Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1913-03-13

franchise. e. There is no TCaECTanlr
ground fer that, II it becnne5 one-a-
tive at the end OF the pres nj fran
chise, II will still be thirty years af;e-
the franchise began. while in Ii cas-
OF the Filo railway. it is to begin
twenty years after the franchise be-
gins, notwithstanding the smallness OF
the town ana the greater risk as 10
the road proving profitable in its ealI,
Ter years. = Whatever the company
gets after the expiration Of the
present franchise, it gets as gift;
and it certainly cannot complain if 50
handsome a gift as an extension OF its
franchise for twenty-one years or so
is subject to termination in the public
interests upon full compensation be-
ing made. 1t should not look so fine
a gift-horEe. in the mouth. Indeed,
without the extension the company
would get nothing for its property
at the expiration Of the present fran
chise. Its rails and cars would be 10
it so much scrap iron and junk.
Purchase Plan Unfair
Again, the provision in the COM
panys bill provides that the purchase
shall be made at a price equal to the
cost of the property less depreciation
and subject to the indebtedness; in
other words, not to go too much into
particulars, it..might be contended at
least that the public would have to
pay not only the entire cost CT the
property less depreciation, without
u hn n n;ah
property might be subjected. and then
assums the debts besides. That would
be like paying the entire value of a
piece of land and getting only the
equity of redemption, if the land were
subject to mortgage.
Moreover, as the bill is drown, Il
is a question whether after paying
the price, the public would get the
property, for by the terms of the bill
it has to pay the price merely in
order to terminate the franchise and
the privilege of using the streets
Nothing is. said about acquiring the
property.
Furthermore, it is provided in eff
feet that one man, namely, the treas
urer of the territory or a representa-
tive of the city, may agree upon 4
price with the company, and that the
matter shall be arbItrated only in
case they cannot agree. No transac-
ton involving perhaps millions of doi-
lars should be permitted to be fixed
up on the quiet by an agreement be-
tween the company and one man.
Stock Juggling Might be Possible
Again, if the contentious are sound
which the company will undoubtedly
make, when the time comes, it may
construck it's entire road or any ex-
tensions of it entirely on the bonds,
then issue watered stock to the
amount of 125 per cent of the cost.
then pay off all the bonds out OF
earnings, then pay off the 125 per
cent of watered stock out of earnings,
then continue to pay at least per
cent in dividends on the LIS per cent
of stock, the value of which the pub
lie instead of the stockholders has
paid to the company, and then compel
the public, if it wishes to buy the
road, to pay for II, an over again. In
other words, the public, in order to
get the road might havesto pay for ii
at least three and quarter times
to company that has not put a cent
into it but has been drawing good
dividends from it. The substitute
bill provides clearly, not that the
public may merely terminate the
franchise but that it may also acquire
4 hn hof In
at the cost, but at not exceeding the
cost of the property, exclusive of the
franchise and good will, and less de-
losses and debts, the pur-
chaser to assume the debts; and that
the price must be determined by arbi-
tration subject to appeal to the SUI
preme court. Even this provision
may not be sufficiently fair to the
public; for in so far as extensions
are made out of earnings the public
pays for them and ought not 10 be
obliged to pay for them over again.
1t would seem fairer to pay the COM
pany only what the stockholders have
put in and a reasonable bonus, or
else to deduct from the value of the
property what has gone into it out OF
earnings. 1t is to be hoped, however.
that under the substitute bill such
good service will be secured that the
public will not want to purchase the
This brings us to the sub
jects of stocks and bonds and earn
ings, which are closely connected with
that of the price to be paid for the
.-....s :. 49,.
2. Under the present law the COM
pany is permitted, after paying eX-
penses of operation, cost of extern
sions, fixed charges, etc, to set aside
a sinking fund to retire the bonds
and stock, and to pay per cent in
and is required to divide
equally with the territory all amounts
paid in excess of s per cent. Under
the bill introduced by the company
the only change made in this respect
is that the public is to get 212 per
cent of the gross transportation re-
teipts after July l, 1917, instead of
all that is paid in excess of s per
cent from the present time. The alb
surdity of this is apparent. One
would naturally EXPECT that the com