Tulsa daily world. [volume] (Tulsa, Indian Territory [Okla.]) 1905-1919, 1915-01-03
RESPONSIBILITY FOR
RAILROAD REGULATIONS
BY TOM FINTY, JR.

years. Recently II has been discov.
cred that the sum partly was due to
an error in addition. Nevertheless,
$200,000,000 Is Insisted upon. This
sum was the apparent difference be-
tween the capitalization OF the Texas
| railroads existing In 1894 and tho
value of these properties as deter
mined by the railroad commission in
that year.
The railroad commissions valua-
tion was the estimated cost of repro
duction In 1894. In that year labor
and materials were cheaper than they
We're when the railroads were con-
structed or than they have been since
Officers OF the railroad companies
have contended that revaluation would
eliminate or greatly reduce the al
legged fiction In their capital but re-
valuation has not been allowed. Tho
railroad commission, however, has
permitted revision" of valuation. Two
companies have submitted to this
process. The revised valuation of the
International & Great Northern very
nearly took care of it's Indebtedness;
that of the Galveston, Houston d
Henderson completely covered its
stocks and bonds
Fiction Eliminated.
The Galveston, Houston & Hender-
son had outstanding Sl,000,000 of
stocks and 100000 of bonds. The
property was valued by the railroad
commission in 1894 at $l,527O23. Ac-
cording to this evidence, the c., II. Il
II. was responsible for, say, $780, 900
of the 5000 100000 of fictitious stocks
and bonds. But when the valuation
of the property was revised by the
n n
found that the property was worth
exactly S3,000,00O, a sum covering
every cent of it's capitalization.
Nevertheless, the politicians insist
that there Is 100000, 600 Of fictitious
stocks and bonds. They refuse to de-
duct even this $1,500.000 now certl'
fled by the commission to be legiti-
mate, and they refuse to accept the
finding of the commission In this case
as circumstantially proving the legit-
imacy of other capitalization alleged
to be fictitious. But the sweeping as
sertion of overcapitalization rejects
the finding of the commission In this
case and subjects to suspicion its val
uation of lines constructed since the
enactment OF the stock and bond law.
Likewise are the similar acts Of the
railroad commission of other states
questioned
The facts, however, go far to prove
the Righteousness Of the fictitious cap>
italzation assertion.
Public Responsibility.
Much of the apparent overcapitali-
zation was justifiable, upon the bonus
theory explained in the foregoing.
Some of 1t was unjustifiable: but are
we not responsible even for this? Re-
sponsible to whom? Well, primarily,
to the investors in the securities. This
responsibility is indicated by the very
efforts which we have been making
within recent years to regulate and
limit the issuance of railroad securi-
ties
What was the purpose of such reg
ulation? We can afford to take the
testimony of the distinguished author
of the Texas railroad stock and bond
law. He said the measure had dual
purpose: To protest the people from
the evils Of overcapitalization to pro-
tect the investors as against the ven-
ders of worthless or Improbable Sc
curities.
Now, II we owed II as duty thus
to protect future investors, were we
not guilty of neglect in failing to so
protect investors In the past, from
the start, as did France? II we per
mitted men to whom we granted char
ters, with the great seal of the state
upon them, to go forth and sell ficti-
tious stocks and bonds in the COM
panies so chartered, can we in good
penalize the victims?
This latter question, however, does
not need to trouble us much, In view
of the tangible evidence that over
capitalization is largely, If not quite,
z myth.