The Green Forest tribune., 1910-12-09
NEW ERA IN FINANCE
ACCURACY AND LICITY PROVES TO BE A POPULAR
 MOTTO.
Prompt Response to Bold Move of President Vail.-"Accuracy Reduc- ed Western Unions Surplus $13,- c0oooo.-"Publicity" Restored Con- fidence and Its Stock Went Up.

Are Sae great financiers of the country beginning to see a new light? Time was, until recently in fact, when the men at the head of the big cor porations kept their business to themselves" as far as the law would allow. Capable men at the head of the big concerns, long realized the weak ness of their position, but what was needed obviously, as in all great re- forms, was an unmistakable occasion and a courageous man. The occasion arose in the purchase of the Western Union Telegraph company by the American Telephone and Telegraph company, and the man appeared III Theodore N. Vail, President of the purchasing corporation
 It was last December when public announcement was made that the Gould holdings of Western Union had been taken over by the Telephone company.
 On account of the high esteem in which the management of the teIe- phone company is so generally held, great things were predicted as a re- suit of the absorption of Western Union. By the press of the country the deal was most favorably com mented on, it being widely pointed out that under the direction of such men as Theodore N Vail and his as- sociates, the telegraph company was bound soon to work Itself into q DO sition where it could offer the public far more efficient service than it had ever before been able to offer.
 But very few months had elapsed when it became apparent to the new management that modern and up- to-date appraisal of the cSmpany's assets would make possible a far greater degree of efficiency of oper- ation. Here" they said to them selves, we've bought control of this property and We know it's immensely valuable, but we don't know just how valuable. These appraisals of real estate and securities owned were made long time ago. If we have a complete inventory made of every thing we've got we can announce the facts to the public, start a new set of books, and begin our responsibility to stockholders right there"
 How Inventory Was Taken.
 The most expert accountants and appraisers to be had were put at the task Their labors lasted over eight months Their report and it's publi- cation by the company marks an ep- och in finance.
 It began by recommending an ad- Justment of the difference between the appraised and book values by charge of $5,595,0S9 against sur plus. Book values of securities held were reduced to market values, bad and doubtful accounts were "charg- ed off," an allowance of S2,000,O was made for depreciation, another of $5O0,000 for reserve" and so on, until the old surplus of $1S,S67,OOO came down to $5,136 ,000
 It required courage, the publication Of this statement to stockholders, say ing in effect "The property of your company has been reval- ued: the surplus isn't nineteen mill
 
 lieye, but five millions" but it was the truth, and President Vail did not finch. Accuracy ana publicity he declared was essential. "The stock holder has a right to know. The shares of this company are scatter ed from one end of the Union to the other. This is more than a private corporation. It is great national enterprise. The public is entitled to the facts"
 The report was ordered published forthwith. Financiers of the old school and spectators generally were aghast. What would happen? Would the bottom drop out of Western Union when the shareholders realiz- ed that their property was worth $13,000O00 less than they had sup posed? But the amazing thing happened The stock went up and stayed up. The public had respond ed to this remarkable display of frankness and confidence; to the new motto, Accuracy and Publicity
 The full significance of the action of the new board is stated concisely by Harper's Weekly in these words:
 ''ls this policy of publicity and of open-handed dealing with sharehold- CTS and public the forerunner of a similar movement on the part of oth- CT big corporations? Certainly it is to be hoped that it is. In the case of these big companies, dependent upon public patronage and doing busi- ness under public franchise, can there be any question of the right of the people to know?
 That Tight is being recognized. It is recognized now in this epochal act on the part of the telephone and telegraph interests. It is the dawn of a new era in corporation finance"