Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1915-01-30
RAPID TRANSIT
REPLY IS made
TO THE governor
Continued from page one)


publicity at the time the provisions
of the Frear bill We're under considera
ton at public hearings before the las
legislature. Although authorized un
der the section of the franchise above
quoted, and although the conditions
of the franchise imposed no such obi
cation upon the part of the stoekhold
ers, the full par value thereof was
subsequently contributed by the stock
holders from earnings available fol
dividends within the statutory limits
not distributed to them in cash, bu1
invested in the property by way o.
additions, extensions, and improve
ments TO the system.
Hawaiian Tramways Purchase: The
properties, franchise, ETC., of the Ha
waiian Tramways Company were pur
chased by this company under the an
thority conferred by section IA of tbs
Rapid Transit franchise, which pur
chase not only carried with it the
privilege of exercising all the rights
etc, embodied in the Tramways' fran
chise to the expiration thereof, bui
by merger to the expiration of thf
Rapid Transit Company's franchise
The consideration for this property
and franchise was $500, 10000 paid IL
cash, stock and bonds What the va
lue of this franchise may be today
assuming that the rights acquired ex
pire in 1916, (which is denied) an
unable to say, yet ] might suggest
that the convenience of being served
throughout its main arteries Of travel
by the present modern system, rather
than by mule-drawn trans, for even
so short a period as eighteen months
must be or some value to the city
irrespective of its value to the com
pany. What the franchise was worth
in 1903 is equally difficult to deter.
mine The company considered il
worth the purchase price, and If my
information is not at fault, you, az ,
resident, citizen, and taxpayer Of
the community, had urged its pur.
chase at 4 somewhat higher valuation,
The local tax records, no doubt, con
tain data which will establish what va.
lue, If any, it has been to the city OF
Honolulu to have had the present mod.
ern system in lieu of the Pain trans
since 1903, and the company sees no
occasion for any one to condemn the
purchase upon the terms stated.
Moneys Withdrawn from Surplus
Earnings: Your table upon page 3
might convey the impression that for
the period between May Is, 1913, and
December 81, 1914. the surplus earn
ings OF the company were sufficient
to admit of the withdrawal therefrom
of a total of s2S3.000.00. The total
surplus earnings for the two years
mentioned were somewhat less than
$150.O00.00. There was carried for
ward from December 81, 1912, cash
surplus approximating $l00.0O0.00,
which amount had been accommodating
for several years, while negotiations
were pending for the extension of the
franchise, with the intention not on
~ Of employing these funds, but also
of employing sums subsequently set
aside against a stock sinking fund. in
extensions and Improvements to the
service, provided that franchise were
extended. Upon the other hand. II no
extension were granted, il was neces.
sary to begin to provioe for the re-
tirement not only of the bonds but Of
the stock. Even though you dismiss as
deserving of no consideration, our con.
tention of the necessity for such provi.
sions, you must admit that to retire the
outstanding bonds at maturity under
the terms of the franchise viii require
setting aside the sum of about $32, 000
each year. A much smaller sum has
heretofore been yearly set aside for
this purpose. 1t follows that in addi-
ton to the above it will also require
a much larger sum to be set aside
annually to provide for the retire.
ment of the stock. II was also neces.
sary to provide a dividend suspense
account, to take care of the aecruing
dividends upon the authorized in
crease of capital stock, in the event
of the approval by Congress of the
bin now before il. 81 ~.
1t has never been contended BY the
company that it was unable to find
the means with which to construct
and equip the much needed additions
and improvements to its present ser,
vice. II has insisted, however, that
it was not in a position to make any
further substantial outlay in this di.
rection, and still provide for the re.
tirement of its capital and bonded
debt upon the lapse of its franchise;
and in this connection it may nave in.
terested you to have noted in your
investigation of the accounts of the
company that its business showed a
falling off in 1914, as compared with
1913. While the decrease has, thus
far. been in no way alarming, it may
be significant of increasing losses in
the future. The experience of SINH.
lar companies operating upon the
mainland shows almost without excep.
ton that their business is declining,
due to the general adoption by the
public of the cheaper class of auto.