8 
Transactions Texas Academy of Science. 
voice in making and which bore no relation to the actnal value of the 
properties that were represented. 
The effect of these decisions was to pnt an entirely new phase on the 
whole subject of State regulation of railroads and to demonstrate that 
if control were to be had over the rate situation, the same tribunals must 
regulate and have jurisdiction over the issuance of the stocks and bonds. 
In accordance with this principle, the Legislature of the State of Texas 
in 1893 established the precedent in the matter of controlling the issu- 
ance of railroad stocks and bonds by enacting the stock and bond law,, 
supplementing the Railroad Commission Act of 1891, which had been 
authorized by a constitutional amendment adopted in 1890. 
Although the people of Texas began early to experience and suffer 
from the abuses of corrupt railroad management, the clamor for State 
regulation, corresponding to the “Granger” movement of the northern 
and western States, did not reach a culmination until 1890, when the 
amendment to the Constitution was adopted authorizing the establish- 
ment of a Railroad Commission. In view of the attitude and decrees of 
the Federal court mentioned, it was also seen that if the authority vested 
in the Commission was to be effective in the matter of regulating freight 
rates, it must also control the issuance of railroad securities which, as 
decreed, were to serve indirectly as the basis for rate-making. The cur- 
rent and fraudulent practice of “watering” stocks and bonds must be- 
suppressed, otherwise the indebtedness of the railroad companies might 
be made as great as they choose, and sufficient to absorb any amount of 
surplus earnings in dividends and interest. 
The State Democratic platform of 1892 contained the following 
“plank:” “No. 14. We demand a law that will effectually prevent the 
issuance of fictitious and watered stocks and bonds of railway companies 
in this State, believing that these great enterprises should be conducted 
upon commercial principles and not as gambling devices.” 
In accordance with the platform demands, the Legislature passed the 
Railroad Stock and Bond law, which was approved by the Governor on 
April 8, 1893, and which went into effect on August 7, 1893. 
THE STOCK AND BOND LAW. 
The Railroad Stock and Bond law, as published in the Revised Stat- 
utes of Texas for 1895, Chapter 14, Articles 4584a-m, declares: “That r 
among other things, the power and authority of issuing or executing 
bonds, or other evidences of debt, and all kinds of stock and shares 
thereof, and the execution of all liens and mortgages by railroad corpora- 
tions in this State, are special privileges and franchises, the right of 
supervision, regulation, restriction and control of which has always been,. 
