7IO HARVARD LAW REVIEW only stocks and bonds in section 15, after having made a much longer list in section 7. The statute might conceivably be construed to mean that the power of the states over the issue of notes or equipment trust certificates remains as before the passage of the act. Indeed it is a fair question whether the provision contained in section 7 that carriers may issue securities approved by the President is a grant or a Hmitation of power.2 It is provided further in section 7 that securities so approved may be bought by the President. Obviously that would add nothing to their validity. The only safe position to take in the matter is that whereas before the act the carriers had to comply with the laws of the various states in issu- ing their securities, now the carriers must also secure the approval of the President as well. The carriers have one more place to go, one more hurdle to leap in the dismal race over conflicting statutes and more con- flicting orders of autonomous railroad commissions to the money lender — a way sometimes beset with spoilers whose regard for the Commerce Clause of the Constitution does not prevent them from levying heavy tribute.^ If the other interpretation be taken, that section 7 is a new grant of power, part of the supreme law of the land, and exclusive of the action of the state commissions, the going is still very bad. There is first the difficulty that the carriers have only state charters and that it is ultra vires for them to issue securities not authorized by the state law. The corporate capacity is lacking. Can it be said that section 7 is an amend- ment to all state charters of carriers? It is very doubtful that Congress so intended. We might well ask for stronger language to accomplish so revolutionary a purpose. This would be federal incorporation by piece- meal. Many lawyers think that federal incorporation must be volun- tary, and accepted by the stockholders concerned, to be constitutional. Not even Congress can force upon them obligations to which they never consented, without depriving them of their property without due process of law. The question involved is similar to that of the limits of the power of the legislature to alter the charter of a corporation, where power to amend has been reserved by the act of incorporation. Thus it is said that the object of the grant or any property rights vested under it may not be defeated or substantially impaired, and that the fundamental character of the corporation may not be changed.^ Assuming, however, that the difficulty of the lack of corporate capac- ity has been safely met, there is still the difficulty in the case of railroad bonds of securing them by lien upon the property. Under the laws of
- In this connection, compare section 5 of the same act, which reads as follows:
" Sec. 5. That no carrier while under Federal control shall, without the prior ap- proval of the President, declare or pay any dividend in excess of its regular rate of dividends during the three years ended June thirtieth, nineteen hundred and seven- teen: Provided, however, That such carriers as have paid no regular dividends or no dividends during said period may, with the prior approval of the President, pay divi- dends at such rate as the President may determine." ' See Union Pacific R. R. Co. v. Public Service Commission of Missouri, 248 U. S. 67 (1918). Illinois has been even a worse offender than Missouri in this respect, and has ex- torted enormous sums from interstate carriers for the privilege of borrowing money.
- Authorities collected in 12 Corp. Jur. 1027, § 654.
