Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1908-07-30
L0UCKS 0UIZZES TAFT ON
RAILROAD MANIPULATION
Wants Nominee to Explain Why Gov
eminent Should Protect Holders
of Watered Bonds Cover
ing High Rates

Robert G. Loucks, who has made
study Of the law of public service cor
porations is one of many Democrats
in Los Angeles who have been left in
doubt by Judge Taft's speech of &C
ceptance remarks. as they deal with
the railroad question.
To settle this doubt Attorney Loucks
last night sent to the Republican ma
tional nominee this letter:
Honorable William H. Taft, Cincin-
natl, Ohio.
Dear Sir: At the time of the Gre
alton of the interstate commerce COM
mission Coils P. Huntington stated
that the railroads would soon be owned
by the government and that the next
railroad step was to prepare for it
intimating that exorbitant rates by
| the process of watering stocks and
bonds would be maintained to the
limit of endurance, thereby compelling
the purchase by the government of all
railroad systems at the inflated values,
and in the meantime reap rich har-
vests from exorbitant rates.
1.-THE railroads, in most cases, were
given millions for construction pur-
poses. Not satisfied with. these gifts
millions more were raised by mort
gaging the roads, not according to the
actual value of the railroad but far
beyond and upon the prospective fu-
method of watering stocks and bonds
manipulated by the allied interests for
the sole benefit Of those in control, at
the expense of the dear public who
have to pay advanced freight and pas
senger rates with each injection of
water.
1.-THE doctrine is well settled and
fundamental rule, that in fixing rates
of quasi-public corporations the rate
should be based upon the actual pres
ent cash value of the property en-
ployed in the public service, regard
less of watered stocks and bonds. In
fact, by constitution and statute many
states declare all such fictitious stocks
and bonds null and void.
NOW why how and by what means
something that had and has no value
can be made valuable by mere legis-
lation?
"A common mortgage is not given
this protection either for his mort
gage on real or personal property,
neither has the government ever at
tempted to protect his private deal at
the expense of the state or nation;
therefore, why does the government
insure, guarantee and protect mort
gagees and bondholders of railroads,
those who not only unlawfully ac-
quired these inflated bonds, but who
still insist on applying the pumps?
ION. this point the Hon. Erskine M.
Ross of Los Angeles, United States
circuit judge. in San Diego Land and
Town company VS.. National City, "A
fed. rep. rs, said:
Nor can 1t make any difference
that the complainant in the con-
struction of it's plant and the car
rying on of its work. borrowed
100000 on which 1t pays inter-
est, and for which, 1t may be, it
issued its bonds.
The buyer Of such bonds, like
the loaner of money on a mort
gage upon real estate, does so
with his eyes open. The loaner
of money on a mortgage knows
that conditions may be such as to
increase the value of his security,
or they may be such as to de-
crease it's value. He takes the
chances that everybody must take
who engages in business transact
lions.
The buyer of bonds issued by a
water company such as the com
plainant has the like knowledge,
and the further knowledge that the
law, which everyone is presumed
to know, prescribes that the rates
to be charged for the water fur
nished by the company shall be
established and fixed by a special
tribunal, subject, as all state laws
are, to the paramount provisions
of the constitution of the United
States. among which is one which
secures such investors against the
fixing of such rates as win oper-
ate to deprive him of his property
without just compensation.
"As a humble citizen interested in
the reduction and fixing of railroad
rates upon the same basis as other
rates and property are fixed, and be-
leving that the law and decisions as
they now exist against the fixing of
railroad rates on fictitious and inflated
stocks and bonds are sufficient for the
protection of the public and If en-
forced would materially reduce all rail-
road rates, I sincerely hope you will
favor me with reply as to your full
meaning of the subject in your ac-
ceptance of yesterday. Very truly
yours, ROBERT G. LOUCKS."