The enterprise. [volume] (Harlem, Mont.) 1899-1926, 1910-12-15
NEW ERA IN FINANCE
ACCURACY AND PUBLICITY
PROVES TO BE A POPULAR
MOTTO.

Prompt Response to Bold Move o.
President vaIl.-"Accuracy" Reduo
, Cd Western Unions Surplus $13,
, ooo,o0o-"PubIlcIty" Restored Con
. hdence and Its Stock Went Up.
Are the great lnanciers 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
porat1ons 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 m
Theodore N. Vail, President Of tho
purchasing corporation.
1t was last December when public
announcement was made that the
Gould holdings Of Western Union had
peen 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
soc1ates. the telegraph company was
pound soon to work itself into q DO
slt1on where 1t could offer the public
1ar more efficient service than it had
ever before been able to offer.
But very few months had elansed
when 1t became apparent to the new
management that modern and up-
to-date appraisal of the company's
assets would make possible q 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 lust
how valuable. These appraisa1s of
real estate and securities owned were
made a long time ago. If we have
a complete inventory made Of every
thlng we've got we can announce tho
FACTS to the public, start a new set of
oooKs' 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 en-.
och in finance.
IL began by recommending an ad.
5ustment of the difference between
the appraised and book values BY a
charge of $5,595,0s9 against sur.
plus. Book values of securities held
were reduced to market values. bad
ana doubtful accounts were "charg-
Do off," an allowance of $4,000, 1000
was made for depreciation" another
u Sooo,0o0 for reserve" and so on.
Hull the old surplus of s18.867. 1000
came down to $5,136,00
II required courage, the publication
II this statement to stockholders. saw.
ng In effect: 1.-THE property Of
'our company has been reval.
led: the surplus isn't nineteen mill.
ons' as you have been led to be.
,eve' but five Millions" but it was
ne truth, and President Vail did not
llncn. Accuracy ana publicity" he
leclared, was essential. 'The stock
lolder has a right to know, The y
mares Ut this company are scatter d
q from one end of the Union to the
ther. This is more than a private g
orporation. 1t is great national
Enterprise. The public is entitled tc
be facts"
me report was ordered published
ortnw1th. Financiers of the old T
chool and spectators generally were Il
ghast. What would happen? Would
le bottom drop out of Western
MON when the shareholders realiz
I that their property was worth n
100000 less than they had sun. a
osed? But the amazing thing
The stock went up and
aged up. The public had respond.
to this remarkable display of b.
ankness and confidence; to the new
otto, Accuracy and Publicity" y
Inc full significance of the action
the new board Is stated concisely Z
Harper's Weekly in these words:
is this policy Of publicity and of
dealing with shareho1d.
8 and public the forerunner of
nilar movement on the part of 9th.
Dig corporations? Certainly It is
be hoped that 1t is. In the case
these big companies, dependent
ION public patronage and doing bust
'ss under public franchise. can
ere be any question of the right Of
Q people to know?
That right is being recognized.
IS recognized now in this epochal
t on the part of the telephone and
legraph interests. It is the dawn
a new era in corporation finance"