The Birmingham age-herald., 1914-05-05
ANTITRUST BILL IS . ACCUSING FEARS OF BUSINESS LEADERS Proposal for FOrbidding Overcapitalization Very
 Serious Problem HARD TO DETERMINE WHAT IS REAL VALUE Some Authorities Claim That Water Is Always Squeezed Out of
 Stocks in Market by Ma
 tural Process
By HOLLAND

New York, May 4-(SpeciaL)-Were it not for the fact that the Mexican compli- cation overshadows all other matters in which there is public interest. the proba- bility Is strong that widespread opposition from business organizations and from bushes smen othe antitrust bill, which will speedily be reported to the United States Senate would De made manifest. For in the first place there seems to be a common feeling in business circles here and elsewhere in the country that the time is not opportune for further anti trust legislation It would be the better part, according to business opinion, if this matter were deferred until next year. Business is already occupied with adjust ing itself to the new conditions created by the tariff law and will be occupied to some extent in adjustment to the condi- tions which will be created when the new national banking law is in operation
 limitations have come from Washing ton to this city that the administration: expects that the organization of the new banking system will br complete, not later than mid-August. Just at that time the harvesting of the crops will be under full headway. Unless there are serious climatic disturbances, we are likely to have the greatest grain crop on record A very large crop and the harvesting of 1t at the time the new national banking system begins operation will inevitably entail some confusion, although the ulti- mate advantages of the new law to those who reap great harvests is unques- toned.
 FOrbids OvercapitalizatiOn
 The latest information from Washing ton Justifies the belief that Congress will send to the President an antitrust bill which, among other provisions, will for bid the overcapitalization hereafter of corporations. In the language of the street, overcapitalization is a police name for stock watering.' But the business organizations of this city are not at all certain that there can be good explana- ton of what overcapitalization is. Some of the .ablest of our business men, both present and of recent years, have frankly said that if fraud be eliminated then there is absolutely no danger in stock watering As cautious and conservative a business man as the late Abram S. Hewitt was accustomed to say that the market ulti- mately always squeezes the water out of stock. Furthermore, the history of railroad building in the United States especially in the far west and in all sparsely settled regions, contains a story of stock issues greatly in excess of the actual cost of construction, purchase of right of way and of equipment. It was by the issue of considerable stock bonuses that capital was precailed upon to make investment in railway properties in the far west. When Commodore Vanderbilt with a stroke of his pen doubled the cap ital stock of the New York Central and Hudson River Railroad company he was often charged with having watered the stock by as much as s400 1000. His re- ply to this charge was that there was &C., tual value for every dollar of the in- creased capital stock and this value could be demonstrated by competent inventory or appraisal. In other words. the work which he put into the system had at last created values.
 Is It Overcapitalization?
 Sometimes railroad corporations have put a considerable portion of their earn ings into Improvements, expansions and the perfection of terminals. Having done this, they have issued stock directly to the stockholders, this stock issue being regarded as a reasonable return to stock holders of that part of their earnings which went into the system.
 This method has been practically aban- doned in recent years. The railroads find it expedient to obtain needed funds through other methods of financing But it is a question upon which the best au- thorities disagree whether stock issues of that kind are or are not over-capitaliza- tion. Washington reports assert that the new antitrust measure will require that every issue of stock must hereafter rep resent actual value. But 1t is not always easy to determine what actual value is. Is it the mere visible property, that kind of property which can be inventoried?
 The Question of Pice Cutting
 Possibly the apprehension that the anti trust bill when enacted into law, will contain a clause prohibiting price cut ting or any legislation which will fix prices may be found groundless. Yet the mere suggestion that legislation can in- terfere with individual action with re- spect to prices seriously alarms many business interests throughout the United States. The statement was made a day or two ago by representatives of some of