The Portland daily press., 1901-02-14

thing for an investor 20 SAY that the
mortgage securing his bonds has behind
It q certain amount Of capital stock,
when In many cases 1 know that not q
dollar has bssn paid IN and the only as
sets OF the corporation are the proceeds OF
the sale OF the bonds themselves
while hssitating to interfere with the
existing order OF thugs, l found this
abuse 90 apparent and the need OF oorrec-
tion so urgent that felt it my duty 90
mention it in my official report. Mr
Timberlake said the proposition mad been
favorably received by the press and by
prominent men. All seem TO favor some
legislation. No, VIII not say all, q few
whom know TO be promoters OF schemes
that would be embarrassed, or their at
torneys, object. I believe that nine out OF
ten citizens OF this state. II you will sub
init the question to them, win be in
favor Of some regulation.
Since the legislature creates these
quasi-pubiio corporations they should see
that they are placed under restrictions
and regulations that will conserve the
public interests. II more capital Is au-
luuElEcu b1An ~ 6At0AsAI AbNNnAI4 AN
places burden on the pubic, for the
public must pay tribute to thsir capital
so long as 10 exists.
In the stats at this time we have
millions Of doilars OF such capital created
by q mere fiction OF law, capital that has
become a mortgage upon the business
and industries Of this state at the expense
OF the public. bsnenting the few who
have been snrewd enough 70 take adj
vantage OF the opportunities our law has
given them.
1t seems time for the legislature Of the
state. through you, gentlemen, to enact
some legislation to protect the state from
further drain upon its resources.
Hon. Herbert III. Heath followed MIR.
Timbsrlake. lie opposed the bill and be-
gan his remarks with an exchange OF
plsasantries with the bank examiner.
~ feel little embarrassed in appear
ing here to opposs new born refoIner
who speaks with the enthusiasm which
always marks the proselyte, said MIR.
Heath.
Mr.. TimberlAke-"I am a reformer
only in my official capacity
MIR Hsath-"Weh, will not tell what
/ know about your business but shall
tell some things about some roads in
your vicinity whirh viii completely mp
set your theories. In the past fifteen
years / have seen a good deal OF what the
distinguished Senator calls irrigating.
In 1885, the were only q few water
works systsms In this state. few electric
light plants, no electric railways In
1856, i was counsel for the iirst water
syndicate In Maine. The following year
l assisted In putting water works into
this city. That syndicate was made up of
such irresponsible gentlemen as Joseph
Ii. Manley, George +. Wescott and Gov.
Bodwelr. / mention this to show who
were the irrigators { that time.
Mr. Heath said tkat ss-tissnen of equal
standing had engaged in the electric rail-
way business. The legislature had
amended the savings hanks law to safe
guard the Investments under these nsw
conditions. In the case OF street railroads
the unbusinesslike rule had been adopted
that 33 1-2 per cent OF the stock should be
actually paid into the construction Of the
road. Now every body who buys 3 bond
intslIigently bases his judgment on earn
ing capacity rather than on the cost Of
the plant. That is the rule Of the busi-
ness world upon alt these auasi-pubiic
corporations Business men want to
know not what an enterprise cost but
what it can earn ana what its operating
expenses are My brother Greats the sub
ject OF the steam railways very gingeriy.
The railway bonds issued in this stata
are good regardless OF whether 'he sto ok
was or was not watered, but there is one
exception, the Phillip, and Rsngeley, a
road built on the prinoiDls Of this bill
Into that plant they put $lO0, 600 in stock
fully paid up and then they issued $3.50.
OOO in bonds. The savings banks took
sllO, ,OG0 OF the issus, regardless OF the
earning capacity OF the road, and the
road never earned the interest although |
the Redington lumber mills have paid
the deficit each year to keep the road
alive. Now the lumber has been cut and |
unless somebody buys the road and builds
a branch to the back Of the town where |
tncIC N AdhASCAe yOa SaA Ohh hAG
loss yourself. And that came about In
road built with paid up capital. MIR. |
Heath contrasted this showing with the
case Of the Bangor and Aroostook, a
road with watered stock whose bonds are
good hecause OF the earning capacity of
the line. Does any savings bank man lie
awake nights worrying aboutBanRor and
Aroostook bonds. No savings bank has
lost through the electric roads in this |
state. In the list of watsr companies
there is only one, tine Richmond company,
which has defaulted on its bonds.
MIR. Heath taking up the statements OF |
the bank examiners report took excep-
tions to some of them arguing that the
question OF over capitalization did not
enter into the problem. The owners of
the enterprises were entitled to fair re-
turn upon the value of the property pro- |
vided their rates were reasonable.
In reply to questions, MIR. Heath said |