New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-11-28
E. p. Thorn Would Not
Alter Present System I'M
der u. S. Charter
OPPOSES A LIMIT
TO DIVIDENDS
Transcript in Test Case OF
Adamson Law Reaches
Washington
tr,sn N. rrihun. Rnrsu.l


Washington, Nov. 27.-The right OF
taxation and exercise Of police power
now asserted by states in dealing with
railroads should be reserved to the
state. under a system Of Federal incor-
poration. Alfred ?. Thorn, counsel 70
the Railway Executives Advisory Com
mittee. told the Newlands committee
to-day in his cross-examination.
Chairman Newlands asked II consent
Of the states would be necessary for
Federal incorporation.
NO" replied Mr.. Thorn, who pointed
out that II corporation owned the
physical property in state IL would
be necessary for the state 70 transfer
TO the owning corporation any charter
or corporate rights
"A holding company would not reach
the situation ?" asked Mr.. Newlands.
"No, because It would retain all the
complexities OF the present system"
said Mr. Thorn.
Upholds State Taxation
"The police power Of the state" Nh
Thorn continued, Ought 20 be disturbed
70 the least possible degree consistent
with free interstate commerce. Gov
eminent ownership would take away
the right Of the states to impose taxa
ton; but in Federal incorporation, how
ever, we think provision should be
written into the law specifically per-
hitting states to tax railroad property
in their confines like Other property.
We think Congress should take over
only those powers essential 20 guar
antee of complete transportation eff
cheney.
state control Of rates is placing an
undue burden on other states. Such
matters as the equipment of train
which runs across the continent should
not be left 10 the states. Such trains
ought not TO be required TO change
equipment at state lines"
Dir. Thorn admitted that the wide d.
vcrgence in state tax laws affected un-
favorably in some states the financing
OF railroad operations.
Nevertheless" said Mr.. Thorn, in
striking balance in the pubic interest
as between uniform taxation and leav-
ing state revenues unimpaired, we be
lieve the existing state control should
not be disturbed now
Respecting the basis OF taxation, Mr..
Thorn said that he thought railroad
property. and not the stocks which rep
resent the property, should be taxed.
To tax both. he said, resulted in double
taxation. Whatever the justice Of
change, ne regarded a change in the
taxation of bonds as inexpedicnt.
Would Not Limit Dividends
Chairman Newlands referred TO
statement made by Mr.. Thorn that TO
attract investors stock should earn s
per cent for dividends and 3 per cent
for surplus, and asked If dividends
should be limited 10 these returns.
IL not think you can limit maxi
mum dividends" replied Mr.. Thorn,
unless the government is ready to
guarantee minimum dividends. Such a
limitation, Offering an opportunity 70
lose everything. but TO restrict gain,
would de rive stock OF any attraction
for investors"
MI mum bdiu AIhL hNt llIlMtIfuNe
of investors TO railroad securities
probably began with the first adverse
general rate decision, when the invest
ing public came 10 realize that owners
of railroads controlled neither expenses
nor revenues.
But there Is abundant capital seek
ing investment elsewhere-in steel
companies, copper, municipal securities,
cotton" he added. "Countless millions
are being poured into them. These
companies can advance prices when
they wish; railroads cannot"
State and Federal Rights
Representative Adamson questioned
Mr.. Thorn about the relation Of state
and Federal rights. Mr.. Thorn ex-
pressed the opinion that the conflicts
between the advocates OF states rights
and federalists had largely disappeared,
but that men in public life were inlu-
enced largely by local considerations.
Railway executives had only COM
paratively recently come into agree
ment about the desirsbility Of Fed
ersl Incorporation. Mr.. Thorn said
Those who now opposed it were those
who had local conditions favoring the
perpetuation Of their status. The diff