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DENVER, Colo., April 6, 1933. Hon. EDWARD P. CostiGAN,

Senate Office Building, Washington, D.C. Colorado mining men are opposed to section 14 Federal Securities Act. It will lead to needless expense and unnecessary confusion. The bill is stronger if section 14 is stricken out. On behalf of Colorado Mining Association I urge that you use your influence to eliminate section 14.

C. LORIMER COLBURN, Secretary.

INTERNATIONAL GOLD PRODUCERS, INC.,

Denver, Colorado, April 4, 1933. Senator Edw. P. COSTIGAN,

Senate Offices, Washington, D.C. MY DEAR SENATOR: This letter is in protest against the bill now pending in United States Congress known as the Federal Securities Act, section 14 of which makes interstate sales restrictions.

As we see it, such legislation will put an end to companies now engaged in the development of the natural resources of Colorado and of all other States, where such companies are dependent upon public subscription for the finances necessary to carry out their plans.

Had there been such a law 75 years ago, there would today be no U.S. Steel, American Telephone & Telegraph, General Eelectric, General Motors, Utah Copper, Homestake Mining, Union Pacific, or great public utilities concerns which have played such a great part in the development of the United States into the richest and most powerful country of the world.

To administer section 14 of the Federal Securities Act, a costly and complicated machinery must be built up. By the time any new corporation dependent upon public subscription shall have had "experts" from each State examine its books and properties in order to pass upon the sale of the securities of such corporation, the expense will have amounted to about as much as the capitalization of the new or proposed corporation. Such a law would give a virtual monopoly to existing corporations which have already reached the self-supporting basis.

This security law will, in my opinion, stop new developments of our natural resources in Colorado, and give the New York Stock Exchange a monopoly of the handling of securities. As president of a company employing some 20 men who will be forced out of employment, I respectfully urge that you oppose vigorously particularly section 14. Sincerely yours,

HOWARD E. Davis, President.

DENVER Colo., April 1, 1933. Hon. Ed. P. CoSTIGAN,

Senator from Colorado: We feel that Federal Security Act 875, section 11, should be amended to include Any security issued by a building and loan association, savings and loan association, cooperative bank and homestead association operated under the laws and subject to the examination, supervision and control of any State or the United States or insular possession or the District of Columbia.” Membership in these institutions is quite similar to deposits in savings banks. Expense and inconvenience to building and loan associations unnecessary and unwarranted as their stock is different from those sought to be controlled. My own association has approximately 8,000 members scattered through 46 States and 10 foreign countries who are making remittances and recieving our literature. Other associations affected similarly. Will appareciate your cooperation in securing above amendment.

0. A. KING, President, Silver State Building & Loan Association.

DENVER, Colo., April 6, 1933. Hon. E. P. CostiGAN,

Senator from Colorado, Washington, D.C. We respectfully urge your active support to amend the proposed Federal Security Act 875, section 11, to include “Any security issued by building and loan associations, savings and loan associations, cooperative banks and homestead associations operated under the laws and subject to the examinations, supervision, and control of any State or the United States or any insular possessions or the District of Columbia." Colorado associations have accumulated several millions of dollars from more moneyed sections of America all of which is loaned in Colorado greatly furthering home ownership. Under Colorado law no association can charge over 2 percent for the sale of shares and many make no charge in selling their shares. Building and loan shares are greatly different than securities sought to be controlled. Expense and inconvenience to building and loan associations under proposed security act unwarranted. Thirty-three Colorado associations, members of this league, join in asking for your cooperation to secure above amendment. COLORADO STATE LEAGUE OF BUILDING & LOAN AssociATIONS,

V. J. DUNTON, President.
GEORGE Wight, Secretary.

DENVER, Colo., April 2, 1933. Senator E. P. CostigAN,

Washington, D.C. Believe essential following changes better securities bill be made sections 6 and 7 should be omitted entirely. Section 8 should be confined to offering circulars descriptive of new original issues and should not apply to letters, telegrams, telephone messages. Section 9 should make test of liability as honesty and good faith instead of absolute guarantee. Section 11 should exempt securities issued prior to date the law becomes effective also exempt commercial paper with maturity not over 12 months. Section 12 should exempt a communication between dealers and brokers in relation to underwriting negotiations in advance of public offering. Section 14 should be omitted entirely. Will appreciate your efforts in clarifying this law as I believe these changes necessary to permit legitimate dealers to remain in business. Greatly appreciate your interest in this matter. Kindest regards,

ARTHUR H. BOSWORTH.

BALTIMORE, MD., April 1, 1933. Hon. PHILLIPS LEE GOLDSBOROUGH,

United States Senate: Reference hearings House and Senate Committees Federal securities measure heartily in accord with general principles but feel careful consideration should be given preparation of bill to insure against unduly hampering financing of merit.

W. W. LANAHAN & Co.

W. W. LANAHAN & Co.,

Baltimore, April 3, 1933. Hon. PHILLIPS LEE GOLDSBOROUGH,

United States Senate, Washington, D.C. DEAR SENATOR GOLDSBOROUGH: We wish to thank you for your letter of the 1st instant, enclosing copy of Senate 875.

We have no objection to having you present our telegram of Saturday, or this letter, to the committee. It was sent in order to let you know that we are in accord with the general principles of the bill; but feel strongly that in a bill of such importance very careful consideration should be given to its wording, for, in the proper zeal of the administration to correct abuses of the past, they may seriously hamper in the future legitimate financing by deserving corporations.

After reading the bill today, we feel that the provision as it applies to the responsibility of directors of corporations is so exacting that it may hamper corporations in securing the very type of men that they should have men of character, experience, and judgment. A registration statement, as provided in section 4, should properly be signed by the principal executive officer or officers, and in certain cases specified directors, trustees, or managers; but it would appear to us that it is an onerous condition to compel all directors to sign a registration statement which may force resignations from corporation directorates of all but a comparatively few men who will be compelled because of the tremendous responsibility placed upon them to have practically as full knowledge of the affairs of their companies as the chief executive officers.

We believe that a serious fault with many boards of directors is due to the fact that they are too large, and are composed of a number of men who have not taken their responsibility seriously, and some measure of responsibility should be placed upon all directors; but their responsibility may vary in degree. Section 4, as it is written, may deprive many corporations of the benefit of the advice of a number of men of character, experience, and judgment, who would be unwilling to serve on boards of directors if they are subjected to the penalties of the bill.

Our reading of the bill leads us to believe that it is only intended to cover new issues of securities, and is not intended to apply to outstanding issues; but we understand that the committee is giving consideration to amending the bill so as to include all securities issued as well as those to be issued. We feel strongly that this should not be done, as no one can foretell what effect it may have on outstanding securities in an already thoroughly demoralized securities market.

We appreciate that you cannot say what changes, if any, will be made; but we do hope that such changes that are made will clarify the bill as originally presented, a copy of which you were good enough to send to us-modifying the responsibility of directors who must depend for their information upon information furnished to them by the principal executive officer or officers, for, even to compel the principal executive officers to guarantee all data and statements regarding the conditions of their companies, including reports of auditors, engineers, appraisers, etc., etc., will as a practical matter operate to prevent issues of any new corporate securities, and, as regards outstanding issues, would prevent practically all interstate transactions in securities, thus seriously affecting their marketability and value.

Thanking you for giving us an opportunity of presenting certain of our views regarding S. 875, we remain, Respectfully yours,

W. W. LANAHAN & Co.

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UNION TRUST Co. OF MARYLAND,

Baltimore, April 1, 1933. Hon. PHILLIPS LEE GOLDSBOROUGH,

Senate Office Building, Washington, D.C. DEAR SENATOR GOLDSBOROUGH: Please let me respectfully call your attention, to the proposed Federal securities bill, as, in my opinion, it is of great importance that the language of this bill be clarified.

Whereas we are fully in accord with the principles announced in the President's message, we think that this bill, as now written, contains provisions which, unless changed, will interfere with the honest distribution of securities. We think that the personal liability placed on directors of corporations by making them guarantee all data and statements regarding the condition of their companies, including reports of auditors, engineers, appraisers, etc., will, as a practical matter, operate to prevent the issue of any amount of new corporate securities. Also, as regards outstanding issues of securities, it will prevent practically all interstate transactions, because all such securities will have to be registered, thereby seriously affecting their marketability and value. Your cooperation in this respect will be greatly appreciated. Sincerely yours,

WILLIAM G. DANCY.

Vice President.

REAL ESTATE BOARD OF BALTIMORE,

April 4, 1933. Hon. PHILLIPS LEE GOLDSBOROUGH,

Senate Office Building, Washington, D.C. DEAR SENATOR GOLDSBOROUGH: Thank you for your very prompt reply to our letter regarding H.R. 4314, which is a duplicate of S. 875, known as the Federal Securities Act. It is our understanding that this bill in its present form imposes somewhat drastic regulations and restrictions upon all corporations or promoters who may engage in the sale of common stock or other securities to persons located in States other than the States in which such securities are interested.

We feel reasonably sure that it was not intended that the restrictions and regulations provided in this Act should apply to the building and loan associations of the country.

While it is true that a large majority of the building associations of Maryland, most of which are located in Baltimore City, do not advertise their stock for sale outside of their own local communities, it is quite possible that many of them receive installment payments on stock through the mails from nonresidents of the State. In addition to this, there are a considerable number of building associations located near the border lines of Maryland who have many members and shareholders in Delaware, Virginia, District of Columbia, West Virginia, and Pennsylvania. I know of no way to meet this particular problem except by inserting a provision in the bill to exempt all building and loan associations operating under the laws of their respective States.

To compel building and loan associations to comply with all of the provisions of the act would impose a very drastic hardship and make it increasingly difficult for those associations to continue operations under existing conditions.

I am therefore asking on behalf of the building associations of Maryland that you endeavor to have this bill amended so that it will not apply to such associations.

We are making the same request to Congressman William P. Cole, who, we understand, is a member of the House committee now considering this bill. Yours very truly,

C. PHILIP PITT, Secretary. The CHAIRMAN. I think that is all. This committee meets regularly on Tuesday. I do not think we need to set any more time for hearings on this bill. We will take the matter up in due course and consider it ourselves and go through the whole question. We will have no more open hearings on the bill so far as I know. This closes the hearings. If there is any occasion for anybody else to be heard, they will be called. And we will consider the bill just as soon as we can. The committee will now stand adjourned until Tuesday.

(Thereupon, at 1:05 p.m., Saturday, April 8, 1933, the hearings on S. 875 were closed.)

APPENDIX

A STUDY OF THE ECONOMIC AND LEGAL ASPECTS OF THE PROPOSED FEDERAL

SECURITIES ACT

(Prepared in the Department of Commerce.)

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tion Journal, December 1930.
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