New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-05-31

similar practices possible and the tendency
to resort to them IS unrestrained by law. While
there have been many instances of gross and
fragrant stock initiation. and while. OF course,
there remain of oVercapitaliZation, yet
when the statistics OF the weaker roads, the
overcapitalized roads, combined with those
of the stronger roads, and considered in the ag
gregatc, in my judgment they will not be found
to impair the wholesome financial standing and
position Of the railroads whole: and while
those railway owners and managers who have
enriched themselves by loading their properties
with securities representing little or no real
value deserve our strongest condemnation, on
the other hand our hearty commentator is due
those owners and managers representing be
lieve. the large majority-who have year after
year worked faithfully, patiently and honestly
in building UP our great system of railways.
which have knitted together in close commercial
and social intercourse widely removed sections
of the country and stand second only to the great
business Of agriculture itself in contribution to
national growth and development
FOR PHYSICAL VALUATION OF ROADS.
Ample provision should be made by Congress
to enable the Interstate Commerce Commission,
by the employment OF a sufficient force or e< :
perts, TO undertake the physical valuation OF
each and any road in the country, whenever ana
soon as in the opinion of the Commission suen
valuation of any road would be OF value to the
Commission in it's work.
There are undoubtedly some roads to which
it would be advantage, from the standpoint
Of the business of the Commission. TO have such
a physical valuation soon as possible.
At the outset let it be understood that physical
valuation Is panacea; It is no sufficient meas
urement of a rate but il will be ultimately
needed as an essential instrument in admnistra-
tive supervision. 1t will be of use to the com
mission in connection with the duty OF deter
mining the reasonabieness of future capitap2a-
ton. both as element to enable such BODY
TO come to right conclusion in the matter ana
also as an element TO be placed before the IN
vesting public TO enable this public in its turn
to reach conclusion. though, OF course, capt.
taltzation must be determined in large measure
by future need rather than past investment
m phySical valuation viii prove
as one of the factors to assist in fixing equita-
BILE rates not able TO judge, but that II VIII
be of a certain Importance can be safely as
sumed because of this opinions Of the Interstate
Commerce Commission and of the courts. and
because Of the recent action OF the Northern
Pacific Railroad in advancing such a physical
valuation s decisive its side in a rate con-
troversy. Such a valuation would necessarily
help to protect the railroads against the maxi
ing of Inadequate and unjust rates, and would
therefore be important from the standpoint
OF the protection Of the railroads as from the
standpoint OF the protection of the public, and, of
course, IT is necessary to the enduring prosperity
and development of the country that the rail-
roads shall yield reasonable profits TO investors.
1t is from standpoint quite important to
know the original cost of the building of the
road 10 know what II would cost to
produce II: from another standpoint the human
equation-that is. the management Of the road
IS more important by far than the physical valu-
alton, and the physical valuation of the road in
one region may have entirely different rela-
ton to the real value of the road than in an
other region where the conditions are utterly
different Therefore the physical valuation can
never be more than one of many elements 10
be considered but IT is one element and at
times may be a very important element when
taken IN connection with the earning power.
franchises, original cost. character Of manage
ment. location and business possibilities In
reaching an estimate on the property and rights
Oh corporation as going concern
WOULD NOT INJURE SECURITIES.
The effect of such valuation and supervision
OF securities cannot be retroactive. Existing
securities should be tested by the laws in exist
ence at the time Of their issue.
ths nation would more injure securities
when have become an important part of the
nationa wealth than it would consider prop
sitlon 10 rePudiate the public debt
but the public interest requires guarantee
against improper multiplication of securities In
the future. Reasonable regulations for their is
suance should be provided, so as 10 secure az
far as may be that the proceeds thereof shall he
oeNoled 10 legitimate business purposes. In pro-
Fldlng against overcapitalization we shall harm
no human being who is honest; and we shall
peiellL many, Tor overcapitaliZation often means
an imitation that invites business panic; it al
ways conceals the true relation OF the profit
earned TO the capital invested. creating a burden
OIL OF interest payments which may rebound to the
loss alike of the wage Garner and the general
PUBIC PUBIC which is concerned in the rates paid by
Shippers; IL damages the small investor, dis
courages thrift and puts a premium on gambling
and business trickery
There is an essential difference between pri-
Vate and quasi-public property which justfes
setting somewhere limit beyond which the ac-
cumuating value in quasi-public properties due
TO the necessity Of a growing community shall
not be capitalized.
CONTROL OF ACCOUNTS
one OF the most important features OF the
Hepburn act is its having given the commission
absolute control over the accounts Of railways
The commission has Just issued an order to the
effect that on July next all the railways of the
country subject to the jurisdiction of the com
mission must standardiZe their accounting
methods. and the commission is now organizing
bureau OF special examiners. whose duty II
Will be, among other things, to see that the
books OF the carriers are kept in conformity with
the rules laid down by the commission. Thus
the means are already at hand and the ma
chlnery already created which. when perfected
viii put the public in position TO know the
facts so that the small investor can exercise an
intelligent judgment when intrusting his money
to the promoters of great railway ENTERPRISES
We hope one of the chief means for better
ment of conditions to secure as complete pub
licity in the affairs Of railroads as now obtains
with regard TO national banks.
INVESTORS NEED NOT FEAR
There need be no fear the part of investors
that this movement for national supervision and
control over railways viii be for their detri-
ment