Pierre weekly free press. (Pierre, S.D.) 1889-19??, 1910-12-08
IIIIEEHI ERA IN finance
ACCURACY AND BLIcITY
PROVES TO BE A POPULAR
MOTTO.
Prompt Response to Bold Move OF
President Vail.-"Accuracy" Reduc
ed Western Unions Surplus Sla,
co.cco.-"Puhlicity" Restored Con-
fidence and Its Stock Went UP.

Are the great financiers of the
country beginning to see new light! |
Time was, until recently in fact, when |
tic 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 N
Theodore N. Vail, President of the
purchasing corporation.
1t 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 tele-
phone company is so generally held,
great things were predicted as 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 po-
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 a modern and up
to-date appraisal Of the company's
assets would make possible a far
greater degree of efficiency of oper-
alton. 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 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 publ
cation by the company marks an ep
och in finance
1t began by recommending an ad
1ustment of the difference between
the appraised and book values by {
charge of s5.595,0s9 against sur
plus. Book values of securities held
were reduced to market values, bae
and. doubtful accounts were "charg
ed off" an allowance of s2,000,00'
was made for depreciation" anothe
of 100000 for reserve and SO on
, until the old surplus of $18,S67 ,00
came down to $5.136,0o0
1t required courage. the publication
; Of this statement to stockholders, say
ing in effect: The property o
your company has been reval
! ued: the surplus isn't nineteen mill
!. ivns, as you have been led to be
lieve, but five millions" but it wa
a the truth. and President Vail did no
J. finch. Accuracy ana publicity" h
o declared, was essential. 1.-THE stock
!, holder has right to know. TIL
4 shares of this company are scatter
q ed from one end of the Union to tn
g other. This is more than a privat
If corporation. 1t is a great nationa
enterprise. The public is entitled t
i. the facts"
v. The report was ordered publishe
5. forthwith Financiers of the oil
" school and spectators generally wer
a. aghast. What would happen? Woul
y, the bottom drop out of Wester
q Union when the shareholders reali:
ed that their property was wort
j. $13,000,O0O less than they had SUI
ia posed? But the amazing thin
le happened. The stock went up an
Ie stayed up. The public had respon,
% ed to this remarkable display
s. frankness and confidence; to the ne
q. motto, Accuracy and Publicity"
The full significance OF the actic
OF the new board Is stated concise
by Harper's Weekly in these word:
II Is this policy of publicity and
n open-handed dealing with sharehol
ar ers and public. the forerunner Of
N similar movement on the part of OF
.r er big corporations? Certainly it
to be hoped that 1t is. In the ca
]. of these big companies, depends
4 upon public patronage and dong bu.
10 ness under public franchise, c.
an there be any question Of the right
- the people to know?
10 That right is being recognize
y It is recognized now In this epoch
n. act on the part Of the telephone al
n telegraph interests 1t Is the day
OF new era in corporation finance
Thickness.
= All measures Of reformation are