as made, or to grant it in part and deny it in part, or to grant it with such modifications and upon such terms and conditions as the Commission may deem necessary or appropriate in the premises, and may from time to time, for good cause shown, make such supplemental orders in the premises as it may deem necessary or appropriate, and may by any such supplemental order modify the provisions of any previous order as to the particular purposes, uses, and extent to which, or the conditions under which any securities so theretofore authorized or the proceeds thereof may be applied, subject always to the requirements of the foregoing paragraph (2).
(4) Every application for authority shall be made in such form and contain such matters as the commission may prescribe. Every such application, as also every certificate of notification hereinafter provided for, shall be made under oath, signed and filed on behalf of the carrier by its president, a vice president, auditor, comptroller, or other executive officer having knowledge of the matters therein set forth and duly designated for that purpose by the carrier.
(5) Whenever any securities set forth and described in any application for authority or certificate of notification as pledged or held unencumbered in the treasury of the carrier shall, subsequent to the filing of such application or certificate, be sold, pledged, repledged, or otherwise disposed of by the carrier, such carrier shall within ten days after such sale, pledge, repledge, or other disposition, file with the commission à certificate of notification to that effect, setting forth therein all such facts as may be required by the commission.
(6) Upon receipt of any such application for authority the commission shall cause notice thereof to be given to and a copy filed with the governor of each State in which the applicant carrier operates. The railroad commissions, public service or utilities commissions, or other appropriate State authorities of the State shall have the right to make before the commission such representations as they may deem just and proper for preserving and conserving the rights and interests of their people and the States, respectively, involved in such proceeding. The commission may hold hearings, if it sees fit, to enable it to determine its decision upon the application for authority.
(7) The jurisdiction conferred upon the commission by this section shall be exclusive and plenary, and a carrier may issue securities and assume obligations or liabilities in accordance with the provisions of this section without securing approval other than as specified herein.
(8) Nothing herein shall be construed to imply any guaranty or obligation as to such securities on the part of the United States.
(9) The foregoing provisions of this section shall not apply to notes to be issued by the carrier maturing not more than two years after the date thereof and aggregating (together with all other then outstanding notes of a maturity of two years or less) not more than 5 per centum of the par value of the securities of the carrier then outstanding. In the case of securities having no par value, the par value for the purposes of this paragraph shall be the fair market value as of the date of issue. Within ten days after the making of such notes the carrier issuing the same shall file with the commission a certificate of notification, in such form as may from time to time be determined and prescribed by the commission, setting forth as nearly as may be the same matters as those required in respect of applications for authority to issue other securities: Provided, That in any subsequent funding of such notes the provisions of this section respecting other securities shall apply.
(10) The commission shall require periodical or special reports from each carrier hereafter issuing any securities, including such notes, which shall show, in such detail as the commission may require, the disposition made of such securities and the application of the proceeds thereof.
(11) Any security issued or any obligation or liability assumed by a carrier, for which under the provisions of this section the authorization of the commission is required, shall be void, if issued or assumed without such authorization therefor having first been obtained, or if issued or assumed contrary to any term or condition of such order of authorization as modified by any order supplemental thereto entered prior to such issuance or assumption; but no security issued or obligation or liability assumed in accordance with all the terms and conditions of such an order of authorization therefor as modified by any order supplemental thereto entered prior to such issuance or assumption, shall be rendered void because of failure to comply with any provision of this section relating to procedure and other matters preceding the entry of such order of authorization. If any security so made void or any security in respect to which the assumption of obligation or liability is so made void, is acquired by any person for value and in good faith and without notice that the issue or assumption is void, such person may in a suit or action in any court of competent jurisdiction hold jointly and severally liable for the full amount of the damage sustained by him in respect thereof, the carrier which issued the security so made void, or assumed the obligation or liability so made void, and its directors, officers, attorneys, and other agents, who participated in any way in the authorizing, issuing, hypothecating, or selling of the security so made void or in the authorizing of the assumption of the obligation or liability so made void. In case any security so made void was directly acquired from the carrier issuing it the holder may at his option rescind the transaction and upon the surrender of the security recover the consideration given therefor. Any director, officer, attorney, or agent of the carrier who knowingly assents to or concurs in any issue of securities or assumptions of obligation or liability forbidden by this section, or any sale or other disposition of securities contrary to the provisions of the commission's order or orders in the premises, or any application not authorized by the commission of the funds derived by the carrier through such sale or other disposition of such securities, shall be guilty of a misdemeanor and upon conviction shall be punished by a fine of not less than $1,000 nor more than $10,000, or by imprisonment for not less than one year nor more than three years, or by both such fine and imprisonment, in the discretion of the court.
The CHAIRMAN. The committee will now proceed further with the hearings on the proposed Federal Securities Act, and I want to place in the record a communication from the Capital Savings Plan, Inc., Philadelphia, by Mr. William L. Law, Jr., manager of the Washington office. He suggests an amendment to section 8 of the bill:
CAPITAL Savings PLAN, INC.,
Philadelphia, April 5, 1933. CHAIRMAN BANKING AND CURRENCY COMMITTEE,
United States Senate, Washington, D.C. DEAR MR. CHAIRMAN: We respectfully request that we be allowed to have the following amendment read into the records of your committee hearings on the above-mentioned bill, the principles and spirit of which we are most heartily in favor of, but are fearful that the expense involved in the phase about to be men
tioned will work a terrific hardship with our company and those doing a similar business.
These burdensome provisions are in section 8 which provides: “That it shall be unlawful to carry,
in interstate commerce, any communications
for sale any securities unless such communication
contains the following information concerning the securities so offered.
"(d) The names of the officers, directors, and trustees of the issuer or of the owner of the property constituting the basis of the issue.
(e) A statement showing: (1) The issuers assets and liabilities.
(2) Profits and loss during year just preceding the offering.” These provisions might be construed in two ways, as we view the matter. First, that we would have to give this information as to each company in our portfolio, and there are 46. These 46 companies own or control over 900 auxiliary companies, and you can readily see that we would be required to print a good sized book instead of a circular, and would be a terrific expense. Second, that we would have to give this information as to our own company. This would give the prospective investor nothing of any interest or value to him, because the condition of our own company is immaterial to him in view of the fact that he is not buying our stock and it does not matter to him what may happen to our company, since all payments are made directly to the trust company that acts as trustee.
Accordingly, we suggest that section 8, of the draft of the said act might properly be amended so that its provision will not apply to sales of the shares of an investment trust whether such sales be outright or upon partial payment, where the securities in the portfolio of the said trust are themselves eligible for sale under the act.
We believe this will cover the situation because, if the securities themselves are eligible, then the purchaser of shares which the said securities underlie will be protected.
The writer will be glad to furnish any additional information along these lines that he can and which the committee may desire. Respectfully yours,
CAPITAL SAVINGS PLAN, INC.
Manager Washington Office. Also, I will make a part of the record a telegram from Mr. Daniel E. Woodhull, president American Bank Note Co., New York City:
NEW YORK, N. Y., April 3, 1933. Senator DUNCAN U. FLETCHER, Chairman Banking and Currency Committee,
United States Senate: I believe many provisions in the proposed securities bill now before your committee if passed will seriously affect the interests of the business and manufacturing corporations of this country. I therefore protest against the adoption of the bill in its present form.
DANIEL E. WOODHULL,
President American Bank Note Co. Senator McAdoo. Mr. Chairman, what is the procedure of the committee as to the many telegrams Members of the Senate are. receiving in regard to this bill? Is it the custom to put them in the hearings?
The CHAIRMAN. Well, I think, Senator McAdoo, that if such action generally followed we would burden the record, because many of them would doubtless be duplicates. But anything that is out of the ordinary, or that you feel ought to go in the record, may be offered. I will leave that to the judgment of each member of the committee.
Senator McADOO. I might present some of them, and we could then decide whether they should be made a part of the record, I take it.
The CHAIRMAN. All right.