Honolulu star-bulletin. [volume] (Honolulu [Oahu, Hawaii]) 1912-2010, 1916-05-09
Taking Up Charter Discussion,
He Asks Why Rapid Transit
Has Kept Profits
Honolulu, May ., 1916.

Editor Honolulu Star-Bulletin.
Sir: was again before the utilities
commission the other evening, and !
wish to say to the people through your
columns in a condensed form what j
there contended for. want it thor
oughly understood that ! am not act
ing at the instigation Of anyone, nor
with any expectation OF reward, nor
for public favor; neither have ] any
luminosity against the Rapid Transit
e. Land Company Quite the contrary,
] hope that the large majority OF the
stockholders OF that company are my
friends. / am not actuated by motives
Of jealousy, envy or revenge, but
what / do and say is what | think is
required Of me as a citizen with the
best interests OF this community at
heart yS '@~
OF course the company thfaks it, has
the power to allow a certain portion
of its net profits to go into extensions
and then issue stock to that amount
or II would not do 1t. would agree
with IL were this mere private cor
poration with no rights Of the people
involved. But the people granted this
most valuable franchise upon the ex.
press condition. after paying operat.
ing expense, repairs, renewals, extern
sions, interest and every other cost
and charge properly or necessarily
connected with the maintenance and
operation, dividends not to exceed 8
per cent on the par value Of the stock
issued, a sinking fund for redemption
OF bonds or other record debt and tile
capital upon the expiration Of the
franchise, that the excess of income
should be divided equally between the
Territory of Hawaii and the stock.
holders of the company. How the
people have been kept out of getting
one cent of the excess of income,
amounting to over a million, dollars,
explained in your issue Of the 4th
inst The company makes no bones OF
1t. They say that's all right, we did ii
because we had right ltoi do it, the
charter gives IL to us. | deny this
most emphatically. To my mind the
charter does no such thing and IL it
does It is the most Ubiquitous piece
OF legislation that has come to my
attention. In one place to plainly say
that the people shall share I'm the in.
come so as to get them to vote for
II, and right at the tail end TO covertly
insert a clause which wholly nullifies
the former provision h unbelievable.
The clause referred to is In the very
last section Of the chartefs and reads:
at shall not be lawful to increase
the capital stock In excess
of said 100000 unless the proposed
increase shall, when taken with the
said original capital stock, represent
only the actual cost Of the property of
the railway and not over 25 per cent
of such cost in addition thereto; such
cost may include all expense of laying
tracks and equipping the road for
public use, and may also include sub.
sequent extensions e."
Says Action illegal.
I contend that the increase of capt.
tai stock referred to here is stock is
sued for cash actually paid in by the
subscribers for shares. The company
has no right to put fits surplus earn
ings into extensions and deprive the
people of their share of those net earn.
ings and then appropriate all of the
net earnings by issuing to itself stock
therefor. The charter does not so
state directly or by implication. II II
had, do you think it would ever have
passed the legislature? But il is ask.
ed II the stockholders wished to fore.
go their right of getting their full
amount of interest and full share of
the net earnings and put the same into
extensions, and then take stock for
II, didn't they have the right to do so?
say. No. They are either obliged to
pay the people their share of the net
profits or put the peoples share of
such net profits with their own share
into extensions, and thus augment the
earning capacity of the company and
then share equally In such augmented
profits. OF course this would be
changed il they had put In cash for
the extensions, for then they would
be unquestionably entitled to the in.
terest on their cash investment, and
as an inducement for them to do so
they were to be given a bonus of %
per cent in stock over the actual cost
Of the work. Is II not preposterous to
claim that they could, after paying ex.
penses, providing for a sinking fund
to return all their original capital,
paying themselves s per cent interest. |
put the net profits. of which one-half
belonged to the people, into extensions
and get % per cent bonus in stock for
so doing? Reason runs mad in max
ing any such claim Admitting, for
the sake of argument, that this propo- |
sition is not so plain as it appears to
me. is it possible that we can be
forced to accept the views of the com.
pany without getting construction
Of the supreme court upon the pro-
position? "
They tell us that the matter has
been decided by one judge in the pend |
ing litigation against my contention |
and that it is now pending in the SUI
preme Court, but the record is in such |
shape that the question will not be
passed upon. If this be true, l have
to say that it is a monstrous shame |
that the rights of the neople are so
BROKEN NECKS" :. H.. !