The Monmouth inquirer. [volume] (Freehold, N.J.) 1865-1933, 1923-01-18


ways the question as to VIII 81 re
rate 80 fixed was coaascaivry og unr
reasonable or In conformity with legal
requirements-not the requirements
fxed by statute, but those laid down
by cha Courts.
Then came the decisions of our
courts which, much to the surprise
of those who had passed the regu-
latins acts, held that these munich
pal grants were not contracts, but
mere grants upon condition, and that
the Utility Commission might regu-
late the rate either up or down, as
might be just and reasonable
The companies are entitled to
| have a fair return upon the money
actually invested in the enterprise
War time appreciation, which does
not represent actual money put In
the enterprise, which merely repre-
sent imitation of prices IL reproduction
we're necessary now, must be elimi-
| mated. Reproduction may not be
necessary until later time, when
/ prices may, be more nearly normal.
Wartime appreciation certainly
! does not represent, in any manner
| an investment of SO many of the COM
I panies' dollars.
"Going- concern value" has no tangt-
BILE basis for being included. De-
velopment-costS as part of this.
| was ruled out in the 'conhscatlo1
cases, of the Galveston case type, and
what is left of "going-concern value."
represents practically nothing, espe-
/ cially in view of the fact that the
franchises are not contracts, but
grants upon condition.
= Neither do these items represent
| so many dollars put in the enterprise.
Then we must deal with the tre-
mendous amount added when the COM
! panies were put together, commonly
i known as water" to which ref
erence has already been made.
Part Of the "watered" securities no
| doubt is in the original hands, ana
the rest of it in the hands OF subse.
| quent purchasers.
! In this problem we have the So
called innocent holder OF securities
on the one hand and the innocent pub
lie on the other. AS between these
two equities, which is entitled to hrst
: consideration?
! Every holder of securities either
/ knew. or by inquiry could have
known, that those securities repre-.
scented in part water injected into the
companies. They were not entirely
innocent. They either lacked dill
gence or chose to take their chances
by investing in these securities as
they do in making other investments be
they in public utilities, oil or some
thing else.
In most cases, the usual course IS
to water" the stock, then go into
liquidation, reorganize, and then pro-
coed upon a solid basis. II that had
been done, our problem would have
been solved with less difficulty, for VIC
would then have valuation repre-
senting real investment values.
Shall we continue as we are going,
without unwatering these companies?
If we do, and SO long as we do, in
Justice is done to the public. We have
no moral right to do this. We have
no justification for mulcting them
further, now that we know our duty
We must act at once, and do that
which must ultimately come. We
must throw out this ballast, II the
passengers and the ship are to be
saved from disaster.
Now how shall this be done?
By insisting that the companies
may continue to exercise their fran
chises, only II they agree to req
sonable return upon prudent invest
ment value-nothing more.
II they will not agree, the State
must then exercise its sovereign pow
er.
The legislature should fix that pru-
dent investment value upon advice
from the Public Utility Commission
Az have conceived that value,
after study, am sure it will bring
about a five cent fare, and later
further reduction.
II the legislature misconceiyes It's
duty, or betrays the public of course
we will be worse off than before.
There Is no just reason why the day
of settlement should be postponed, at
the expense of the innocent public
All that I have said about street
railway companies applies with equal
force to light. heat and power com
panies.
AS have stated before, in solving
this problem there are two equities
| Il
to be considered. On the. one hRnd
we have the owners of the securities.
AS against these we have the man
who tolls and who must be carried
from his home to the factory, the
woman who must earn her own living
and the children who attend school
They are truly innocent. They are
| entitled to honest treatment. They
| should not be called upon to furnish
return upon inflated securities;
they should not have to take from
their hard-earned pay, the large sums
required to bring return to those