The Bridgeport evening farmer., 1909-06-02
PRESIDENT MELLEN'S ATTITUDE TOWARD BETTER CONTROL OF
 RAILROAD COMPANIES BY STATE

before this earning power receiv- ed it's full expected increase through the completion of all the plans for which the money was raised.
 I do not wish to speak for others than the company of which I am President, but it seems to me clear that the proposed law will f1nan- cially injure weak corporations, as well as those financially strong. I suggest that yous imagine the con- dition. under this law, of any cor poration in a small town strug- gling in a small way to serve the public, whose stock is quoted be- low par. This corporation will at the outset have issued bonds to the amount of its nominal capital stock so that it can issue no more bonds until it has increased its capital stock. But it cannot issue it's stock at less than par and nobody will buy it at par; for such stock can be bought on the market for less than par. Under these circum- stances how can such a company possibly raise new capital if this. proposed bill is in force?. But if you leave such a company free, it may be able to sell securities on some terms, and by increasing it's facilities, so add to it's net earn ing power, as to rehabilitate it. self, and enable~it to serve the public better, as we'll as secure a return on the money invested.
 There seems to be an assump- tion in some quarters that there should be public interference with methods of raising new capital, because the public is somehow harmed, if the nominal capital of a company is greater than it need be. I suggest that careful consid- ion h crix fr "a C1Jh O. fore such notion as this is adopt ed as a basis of legislation. It seems to me an economic fallacy. I have in mind a manufacturing corporation, whose capital stock is s1OO. O.0OO,0O. It pays annual divi- dends of one hundred per cent. It would not earn or distribute dol lar more, if it's nominal capital were increased by a stock dividend. If it's nominal capital were raised to s1. GOO, ,000.O0 it would earn and pay dividends of ten per cent. in stead of one hundred per cent; if the nominal capital were raised to S10,O00 00O. %, it would earn and pay dividends of one per cent. In the first case, the market value of each share would be One-tenth as ' much. and in the second case one hundredth as much. No one can create earning power or market
 
 of shares of a corporation.
 But, however this may be, The New York. New Haven and Hart ford Railroad Company cannot be inteliigent1y accused of having any "watered'' stock. It has never is sued any stock since it was or ganized in 1872, at less than one hundred cents on the dollar; but on the other hand it has during that time received in premiums on stock issued s22, sos. .537.00.
 I respectfully submit that stat ute ought not to be passed injur- iously affecting the financial fu- ture of this great Connecticut company, because it is thought, (whether intelligently or noO that some other company has in the past followed unsound principles of f1- nance. It is easy to declain about the existence of evils, and to de- mand that they be immediately cured by statute. But when such a declaimer drafts his statute, it often appears that this statute would cause, in direct or indirect ways, evils in other respects, which would outweigh any good expected from the law. It used to be better understood than it is now, that there are comparatively few evils that can advantageously be attacked by the statute law, and that on the whole that coun- try is governed the best which is governed the least.
 Yours very respectfully,
 c. S. MELLEN,
 President.