The Beaver herald. [volume] (Beaver, O.T. [Okla.]) 1895-1923, 1911-01-12

Are the great financiers OF the
country beginning 10 see a new lightI
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 unmistakable occasion
and courageous man. The occasion
arose in the purchase OF the Western
Union Telegraph company by the
| American Telephone and Telegraph
company. and the nah appeared IN
/ Theodore ~ Vail, President OF the
( purchasing corporation.
/ II was last December when public
announcement was made that the
Gould holdings OF Western Union had
4 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,
I great things we're predicted as n re-
/ suit OF tho absorption OF Western
| Union. BY the press OF the country
the deal" was most favorably com.
mented on, it being widely pointed
out that under the direction Of such
men as Theodore ~ Vail and his as.
sociates. the telegraph company was
/ bound soon to work itself into n DO
/ sition where It could offer the public
I far more efficient service than II had
/ ever before been able TO offer.
| But very few months had elapsed
when II became apparent TO the new
management that a modern and up
/ to-date appraisal Of the companys
hssets would make possible 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. II 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
10 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 an ad-
fttdt oF h.
the appraised and book values by a
charge of s5.595,0S against sur.
plus. Book values of securities held
were reduced to market values, bad
and doubtful accounts were "charg-
cd on" an allowance OF $4,000 900
was made for depreciation" another
OF 100000 for reserve" and so on,
until the old surplus OF s1S,S67. 900
came down to s5,136,000.
It required courage, the publication
OF this statement 10 stockholders, say.
Ing In effect: Tho property of
your company has been reval-
ued: the surplus isn't nineteen mill
ions, as you have been led to be-
lieve, but ive Millions" but II was
the truth, and President Vail did not
finch. Accuracy ana 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. II is a great national
enterprise. The public is entitled 10
the facts"
The report was ordered published
forthwith. Ffnanciers OF the old
school and spectators generally were
aghast What would happen? Would
the bottom drop out OF Western
Union when the shareholders realiz.
cd that their property was worth
Sl3,0O0,OO0 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 Ia stated conciseIy
by Harpers Weekly In these words
rs this policy OF publicity and OF
open'handed dealing with sharehold.
ers and public the forerunner OF a
similar movement on the part OF 9th,
er big corporations7 Certainly It is
to be hoped that 1t is. In the case
OF these big companies, dependent
upon 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 recognized
II is recognized now In this epochal
act on the part OF the telephone and
telegraph interests. II is the dawn
OF new era In corporation finance. '