The daily Gate City. [volume] (Keokuk, Iowa) 1855-1916, 1910-07-14

railroads made in the state OF WASH
ington and their capitalization. 70
; the purpose of a check on the accu
racy of his statistics in this particu
!, lar / wrote to the state commission
of Washington for the results 0
their work, and waiting for their re
ply has caused this delay. Yesterda.
4 received books from them aggregat
ing over 500 closely printed pages.
cannot digest all this material in thi:
/ reply. But we will consider briefly al
the statistics for one railroad, the
Northern Pacific.
Mr.. Baldwin gives the state valua
tion of the Northern Pacific per mile
as s106,500; while the reports of the
commission show the valuation to be
! SGT 800 per mile, and the original cost
] to be only S52,364 per mile. The prob
abilities are Mr. Baldwin did not go
/ to the original sources but consulted
/ a little pamphlet published by the
railroads and edited by one Slason
Thompson at their expense.
! As to whether there is any neces-
sity for governmental supervision ov,
er stock-watering you may be inter
ested in the following paragraph from
recent decision of the Interstate
commerce commission relative to this
same Northern Pacific railway. After
an exhaustive review of the facts and
conditions connected with that COM
pany the interstate commerce COM
mission stated, in the famous Spokane
rate case:
THE statistical report of the North
ern Pacific for the year ended June
so, 1907. shows that this company has
voted an additional issue of S95 000,-
600 of common stock, none of which
was at the time of the filing of that
report outstanding. There is nothing
in the case to show the necessity for
or purpose of this stock issue"
Again in the same case the COM
mission states. "Of the s150,000,000
of the capital stock of the Great
Northern Railway company outstand-
ing s30,OoO,000 has been issued with
out the payment to that company of
any money c0nSlQeraI1On.
For many years the interstate COM
merce commission has constantly
urged that a physical valuation OF
American railways should be made.
followed up by careful supervision OF
issues of stock.
The following was stated last year
by Mr.. Commissioner Prouty concern
ing this stock watering: These tran
sactions ought to have been prevent
ed to begin with. Great sums might
have been properly saved the public
by suitable supervision at the outset,
but the evil has been done and for
the most part cannot be safely UNI
done"
AIR. Baldwin has brought the Great
Northern into the controversy; no
tice few more remarks about this
company, according to the interstate
commerce commission: The first is
sue of Great Northern stock was at
80 gents on the dollar, and. as we
have just seen, the total issue en-
braced s30,000000 at par for which
no money was actually paid. The divi-
dends paid by the Great Northern
have yielded its stockholders an am
pie return upon the investment. In
addition to this that company since it
began operations has shown sur
plus. including its investment out of
earnings in permanent improvements,
of some s60,000,000. The Manitoba
company in addition to the payment
of dividends upon its stock of which
three fourths was an absolute gratu-
ity, accumulated during the ten
years of its existence surplus of
some s10,DO0,Ooo"
We could go on giving columns and
pages on both sides of this question
of over-capitalization, and no fair.
just conclusion could possibly be
reached. Some roads are over-capital-
lied. some are not, of both PROPOSE
tons we have evidence gathered by
experts. Please contrast his bitter IT,
rade and Misrepresentation of my
position with what / actually said in
my former article Mr.. Baldwin says
Who is indulging in the wild talk
about the railroads being over-capital-
lied? Such men as Mr.. Clifford
Thorne who seek public office by
such means. Mr.. Knapp says this
common talk about railroad watered
stock is wholly ignorant and mistak-
en- In the case of Mr.. Thorne it is
neither ignorance or mistake" Now
notice what | did in fact have to say
on this phase of the subject, | only
devoted one brief paragraph to this
matter, commencing Mr.. Baldwin
claims our railroads are not over-capi-
talized. He may be correct. | do not
know, and he does not know. He
/ gives as his authority an ex-president
of the United States, and a president
of university. Neither do these gen.
I tlemen know. How can a man seated
/ in his palatial office in an eastern
city who has had absolutely no ex-
perience of that character. make an
! inventory of all the railroads in the
| United States at one huge guess %
Then ! quoted several actual inyesti
cations in Texas and Minnesota
which disclosed large over-capitaliza
.Sr, II.