The Bon Homme County independent. [volume] (Tabor, S.D.) 1904-1913, 1910-12-08
new ERA IN FINANCE
ACCURACY AND PUBLIctTv
PROVES TO BE A PoSULAR
MOTTO.
Prompt Response to Bold Move OF
President vail-"Accuracy" Reduced
Western Unions Surplus $13,o00,oo0
-"Publicity" Restored Confidence
and Its Stock Went UP.

Are the great financiers OF the coun-
try beginning to see a new light?
Time was, until recently in fact, when
the men at the head of the big corpor-
atoms kept their business to them
selves" as far as the law would al
low. Capable men at the head of the
big concerns long realized the weak
ness of their positions, but what was
needed obviously, as In all great re-
forms, was an unmistakable occasion
and 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 N. Vail, president of the pur-
chasing corporation.
1t was last December when public
announcement was made that the
Gould holdings of Western Union had
been taken over by the telephone COM
pany.
On account of the high esteem in
which the management OF the tele-
phone company is so generally held,
great things were predicted as result
Of the absorption OF Western Union.
By the press Of the country the deal
was most favorably commented on, It
being widely pointed out that under
the direction OF, such men as Theodore
N. Vail and his associates, the tele-
graph company was bound soon to
work itself into a position where It
could offer the public far more efficient
service than it had ever before been
able to offer.
But a very few months had elapsed
when 1t became apparent to the new
management that a modern and up-to-
date appraisal OF the company's assets
would make possible far greater de-
gree OF efficiency of operation. Here"
they said to themselves, we've bought
fU rd xUa knn
it's immensely valuable, but we don't
know just how valuable. These ap-
praisals OF real estate and securities
owned were made long time ago. II
we have complete inventory made Of
everything 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 ap-
praisers to be had were put at the task.
Their labors lasted over eight months.
Their report and its publication by the
company marks an epoch in finance.
1t began by recommending an adj
justment Of the difference between the
appraised and book values by charge
of $5,595,0S9 against surplus. Book
values OF securities held were reduced
to market values, bad and doubtful ac-
counts were charged off, an allow
ance OF s2,000,000 was made for "depre-
ciation," another of 100000 for "re-
serve" and so on, until the old sur
plus OF $1S,S67, 900 came down to $5,-
1886. OOO
1t required courage, the publication
OF this statement to stockholders. say
ing i'm effect: 1.-THE property of your
company has been revalued: the sur
lead to believe, but $4,000, 000," but It
was the truth, and President Vail did
not finch. Accuracy and publicity"
he declared, was essential THE
stakeholder has right to know. The
shares OF this company are scattered
from one end of the union to the other
This Is more than private corpora
ton. 1t is a 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 realized that
their property was worth $4,000, 900
less than they had supposed? But the
amazing thing happened. The stock
went up and stayed up. The public
had responded to this remarkable dis
play of frankness and confidence: to
the, new motto. Accuracy and Pub
lefty"
The full significance Of the action OF
the new board is stated concisely by
Harper's Weekly in these words.
rs this policy Of publicity and OF
open handed dealing with sharehold-
ers and public the forerunner OF sim
liar movement on the part OF other big
corporations? Certainly it is to be
hoped that it is. In the case of these
big companies. dependent upon public
patronage and doing business under
public franchise. can there be any
question of the right of the people to
know?
THAT right is being recognized. It
Is recognized now I'm this epochal act
on the part Of the telephone and tele-
graph interests. 1t is the dawn Of o
new era in corporation finance"