The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1907-05-31

offenses arouse suspicion, which ra-
turally extends to oil other corporate
securities so long as similar practices
are possible and the tendency to re-
sort to them is unres:railcd by law.
While there have been many Instances
of gross and fragrant stock tnilation,
and while, of course, tiiere rerGltn cases
of overcapitalization, yet when the
statistics OF the weaker roads. the
overcapitalized roads, are combined
with those of the stronger roads, ana
considered in the aggregate, in my
judgment they will not be found to M
and position of the railroads as u
whole; and while those railway owners
and managers who have enriched them
selves by loading their properties Win
securities representing little or no real
value deserve our strongest condemna-
ton, on the other hand our hearty COM
niendauon is due those owners and
managers-represent l believe, the
large majority-who have year alter
year worked faithfully. patient. ara
honestly in building up our great sys-.
TEN of railways, which have knitted
together in close commercial and social
Intercourse widely removed sections
of the country and stand second my
to the great business of agriculture
itself in contribution to national
growth and development.
Physical Valuation.
Ample provision SuOulu NC maui W
Congress to enable the Interstate
Commerce Commission, by the employ
ment of sufficient force of experts,
to undertake the physical Valuation
of each and any road In the country,
whenever and SO soon as In int opin-
ion of the commission such a valuation
of any road would be OF value to the
commission in Its work There are
undoubtedly some roads as 70 Whicn
it would be an advantage. from me
standpoint of the business OF tho com
mission, to have such a physical Valud-
ton as soon as possible.
At the outset let it be understood
that physical valuation is no panacea;
lit is no sufficient measurement OF
rate: but it will be ultimately needed
listratlve supervision. 1t Will be OF use
to the commission In connection with
the duty Of determining the reason
ableness of future capitalization. both
as one element to enable such pody
to come to right conclusion IN tne
matter. and also as an element to be
placed before the investing pubic, 70
enable this public In its turn to reach
conclusions; though OF course capt
talization must be determined IN large
past Investment. How lmporta ~
physlcal valuation will prove as one
OF the factors to assist IN Hxlns
equitable rates ] am not able to Judge;
but that it will be Of certain I'M
portance can be safely assumed be-
cause of the opinions of the Inter
state Commerce Commission ana of
the courts and because Of the recent
action Of the Northern Pacific Raeiroad
! in advancing such a physical Valua-
ton as decisive on its side In rate
lcontrovcrsy Such a valuation would
necessarily help to protect the rail-
roads against the making of lndue-
quate and unjust rates. and would
| therefore be as important from tAe
standpoint OF the protection ct INC
the protection of the public; and OF
| course 1t is necessary to the endurlns
| prosperity and development or tue
country that the railroads shall yield
rca sonable profits to investors. Is
! from one standpoint quite as important
| to know the original cost of the build
ling Of the road rs to know wh.t y
would now cost to reproduce II; from
Ianother standpoint the human enua'
tion--that is, the management or 'he
roads more important by far taar
the physical valuations; and the lhysi-
cal valuation of the road in one reslol
may have an entirely different reldtlol
to the real value of the road y enn a., ! ~
another region. where the csnastlo rs
physical valuation can never DO more
than one of many elements to he con
sidered; but It Is one element, and a.
times may be very important els'
|ment, when taken In connection VIII
the earning power, franchises, orig
/ neI cost, character Of management, 10
cation, and business possibilities, u
i reaching an estimate on the proper !,
land rights of corporation as a golns
4 concern.
Won't lnJure Securities.
The effect of such valuation and su
! pervison of securities can not pc ~
f trCactive. Existing seucrties should
he tested by the laws in existence !,
Z the time OF their issue, This natlol
would no more injurc securities Whic
have become an important part of til
national wealth, than II would conslur
II proposition to rrpudtnte the puhii
debt. But the public interest REQUIRE
Iguaranty against Improper multipllca
tion OF securities In the future, Rea
sonable regulations for their issuane
should be provided, so as to secure u
far as may be that the proceeds there
of shall be devoted to legitimate husl
4 ness purposes, In providing ngalns
Il nyarpn nj nliXa tfOn WD shall harm III