The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1912-09-17

II lands should be acquired by pnrchase
or by long leases which could be cult.
waited, either by demonstrating or under
the plantation system. II was n rather
indefinite idea in the mind of the pro.
moter himself at the time. but he
believed II would result in good for the
island.
cit was understood that the railroad
would be interested in developing land
TO promote their own interests, - sug-
gested the Secretary. "Do any of the
companies retain any considerable own
ership of landfn
1.-THE q. r. & L. Co. has comparative.
ly little land. What lands il had were
taken over by purchase in bonds and
stocks. 1t seemed important that if the
road was to be a success there should
be land owned, in order to get people
TO put money into the enterprise, which
then seemed a hazardous undertaking.
That was IN 1889 and 1890. The Hilo
railroad company received its fran
chise in 1899
Financing the Road.
1.-The O. X. & L. Co. was started with
a capital stock of 100000, the expecta.
tion then was that the road would not
20 beyond Eva plantation, about fif
teen miles from town. Beyond that it
was thought it would not be safe un.
dertaking. | don Z think, when the
government decided to give 500 mile
subsidy, it thought it would have to
pay us that money, believing we would
never get beyond the first fifteen miles.
'The road began to pay DIVIDENDS
ten or eleven years after its completion.
When the dividend was twelve per cent.
the capital stock was doubled, and six
per cent. was paid on a capital stock
of $4,000,000. From that time until
1907, when the dividends were in.
creased to seventy-fve cents a share,
the capital stock remained the same un-
til July, 1912, when the capital stock
was again increased by ST. 900, 900,
bringing it up to the full authorization
of capital. Since July the dividend
has been paid at sixty-five cents per
share, ON the fifteenth of each month.
The net revenue account in the last an
nual report shows over 81 100000 to its
credit. The surplus net earnings over
dividends has largely gone into new
rolling stock and extensions to the road.
AS the road progressed and in.
stock was increased. improvements
were made out of surplus earnings. The
total bond issues outstanding is now
100000. The original bonds had had
eight to ten years to run when they
were called in and a reissue made under
the same deed of trust, at five per cent.
The 100000 of new bonds were dis
posed of at 10l. The present market
value of these bonds has been running
from l0l to 100 and 1903. The market
value of the stock is 40 and 141 When
the stock was offered in the beginning
people came to me to get in for stock,
but ] told them to buy the bonds as
was not sure the stock would pay. The
last annual report shows that the net
revenue for the year was over 81 ,000,-
GEO. The surplus, after paying for
twelve or thirteen years six and nine
per cent. dividends-the excess profits
nave been invested in rolling stock and
extensions of road, twenty miles having
been built by the surplus. 1t has al
ways been profitable road to the stock
and bondholders since the paying of
dividends.''
eff you were to get compensation
for your services that would have to
come out of the appreciation of the
stock suggested the Secretary.
".Iust as in any other business that
would grow,'' replied Mr.. Dillingham;.
The Hilo Railroad.
"What has been the financial history
of the Hilo Railroads.
"That road was started by few peo-
pie who paid $4,000 into the treasury
through stock purchases at par" said
Mr.. Dillingham;. "Money was raised
following that on bonds of the company
to build few miles of road when it was
found necessary to extend the bond,
and call in first bonds for refunding if
possible. This was done and 100000
was put out at six per cent, SO that if
ty miles of road were built and an 500
foot wharf established in Hilo harbOr.
That part of the road cost $4,000 a
mile; there were no ravines and gulches
to cross.
"The corporation then asked for a
franchise to build road north from
Hilo. Other applications were also
made for a franchise by other parties.
Gehr & Brown, one of the applicants,
said they had several million dollars
and were in position to proceed to
build. ] suggested to my colleagues
that we withdraw in the interest of the
for their people had money.
We had then assumed as much as we
were able to take care Of. We with
drew one application for franchise.
and five years passed away and nothing
had been done.
Wagon Road Fund.
George r. Carter was then Governor
and he called meetings in regard to
this franchise and finally notified the
other people officially that the time
limit had expired on the franchise
which they had and the government
would be obliged to cancel the contract.
called personally on Governor Car
ter later and asked him if it would be
of interest to him and the public a.
large if the Hilo Railroad Company
should undertake to build the railroad
up north. He said it would. l asked
what encouragement the Territory
would give toward the raising of capI-
tal / said i wanted a twenty-year ex-
emptiOn from taxation, as il was hard
TO make both ends meet Carter said
he would be in favor of exempting tine
road from taxation for time ON the
theory, possibly, that the road would de-
reop other taxes and that the govern
nent couldn't lose, anyhow. The legis- !,
ature passed bill, not for twenty