The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1910-10-04
RIPLEY TO STUBS.
Continued on Page six.0

exploded. The only other excuse TOR
physical valuation of railroads is in
order that Government may pass laws
! limiting capitalization. AS to this,
tagain do not object as a railroad man
or as representing the Santa Fe, which
mas never issued security except for
cash which was invested honestly in
the property without single dollar of
graft or perquisite or "rake-off'' for
ANYBODY. My objection is simply as
citizen and tax payer.
Cost of physical Valuation"
It is proposed that a Government.
already justly criticised for its ex-
traVagance, shall spend a sum estimat-
ed at twenty millions of dollars for the
purpose of ascertaining the value of
the railroads-and the valuation, (sup-
posing it be accurate in the first
place.. will be worthless a few months
after it is finished, because some of
the properties will appreciate in value
while others will depreciate
but you. and the estimable gentle
men who participated with you in the
Iopeka conference, reply: Granting
that the valuation when ascertaine5
may nave no bearing on the question of
rates We propose it in order that
future issues of capital may be limited
Dy law. do not quite see the con-
neetion, but let us see how this limita-
tlon' of capitalization would work.
know of territory more than one
hundred miles long and fifty to seven
ty-HVe miles wide, where the soil IS
good and agricultural conditions fav-
orapIe but lacking transportation the
average distance to the railroad being
perhaps forty miles-the population
scanty, the land for the most part Ull-
cultivated and worth six or seven dol
lars per acre. Suppose the land own
ers want to induce capital to build
road through this section and bring it
IN touch with the rest of the world:
they go to those who have money and
STATE their case; they describe the
needs OF their country, their own
necessities and the certainty that the
railroad will more than double the
value of their farm lands besides
creating towns and attracting settlers
and when the capitalist inquiries what
are the chances of profit for those who
FISK their money in such a venture
with the certainty that there can be no
return whatever till the country is set
tied and the business created. the an
swer is that the state or nation will
Tx the amount of stock or bonds that
may be issued at the cost of the prop
erty, but will assume none of the risks
seriously, governor, does any sane man
believe that those who have money
Will invest under such conditions?
Put End to Building.
The passage of laws limiting issues
OF capital to the cost of the undertake
ing would put an end to railroad build
ing, except so far as the existing rail
roads having established credit might
be willing to build side lines or feeders,
not because the lines would be profit
able in themselves but for their value
as feeders to roads already built Here
AGAIN am not speaking from self in
terest Or on behalf of the Santa Fe
company. because the passage of such
a law would not hurt us but would eff
fectually prevent the danger that any
/ body will build any road to compete
with US. Here again my objection 20
this scheme to limit capitalization is as
citizen and not as q railroad man It
seems to me not the function of gov
/ eminent to attempt to protect either
| investors or gamblers, except in the err
joyment of their rights under the cor
stitution and the laws.
In the few instances where railroa5 s
have been over capitalized the invest
ing public has generally been able to
! fairly size up the real value of the real
property and to place it's own value on
| the securities regardless of their face
value Thus we see the stocks and
| bonds of these over capitalized roads
| selling at a great discount and if YOU
| take their value in the market it will
| be found that in most cases it closely
| approximates the real value.
It is doubtful in my mind whether il
| is the function of the government to
protect the investor against himself
| Moreover. the government is likely to
| place itself in a false attitude by au-
| thorizing an issue of securities which
| may correctly represent the actual
| cash investment and vet be in excess OF
! the earning power of the enterprise.
! Thus road may cost $4,000 per mile
| and still be unable to earn interest IN
| such sum, and an investor having
! bought the securities might claim that
as the government had approved the
| issue its faith was pledged thereto. If
| the government approves any given is
| sue,-if it undertakes to limit should
it not also guarantee returns? These
| question naturally occur to anyone
| familiar with the subject, but as be
| fore stated I have no official objection
| to the valuation idea,-it is simply 2.
| question of the extent to which
paternalism in government should be
| carried.
Santa Fe Wage Increases.
I have noted that a sa good politi-
| clan you have not overlooked the OPP
portunity to try and prejudice the rail-
| way employee against his company as
you say that zone of the principal rea-
| sons urged by the railroads for the
advance in freight rates is the propo-
sition that the employees should be
| paid higher wages. If they Cthe rail-
| roads) are honest in this contention
why have these employees always been
| forgotten when the railroad companies
| had a melon to cut of 10, 20 or 30 mil
/ lion dollars surplus earnings" The
| Santa Fe has cut no melons but has
| advanced its wage scale for the fiscal
| year ending June 80, 1910, as against
| the previous fiscal year over two mil
lion dollars, and We are now confronted
| with demands from other branches of
| our service which, if acceded to, will
| contemplate a further increase of
S2,500,000 per year. Now, governor,
the railroad man and vast number
| of thinking men in other walks of life
| fully appreciate and realize that the
| very best of well managed railroads are
| confronted with the most serious prob
| lem. namely, how can they accord the
service which they would like to give