The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1911-12-12

atives OF the purchasing company on
the one hand and the holders OF min
ority interests on the other.
II seems TO be generally agreed thai
no limitation should be placed on the
price at which bonds can be sold, but
any discount should be cancelled or
amortized during the life of the bonds
by the appropriation each year. out OF
annual income or surplus accumulated.
We hear much about reasonable
return on capital. A reasonable re-
turn Is one which under honest ac-
counting and responsible management
VIII attract the amount OF investors
money needed for the development OF
our railroad facilities. More than this
Is an unnecessary public burden. Less
than this means check TO railroad
construction and to the development OF
traffic. AS result OF misunderstand-
ing. the necessary development OF rail-
road facilities Is now endangered by
the reluctance OF investors TO pur-
chase new Issues OF railroad securities
In the amounts required. This reluc-
tance Is likely TO continue until the
American public understands the es-
sential community OF interest between
shipper and investor and the folly OF
atteEsfPt 4Hs-te- Pfeteet- tht-ehe-e y-tak-
ing away the rewards OF good manage
ment from the other.
We are told that a good law re-
sarding national incorporation would
OF itself create public confidence This
Is an oyer-statement. Such law
would remove one set OF sources OF dis
trust, but there Is another set. more
fundamental which can only be re-
moved by the exercise OF intelligence
on the part OF the American people
as whole.
There IL widespread belief basal
on imperfect examination OF the owl
dence that the amount OF capital
needed for the future development or
our railroad system 10 small In proper
tion TO that which has been required
In the past; that the profits on such
added investments OF capital are req
sonably well assured; and that we can
therefore FIX attention predominantly
IL not exclusively on the needs of the
| shipper without interfering with the
necessary supply OF new money form
the investors.
1t Is quite possible that the building
! Of additional railroad mileage will be
| far less rapid In the future than "
has been In the past. but the capital
improvement OF the mileage already
existing is enormous, even IL we built
no new mileage at all
Whatever alternative we adopt any
disturbance but'a voluntary one OF the
existing amounts or status OF bonds
or stocks validity issued Ia clearly IN
admissible and in general there hould
be as little disturbance as possible OF
different classes OF security holders.
These relations often seem unneces-
sarily complicated. both in their pro-
visions regarding distribution OF In
come and In their delegation OF voting
powers But the confusion and litiga-
tion which would result from the at
tempt to disturb them would outweigh
any possible good TO be obtained.
The absence OF any attempt to base
security issues upon revalIation Will
emphasize the true character or our
American railroad stocks, as being es-
sentially participation certificates Civ
ing a right TO proportionate share or
whatever profits may be earned, rather
than evidences that a certain SPECIFIC
amount OF money has actually been
invested in the property.