Evening journal. [volume] (Wilmington, Del.) 1888-1932, 1916-12-09
The Interstate Commerce Commissions
Manufacturer of Rum0rs

The Railway Age Gazette in its
current issue calls attention to the
fact that unwittingly, probably, the
Interstate Commerce Commission is
doing a serious injustice to the rail-
ways and the holders OF their secur-
tiles through the manner in which it
is giving out the figures concerning
the so-called tentative valuation of
the different carriers which are now
being made public.
The Interstate Commerce Com
mission" says the Railway Age Ga
zette, lis making public the results
OF the land. engineering and account
ing sections OF the Division OF Valu-
alton and is serving on the roads
what are called tentative valuat Ons
based on the reports of these sections.
Although these reports are given 70
the public as tentative Valuations
they are not valuations IN any true
sense whatever. They are merely
partial Inventories With this fact In
mind, the chairman of the President
Conference Committee wrote to the
chairman of the Interstate Commerce
Commission on July q, requesting
the Comm ssion not TO serve the re-
ports OF the engineering and account
ing division as tentative valuation
on the Texas Midland. the Atlanta,
Birmingham G. Atlantic, the Norfolk
Southern the Kansas City Southern,
because these reports ne Their separ-
ately nor collectively constitute the
tentative valuation required by the
act The Commission on October IL
replied to the Presidents Conference
Committee that it is not felt that the
delay incident TO a compliance with
your request would be justified ..
"The theory on which these tenta-
tive valuations are being made is
that II an injustice is done TO road
it will have ample opportunity to
present To the Commission evidences
Of the injustice and corrections VIII
be made accordingly. The reports on
the estimated cost OF reproduction
new OF the Atlanta, Birm ngham 4 At
lantic. the Texas Midland, the Kan
sas City Southern and the New Or
leans, Texas & Mexico all put thIs
cost at a fraction of the face value OF
the securities issued by these COM
panies This is the fact that VII
strike 500 men out OF 1000 who read
these early statements from the Com
mission II on later investigation it
is found that these tentative reports
were absurdly low a few of these
men may become aware Of this fact
but Il is a moral certainty that large
majority OF them will not The thing
that will stick in their mind Is that
the Interstate Commerce Commission
Is finding the roads grossly Overcapi-
talized A rumor such as this. given
the official character that attaches to
it by reason Of coming from the In
terstate Commerce Commission, en-
dangers the credit OF the company
about which the rumor is spread and
may endanger railroad credit as
whole.
THAT this is a real danger is indi-
Gated by articles appearing in the
newspapers, such as the one headed
Find Kansas City Southern Is Capt.
talized for Twice What II Is Worth
which appeared in the Topeka kan
sas) State Journal few days ago."
Reference 20 the statements made
concerning the Kansas City Southern
shows how misleading these tentative
! valuations may be. The Gazette says:
"The cost OF reproduction new. ex-
elusive Of land, is placed at S40,274.-
1863. The value of land Is placed at
| S2.409.61S, but with the qualifying
statement that Of this land valued az
$24S,156 was acquired by gift Ma
| terial and supplies are simply stated
to have a book value OF S2715 1876. but
! the Commission makes no finding of
! their actual value. No mention Is
made Of ca q. which is fairly neces-
sary and fairly valuable part OF the
assets OF railroad company. No es-
innate Is made OF other values and
elements Of value of the property OF
the carrier which under the law will
have 20 be included IN the final val
uaiion The Division OF Valuation
refuses to accent the data presented
nv the Kansas CITY Southern as a
basis for arriving AT the original cost
to date Of the property and then II