"It is claimed that the power of taxation is one of the sovereign powers of the State necessary to its continued existence, and that it was never contemplated, when the people through their Constitutions delegated to their representatives in Legislature assembled the power to make laws for the good of the people of the State, that this grant of legislative power carried with it the right to barter away with private corporations one of the essential prerogatives of the Government, the very life-blood of the State."[1]
How one of the States of the Union—Connecticut—has recently thrown away valuable public franchises is thus graphically described by one of the leading and authoritative newspapers of New England—i. e., the Springfield Republican. We have here the astonishing fact that over seventy per cent of the stock capital of twenty-six monopoly electric or "trolley" companies operated in that State has been issued for something other than money, (cash) paid in, and hence may be said to represent nothing but what is popularly characterized as "water." The bonded debt of these roads amounts to $8,690,100, or over three times the amount of their cash stock—i. e., $2,671,240. This bonded debt, standing in comparison with a total stock issue, strikingly illustrates what has taken place:first, a gratuitous grant or franchise; second, an issue of bonds thereon to build the roads; third, a share capital, the product of the printing press, and representing no value whatever except as an instrumentality for obtaining extra profits and exceptional legislation through its distribution.
"This watered capitalization will in time, of course, pass into innocent hands, and the ‘rights’ of the monopolies in the matter of charges will all be gauged by the yearly revenue in its relation to this totality of nominal capital. The stock waterers will have sold their water at handsome figures and made off, and the purchasers of the water must henceforward, of course, be considered legitimate investors whose holdings are entitled to full consideration; and only until monopoly charges suffice to pay eight and ten per cent on all capital, watered or otherwise, will it be safe for any community to demand a reduction of charges without bringing upon itself the charge of being favorable to anarchy and confiscation.
"The people of Connecticut are preparing the way to pay handsomely for their electric transportation. The penalty of present neglect to guard and restrict closely the capitalization of these monopolies will fall in ugly force upon this and future generations; and when the time is ripe for municipal or State assumption of the monopolies, as may some time happen, the people
- ↑ Burroughs On Taxation, from which authority the writer is mainly indebted in his presentation of this important subject.
