The Greenville journal. [volume] (Greenville, Ohio) 1850-1918, 1910-12-08


fidenee and Its Stock Went Up.
Are the great financiers 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 unmistamble occasion
and courageou 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 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 CON-
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 a po-
sition where it 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 it became apparent to the new
management that 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 mcst 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.
justment of the difference between
the appraised and book values bS @
charge of $5,595,0S9 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,OO0,OOC
was made for depreciation" another
of $500,000 for reserve" and so on
until the old surplus of $1S,S6700O
came down to $5,136000.
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 isct nineteen mill
ions, as you have been led TO be.
! lieve, but five millions" but 1t was
} the truth, and President Vail did not
finch. Accuracy anG publicity" he
declared, was essential. THE stock
holder has right to know The
shares of this company are scatter
ed from one end of the Union to the
. other. This is more than a private
corporation. It 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 realz
, ed that their property was worth
: S13,OOO,O00 less than they had sup
posed? But the amazing thing
; happened. The stock went up and
, stayed up. The public had respond
ed to this remarkable display Of
frankness and confidence; to the new
motto, Accuracy and Publicity"
The full significance of the actor
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 6
similar movement on the part Of otn
er big corporations? Certainly it is
to be hoped that it IS In the case
CT these big companies, dependent
upon public patronage and doing bust
ness under public franchise, car
there be any question of the right Of
the people to know?
That right is being recognized
1t is recognized now in this epocha
act on the part of the telephone and
, telegraph interests. 1t is the dawI
. Of new era in corporation finance