Wausau pilot. [volume] (Wausau, Wis.) 1896-1940, 1907-01-22

dends must be earned by increased
charges upon the public.
The additional issue of stock may be
prompted where the earnings are Excess
sive, to reduce the rate of dividends with
out diminishing returns to the stockhold-
ers in order that the liabilities may APP
parently keep pace with the constantly
increasing earnings. Not infrequently
such issue is made for the purpose of ma
nipulating the market and to keep or to
gain control of the corporation. Another
inducement for such additional issue is
the practice recognized by law of giving
to existing stockholders the prior right
to subscribe for a proportionate share
thereof at par, regardless of market
value. In such case the corporation will
receive but a proportion of the amount
that might have been realized, and the
commerce of IT, country is taxed to pay
dividends upon the excessive issue.
The recent action of the two great rail-
way corporations operating in this State
in authorizing an additional issue of stock
is significant in this Connection. The ne
ceSslty for this large increase of its CAPT.
talization by each of these great com
panleS is not apparent and may justly
challenge the attention of the Legislature.
Moreover, l am advised that the addi-
tional stock. when issued by either of
these corporations, is subject to the pre-
emptive right of existing stockholders to
purchase the same at par, although its
market value is largely in excess of that
amount. Issue and sale of additional
stock under such circumstances, places an
unjust and unreasonable burden upon the
commerce of the State and country, and
proper legislation should be enacted to
prevent the continuance of such methods
of railway management. This is but one
form of the evil of over-capitalization
OF public service corporations, and dem
onStrates the Importance of placing the
whole subject under the control of COM
petent State authority.
L therefore recommend the enactment
of law providing that the issue of
stocks and bonds, or other evidences of
debt to be secured by a lien or mort
gage upon the property or franchise of
any transportation corporation organized
under the laws of this State, shall be
subject to the supervision and control of
the State railway commission. and that
any additional stocks or bonds so issued
shall not be sold for less than the mar
ket value when the market value exceeds
the par value.
l therefore recommend that the State
Railway Commission be clothed with ade-
quate power to determine the value of the
railway properties of the State and TO
employ such experts as may be required
to aid in this work.
Local Public Service Corporations.
The eagerness of the municipalities for
local improvements and the apparent in
difference of the State. has furnished the
opportunity for organized wealth to OBJ
tain valuable franchises extending over a
long period of years for the control of
public utilities and to furnish such SER
vice and TO fix such rates as would yield
the largest possible returns without re-
gard to actual investment or the needs
OF the people.
The evils growing out of { e local SER
vice problem are attributable TO three
well-defined causes-namely. long term
and excessive rates and over-capitaliza-
ton, or the practice of watering stock.
Remedial Legislation.
The only adequate remedy for excessive
charges by public service corporations is
the regulation of the rates BY public au-
thority. The Legislature may exercise
this power directly or it may delegate the
authority TO any appropriate public
agency. This doctrine has long been rec
ognized by the Supreme Court of this
State.
Municipal Ownership.
There is a growing sentiment in favor
Of municipal ownership and encouragement
should be extended in this direction. espe-
cially with respect to water works and
gas and lighting plants. | recommend the
necessary legislation TO enable any city or
village to establish public utilities. or to
acquire such as may already exist under the
power OF eminent domain. and to paw for
the same out of the proceeds of certificates
OF indebtedness, which tay be made A
lien on the property so acquired In the
ity, it should not be required to pay an
exorbitant sum for the franchises where the
same have been granted without consider
alton. The legislation already recommend
ed to limit the duration OF existing fran
ehises would be material aid to munich
palitieS contemplating the purchase OF pub,
lie utilities
1 earnestly hope that the legislative arm
Of this State which has seen fit TO protect
the people of the commonwealth from dis
elimination and extortion by railroads. Will
also grant appropriate relief 10 the people
OF our cities against the exactions of local
public service corporations.
Insurance Legislation.
At a special session of the legislature
held in December, 1905. there was adopted
a joint resolution known as Joint Reso-
luton No. l. providing for the appointment
vestiyation and examination into the meth
DDS of transacting business followed by in
Surance corporations: 10 Investigate and ex-
anime into the expenditures. in all matters
including their expenditure Incurred In the
employment OF legislative and municipal
Hobbies, in making payment OF contriba-
tions TO candidates cssamittees or Others
TO be used for political or campaign pur-
poses. in paving wages. salaries and ex-
penses of officers, agents. attorneys and
employees: to examine into and investigate
the methods employed by such companies
in securing business and in paying commits
sions and other compensations to agents.
officers and employees. TO examine into and
investigate the nature and condition OF
their Investments, methods OF making such
Investments. and the manner in which their
funds, securities and assets are safeguard
ed" A law was passed investing such COM
mittee with plenary power in order to en-
able II 10 best carry out the terms OF the
resolution
The committee appointed pursuant to
legislative enactment has spent nearly an
entire year in the discharge OF its duties.
The report of this committee inrlns!-s its
Recommendations for additional legislation.
Will be placed before you The exhaustive