Decorah public opinion. (Decorah, Winneshiek County [Iowa]) 1895-1928, 1910-11-30
Des MOines Correspondent Cites Pc
culiar Instance.
STOCKHOLDERS ARE INFORMED
Tells How Surplus Valuation of
Western Union Telegraph Co.
Was Reduced Five Millions.

In view OF the popular demand
that has been made in Iowa for ac-
curacy and publicity of corporation
business affairs and the fact that the
subject will have prominent consid-
Grafton before the state legislature
and congress this winter, it is in
teresting to note the effect upon the
| public of the first experiment along
this line.
Until recently it has been the at
titude of great corporations and
great corporation men to keep their
business to themselves, as far as the
law would allow. All their doings
were enveloped in mystery and the
true conditions of the affairs of the
companies was obscured by vague
and meagre statements, issued at ir-
/ regular periods. The inevitable
4 consequence of this policy was
4 growth of distrust and suspicion,
which have been intensified from
time to time by the unexpected fail
.ure of a company supposed to be
sound and prosperous.
1t has been maintained by fnan-
ciers of the old school that such Sc
crecy was necessary to keep at equi-
librium the financial status of the
country. During recent years there
has been a rapidly increasing de-
mand for publicity, accuracy and
honesty. 1t has been contended that
openness would put the countrys
commercial condition on a firm foun-
dation.
What was needed to prove this
contention, as in all great reforms,
was an unmistakable occasion and a
courageous man. Fortunately for
the stability of American finance, /
the occasion arose in the purchase
of controlling interest in the West
ern Union Telegraph Company by
the American Telephone and Tele-
graph company, and the man appear
of the purchasing corporation. The
new controlling interest demanded
transaction of the business on
4 sound basis. They know the prep
erty just taken over was valuable,
but not how valuable. They deter
mined to find out. Impartial ap-
praisers and experts were retained
and given almost absolute freedom
in examining physical property, ac-
counts and franchises. After several
months of work these appraisers pre-
sented a report to the Board of Di-
rectors. The old Western Union
valuations gave a surplus of $751;
SCI, 461.S6. The appraisers made
the astounding report that the valu-
ations placed by the old company
had deprecated $13,731,143.10 and
that this amount should be deducted
from the surplus in order to give
an honest working business basis.
The directors were for the time
perrleXed. The cid sc9recrow of
facts frightening the public and
forcing down stocks arose with for
bidding hand. But after a thorough
discussiins led by the president the
directors concluded that the stock
holders had a right to know. The
shares of the company were scatter
ed from. one end Of TIE Union to the
other. The public had a right to
know. All over the United
States the company is doing business
under public franchises. Theo-
dore N. Vail and his business as
. sociates ordered the facts made pub
lie. It required courage to write
; the stockholders and say: The prop
erty belonging TO your company has
been revalued; the surplus isn't
nineteen millions, as you have been
; led to believe, but five millions
When this report was sent forth
!. financiers of the old school and
: spectators generally were aghast
What would happen? Would the
bottom drop out of the Western
Union when the shareholders real
; lied that their property was worth
$13,O00,000 less than they had sup
posed? And then the amazing
; thing happened. The stock went up
and stayed up, The public had re-
sponded instantly to this remarka-
bic display of frankness and conf
dence, thus demonstrating that the
demand for accuracy and publicity
of corporation affairs is one that will
put American finance on a sound
basis and furnish protection to in
vestors.