The morning journal-courier., 1908-03-23
NOT THE BILL TT WAS.

Whether the Aldrich bill, which the President is said to favor, has any chance of passing the house of repre- sentatives is now the mooted ques- ton. With the railroad bond provi- sion eliminated by the senate finance committee, it's chance of success IS salo to be better. On this point Congress- man Hill of this State is quoted by Washington dispatch as saying: Yes. it will pass the house. When the bill comes over from the senate we'll chm mate most of the other provisions, and then I think We can pass it.'
 If this talk gives any fair idea of the feeling of the house in the matter 1t can be seen how effective a measure the Aldrich bill will be when the house is through with 1t. Its best friends Tn New York will not be able to recog- nize it.
 It is more than likely that the La Toilette proposition to secure a physi- cal valuation of the railroads of the country has induced an unpleasant feeling regarding the railroad bond feature of tho Aldrich bill. To elim- mate this feature Is to deprive the measure of the pet idea of its friends If might as well be shorn of its other features, as Congressman Hill IS re- ported as suggesting. and then passed, or pigeonholed. There is too much uncertainty about railroad bonds to make them the basis of bank circula- ton. To go outside of government bonds and take up with bonds of prl- vate parties is establishing a precedent that is sure to reap sooner or later grlevous consequences. It seems clear that the object in securing government endorsement of railroad bonds was for the purpose of restoring public confid- ence in this class of securities and gaining a market for the sale of bonds. This would be bit of paternalistic l legislation with vengeance. If rail road bonds could be made acceptable for bank issues, why not the bonds of the United States steel company and like industrial corporations? The pro- position to Inquire about the actua capital invested in railroad property and how far beyond this the roads arr lcapitalized Is a fair one. It is reported that tho railroads of the country art capitalized at approximately sl5,O0o,
 0C0, 900 and something over ss,000 900, ,0ot are in bonds. Estimates made on th'
 cost of rebuilding and re-equippinl these roads place the amount at abou
 half of the capitalization, which would Indicate that they are bonded at nearly l tlitiI NhiuN, anu iti H'htN liiS'oiiN'' iii' stock issues represent no investment
 Furthermore an appropriate question to ask in connection with this matter is: Are the bonds themselves baset on the physical value of the proper
 ties or on the earning capacity?
 The main question back of this rail
 road bond proposition ia the big econ
 omic one back of the modern corpor ate method of doing business-over
 capitalization. There is a considera
 ble difference between the actual cap lta invested in an enterprise and th, capitalization. A fair return on cap
 ital is one thing, but to give to fictti
 ous value, which is the difference be tween capital and capitalization, tht same earning power as the real in
 vestment, is to work social lnjustic, that cannot go far without invokinl a reaction such as Is now under way.