Imperial Valley press., 1913-11-28
Government Hits
Stock Watering
BY Congressman Clyde H. Tavenner

Washington, Nov. 2s.-The first
legislative blow struck at stock wa
tering by railroads is bill which is
being drawn by Congressman Thetus
w. Sims of Tennessee. Mr.. Sims is
ranking member of the house commit
tee on interstate and foreign COM
merce, and the Importance Of his
measure gains from that fact, since
the bill is thus guaranteed considera-
ton by the committee.
/ In brief, the Sims bill will require
all railroads to make application to
the interstate commerce commission
before it can legally issue new stocks
or bonds. The commission will in
quire carefully into the necessity of
such issue. If the issue is allowed,
then the bill prescribes certain regu-
lations governing the sale of the Sc
curities, and directs that the commits
sion shall have power to see to it that
the money from the sale of the Sc
curities be devoted to the betterments
and extensions for which the issue
was permitted.
This bill seems to strike directly
at the root of many railroad abuses.
1t has been clearly shown that the
fundamental cause of the New Haven
wrecks is the overcapitalization of
the road. Moreover, all rate making
is based on the railroad costs and the
necessity of paying dividends. If the
stock is badly watered, then the rail-
road will attempt to maintain rates
which are unreasonably high.
"If congress has the right to reg
ulate rates, it has the power to reg
ulate everything on which the rates
are based" said Mr.. Sims. Then he
turned to the paragraph in the Balti
more platform which reads: "We ia
vor IS legislation preventing
the overissue of stocks and bonds by
interstate railroads." ETC., quoting
that as authority for such legislation
as he proposes.
Various prominent financial stu
dents and authorities are responsible
for their statement, and their conclu-
sions are wholly sustained by reports
of the United States commission and
: the published figures of the national
corporation tax returns, that about
$50, ,OOO, 100000 of the stocks of our
industrial or tariff trusts represent
only water.
On this stock dividends of about
$1,5OO,O00,OOO are being paid yearly,
amounting to approximately $18
person or nearly 500 an American
family!
There is not a dollar of "water" or
imitation in the capitalization of cor
porations which deal in commodities,
or in railroad or other public service
corporations, that does not impose
burdens upon the consumers and pro.
ducers of this country.
Watered stock is not only one Of
the prime causes for increased prices
of commodities, but it is also an i'm
portant cause of the present unsatis-
factory condition of labor. To pay
these dividends on watered stock the
trust magnates must either hold down
wages abnormally low or raise prices
artifcially high.
Over capitalization, therefore, is OBJ
viously one of the most important
; problems confronting the American
people today. Politicians, for some
reason, refer to it less than they
should. The subject ought to be ont
of the foremost political issues.
The people are not going to forever
permit the Perkins and other finan-
ciers to strap upon their backs the
burdens of these enormous over cap
! italizations, which constitute one Of
the principal causes of the increase
in the cost Of living.