The Columbus journal., 1910-12-14
TURNING ON LIGHT.
PRESIDENT Walls BOLD MOVE
MARKS EPOCH IN FINANCE.

Accuracy" Reduced Western Unions
Surplus $4,000. cco.-"PubIieity"
Inspired Such Confidence THAT
Its Stock Went Up.
Are the 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
poraticns 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 unmis;akabie 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 in
Theodore " 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 te!e.
phone company is So generally held,
great things were predicted as a re-
suit Of the absorption O: Western
Union. by the press Of the country
q.
mentcd On, it being widely pointed
out that under the direction Of such
| men as Theodore y. Vail and his as
scciates. the telegraph company vas
bound soon IL work itself into a po-
sitinh where il could offer the public
far more efficient service than II had
ever before been able TO offer.
But a very few months had elapsed
when il became apparen: to the new
management that a modern and up.
| tO,late 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 a long time ago. If We have
complete inventory made OF every
thins 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 its publ
cation by the company marks an ep-
och in finance.
Ii began by recomme ndinS an ad.
.nstmeEt of the difference between
the appraised and book values by a
charge OF $5.595,0S? against sur.
plus. Book values OF securities held
were reduced to market values. lad
and doubtful accounts were "charg-
ed of" all allowance Of 100000
was made for depreciation. ano;hey
of $685. 600 for reserve. and SO on.
until the old surplus Of $IS,S6., 900
came down to $5,l3G.OG0.
1t required courage, the publication
Of this statement to stockholders, say.
ing in effect: The property Of
your company has been reval.
ued: the surplus ism. nineteen mill
ions, as you have been led to be-
lieve. but five millions" but it was
the truth. and President Vail did not
finch. Accuracy and 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
ether. This is more than a private
corporation. 1t is a great national
enterprise. The public is entitled to
the facts"
The report was ordered published
forthwith. Financiers CT the old
school and spectators generally were
aGhast. What would happen Would
the bottom drop out OF Western
Union when the shareholders realiz-
w shot "eS
$l3.OOO.0OO less than they had sup
posed? But the amazing thing
happened. The stock went IN and
stayed up. The public mad respond
ed to this remarkable display O;
frankness and confidence: to the new
motto. Accuracy and Publicity
The full significance of the action
OF the new board is stated concisely
by Harpers Weekly in these words:
rs this policy of publicity and OF
open handed dealing with sharehoid.
ers and public the forerunner OF a
similar movement ON the Part OF 9TH
er big corporations? Certainly il is
to be- hoped that il is. In the case
of these big companies. dependent
uron public patronage and doing bust
ness under public franchise. can
there be any question OF the right of
the people TO know?
That right is being recognized.
II is recognized now in this epochal
act on the part Of the telephone ard
telegraph interests. II is the dawn
OF new era in corporation finance"