I THE PROBLEM THE recent expoining from municipal councils HE recent exposure of the practice of corpora and legislative assemblies valuable franchises by means of secret bribes, has aroused the American public to seriously consider the advisability of municipal and State ownership of such public utilities as surface, underground, and elevated railroads, telephone, telegraph, and lighting franchises, and the business of supplying communities with gas and water. Not only do corporations obtain without pay franchises of the value of millions of dollars, but, not content with a fair return on the value of such franchises for which they paid nothing, the owners thereof have almost invariably over-capitalized the companies so as to necessitate the charging to the public of an excessive price for the use of such franchises. The facts recently brought to light in regard to the over-capitalization of individual street railway companies have astounded the public. The history of the consolidations and reorganizations by which the railway systems of most of our great cities have been welded together is filled with evidence of stock-watering. In New York, Philadelphia, and Pittsburg the process of combination and reorganization has been repeated several times, with the result that the stocks and bonds have grown more inflated with each change. From the careful estimates made by competent engineers regarding the cost of construction of street railways, it is probably safe to say that the present electric surface railways in our large cities could be completely reproduced in their present style at a cost of not more than $60,000 per mile of track, although the average capitalization of these railways is $182,775 per mile, or three times their cost. This condition, to a very large extent, prevails in all corporations owning natural monopolies. It has been suggested and much elaborate argument has been wasted in the vain effort to show that competition could be obtained in these monopolies under all conditions. But the fact remains that when an attempt has been made to put such argument into practice by the organization of rival corporations, the result has inevitably been that within a short period the rival companies entered into an agreement as to prices, or divided the field, or consolidated, and the dream |