THE STATE AND THE STREET RAILWAY by a street railway company, required the approval of the railroad commissioners to the increase of stock or issue of bonds, and an investigation by them of the physical and financial condition of the company. Un less such investigation indicated that the value of the company's property, exclusive of the value of its franchise or good-will, was equal to the amount of its liabilities, the approval could not be obtained. The practice, under these statutes, to ascertain such value, has been to require an expert independent appraisal of the physical prop erty of a company seeking authority to issue either additional stock or mortgage bonds. Prior to the passage of these two statutes, neither stock nor bonds could be issued except by authority of a special statute, and such special legislative authorizations were occasionally made after these general statutes had rendered them unnecessary. Unless a special act so required, an issue of securities under its provisions was not subject to the railroad commissioners' super vision. In 1894 the legislature enacted a series of statutes, usually called the AntiStock Watering Acts. These Acts pro hibited the issue of any stock or bonds, whether the issue was authorized by special statutes or under general laws, without the approval of the railroad commissioners, and only to such amounts as they might from time to time vote to be necessary. They further provided that when stock was issued it should be first offered to the stock holders at its market price, as determined by the railroad commissioners, and if not taken by the stockholders, should be sold at public auction, but in either case, at not less than the par value. At the present time, the total capital stock and indebted ness of the Massachusetts street railways is nearly $110,000,000, of which $70,000,000 has been issued under the highly restrictive provisions of the Anti-Stock Watering stat utes. Of the $40,000,000 issued before the passage of those acts, one-half was issued
under the requirements for an appraisal of the physical property of the companies and for an authorization by the board. That these laws governing capitalization have been effectual is sufficiently shown by the United States census bulletin of 1902. That gives the average amount of stock and bonds per mile of street railway track in the whole country as $96,287, and the average in Massachusetts as only $39,067. Other states containing American cities of the first importance show these average amounts of stock and bonds per mile: Cali fornia, $90,166; District of Columbia, $165,608; Illinois, $135.507: Louisiana, $113,313; Maryland, $156,142; Missouri, $152,206; New Jersey, $148,155; New York, $177,532; Ohio, $71,805; Pennsylvania, $103,267. The significance, to the public, of these figures is that the corporations must pay interest on so much of the capitalization as repre sents debt, and will strive to pay dividends upon that part of it representing capital stock, and that the Supreme Court of the United States may hold that they are en titled to earn dividends upon all their cap ital stock before they can be compelled to either reduce their rates for the service ren dered, or substantially to improve the char acter of that service. That Massachusetts has more miles of street railway than any other state except New York, shows that the revocability of locations has not unduly checked enter prise. Indeed, rather the reverse has been true. Until the power of local authorities to grant locations was restricted, many use less and unprofitable lines were built. Even with their carefully restricted capital, the street railway companies in 1903 paid to their stockholders in dividends only twice as much as they paid to the State in taxes; and several of the more recently organized companies have become financially embar rassed. Could there be a greater contrast than that between the system in Massachusetts, and those which have been adopted or de
