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LINCOLN, NEBRASKA, SATURDAY, APRIL 19, 1902
ESTABLISHED IN 1886
LINCOLN'S TRACTION INTERESTS
The Evolution of an Up-to-D&te System of Urban and Inter-
Urban Traffic from Beginnings
That Were Discouraging. The Man Who Directed It
v,
Four years ago Lincoln had a street
railway system that was not a credit
to a city of her pretensions and promi
nence. The cars were In bad shape
and the rails In worse. No more cars
were run than were absolutely neces
sary to accommodate the traffic. No
extensions ha'd been planned In several
years; In "fact, every line that did not
pay then and there was cut off.
Break-downs were frequent; if a man
In South Lincoln desired to catch a
train he was compelled to make allow
ances for lost time or take his chances.
The power house of the company was
In a condition far from perfect. The
new machinery of seven years previous
h,ad grown old and out of date.
Jt was about that time that the
ownership of the company became
vested in the hands of new men. Four
years .may seem a long time to the or-
wnary""lnatvrdual, but whenthes'aays"
and weeks and months have been em-
ployed In the perfecting of long-cherished
plans they pass swiftly. And
yet when the present condition of the
street railwav svstem is contrasted
with that of December. 1897, one must
feel a desire to take oft! his hat to the
man or men who have made possible
the" transformation, slow and possibly
imperceptible at the time to many,
that has taken place.
All of the more important lines have
been rebuilt, new cars of standard size
and regulation comfort have been
added, and new lines laid. Four years
ago Havelock was a town in Lancaster
county; now it is a suburb and almost
a part of Lincoln. Then there was a
line that ran up hill and down dale
across the prairies, with a wide swing
to nowhere, that eventually halted at.
the enterprising village of College
View. This line has been abandoned.
In its stead Is a newly-built road con
necting the village and the city by
means "of a road that passes through
the town of Normal and touches some
of the prettiest garden spots about the
municipality.
Behind all achievements rests a
forceful personality. The man who has
beei laboring silently and surely to
build up this system of urban and
' inter-urban transportation is M. L.
5 Scudder. Mr. Scudder is personally
unknown to a great many Lincoln peo
ple, and it is because of this fact that
i, - The Courier takes this means of plc-
t torially introducing him to its readers.
Mr. Scudder became Interested flnan
i cially in the old Lincoln street railway
I company through its bonds when these
I were floated in the east by F. W. Little
and others. When Little was forced, to
j give over control, the system went into
a receiver's hands and at the foreclos
ure sale, In December, 1897, it was pur
chased by Mr. Scudder and some as
f soclates representing the bondholders.
TW Shortly afterwards the Lincoln Trac
er tlon company was formed, and the
rights, franchises and property of the
old system passed into its hands. If
Mr. Scudder had cared to follow the
usual plan of reorganizing financiers
and expanding the capitalization here
would have been his opportunity. But
he had other and sounder Ideas. These
he proceeded to carry out in the re
organization and they mark a distinct
variation, a new feature, of corpora
tion forming. The old company, the
Lincoln street railroad concern, was
bonded for $1,480,000 and there was a
stock issue of $1,200,000 besides. This
meant a total of $2,680,000 upon which
interest and dividends had to be
earned to keep the company a going
concern.
The new corporation has but $45,000
bonds outstanding. There are $700,00")
of preferred stock and $277,000. of com-
attacks. Pirates of many varieties
Knd it an easy victim.
Mr. Scudder was familiar with the
history of reorganizations and he de
termined to follow the. contrary plan
in the case of the street railway com
pany. He did this because he believed
it would make a much stronger com
pany, because it was best for the com
munity. He believed that with a mod
erate amount of capital the new orga
nization would be able to give much
better service and much more closely
meet the demands upon it.
The best argument ever made on be
half of municipal ownership is fur
nished by overcapitalization of public
service companies. Experience has
shown that because of the political ele
ment in public ownership, the cost of
i
M. L. SCUDDER.
mon a total of $1,022,000, or a reduc
tion in the process of reorganization of
almost two-thirds, to be exact, $1,658,000.
This theory, which was urged strongly
by Mr. Scudder and adopted by his
associates, is unusual. The common
method, in reorganizing a financially
stranded corporation, is to increase the
capital stock, at least enough to afford
some one a fat commission for floating
the securities and stock of the new
concern.
Contrary to the general belief, the
strength of a company is not indi
cated by the millions of Its capitaliza
tion. A company with merely adequate
capital is stronger than one with too
much capital. The latter is embar
rassed by Its fixed charges and the ex
pectations of its stockholders. It can
not use its funds for needed replace
ments and improvements. Its credit
is vulnerable. It Is open to all sorts of
operation of a given utility is greater
than in private enterprise, but the
greed of capitalists and the temptation
to make unearned money by watering
stock and Issuing bonds so materially
increases fixed charges for a private
corporation that in a comparison of
figures It Is at a grave disadvantage.
The business of the traction com
pany has been fairly profitable. A
material Increase Is shown each year
in the gross receipts, and while a few
dividends have been paid, the larger
part of the net earnings have gone to
improvement of the physical condition
of the system. It Is the almost Invari
able practice In financial circles that
when a business is earning a comfort
able surplus it should be exploited. In
other words, the capitalization or bond
ed indebtedness should be increased.
This is regarded as legitimate, and the
temptation is great. So far the own
ers of the Lincoln Traction company
have resisted outside pressure along
these lines, and If they are fairly treat
ed by the city authorities they will
continue to resist the temptation.
It is Mr. Scudder" a most earnest de
sire that Lincoln people become Inter
ested In the company by becoming
stockholders. He thinks that this
would knit more Intimately the rela
tions between the organization and the
citizens, lead to better service and
greater development. The earning
power of the stock under present con
ditions is considerable and It Is re
garded as a good investment. This
matter of citizens purchasing stock
has not been urged upon the people,
nor will It be; the officials merely con
tent themselves with saying that they
would like to have Lincoln men as
sociated more numerously with them.
Already about a score of Lincoln's cit
izens own stock In the Traction com
pany, which they have bought at mar
ket prices. It Is said that twenty-five
per cent of the common stock Is al
ready owned here.
Seme local prejudice has been worked
up against the corporation by Inter
ested parties because of-the unfortu
nate complications over paving taxes
left unpaid by the former corporation.
The Traction company itself owes not
a dollar in taxes; these are promptly
paid up. The old company was care
less about the payment of Its paving
assessments, and the city officials of
those days did not press them very
hard. Some $55,000 of paving taxes
assessed against the Lincoln street
railroad company are due from its
successor and this the traction com
pany has stood ready to pay for sev
eral years. What it objects to paying
is the $42,000 of Rapid Transit taxes,
which became a Hen upon the com
pany property after the mortgage
through the foreclosure of which the
traction company traces Its title was
executed and delivered. It Is un
fortunate that some one must lose this
sum. but the owners of the traction
company, who were the holders of the
mortgage, think it unjust to require
them to pay. following the maxim of
the law that where one of two Inno
cent parties must suffer, the burden
must fall upon that one which had the
best opportunity to have saved Itself
from loss. In this case. If the city offi
cials had insisted upon prompt collec
tion of taxes from the Rapid Transit
company the city would not now be
holding the sack for a large amount.
M. L. Scudder, the president of the
company, began his business life in a
bank at Waterbury, Conn. He now re
sides In New York city, but has many
Interests in the west that have taken
up so much of his time as to thorough
ly imbue him with the distinctive
energy of the western man. combined
with the conservatism of the New
Englander. Mr. Scudder was born in
Massachusetts and educated In New
York and Connecticut. He has been
looking after investments for himself
and others for many years, and has
spent much time In Chicago. For
years he has been familiar with trac
tion interests In various cities, aria his
thorough familiarity with them and
his connection with strong financial In
terests has enabled him so far to carry
out his plans for the rehabilitation of
the Lincoln system. The reconstruc
tion of the lines of the company has
now almost reached completion. The
power house is now receiving undivided
attention and new and improved ma
chinery is being installed there.
Mr. Scudder has visited Lincoln at
least once a month for the last four
years and is thoroughly identified, not
only with one of her most Important
industries, but with the hopes, aspira
tions and interests of her people.