RAILWAY CONSOLIDATION. 4^7 legislative policy of Illinois continues adverse to such consoli- dations. Since the repeal of the statute in 1874 a number of roads oper- ating across adjoining States have refused to consolidate with cor- porations of Illinois, but have made their terminus at the Illinois State line, and have reached points within the State by means of leases, operating contracts, or stock ownership. Most railways have, however, refused to follow so conservative a course, and many so-called consolidations have been made as though the act authorizing consolidation were still in existence. Securities have been issued by these consolidated companies for many millions of dollars, and the rule announced in the American Trust Company case throws great doubt upon the validity of all these transactions. The result has been the passage, in 1897, of ^ statute ratifying consolidations made by corporations of Illinois and those of other States between July i, 1874, and July i, 1883.^ There may be some doubt whether this statute can have the in- tended effect, but in any event it gives no authority for the many consolidations which have been made during the last fifteen years. Among the interests thus threatened are some very valuable securi- ties, and the questions presented are, by reason of their magnitude, of national importance. Beside these two methods of dealing with the law, — that is, of directly obeying or disobeying it, — there also developed upon the Indiana-Illinois State line a third course by which some lawyers have considered that the fruits of consolidation might be obtained without the fact. This is the method now in vogue when railway corporations operating eastward from Illinois are united. Large investments have been made and are making upon faith in the validity of this scheme. It may be that this faith will be justified, but whatever the ultimate result, it seems clear that those who make these investments take a substantial present risk. It is the policy of Illinois that railroads within the State shall be operated by domestic corporations. Until recently and with a single exception,^ an Illinois railway could not sell its road to a foreign corporation, but, so far as the Illinois law was concerned, could purchase a railway in another State. The statutes of Indiana provide that companies organized under 1 Session Laws of Illinois, 1897, 198. a Act of 1895, Starr & Curtiss, Stats, of 111., 2d ed,, iii, 3240.
