Ottumwa tri-weekly courier. [volume] (Ottumwa, Iowa) 1903-1916, 1907-06-01


recent yesrs In double tracking, I'M
proving grades, roadbeds, andN struc-
lures have brought the total invest
ments to point where the opinion
that the real value is greater than the
face value 10 probably true. No gem
eral statement such as this can be ac-
cepted as having more than q general
value; thcre are many exceptions;
but the evidence seems ample that the
great mass Of our railroad securities
rest upon safe aud solid foundations;
If they fall in any degree to command
complete public confidence, 1t 10 be-
cause isolated instances Of uncorl-
scionahlo stock-watering and kindred
offenses arouse suspicion, which nat.
uraily extends to all other corporate
securities so long as similar practices
are possible and the tendency to ree
sort to them is unrestreined by law.
While there have been many instances
1of gross and fragrant stock imitation,
and while, Of course, there remain
cases Of overcap italization, yet when
the statistics Of the weaker roads. the
overcapita1ized roads, are combined
18th those Of the strongest roads, and
III VIC uso6IS5dIO. III NY
judgement they will not be found to
impair the wholesome financial stand
ling and position Of the railroads as a
whole; md while thuse railway owners
and managers who iavo enriched
| Themselves by loading tktir properties
with securities, representing little OF
NO real value Deserve ocr strongest
| condemnation. on the other hand otr
| Hearty commendstioa IL due those
owners and lnanagcrs-reprcsentf I
| believe, the la..re majority-Who have
year after yca- wo'.'lod Faithfully. and
honestly in building up oar great sys-
| TEN Of railways, which have knitted to-
get..er in close commercial and social
intercourse widely removed sections OF
the county anG AMI second only
to the great b,;ciness of agriculture it.
self in contribution to national growth
and Development.
/ ample provision s,louli be made by
congress to enable TIE interstate COM
mcrce commission, by tho employment
of sufficient force Of experts, to un-
drtakc the physical valuation of each
and any road In the country, when
ever and so soon as in the opinion Of
the commission such valuation Of any
read would be Of value to tne commits
sion In its work. There are undoubted-
4, ly some roads as to which 1t would be
an advanta~o. from the standpoint of
the business of the commission, to
have sl,ch a physical valuation as soon
as possible.
i Physical Valuation Necessary.
At the ortset let 1t be understood
1t Is no sufficient measurement Of g
rate; but it will be ultimately needed
as an ESSENTIAL instrument in admins
trative supervision. It will be of use tt
the commission in connection with the
J duty of determining the reasonabl enes.
, of future capitalization, both as one
, element to enable such body to {
right conclusion in the matter, and al.
so as an element to be placed before
the Investing public, to enable thi,
public in turn to reach conclusion
though of course capitalization mus
be determined In large measure b.
future need rather than past invest
3 ment. How important physical valu
. alton will prove as one Of the factor
i not able TO Judge; but that 1t vii
a lbe< of certain Importance can be safe
: Nv assumed because Of the opinions o
!, the interstate commerce commission
and Of the courts. and because of tn
!, recent action of the Northern Pacif
Q Railroad in advancing such physica
a vaulatfon as decisive on It's side In
r would necessarily help to protect tn
q railroads against the making Of mad
), equate and unjust rates, and woul
/ therefore be as important from tn
, standpoint of the protection OF rail-
n roads as from the standpoint Of tn
{ protection Of the public: and Of cours
It it Is necessary to the enduring pros
!. perity and development Of the countr
a that the railroads shall yield reasonabl
q profits to investors Il is from on
standpoint just as important to kno,
!; the original cost of the building
K the road as to know what 1t woul
e now cost to produce 1t; from anothe
% standpoint the human equation-ths
Z is, the management Of the road
q more important by far than the ply
- steal valuations; and the physical val,
Is alton of the road in one region ms
}; have an entirely different relation
n the real value of the road than in 81
lie other region where the conditions e.
al utterly different. Therefore the phi,
Je steal valuation can never be mo
- than one Of many elements to be col
= sidered; but it is one element. and ;.
e times may be very important ell
N ment, when taken in connection WI
es the earning power, franchises origin
ge cost, character of management. loci
H. ton. and business possibilities,
w reaching an estimate on the proper
re ana rights OIL d COIpOIdtiOlh eIS O. So
~ concern.
-. Must Not Injure Securities.
r. The effect of such valuation and 8
,h pervison OF securities can not be re
q; roactive. Existing securities should
IN III tested by the laws in existence at t
On time Of their issue This nation Won
ne no more injure securities which ha
lis become an important part OF the n
OF tional wealth than 1t would consider
sn proposition to repudiate the pub
70. debt. But the public isterest reauir
be guaranty against imptoner multiple
ny ton of securities in the future. Re
Au sonable regulations for their issua1
en- should be provided, SO as to secure
tie far as may be that the proceeds ther
bit Of shall ba devoted to legitimate bu
It's ness purposes. In providing agar
he overcapitalizat ton we shall harm no h
Tn man being who is honest; and
~ shall benefit maay, for ovescapltaliz
Id. ton often means an imitation that
lat vftes business panic; 1t always Cd
rk ceals the true relation Of the PFC
mt earned to the capital invested. creati
is burden Of Interest payments viii