Los Angeles herald., 1908-03-18

the Aldrich bill by which railroad
bonds are to be made security for
emergency circulation, and charged
that it was a scheme to defeat legisla-
tion which might lower railroad rates.
LAS a common carrier" said Mr.. La
Toilette, 1.-The railroad is entitled to
charge sufficiently high rates to pay
operating expenses and a reasonably
fair return upon the fair value of the
property which it uses for the con-
venience of the public. This is the
standard and the only standard by
which to measure reasonable rates. To
secure the application of this standard
to the railroad rates Of the country has
been the object of a struggle extending
over many years. The courts have
sanctioned ii.
sion has urged it upon the attention of
congress and common justice to the
public interest demands II. Tried by
this standard, if a railroad company
has grossly overcap apitalized its prop
erty it cannot rightfully impose upon
the public a transportation charge to
pay any return or dividend upon this
fictitious capitalization.
"It does not signify the public have
not yet been able to secure the appli-
cation of this standard to the rates of
the country. Their cause is just and
its defeat from year to year has been
accomplished only through the powerful
interests which the great transporta-
tion companies of the country and
those interested in their securities have
been able to successfully exert in pre-
venting legislation.
Pays on overcapitaIization
"Today we are confronted with the
astounding proposition that congress
should hold out Legislative inducement
for the enaction Of transportation
charges which shall net a continuous
per cent dividend on railway capi-
talization. 1t is idle to say that this
measure is limited in its scope; that it
has reference simply to a limited issue
of railroad bonds as security.
He is blind indeed who does not see
the ultimate effect of a proposition
which directly or indirectly raises a
standard for the payment of a fixed
dividend upon railway capitalization
without regard to the valuation of the
property
"The certain effect of this action by
congress is to stimulate every railroad
company within the purview of this
statute to maintain the position of its
bonds within the favored class and
every other railroad company to quail
ify at the earliest possible moment for
admission to the favored class. 1t is
plain, sir, as the MONDAY sun that the
direct effect of this proposition is to
advance railroad rates, and it will
identify the government with main
tenance of rates in all cases where it
has accepted railroad bonds for cur
rency circulation"
He insisted the interstate commerce
commission is now empowered to as
certain the value of the physical prop
erty of the railroads of the country
and strongly favored such a valuation
as the only means of fixing railroad
rates.
Protects Railroads
"When once the government invites
the national banks of the country to
invest in them for the patriotic purpose
of averting financial disaster these
railroad bonds will become sacred
paper The good faith of the country
will be pledged to defeat any legisla-
tion that suggests a disturbance of
the per cent dividend upon the stocks
"The senator from Rhode Island will
be heard in solemn warning. He will
be told that the bonds were bought by
the banks not to make money, but to be
held in readiness to protect the credit
and commerce Of the country; that
bond markets arc easily disturbed;
that such security is delicate and SEN
stive; that legislation menacing divi-
dends upon grossly watered stocks
would alarm the holders Of these bonds
and force them upon a falling market
at great sacrifice. possibly. producing
panic and leaving the banks but par
TALLY prepared to take out emergency
currency.
Gould any plan be devised which
would be effective in blocking the way
In af Of
physical properties of railroads and
defeating the final reduction of rates
TO a lust and reasonable basis?"
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