188
BONDS AND STOCKS
homes to the office or shop and back again at night
are proof of the security of street railway bonds.
The fact that such a statement as this seems so
commonplace is proof of the necessity resting upon
the people, industries and commerce to support
these public utilities.”
The principle exploited in the above statements
is radically wrong, and is at the bottom of ninety
per cent of all financial and political troubles affect
ing railway properties in our large cities today.
The point made by this writer, that the actual cost
or replacement value of the real property possessed
is a secondary matter; and the strength of street
railway securities lies in the power of the company
to tax “the throngs of clerks and workmen carried
every morning from their homes to the office and
shop and back again at night,” is an exploded fal
lacy. Fortunately for the citizen and unfortu
nately for the promoter, there has been progress
in civic conditions as well as in means of transporta
tion, methods of manufacture and other lines,
and although the principle outlined in the
above quotation could have been depended upon
and utilized a dozen years ago, this is not the
case today.
Today, unless street railway securities are rein
forced by property, the actual replacement value
of which exceeds the market value of the securities,
they should not be recommended by conservative
banking houses. There was once a time when a
street railway company could increase its earnings
so as to pay the interest on almost any capitalization