Harrisburg telegraph. [volume] (Harrisburg, Pa.) 1879-1948, 1914-03-11

Confidence received a solar pleXis
blow as the result of the unexpected
charge brought against the st. Paul
the Interstate Commerce Commission,
of serious irregularities in accounting
of its earnings. The essence of the
charge is that the road padded the
earnings of its Puget Sound extension
so IL could obtain a better price for its
bonds and when this was accomplished
the road reversed its position by con-
cealing a part of it's profits for the
purpose of influencing an increase in
freight rates.
In other words, il Commissioner
Harlan can substantiate his serious
allegations, the st. Paul tried to catch
the investing public going and the
Interstate Commerce Commission COM
ing. However, the last word about
this new development In our railroad
financing, which cannot help but have
a most unfavorable effect upon invest
ment sentiment unless satisfactory
explanation is forthcoming, has not
been said. We shall hear more from
ii, for this story of wrongdoing, If 1t
is proven, strikes at the very founda-
tions of confidence on which billions
of dollars in railroad securities rest.
Not single person would have ever
suspected the st. Paul management of
being capable of q resort to irregu-
larities (to quote Commissioner Har-
LAM similar in character to those
which were responsible for putting the
New Haven and Rock Island and the
Frisco hors de combat. Like Caesar s
wife Poppea, st. Paul was above sus-
picion, and consequently its securities
were always prime favorites with in
vestors. There were some who ques-
toned the roads wisdom in extending
to the coast, but none dared ever ques-
tion its honesty.
1t is on this account that there is
danger that fear among the bondhold-
ers and stockholders of st. Paul may
f. travel on the wings of wind spreading
terror and arouse Il needless desire to
sell what they have, not knowing
whether the worst is known or not.
1t is the uncertainty always which
plays such havoc with investors. There
is no damage so great as that arising
from panic of fear. Even the state
ment Commissioner Harlan made that
the charges are no reflection upon the
roads present financial condition and
that the earnings are favorable will
not serve entirely to still the disquiet.
cndTEG
has brought upon the commission a
great deal of criticism. Washington
bears are in clover. They have grown
fat on the never-ceasing attacks the
politicians have hurled at our cor.
porations. The statement Is made. and
1t seems logical, that as long as the
commission found that the st. Paul
roads solvency was not in question,
and as long as the earnings are favor
able 1T could have couched its lam
guage in different and soothing phrase
ology, instead of resorting to the sen.
sational and flat declarations which
inflicted suffering and losses on per-
sons who are defenseless in protecting
themselves. Those persons are the
stockholders and the bondholders who
are the principal losers in the decline
in st. Paul securities last week.
Serious friction has developed be-
tween the Chicago. Rock Island and
Pacific Railroad, the operating COM
pany, and the protective committee
which is acting for the collateral per
cent bondholders. President Schu-
maker sought to have the committee
publish statement he had prepared
10 show the road would need at least
S4s.OO0,OOO to completely rehabilitate
itself. The figures the committee
would not accept, claiming that the
roads last annual report indicated no
such condition existed as was reported.