The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1910-12-08
NEW ERAlA Finance
ACCURACY AND PuBEiciTYE
PROVES TO BE APoPuLAR
MOTTO.

DrE 4NSS
President vail-aAccuraeyr Reduced
Western Unions Surplus t~ts,oco.oo6
-"Publioity" Restored Confidence
and Its Stock Went UP.
Are the great inanclers Of the coun-S
try beginning to see new ightf
Time was, until recently In fact, when
the men at the head Of the big corpor-s
ntions kept their business to them
selves as far as the law would al
low. Capable mel at head OF the
big concerns long realized h weak
ness OF their positions, but what was
needed obviously, as in all great re-
forms, was an unnistakable occasion
n a courageous man.. The occasion
arose in the purchase OF the Western
Union Telegraph company by the
American Telephone and Telegraph
| company, and the mar 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,
l a. 49, AA5 EWSAS IA 0S ASSAAS
of the absorption of Western Union.
By the press Of the country the deal,
was most favorably commented on, Ii
being widely pointed out hss%szz1dsE
the direction Of such men as Theodore
N. Vail n his associates, the tele-
graph company was bound soon to
work itself into q position where IL
could offer the public far more efficient
service than 1t had ever before been
able to offer.
But n very few months had elapsed
when 1t became apparent to the new
management that o modern and up-to-
date appraisal Of hi company's assets
would make possible q far greater de-
gree of efficiency of operation. .Here,,'
! they said to themselves, we've bought
It's immensely valuable. but we don't
know Just how valuable. These ap-
praisals of real estate and securities
owned were made q long time ago.. II
we have a complete inventory made OF
everything We've got we can announce
the facts to the public, start q new set
Of books, and begin our responsibility
to stockholders right there
How Inventory Was Taken.
h most expert accountants and APP
praisers to be had We're put at the task.
Their labors lasted over eight months.
Hell =ssper TT and its publication by the
company marks an epoch In finance.
IL pS6Gl DS GGSpIlllllCtlQIIlE ELK AQ-
justment of the difference between the
appraised and book values by a charss
of $5,595,0S9 against surplus. Book
values of securities held were reduced
to market values, bad and doubtful ac-
counts were ss re charged or an allow
c~iation," another of $500, 600 for ire
serve" n so on, until the old sur
plus OF $lS,S67,000 came down to $5,-
10000.
1t required courage, the publication
of this statement to stockholders. say
ing in effect: THE property Of your
company has been revalued: the sur
plus isn't 49, 00, 900, as you have been
lead to believe, but $4,000, 000," but 1t
was the truth, and President Vail did
not finch. Accuracy and publicity"
he declared, was essential. 4The
stakeholder has a right to know. The
shares of this company are scattered
from one end Of the union to the other.
This is more than a private corpora
ton. 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 realized that
their property was worth s13, ooo, 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 franlfness and confidence: to
the new motto, Accuracy and Pub
lefty"
The full significance of the action OF
the new board is stated conciseiy by
Harper's Weekly In these words:
is this policy of publicity and OF
~open-handed dealing with sharehold-
ers and public the f%orerunner of a sim
liar movement on the part of other big
corporations? Certainly 1t is to be
hoped that 1t 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 in this epochaI act
on the part of the telephone and tele-
graph interests. 1t is the dawn of a
new era In corporation finance"