The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1907-05-07
SQUEEZING OUT WATER"

Massachusetts frequently gives val
liable illustration Of the ability TO
keep its head and meet new condi-
tons with admirable foresight. Par
ticularly is this true with respect to
its avs controlling corporations. Ac-
cording to the arguments which are
usually brought forward in opposi-
ton to any legislation regulating
railroad action. the state that owns
the Hub" is radical to an extreme.
Yet somehow it seems to have es-
~aped the r~eproach. Possibly this
is because it is 50 evidently in earnest.
For instance, Massachusetts meets
the problem Of "watered stock in the
only practicable way, by giving its
railroad commission control of the
stock issues Of corporations desiring
to operate under State franchises. Be
fore q company is organized, it must
submit its plans in detail, including
the value of the physical property
and Investment, the proposed issue
of stocks, bonds, etc. 1t is upon all
this date that the charter is finally
approved. How effectively the law
operates is shown in the following
from the Boston Transcript:
"A considerable amount of water
is squeezed out of the stock of the
Western Massachusetts Street Railway
as the prerequisite of the rail
road commissions approval Of this
company'S absorption of the Woron-
oco Street Railway. The beard Would
approve the merger, it appears, only
after the company had cut down the
mount of stock and bonds first ask
ed for.
The merger is a part Of the New
York New Haven and Hartford Rail
road owners plan for general ac-
quirement and consolidation Of troll
ley lines IN Connecticut, Rhode Island
and central and Western Massachu-
sets. The New Haven people some
time e acquired the Western Mas
sachusetts, which is already built
from the Westfeld boundary through
Russell to Huntington, and is pro-
iected through Chester and Beckett
to 4 connection with other New Haven
trolley lines in Lee BY taking the
W~oronoco, the New Haven people
found a way TO control the entrance
into Holyoke and Springfield Tor its
Western Massachusetts, as the Woro-
nDcO directly with the
Springfield system Of trolleys, owned
by New Haven interests. The petit
ton for approval OF the terms Of the
merger has been pending for some
tine, the hitch having apparently
come on the stock and bonds ques-
ton"
This means in the last analysis that
the road as chartered must be con-
Quoted. not upon the basis Of what
the tariff viii bear, but upon What is
a fair return upon property and
money invested. The water having
Iean SCIpeZe1 ont there will he no
opportunity given for the plea which
makes the question of fictitious yalu-
alton q hard one to deal With-that,
however wrong the original issue, the
securities have passed into the hands
Of '~'innocent holders for value"
In permitting the organization Of
the proposed company. the commits
sion absolutely fixed the amount Of
stocks and bonds by the following
direction:
Ordered That the approval of the
Board be hereby given to an increase
in the capital stock of the Western
Massachusetts STREET Railway Com
panY by the issue of shares not eX-
ceeding two thousand five hundred
t2,50G) in number, amounting at par
value to two hundred and Gfty thous-
and dollars t$250, 000) the said shares
to be issued for the purpose of carry
ing on the terms of said contract
and to exchange, share for share, foI
the outstanding shares Of the Woro-
noco STREET Railway Company, the GER
tificate of the last-named shares to
be upon exchange surrendered and
cancelled"
The Massachusetts rule is one which
could we'll find countrywide adOp-
ton. 1t is too late to gain adequate
relief from the floods of water
which are the basis of the power OF
the railroad interests which has be-
come q menac to the country. But
it should be the duty and pleasure oi
legislation in all the States to guarG
against its being indiscriminately
poured in in the future.