June I, igo7





RECORD   AND   GUIDE





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Copyrighted.




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Vol.




LXXIX-




JUNE 1,




1907.














No-




204G.





INDEX TO DEPARTMENTS.
Avertising Section.

Page.                                                          Page.
Cement  .......................vii Lumber   .......................xx

Consulting  Engineers   ..........vi Machinery..................viii

Clay Products ................xviii  Metal   Work   ...................xv

Contractors and Builders.......iv Quicli Job Directory............xx

Electrical   Interests............ix Real   Estate..................xi

Fireproofing...................ii Roofers & Rooflng Materials, .xix

Granite   ............'.........xvi Slone.......................xvi

Iron and Steel.................x Wood Products ................xx





The    New    Laws    for    Public    Service
Corporations.

AFTER a long and stiff: fight Governor Hughes has suc¬
ceeded in extorting from the Legislature his so-called
Public Utilities hill. The Reinibliean niacdiine at Albany
would have rejected the hill if it had dared, hut the leaders
o£ that machine were afraid to face the schism in the party
and the imblic reprobation which would have been incurred
by a refusal to pass the bill- The consequence is that the
Governor will be armed with ail the power to regulate the
public service corporations for which he has asked. The
two commissions appointed by him can virtually force the
corporations operating public utilities in this State to do
whatever seems to be necessary in the public interest, and
the commissions themselves will be responsible exclusively
to the Governor. He can appoint them, he can remove
them, he can hold the commissioners responsible, and the
people of the State can hold the Governor responsible. If
the legislation fails of its purpose, it will not be due, as is
■so often the case, to any division of responsibility. The
Governor has asked for as much power as the law wil! al¬
low, and it has heen bestowed upou him. The logic of the
whole situation demands tbat he should be elected Governor
for another term, so that he wil! have sufflcient time to
safeguard the eiScient operation of the engine which he has
constructed-

Of all the State legislation against the corporations, of
which we have recently seen so much, this bill of Governor
Hughes' ha'S been most carefully drawn. When the Gover¬
nor declared in his speeches in support of his bill, that he
was not animated by any unreasonable hostility towards the
corporations, he was undoubtedly sincere. His object has
not been merely to embarrass the operations of the New
York public utility corporations, or to prevent them from
earning a fair rate of interest on the capital invested. His ob¬
ject is undoubtedly to remove those grave abuses which hith¬
erto have accompanied the methods employed by these corpor¬
ations, both in their flnancial operations and in their service
to the public. In oi-der to accomplish this ob,iect he has
been obliged, as he believed, to bestow upon the commis¬
sions complete and authoritative jurisdiction over practically
all the acts of the public service corporations. The com¬
mission wil! have the power, if it wills, to order the New-
York City Railway Company to paint its cars blue. But on
the other hand, it should be added, that the Governor has
done his best to provide against the abuse or the arbitrary
use of the great powers bestowed upon the two commis¬
sions- The commissioners will be paid high salaries, and
(he Governor evidently expects to secure the services of two
groups of fair-minded and competent men. He- evidently
anticipates that in the long run he will be able to reassure
the owners aud managers of the corporations, and to oblit¬
erate past abuses without preventing the necessary improve¬
ment in the service rendered by these corporations that
cau be accomplished only by tbe liberal investment of new
capital.





It remains to be seen whether the instrument which he
has devised for this purpose will or will not accomplish its
object. The abuses which this instrument is intended to
eradicate have been undoubtedly serious. The public ser¬
vice corporations that have been operating franchises in and
near New York have unquestionably pursued a policy of
public exploitation. The various street railways, electric
light and gas companies have consolidated at a huge ex¬
pense. Their capitalization has been increased enormously
during the process of consolidation, and their fixed charges
have in this way been rendered very high. The necessity
of meeting iuterest charges and passing dividends upou this
swollen capitalization has, in some instances, forced the
corporations to put excessive prices on their services, and
has, in other instances, affected seriously for the worse the
quality of these services. T'he public was either being
badly served or else was being compelled to pay veri dear,
aud some larger and more effective measure of regulation
was demanded in the public interest. The new commis¬
sions will be expected either to effect improvement in the
services rendered, or to reduce the eost of those services to
the public, while at the same time it will be expected also
to prevent the corporations from making extortionate profits
at public expense. In fulfilling these public expectations
the commissions will undoubtedly be confronted with stub¬
born opposition on the part of the corporation managers.
They will use every means to evade the orders of the com¬
missions, and they will appeal constantly to the courts. It
will probably be some years before the commissions will
find out just what they can or cannot accomplish by meaus
of the powers which the Legislature is conferring upon
them, That is the reason why Governor Hughes will need
another term in order to arrange for the efficient operation
of the machine which he has wrought.

What the outcome will be no one can at the present time
with any confidence predict. The legislation will neither
be as effective for its purpose as its friends imagine nor as
disastrous for the corporations as its opponents declare.
But of one result there can be little doubt. During the
next few years, while the machiuery of the law is getting
fairly into operation, the people of this city need not ex¬
pect any very positive results from it. During that period
the service rendered by the local public utility corporations
is more likely to deteriorate than to improve. There will
be years of opposition from the corporations, of litigation
and of disinclination on the part of capitalists to invest
money in a business subject to such drastic public control.
The corporations will seek to render the commission un¬
popular by making its interference as ineffective as possible,
and they will probably succeed in creating a condition cal¬
culated to prevent any improvement iu service that can be
effected only by the investment of new capital. Such a con¬
dition cannot last for very many years, and it is possible
that at tlie end of the period of litigation the corporations
will find that they will gain more by cooperating with the
public utility commissions than by maintaining a costly and
unprofitable conflict. It wil! all depend in the end on the
wisdom of the commissions' orders, aud it is very much to be
hoped that such wisdom will not be lacking. If the com¬
missions to be appointed by Governor Hugiies fail in their
object, the whole ideal of official regulation will be proved
to be abortive, and in that case the State will have to fall
back either upon less stringent regulation or upon public
ownership.





FEAR of large gold exports, what the President might
say in his Memorial Day speech and more recruits to
the bear party combined this week to make a Wall Street
market that was viewed with anxiety by some operators
and indifference by othei:s. This indifference is apparently
born of the belief that whatever disquieting factors there
may be in the general situation there is no reason for im¬
mediate alarm. Wall Street, that is said to discount every¬
thing, has done so with the crop scares and iu view of in¬
creased railroad earnings and active business, pessimism
scarcely seems logical. It is true that hostility towards
corporations has had a deterrent effect upon many new en¬
terprises on the part of capital, and it must be conceded
that some of these attacks have been merited. Real estate
and building interests are probably suffering as much as
any other business activities from this cause or. as a well-
known Wall Streel man puts it, "the opposition towards the
corporations has worn the appearance of public hysteria."
But when stocits declined, as they did in the earlier part
of the week, it is difficult to write reassuringly or encour¬
agingly, the quotations on the tape of the stock ticker tell-