The Houston daily post. [volume] (Houston, Tex.) 1886-1903, 1902-12-22
Al Address by a Committee of The
Manufacturers Association.
FRANCHISE or THE STREET RAIL WAY
They Represent That Il Is Worth $780,
600 TO s75o,ooo and the City Is Get
ting Only $4,000 in Exchange.

"PpIV'lng the minority report of Alderman
thompson, opposing the granting OF an
extension of the franchise OF the Houston
hIectrlc Street Railway company for an ad.
ultlohal ten years, TO begin after the OK
Plrution OF It's present franchise, which has
Eet twenty-thrce years or more to run. At
tuls meeting It was stated that Mayor
holt would give notice Of o veto In the
event OF the ordinance including the e1.
tension OF the franchise being passed as
amended by the majority OF the com.
HIttee TO which II had been referred.
EgIsolutlon was adopted by the meeting.
ultnvclug It's CD lirman to select a com.
n.iiJ5Lee 90 prepare and have published an
u Ills 70 the people of Houston, Tor the
puIpost OF orousing their interest In the
IdlteF, with the view of bringing to hear
lee pressure of public opinion against such
o. lhe aldermen as might otherwise be
over the mayors veto
me ordinance was rushed through under
SUSPENSION Of the rules after an amend.
u5enJ mat It FIRST be submitted TO a vote
~ lhe people had been voted down, al
though petition requesting that this be
uyuc Iau oeen previously presented 10 the
council, with l20n signatures Including
nose OF many OF the most prominent bust
iless men IN town and Hiuety-three leading
li"yerS out Of the lO6 to whom II was
presented. believing that this franchise ey.
tension which the street railway company
ms 1, peen trying to get for the past eighteen
Avllhs 10 be equivalent TO presenting #
WIN bonus Of $4,000 or 100000, the
tILuetalsueu' as citizens and tax payers Of
Houstoh interested solely in its welfare.
ana most Of whom supported the admin
lstrduon in the last city election feel II
70 pc our duty, at the request OF the chair
man or tue citizens meeting above referred
10 10 JON In this address 10 the public
IN the nrst place, what Is the value OF
me ten years extension? No committee OF
me council has been appointed to report on
THIS subject. nor has the street railway
company ITSELF invited any discussion of II,
UT ldue any attempt through the press
10 snow mat the estimate as 10 its value
mace by Mf. Ring IN an article appearing
Ia Inc Houston Daily Post on July % 1902,
ana another article In the same paper on
July %, 1902, was exaggerated. Nor has
amy attempt been made TO prove mat AL
derman street, as shown by an interview
WIN him also appearing in The Post on
following language.
Passed on the present returns, nomlnally
2-oV'VOu lper anuum), and adding an IN
crease OF per cent annually compounded
10 cover increase of pOpulatOu), Mr. Street
ESTIMATES that during the life OF the fran.
culse extension Item years. the company
would earn approximately S9,Bi7 So, from
winch the operating expenses, on the 70
per cent basis, deducted would leave 81.
eJ4,a0l for the company, or more than the
prrs.nt amount Of capital stock and bonds
outstanding
TO put It in nutshell" said Mr.. Street
tine city OF Houston Is selling for less
than or approximately 100000. a franchise
out OF which the Companys net earnings
are TO be millions Of dollars Ia excess OF
us entire capital aud bonds
IL Will be noted that the S2Oo0O referred
TO by Alderman Street was not to be paid
down, but In annual instalimenrs running
through period of thirtythree years, the
present worth value of which would NOT
probably exceed $4,000; aud that thus, for
an equivalent not exceeding a burden to
tue street railway company OF $4,000 or
$4,000 IN cash, Its holdings were to be en- !
HANGED $4,000 or more,
our Information Is that the value Of the !
comp0ay'5 physical plant, including its 1
tracka1e, equipments and power house Is |
ditunal value IL has Is due to the fran /
chise, 4. o., 10 the legalzed right to charge /
for the service performed, II it can get It, |
more than sufficient amount to produce |
q fair dividend on the actual cost Of the |
plant Our information further is that the |
property cost its present owners but about /
N'9ttuo; that this is the amount recently !
pold by them under the last Que Of several |
successive receivership and foreclosure pro- |
cceuiuCs previously brought about by the /
excessive ISSUANCE Of bonds in the interest /
OF promoters. Our Information further Is
that the owners and promoters of the exist
Ing company have issued bonds upon Its
holdings TO the extent Of 1,JOaOOO, which,
with only twenty.hve-ycar franchise, they
and that tn order to sell these bonds at
par, IL Is necessary to give them the adj.
ditional value which would result from
the ten years extension, and that this OK
plains their anxiety to get such an eNten-
sion Assuming that the bonds are now
worth 10 cents on the dollar and that the
proposed extension will bring them to par,
then the extension will have the effect at
once of adding 1919 600 to the value Of the
bonds alone. to say nothing of Its effect
upon the value OF the stock of the com
pany.
But this is not all. Estimating the gross
earnings Of the company to be $4,000 per
cl mum, as stated b, Al term st Get, and
lis operating expenses 20 per &c OF its
rec, ipts, It's net earnings are $4,000 wear
"a sum rely suaicl Mt 10 pay terest on
81 oCOO Of bonds, The rec ipts OF the
cont any, however II now sufficient
would probably soon be Sufficient to pay in
vide for operating eVDepses and / neWlls
A 4 per cent bond, backed by tlirty-nve.
year franchise, is a safer and mo l.
roctlye Investment than per cent bond
back by only a twenty hveyear franchise.
Hence, II the extension be granted, the
-gmpany vii. doubtless be able, not only TO
'dd at once $4,000 to the value Of its
ponds, but also to effect saving Of Its In
crcst acc unit Of $4,000 aunu II hIh
capitalized at 1 per cent Is equivalent 10
$1,000 since I per cent per an um on
hat $4,000 is by no means an eNaggerat-
ID estimate OF the value to the company
II the proposed extension. In this conncc-
ion, the question may wen be suggested
rs TO why Il has ever become necessary
% issue a million and a half Of bonds, n
say nothing OF hundreds of tn usands Of
lol.ars of stock 10 addition, ON property.
he ply steal and tangible part OF which
'oulu be dup ic9ted. as we are Informed,
or less than $4,000.
franchise probably worth $4,000 or
more should not be granted by the city
lnder suspension OF the rules or otherwise
80 any individual or corporation WITH ut
adequate consideration. In the Interest OF
~ the p oplc, the S me eompens tiou
should be demanded as would be tae case
7 individual and private int rests Criy IN
9th Sides were involved; aud, II that were
lac case, a prop sition TO ext, nd Il fran.
MISE twenty three yeas before its expi a.
ION wtulu not be considered for a moment
we VIII next consider the consid grafton
'nered by the street railway company We
understand the books OF the city show that
ne con pany Is now lndel ted 70 the city IN
ne sum OF SIS, s45 90. The company claims
nat II ewes much less than this, and In
ne proposed ordinance the city Is Ia re-
elye $4,000 ia settlement 10 full OF tia
lain. We hardly see how an agreement "a
ay portion OF the amount Claimed hv TIE
Ivy as being justly owing TO II should sg-
ne as any part Of the consideration for a
TNneQIEn ]