(d) No allowance was made for franchise values of any kind, except track rights in streets.
(e) No allowance was made for contingencies, except as made in prices or quantities.
Their practice was in accord with the Michigan appraisal, in allowing from 5 to 6% to cover legal and engineering expenses and superintendence, and from 5 to 6% to cover interest during construction.
The Result of the Texas Work.—The object sought in Texas was to secure a capitalization in harmony with the actual investment in the physical property; in short, to "squeeze out water."
Of course, all stock and bond issues outstanding in 1894 are still in existence, except as a few roads have been sold out or re-organized. No new issues of stock or bonds may be made on roads in excess of the valuation. Consequently, new roads are limited to issues of bonds not far from $15,000 per mile. The effect is shown by Table 8, from the Railroad Commission's Report.
TABLE 8.—Miles of Railway in Operation in Texas, 1894 to 1908, With Outstanding Stocks and Bonds.
| On June 30th. | Miles of railway in operation. | Stocks outstanding, per mile. | Bonds outstanding, per mile. | Total stock and bonds outstanding, per mile. |
|---|---|---|---|---|
| 1894 | 9,154 | $15,076 | $25,726 | $40,802 |
| 1895 | 9,291 | 14,874 | 25,420 | 40,294 |
| 1896 | 9,437 | 14,647 | 25,302 | 39,949 |
| 1897 | 9,484 | 14,320 | 24,793 | 39,113 |
| 1898 | 9,540 | 14,205 | 24,036 | 38,241 |
| 1899 | 9,702 | 13,997 | 23,562 | 37,559 |
| 1900 | 9,867 | 13,724 | 23,202 | 36,926 |
| 1901 | 10,154 | 12,922 | 22,649 | 35,571 |
| 1902 | 10,617 | 12,388 | 21,779 | 34,167 |
| 1903 | 11,029 | 11,971 | 21,464 | 33,435 |
| 1904 | 11,495 | 32,400 | ||
| 1905 | 11,662 | 33,418 | ||
| 1906 | 12,056 | 32,886 | ||
| 1907 | 12,577 | 32,142 | ||
| 1908 | 12,830 | 32,305 |
| Total reduction, up to 1903, of stock per mile | $3,105 |
| " " " " " " bonds " " | 4,262 |
| Total stock and bonds | $7,367 |
E. L. Corthell, M. Am. Soc. C. E., speaking of results secured by the Texas law, says[[8]]:
"The law, and generally its just operation, has cured many unmitigated and notorious evils. Not only has the public in Texas been benefited, but also the investor in railroad securities from the outside of the State. The people of Texas now have just and uniform rates of transportation, and the investor knows what he is purchasing, and may be reasonably sure of a return on his investment."