New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1895-12-15
RAILROADS IN TEXAS.
THE STATE NOT HOSTILE TO CAPITAL.
RESTRICTIVE MEASURES ARE ONLY PREVENT
EXCESSIVE CAPITALIZATION.

EXCESSIVE CAPITALIZATION
To the Editor of The Tribune
Sir: With the revival of business throughout the
country capital will seek investment; many enter
prises from the Southern and Western States will be
brought 10 the notice Of nanciers and, apart from
their Individual intrinsic merit the state in which
they located will largely affect their acceptance
rejection. The Legislatures Of some States are
suspected Of being ininical to capital. and others
quoted favorably disposed; does any one VINO
has given the subject moments thought believe
for an instant that a body OF representative men
such as State LEGISLATURES are would deliberately
incorporate in the statutes OF their State laws un-
favorable to capital-seeking legitimate investment
and development?
1t took sustained fight Of years in the State
OF Louisiana drive out the lottery company; and
il is hardly putting 1t too strongly 10 say that in
other States combinations corrupt. but cloaking
their practices under more respectable exterior.
have vigorously opposed the passage OF laws that
would put end TO their operations. and. hnding
themselves powerless TO prevent such legislation
have denounced the State being hostile to capital.
No State has suffered more in this respect than
Texas. The "alien land law" it was called,
which was aimed at the large holdings of real
estate by foreigners. might be deemed H. advised
but no one conversant with the facts could ques-
ton It's patriotism Millions of acres Of land had
been bought up by English and Scotch syndicates
and converted into enormous cattle ranches. prac-
cally blocking up that part of the State from de-
velopment and creating immense entailed estates
against the very genius Of American institutions
The wisdom Of the law it now stands is unques-
toned.
The loudest cutlery OF ALL however. was made re-
garding tho establishment of the State Railroad
Commission Many causes too numerous
ton in an article OF this kind led up TO its forma-
ton. Among them may be mentioned the large
donations Of land given by the State Of Texas TO
railroads. sixteen sections Of land per mile Of road
which was kept Jp long the land held out.
magnificent gift for which the people thought sub
stantial acknowledgment due from the rail-
roads receiving it, instead OF which rates were ad-
vanced rather than lowered determinations were
made AGAINST home enterprises, immense amounts
OF indebtedness were piled up against the roads
and the railroad managers, in justification OF their
increase of rates. pointed TO these enormous
amounts Of stocks and bonds and asserted their
roads could not fixed charges II took a const-
tutional 'tment to make passenger fares three
cents a mile. Every was dissatisfied with this
state of affairs; roads going into the hands Of
receivers and deficits were the order Of the day.
The roads stocked and bonded far above their
cost. and traffic was taxed 10 its utmost 10 pay the
interest demanded by the securityh oiders: All this
discouraged immigration ana mdhulac' urlhs Enter
prises. Something had to be done, ana the outcome
was the formation of the STATE kailroad Goi aaf
sion. Great care was taken that vested lhteresis
should be disturbed; but in new work, railroads
to he built in the future. the Commission had
large discretion Ihey We're einpoWeltu 10 IN ne
amount Of stocks and bonds 10 be issued per mile
duired TO file a copy OF its profile plans and speci
fcations with the Commission who, from these data
line by experts, determine the valuation Of the
line; they make liberal estimate Of the cost OF
building and equippng the road and grant authority
10 the company 10 issue bonds and stock for that
amount the Secretary Of State making the proper
are protected in their investments, as far as the
pars 81 show ha ths eSa railroads have earned
from per cent 20 20 cent or the Commissioners
As instancing the difference between the capital
!zation OF the railroads and the Commissioners
valuation of the same, l will give the following
figures one railroad is capitalized for sG6,sis
mile; assessed value by commission. sl7o5s mile;
sl7576 mile; another al Sl,55s mile valued at
lS6 mo sR an 7a mile DO not specify the
railroads for obvious reasons but ms figures can be
Verified by gape h be 9 o in lhe Ra
these figures? They show that not only the State
but investors needed protection
Formerly a road would be built with whoop and
a hurrah. newspapers would be hiied with glowing
country traversed by the lines, tables would be
scattered broadcast showing earnings from an i'm
nT i Ise6 in bujIding the road that was hauled
over the completed line, appeared in the published
statements Of the companys earnings as legitimate
no one not conyersant with the facts could tell that
with the completion Of the road this great volume
statements were led believe that the surplus Of
earnings over operating expenses and fixed
were assured and Il was only when the road was
completed. earnings dropped OF and interest ceased
that found out their mistake. The property
was supposed to be capitalized its earning
pacity rather than its cost.
Now il is different A railroad bull, since the
formation Of the Railroad Commission Is capitalized
according 10 IFS cost, and experience has demon
strated that Texas railroads IN the duHest times
can earn from per cent 10 20 per cent on an ex-
trenely liberal estimate Of their valuation
Taking these circumstances into consideration the
Intending investor well see that the design OF
the Texas State Railroad Commission is 10 sur
round investments in railroad securities in this
state with all the protection that can be afforded
bv legislation. Railroads in demand in Texas;
some OF the parts OF the State still far
moved from railroad communication; lines through
this unopened territory have been projected and
with the revival OF business capital VIII undOubt
edy be solicited for their construction. An intelli-
gent examination of the situation in Texas will
move the last vestge Of the undeserved sur OF
being hostile railroads or nimical 10 capital
under which Texas has suffered for so long time
JOHN ADAMSON.
Fort Worth. Tex. Dec. T. 1895.