Highways and Highway Transportation

by George R. Chatburn

The large transportation companies, the railways, the steamship lines, electric street cars, canals, trolley lines, pipe lines, and so on, when held under private ownership, are all organized in this manner. There are many bus lines and many truck lines already incorporated, and with time the number will, no doubt, rapidly increase.

The shares of stock usually have a par value of $100. These are sold to investors to obtain the working capital. The amount of stock is limited by the articles of incorporation and must not exceed by the laws of most states an amount conducive to good business. The stock may be either common or preferred. Holders of preferred stock have some preferment such as drawing a definite fixed rate of interest while common stock receives no dividends until the interest on the preferred stock is paid.

Corporations may also raise money by selling bonds. These are certificates of indebtedness, bearing a fixed rate of interest, payable at definite fixed periods. Like other bonds they may be either sinking-fund, serial or annuity. Bonds differ from stocks in that their owners have no voice in the affairs of the corporation.

Money may also be borrowed on the notes of the corporation signed by its officers, when authorized by the board of directors.

Since the laws of the several states vary so widely and there are so many of them, it is impossible to give even a brief synopsis here. Should any highway transport company wish to incorporate it would be well to seek the advice of a lawyer and have him draw up the articles of incorporation and see that the laws of the state are fully complied with.

Public Ownership.

—It is not the intention here to go into a lengthy discussion of the merits and demerits of public ownership, but merely to mention this as a method of financing transportation lines.

On the continent of Europe public ownership of railways and canals has long been the practice. In England there is private ownership of railways, but the post office department operates the telegraph lines. In this country the Government has built and operates several ship canals, including the great Panama canal. The state of New York owns and operates the Erie Canal. During the War the operation of railways was taken under supervision by the Government, but this has now been turned back to the several lines. The public regulation, however, of railways is so strict, that they have so little initiative and freedom left, so little power to make rates, so little choice as how to deal with employees, that they might just as well be operated by the Government. Indeed, it is frequently stated that there is quite a large minority of the American citizenship that would like to see the Government take over all the railways and operate them as it does the Post Office at the mere cost of operation and maintenance.

On the other hand, a very large number of persons believe that the best governed nation is the one least governed and that the ordinary commercial and financial laws of supply and demand should regulate prices and that private capital should govern all industries.

There are places, however, where it seems to be the part of wisdom to establish public ownership. First, where the amount of money necessary to finance and operate the enterprise becomes a menace to the rest of the country, or where it is so large that it becomes a practical monopoly, then it would seem just for the Government to step in and, as in the case of the Standard Oil Company, force an unscrambling, or else take it over and run it as a public industry.