The times. [volume] (Washington [D.C.]) 1897-1901, 1900-05-20
REPORTED TO 3RB House
The Bill Providing for Consolida.
ton of Street Railways.
Its Purposes md Merits Discussed
by the Committee on the District
Protection of the Rights of
Stockholders Not Asserting to a
Combination of the Companies.

The Street Railway Consolidation bill
was reported from the Committee on the
District of Columbia to the House yes;er-
day.
The main object of the bill is to permit
the union of all the street railways in the
District except the Capital Traction Com
pany. The report recites in part:
1T is not the purpose to affect directly
the relations of these companies to the
public, or to their creditors. No new priv
iiege or franchise in respect to the use Of
public streets is granted The companies
are permitted merely SO to adjust their
in;eranl organization that 1t will be prac-
tically possible for them to make the full
est and most advantageous use of the
power which Congress has already grant,
ed for the public benefit without the dimi-
mutton of any obligation resting upon
them.
1.-The companies are not relieved of any
existing obligation to the public. the bill
expressly preserving all such obligations in
full force and effect
The enlarged corporation will have
greater ability to perform the public du-
ties which deyolre upon It, and should
have greater incentive to their full and
satisfactory performance than would be
the case with several small corporations.
enjoying varying degrees of credit, and
with a separate responsibility for any un-
satisfactory public service.
The indirect effect OF the bill should be
conducive to the public interest in several
different ways: Where the control Of a
railway system is direct and complete
there is no way of evading responsibility.
When the rendering Of satisfactory public
service is dependent on the agreement OF
several distinct corporations, they cannot
be compelled to agree without debating to
them all the terms of the contract, and this
no external authority is competent to do.
When only one corporation is to be reck-
cned with, if satisfactory service lis not
Forthcoming. the blame can be fixed and
the remedy applied without difficulty or de-
lay. Even where distinct corporations sin
cerely endeavcr to cooperate with each
other their directors are frequently embar-
rassed and sometimes prevented from en-
tering into arrangements that would be for
the public benefit, by the fear that they
may be imposing a disproportionate burden
upon one set Of stockholders or comforting
a disproportionate benefit upon another set
Identity of interest in all parts of a rail-
way system means liberty to the directors
to shape their policy for the benefit of the
whole body of stockholders. Such policy
ordinarily involves a prompt and effectual
response. to all reasonable requirements or
suggestions which are in the interest Of the
general public.
mo corporation has power to unite with
another without express legislative author
fly. In early days, when companies desired
to consolidate they were obliged to obtain
a special act of the Legislature permitting
It Such permissions were free granted.
and are still freely granted, in States where
the subject is not provided for and gov
erned by general laws. In Massachusetts.
Mississippi, Rhode Island, Texas, Vermont,
Virginia, and the District Of Columbia no
general Law permitting the consolidation of
street railway companies appears TO exist.
In nearly all the other States Of the Union
such consultations are permitted by gen.
eral laws.
These companies ask the permission OF
Congress only to do what is permitted by
the general corporation laws of thirty
seven States.
1.-THE only point which needs to be
guarded In such statutes is to protect the
rights OF nonassenting stockholders.
though In the statutes of twenty-five Of
the States no special provision is made
Tor such stockholders.
The methods in general use for pro-
tecting the interests of nonassenting
stockholders are two:
I'D In twenty-three States the consent
OF q large proportion of stockholders
more than a majority-is required. the
presumption being that a scheme of con-
Bplidation which is approved by three |
fourths or two-thirds OF the whole body of |
stockholders will be for the interest Of |
oil.
"(2) In only thirteen States are nom
asserting stockholders not required TO go
into the consolidation; but they may, if |
they prefer. be paid the value Of their
shares In cash, according to certain stand
ards Of valuation, which vary in different |
States.
This bill adopts both methods for pro-
tecting the interest of the nonassenting |
and SO far as the committee
has been able to ascertain contains to
hat end more stringent and effectual pro-
visions than are to be found in the statute
book of any State.
ITO authorize q consolidation, the con-
sent Of the holders of three-fourths OF all
the stock issued in each company is re-
qufred in California Connecticut, Idaho
Iowa, Michigan (some counties), and Ne
vhda. Louisiana is satisfied with three
tourths Of all the stock represented 1t
meeting. Delaware, Illinois,
Kansas. Kentucky, Minnesota, New J rEey,
New York, North Carolina, and Utah re-
quire thirds of all the stock issued 1
RiIile Alabama. Nebraska, New Hampshire,
Ind Ohio require only thirds of the
Itock represented OF stockholders meet
ing. Oregon requires seven-eighths of all
The stock to authorize an extension OF the
purpose SO as 10 make possible
he acquisition of the franchises of another
Montana permits the vote OF
.hree-fifths Of all the stock issued to au-
-horiZe consolidation Arkansas. Maine.
Michigan fsome counties). Missouri, North
Dakota, Pennsylw MIA, South Dakota, South
Carolina, Tennessee. Washington, West
Virginia, and Wisconsin give this power 10
bare majority of stockholders. Florida,
Georgia, Indiana. and Wyoming require no
consent of stockholders, but place final
authority in the hands OF the directors.
This bill requires that, before its pro-
fsions shall take effect. three-fourth3 of
he stockholders OF the corporstion-the
highest percentage required by the laws
4 any Stste-whose franchises and prop
rty are to be acquired. shall not merely
Owe their consent. but shall exchange
heir stock for stock Of the acquiring cor
,oration In order to carry out the pro-
,osed consolidation. This is as FAR rs il
vould be practicable or safe to go in the
Erection OF restraining the making OF
Infair and imprudent contracts by re-
uiring the consent Of a large proportion
4 the stockholders whose interests are
o be affected thereby.
Section 592 Of the Revised Statutes,
ppiicabie to the District OF Columbia,