The Washington herald., 1913-11-13

endangered Just TO the extent that the
equipment Of the street railway property
is defective This interest oe yours In the
proper maintenance of the Washington
Railway and Electric Company was the
uppermost thought In my mind when
| Joined with the other Commissioners In
| writing the letter to the Washington
Railway and Electric Company, OF which
have told you win not permit. II
have any power to prevent It. the use Of
/ the earnings Of any street railway Uom-
pany for the payment OF dividends until
after your interest Is conserved by the
establishment and maintenance of an ade-
| Quate depreciation fund. No street rail-
way company has any moral right to use
the money which it collects from you and
which it ought to expend as have indi-
4 Gated, for the payment Of dividends of
stockholders; and this particular company
/ has no legal right TO do so.
/ your Interest in the maintenance of a
sinking fund Is quite similar to your In
terest in depreciation iund. The WASH
ington Railway and Electric Company
has some S15, 900 900 of bonds outstanding.
That means that the company owes some-
4 body-the holders of these bonds-S1b, ,000.-
900, and that some day 1t has got to pro-
duce $15. 10000 in cash to pay that debt
That debt is Just like a mortgage on q
| house Unless you keep chewing away
at II, biting on a little each year and
firmly getting II all paid OF, some day
the fellow who holds the mortgage is
going to foreclose on you and take your
house away from you.
Debts should BE Paid.
There can be no question in the mind
Of the average citizen of Washington
that IL be has got a mortgage on
house that IL is good business policy for
him to get that mortgage paid on as
soon as he can. He takes a pride in pay
ing 1t of, and, incidentally, when he gets
II paid of he thereby stops the interest
which, as a friend Of mine said, Is an
/ 'eatin' sore 1t is a fundamental prin-
ciple OF finance, OF economics. Of soci-
ology, that one ought to pay ones debts,
and that no individual can prosper and
make healthful progress unless he reck-
ons with his indebtedness and systemat-
icaIly makes provision for its payment
This is just as true of a street rail-
way company as II is of an Individual,
and yet the report OF the agent of the
Public Utilities Commission to the COM
mission was to the effect that the WASH
ington Railway and Electric Company,
instead of setting aside from its earn
| ings every year a sum Of money SUM-
cient to pay of its SIS. 900, 900 of bonds by
the time they are due was using those
earnings for the payment OF dividends
to stockholders, and that upon this occa-
sion it proposed to pay an extra dividend.
I'VE are going to find out whether
! that report is correct, and II II is, we
are going to go the extreme limit OF our
authority and resources to require this
company to be honest with its stock
holders and with the public that sup
ports 1t by making adequate provision
| from year to year to meet its indebted
ness when that Indebtedness becomes
due. In this, as in the other deprecia-
ton matter, every street railway COM
pany should make secondary the interest
of its stockholders and primary the pub
lie service which is concerned by eco
nomic and honest administration
Public Comes First.
II have been quite a while leading up
to the events OF today, but my excuse is
that ! am sincerely anxious that you
shall understand what We are trying to
do d d why we are trying to do 1t, and
that we keep foremost in our minds not
the interest of the stockholders and the
interest OF the directors or the interest OF
the officers, but the interest Of the public
which must depend upon the company for
service, and upon which the company
must depend for its life. l do not mean
by this that We do not recognize that
the stockholder has an interest to be
considered, but what l mean Is that the
OTQeF IN WHICH lESy OusnN " GOi-
sidered is the public first and the stock
holder second.
Now, l must get back to the reply
which the street car company sent to US
when we received 1t we put our statisti-
clan to work in earnest, and a few days
ago he made another and more ex-
haustive report, in which he drew the
same conclusions that he had drawn in
his first report, and amplified them with
more detailed information. He stated
that a. more extensive examination Of
the company's reports and books forced
him to conclude that the company does
not maintain either a depreciation &C.
count or a sinking fund.
When We received that report we
wrote another letter 10 the Washington
Railway and Electric Company, request
ing that its officers appear before US at
10 o'clock this morning and furnish us
with whatever Information as to their
financial affairs we needed IN order that
we might be shown whether the extra
dividend that told you about was prop
er, in view of the question whether they
maintained an adequate depreciation ac-
count and sinking fund. You probably
observed from the afternoon papers that
this inquiry was begun by the Public
Utilities Commission
Not Private Concern.
'T do not recall. however, that the