Montpelier examiner., 1910-12-23

President VaiI.-"Accuracy" Redue-
ed Western Unions Surplus $13,-
900, 0,0OO.-"Pubiicity" Restored Con-
fidence and Its Stock Went Up.
Are the great f1nanciers of the
country beginning to see 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 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
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 a re-
suit of the absorption of Western
Union. By the press of the country
the deal was most favorably COM
mented on, 1t 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 1t could offer the public
far more efficient service than 1t 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 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 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
| 1oh Ill. 4
months Their report and its 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 a
charge of $5,595,089 against sur.
plus. Book values of securities held
were reduced to market values, bad
and doubtful accounts were "charg-
ed off, an allowance of $2,000,000
was made for depreciation" another
of $500,0 900 for reserve" and SO on
until the old surplus of $1S,S67, ,00C
came down to $685. 900.
1t required courage, the publication
of this statement to stockholders, say
ing In effect: "The property oi
your company has been reval
ued: the surplus isn't nineteen mill
ions, as you have been led to be
lieve, but five Millions" but 1t was
: the truth and President Vail did moi
D finch. Accuracy ana publicity" ht
, declared, was essential "The stock
l holder has a right to know The
p shares of this company are scatter
3 ed from one end of the Union to the
I other. This Is more than a private
= corporation. 1t is a great nationa
= enterprise. The public is entitled t
t the facts"
The report was ordered published
= forthwith. Financiers of the olC
school and spectators generally wer,
4 aghast What would happen? Woul(
the bottom drop Gut of Western
s Union when the shareholders realiz
ed that their property was wortl
$13,000,000 less than they had sup
posed? But the amazing thini
a happened. The stock went up ant
n stayed up. The public had respond
|. ed to this remarkable display o
& frapkness and confidence: to the ney
i, motto, Accuracy and Publicity
The full significance of the actiol
4 of the new board is stated concisel
3 by Harper's Weekly fl these words
k is this policy OF publicity and Q
r open-handed dealing with shareholt
"a ers and public the forerunner of
similar movement on the part of otl
+" er big corporations? Certainly it
to be hoped that 1t Is. In the cas-
of these big companies, depender
"a upon public patronage and doing bus
ness under public franchise, ca
there be, any question Of the right {
NJ the people to know?
THAT right is being recognized
- It is recognized now in this epochi
act on the part OF the telephone an
= telegraph interests. 1t is the daw
of a new era in corporation finance