Watertown weekly leader. [volume] (Watertown, Jefferson County, Wis.) 1906-1908, 1907-01-18

road which it may be legally authorized 10
purchase or construct, for additions or i'm.
provements TO it's property, for additional
equipment which may be necessary in the
operation of it's railroad. and for real estate
that may be needed for railway purposes.
The corporation so increasing its capital
stock is required to file with the secretary
of state, whenever such issue IS made, a
report of the amount issued AID the pur-
pose for which it has been or is to be de.
voted. There is no provision for the super
vision or control of such issue by state
authority, and no restriction as to methods
Of sale of such stock.
In 1903 the Chicago &c North Western
hallway company increased its capital stock
tober, 1906, filed with the secretary OF
state an amendment to its articles of asso-
citation making further increase of $780,
OCoOO0, creating a total capitalization OF
$2O0,00O,0O0. The Chicago, Milwaukee &
st. Paul Railway company, in October and
November, 1906, filed amendments to its
articles of incorporation increasing its
to S20O.Oo0,00G. Each of these companies
IS at the present time, and has for many
years, been operating thousands of miles
of road, fully equipped, considerable of the
trackage having been doubled. 1t is hard
ly. probable that either of these companies,
within the near future. contemplates the
duplication of its extensive properties. The
necessity for this large increase of its
capitalization by each of these great COM
panles is not apparent and may justly
challenge the attention of the Legislature.
Moreover, | am advised that the addf-
tionaI 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 sucn
circumstances, places an unjust and IN
reasonable burden upon the commerce of
the state and country, and proper legisia-
ton should be enacted to prevent the con-
tfnuance Of such methods OF railway man:
agement. This is but one form of the evil
OF over-capitallzation of public service cor
pOrations, and demonstrates the Importance
of placing the whole subject under the
control of competent state authority.
| therefore recommend the enactment of
law providing that the issue of stocks
and bonds, or other evidences of debt to be
secured by lien or mortgage upon the
property or franchise of any transportation
corporation organized under the laws OF
this state, shall be subject to the super
vision and control OF the state railway
commission, and that any additional stocks
or bonds so issued shall not be sold for less
than the market value when the market
value exceeds the par value
The state board of assessment ascertained
the value of the railway properties of The
state for the purpose of taxation, but such
valuation may not be adequate to serve as
q guide to the railway commission when
considering the reaSonablcnCSS of the rates
prescribed for the transportation of paSSen-
gers and freight. The cost of railroad prop
critics must be considered as an element III
determining rates rs the earnings of the
corporation must provide for the expense
of maintenance and repairs and reasonable
returns upon the capital actually invested
| therefore recommend that the state rail
way commission be clothed with adequate
power to determine the value of the rail
way properties of the state and to employ
such experts as may be required to aid in
this work
The governor wants the railway com
mission given power to supervise all is
sues of stocks and bonds by railroads
and to see that they are not sold at less
than the market value. He also wants
the commission empowered to determine
the value of railroad property.
The governor wants all the laws rclat-
ing to public utility corporations revised
He wants all franchises limited and sug-
gests that all should terminte by Jan
nary l, 1880, at the latest. He recon-
mendS a state commission to regulate the
price of gas, electricity, telephones,
street car fare and all other charges by
public corporations.
The governor favors municipal own
ership and advocates laws to enable cit
les or villages to establish public utili-
ties or by eminent domain to acquire
existing property by payment of a fair
price.
Necessity for State Control.
The governor says:
A question Of the utmost Importance TO
large classes of our people, commanding i'm.
mediate consideration and judlcious action
by the Legislature, relates to the control
and regulation by the state of local public
service corporations. The services rem.
dered by this class of corporations greatly
contribute to the life and comfort of the
inhabitants Of the larger cities of the state.
and in many instances to those residing in
contiguous territory. A congested
Ro gRf2g makes 5Gsord necessary artificial
and the means of rapid TRANSFORMATION
and if these cannot be furnished by the
municipality the services of public utility
corporations become Indispensable 1t has
been common practice in this as well as in
other states for the city to grant the
privilege, of furnishing these facilities TO
corporations and franchises have been
granted exclusive in express terms or in
practical application and monOpoliStic in
their character which contain no adequate
safeguards for the protection of the pub
lie. The result has been that these cor
porations with the absence of governmental
restraint have grown in wealth and power
and have become the masters instead of
the servants of the people. The standard
of service has not kept pace with the needs
of the public, or with the rapid improve
mcnt in methods and appliances while tho
rate of profit has steadily increased. 1t
requires but Il superficial knowledge of the
subject to reveal the fact that there is
no uniform relationship between the rates
charged and the cost and character of the
services rendered.
The eagerness of the municipalities for
local Improvements and the apparent in
opportunity for organized wealth to obtain
valuable franchises extending over q long
period of years for the control of public
utilities and to furnish such service and
to fix such rates as would yield the larg-
est possible returns without regard to ac-
tual investment or the needs of the peo-
pie. Complaints against service and rates
have received little attention or escaped
correction either because tho municipality
did not have the power to properly protect
the public, or having the power, has failed
q ~ n ind
encc or subServiency to improper in
nUences. With uncertain powers, with fire.
quently changing administration, with no
fixed responsibility upon officers chosen for
the task, the cities of the state are not in
position to successfully deal with this i'm
pOrtant problem and undertake the regula-
tion Of public service corporations.
Tho evils growing out of the local service
problem are attributable to three we'll
defined causes-namcly, long term and ex-
elusive franchises, excessive rates and
ing stock.
Municipal Franchises
Public utilities can only be established
by the municipalities or by persons or cor
poratfOnS to whom the right is granted. A
franchise for such purpose is public grant
and it should be exercised under public
supervision in order to secure adequate
protection to the public interests. The
people of the municipality are at the out
set eager for public improvements, and
franchises are readily obtained for a long
term of years and exclusive in character.
for gas or electric lighting, for water works
future developments and to the needs of q
growing community. AS a consequence
the public interests are not properly safe
guarded but are subject to the rapacity OF
rierS. The franchise, which is usually the
free gift of the municipality, is capital
lied and re-capitalized as it increases in
value by growth of population, and charges
for services are fixed by the management