Vernon County censor. [volume] (Viroqua, Wis.) 1865-1955, 1907-01-16


nor also deals with excessive rates
and adds:
The custom has long prevailed in
the org anization of public service
corporations, to issue bonds to an
amount sufficient to pay the cost of
the entire plant, the stock being is
sued without consideration, as a
stimulus to the sale of the bonds or
to reward the promoters. When the
corporation, through the earnings
exsoted from the public, is enabled
TO pay attractive dividends, the stocA
is listed on the exchange and ostens-
ible value is given to that which has
none, and the shares are bought al
substantial prices by innocent pur-
chasers. Excessive rates must
thereafter be maintained to pay di-
vidends upon the fictitious capitaliza-
tion, thus imposing an unjust burden
upon the community.
In nearly all cities, profits depend
ent upon gratuitous franchise grants
have in a very short time become so
large as to require concealment.
! Further, the progress of the puvuc
service industry has neeessitated
! revolutionary changes in plant and
| equipment. These, in turn, have in
vited financial manipulation at every
turnover and replacement, and final
ly the rapid growth of cities has
,necessitated a great extension of
/ lines and mains, always at increased
capital, and often leading to consoli-
datiOn with all their attendant OPP
portunities for imitation. Efficiency of
service hass seldom been a factor in
determining the amount of capitaliza-
ton. III order to pay interest and
! dividends on this large capital, rates
have been fixed at a point entirely
unreasonable in comparison with the
cost of service. Largely increased
earnings are also disposed of by re-
sorting to the issue of stock diYi-
bends, all of which, become an
I increased burden loaded upon the
property from which no benefit is re
ceived. Another inducement for
such additional issue is the practice
of giving to existing stockholders
the prior right to subscribe for a
prOpoTtionate share thereof at par,
! regardless Of market value. In such
cases tire corporations will receive but
portion of the amount they might
have realized, and the people of the
cities are taxed to pay rates on the
excessive issues"
| The remedy for conditions, says the
governor, lies in a complete revision
of the statutes relating to the organ
izatiOn Of public utility corporations
and the granting of municipal fran
chises, and providing for the super
vision by public authority of the is
sue OF stocks and bonds and the con-
troll of the rates that shall be charged
and the service that shall be reu-
dered Such legislation should strike
at the root of the matter. Franchises
! .mprovidently granted are generally
recognized in this and other states
as the source of the evil which is ag-
grayated by overcapitalizltion and
! oppressive management. The remedy
, lies in placing an absolute limit by
4 the legislature upon the time for
/ W. III a franchise may be granted,
and prescribing a period upon which
! all franchises heretofore granted shall
! terminate. Already twenty states and
: Two territories have adopted legisla-
ton fixing such limit, ranging in a
great majority of cases from 20 to 35
years, and containing provision per-
4 hitting the city to purchase the plant
at the expiration of the term or at
time prior thereto. The constitution
Of this state has wisely reserved to
the legislature the power to alter,
amend or repeal all general or special
laws granting corporate powers and
/ privileges. The exercise of this
power by the legislature for the con-
trol of public service corporations
has been upheld for more than a gen.
Grafton by the supreme court Of this
state and of the United States, and
there can be no just cause for com
plant against the adoption of proper
amendments to charters and fran
chises which have since been granted
and accepted. Such grants have
been made subject to the exercise Of
| this power for the protection of the
| public.
| Since there are franchises in this
| state which have been granted to
public service corporations in per-
petuity, or claimed to be such, and al
so many which have been granted for
very long period of years, the terms
of which will operate hardship and OPP
ipressyely, the government recon-
mends the enactment of a law de
claring mat all franchises heretofore
granted to any individual, partner
ship or corporation. to engage in a
public service business in any city in
this state, shall terminate on Janu-
airy /, 1880, unless they shall sooner
expire by their own terms, and also
declaring that no franchise of such
nature hereafter granted shall be
for longer term than twenty years"
A State Commission Too.
! The only adequate remedy for ex-
cessive charges by public service cor
porations is the regulation Of the
rates by public authority The legis-