The herald-advance. (Milbank, S.D.) 1890-1922, 1910-12-09
new ERA IN FINANCE
ACCURACY AND PUBLICITY
PROVES TO BE A POPULAR
MOTTO.

PFompt response TO 6oIo move OF
President vaiI.-"Accuracy" Reduc
ed Western Unions Surplus $13,.
CC0.CCO.-"PubIicity" Restored Con-
fidcnce and Its Stock Went Up.
Are the great f%inanciers 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.
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 al unmistakable occasion
and a courageous man. The occasion
arose in the purchase Of the Western
Union Telegraph company by tho
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 fayorably COM
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 o o to work Itself into = po-
sltion where it could offer the public
Tar ntre 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 p
alton. Here" they said to them
selves. we've bought control O this
property and We know It's immensely
valuable, but we don't know Just
how valuable. These a~ppraisals Of
real estate and securities owned were
mado . long time aso. II We have
q complete inventory made of every
thing we've got we can announce the
facts to tho public. start = 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
task. Their labors lasted over eight
months. Their report and its publ
cation by the company marks an ep-
och in finance.
1t began by recommending ar ad-
5ustment Of the difference between
the appraised and book values by a
charge Of 5 5 1895, OS9 against sur
plus. Book values of securities held
were reduced to market values. bad
and doubtful accounts were "chars-
ed Off" an allowance of 3 1000, 600
was made for depreciation" another
Of $500. 600 for reserve" and so on.
until the old surplus OF SIS. S87, 900
came down to $5,136, 900.
1t required courage, the publication
Of this statement to stockholders. say
ing in effect: Tho property Of
your company has beer reval-
ued: the surplus isn't nineteen mill
Ions, as you have beer led to be-
lieve. but five Millions but 1t was
the truth. and President Vail did not
finch. Accuracy ana publicity he
declared, was essential. The stock.
holder has a 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. 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
eshast. What would happen? Would
the bottom drop out of Western
Union when the shareholders realiz-
ed that their property was worth
$13, 000. 600 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 action
Of the new board 5 stated concisely
BY Harpers Weekly In these words:
Ia this policy OF publicity and of
spen-handed dealing with s~harehold-
srs and public the forerunner Of q
similar movement on the part II 9th
Or big corporations? Certainly II is
to be hoped that It Is. In tho case
n these big companies. dependent
spen public patronage and doing bust
ness under public franchise. can
there be any question of the right OF
the people to know?
That right Is being recognised.
Il 10 recognized now in this epochal
act on the part o. the telephone and