The Meridian times. (Meridian, Idaho) 1909-1938, 1915-04-30
Traction Co.'s Showing
Financial Results of Traction Com.
pany Made to Commission.

Several weeks ago the Idaho Trac-
tfon company announced that 1t had
applied to the Public Utilities COM
mission of Idaho for permission to
raise its interurban fares. Since
that time it has published 4 tables,
giving the financial results of opera
tion of the local lines from January
l, 1907 to December 81, 1914--a
period of 8 years. The editor of the
Times is Of the opinion that a study
of these tables will prove the COM
pany's statement that these lines
have not earned their bond interest
during any one year of their entire
history.
further analysis of these tables
indicates that the bonds of some of
the underlying companies (parti-
cularly those of the Boise Valley and
the Boise Railroad) were probably
sold at too great discount. Usual
ly the discount on bonds varies di-
rectly with the rate of interest that
they bear, but more particularly ac-
cording to the hazard of the enter
prise. The hazard encountered by
the average Public Utility company
are numerous, and at times the pro-
sell their securities (bonds and
stock) at very substantial discount
1t must be remembered that these
promoters must make a bid for the
money with which to do their build
Ing the same as the manufacturer,
ha"ber and merchant. If there is
stringency in the money market, or
il Tue particular project, which it is
proposed to finance, seems rather
hazardous, then the promoter is
forced to sell his securities at big
discount, for it is an economic law
that whoever offers the highest rate
of interest and best security, is the
one who gets the money-ask your
banker.
In the case of the Idaho Traction
company, fortunately at this time,
the subject of bond discount can be
waived because the majority of bonds
outstanding against this property s4re
being wiped out by foreclosure pro-
ceedings in the federal court. In pub
fishing it's results of operation, the
company has waived the question of
bond discount and outstanding bonds,
and asks that only the actual cash
invested in the property be consider
ed, and that it be allowed to earn
fair return on that sum. In its
Table No. (Which appeared in last
weeks issue), 1t gives the cost of the
railway properties. The checking of
these figures by the Public Utilities
commissions expert accountant should
not be much of task, and in that
way the value of the property can
be ascertained.
II these figures are found to be
correct and IL 1t is found that the
property has been economically op-
Grated, then we feel that the Trac-
tion company application for in
creased rates should be granted, for
we realize that this company cannot
get additional money to improve or
extend its line on the rate of return
that 1t has earned during the past
years, which averaged 4.S per cent
without any deduction for deprecia-
zion. Nobody wants to invest his
money at that rate In an enterprise
as hazardous as the average Public |
Utility company.
We believe that, next to irriga-
ton, the local electric lines have
done more toward developing the
Boise Valley than any other one fac
tor. With the vast water power re-
sources of this State, as yet for the
greater part undeveloped, and with
the numerous large sections of our
state plading for better transporta-
tion facilities, it behooves us to en-
courage the electric railway industry
as much as we possibly can. We
should announce to the financial
world, to builders and organizers
everywhere that the citizens of Idaho
are willing that fair return should
be earned by all money that has been
legitimately and honestly invested in
the development of the great re-
sources OF this state.
In the opinion of the Meridian
Times the commission should not de-
lay considering the merits of the COM
pany's application nor let them be
influenced by politics in their deci-
sion. They should safeguard the in
terests of invested capital, as well as
the interest of the citizens of Idaho
in other words. they should see fair
play all around.