Arizona republican. [volume] (Phoenix, Ariz.) 1890-1930, 1907-07-14

Dortation. Railroads should not be
permitted to invest generally in the
stocks, bonds and securities of other
railways and steamship companies and
present connecting lines for the pur-
pose of forming through rates of
including branches and
feeders. 1t is not in the interest of !
he public to facilitate the consolida-
lion of connecting lines.
The credit OF a railroad is founded |
upon the resources and prosperity of
the country through which ii runs. Its |
surplus funds and credit should be |
used for the betterment of its lines and /
the extensions of branches to develop |
country contiguous to il. The testi- |
mony taken shows that about 100000 |
square miles of territory in the state
Of oregon. surrounded by the lines of
the Oregon Short Line. the oregon
Railroad and Navigation Company and
Southern Pacific are not developed
while the funds Of those companies are
used for the purpose of being invested
in stocks like the New York Central
and other lines having only remote
relation to territory in which the
Union Pacific is located.
Railroad securities should be safe
and conservative investments for the
people. To this end, the risks of a
railroad should be reduced to-a min
imum. Every one knows that railroad
securities fluctuate more or less ac-
cording to the prosperity Of the times
and also by reason of wide speculation
i'm securities.
Ii therefore. adds an element of haZ-
ard to a railroads capital and credit
to have the funds invested in the
stocks OF other companies, thereby en-
dangering its solvency and ability 10
pay regular dividends on its own cap
ital stock. 1t is n serious menace To
the financial condition of the country
to have large railroad systems fail TO
meet their obligations or go into tho
hands Of receivers. and the object Of
legislation and administration should
be to lessen the risks of railway in
yestments.
.. II is contrary to public policy, as
well as unlawful, for a railway To ac-
quire control of parallel and competing
lines. This policy is expressed in the
federal laws and in the constitutions
and laws of nearly every state in the
union. We have examined the consti-
tutions and laws of all the states, and
find that in about forty of them prohi-
bitions against the consolidation of the
capital stock or franchises of compet-
ing railways, or the purchase and ac-
QUESTION by railways of competing
lines. Competition between railways
as well as between other industries is
the established policy of the nation.
and while the acquisition of a small
minority Of stock OF a competing line
might not decrease the competition,
yet the acquisition of any considerable
amount of stock. with representation
on the board of directors of such rail-
way unquestionably has the effect of
diminishing competition and lessening
TO that extent its effectiveness. Sc
long as it is the policy of the general
government and the states TO MAIN
tain competition between naturally
competitive lines, the ownership
of any stock by one railway in a COM
peting railway should not be permitted
and such lines of railway should be
prohibited from having any common
directors or officers.
Inc time mas come when some reaS-
enable regulation should be imposed
upon the issuance of securities by rail-
ways engaged in interstate commerce.
We are aware that in the construc-
tion of new lines of railway, develop
ing new territory, 1t has been nee
essary in many instances to sell rail-
way securities at a large discount and
TO sell bonds with stock bonuses. Even
in such cases il many times has been
difficult to raise the necessary capi-
tai. Men will not invest money and
take risk for small rates of interest.
But this principal does not apply to
old established railway systems, hav-
ing good credit. Such railways should
be prevented from Initiating securities
for merely speculative purposes. Rail-
roads should be encouraged to ex-
tend their systems and develop the
country. 1t is of the utmost import
ance. also, that railway securities
should be safe and conservative in
vestments for the public, and should
yield good and ample returns for the
money invested. Reasonable regula-
tion will tend to make them safer and
more secure Investments. and thereby
benefit not only the railroad COM
panies but the public.