Arizona republican., 1910-04-05
4 Proposal Of Foolish Railroad
 Legislation.

structiOn of New Railroads Except on
 Consent of the Main Lines" We re-
 fer, of course. to the proposal to rest
 with the interstate commerce commis-
 sion authority to say what shall be the
 market value of bonds issued by a
 railroad company in case they must
 be sold for less than par. The main
 lines-the transcOntinental roads-can.
 bonds they offer on branch roads pro-
 jected by them, since the credit of
 these great companies is so fully es-
 abolished that investors take without
 question the securities offered. So the
 proposed law cannot injure them.
 But if the proposed legislation goes
 into effect il will greatly increase the
 difficulties of promoting and financing
 new and independent lines The bonds
 of such projects are. almost invariab bly
 sold for less than par. because of the
 speculative risks involved. The trans action is concluded to the mutual sat
 isfaction Of promoter and investor. To inject into such transactions the prin- ciple of requiring from the interstate commerce commission d decision as to the market value Of the bonds before they are sold would introduce such complications as would pretty effectu- ally prevent promotion.
 Take. for illustration. the pending promotion of the Phoenix Buckeye line. The promoters and the investors may have agreed on a price of 90, say. for the bonds; but under the pro- posed law the promoters could not sell and the investors could not buy until the market value" of the bonds had been fixed by the commission. The commission might say, on the one hand, that the bonds must not sell for less than 99; or. on the other hand, that they must not sell for more than 90 per cent of par In either case promotion would be defeated.
 That the interstate commerce com mission would act honestly and with the best judgment of its members, and
 so far as it was aware-free from the influence of the great railway companies. we may assume. But is their judgment any better than that of the investor in railway securities? On this question the chairman of the commission frankly stated before the house committee on railroads that he was not competent. The chairman oi the house committee had said: 'I drew this proyision of the bill and what I do not know about the subject of is suing stocks and bonds would fill ! many libraries, and what I do know | could be put in the space of very | small book" To this the chairman i of the interstate commerce commission i replled. 'I would not be vain enough i to claim superiority over the chairman of this committee in any respect. but | if there is any it is in my greater i ignorance of the subject"
 The proposed law is. of course one of the results of the popular dissatis- faction with the alleged watering of railway securities And the great i transcontinentai lines are shrewdly taking advantage of this state Of the public mind to concentrate into thelr own hands the power to dictate in stiu larger measure in all questions relating to the construction Of new lines.
 Tn what extent the transcontinental lines are disposed to accommodate the growing needs of the country for m terior lines. we people in Arizona have been in pretty good position to judge. Practically every branch road we have today was built without the active help of the main lines, and Tn some cases in spite of their opposi- ton. Old-timers remember the diiil- culties which confronted the promo ters of the line from Ash Fork to K would not aid it in any way. It was even impossible to enter into traffic until the promoters had given an option on the stock of the branch road. so that the main line company would be in a position to ao- sorb it if 1t should prove success. It was the same with the line between Phoenix and Maricopa. Although urged for years to build the road, the South- ern Pacific stubbornly refused to take it up. The people had to vote bonds as a subsidy, and in an amount almost sufficient to build the line. for the benefit of a local company. And even then it could not effect traffic ar- rs agreements with the main line until the main line company had been put