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


ground for that. If it becomes opera
tive at the end of the present fran
caise. it will still be thirty years after
the franchise began, while in the case
of tie Hilo railway, il is to begin
twenty years after the franchise be-
gins, notwithstanding the smalinsss OF
the, town and the greater risk as 10
the road proving profitable in its earl
Ter years Whatever the company
gets after the expiration CT the
present franchise, it gets as 2 gift;
and it certainly cannot complain If so
handsome a gift as an extension of lis
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.horse 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 to
it SO much scrap iron and junk.
Purchase Plan Unfair <..
Again, the provision in the COM
pany's bill provides that TIE purchase
shall be made at price equal to the
cost of the property less depreciation
ard 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 of the
property less depreciation, without
deducting the debts to which the
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. 49,. -. 49,.
Moreover, as the bill is drown, 1t
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. ....=@. r.. -. ~. ..ss
Furthermore, it is provided in eff
feet that one man, namely, the treas.
urer of the territory or representa-
tive of tie city, may agree upon q
price with the company, and that the
matter shall be arbltrated only in
case they cannot agree. No transac-
ton involving perhaps millions of dol
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
CONSTRUCT its entire road or any ex-
tensions of it entirely on the bonds,
then issue watered stock to the
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 nay at least 8 per
cent in dividends on the 125 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 it all over again. In
other words, the public, in order to
get the road might have to pay for il
at least three and a quarter times
to a 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
the property; that it may do this, not
at the cost, but at not exceeding the
cost of the property, exclusive of the
franchise and good will, and less de-
probation, 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
property. 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
property. .~..~.... 49,. ....5 p. -. ....<..
2. Under the present law the COM
pany is permitted, after paying en-
penses of operation, cost of extern
tsions, fixed charges, ETC., to set aside
a sinking fund to retire the bonds
and stock, and to pay s per cent in
dividends, and is required to divide
equally with the territory all amounts
paid in excess of per cent. Under
the bin introduced by the company
! the only change made in this respect
| is that the public is to get 211 per
cent of the gross transportation re-
ceipts after July l., 1917, instead of
all that is paid in excess of 8 per
cent from the present time. The alb
surdity of this is apparent. One
would naturally expect that the COM
F, pany would offer more rather than
less to the nuhlip for a long extension