davidaulloa/AmericanStories huggingface dataset:
Martinsburg W Va evening journal. [volume] (Martinsburg, W. Va.) 1913-1920, 1917-06-09

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Martinsburg W Va evening journal. [volume] (Martinsburg, W. Va.) 1913-1920, 1917-06-09

.a4es1.4ag yeu ga4, reias you your couatryj
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11
How Capital Investment
Should Be Safeguarded

amounts that should be set aside
from current earnings to provide
against future losses due 10 values
already received differs from the
manner Of determining the amounts
that should be set aside TO provide
against future losses due to direct
dissipation or impairment of assets.
In the first case the losses accrue
from day to day and from month to
month in accordance with the value
received and not paid for. For these
losses a reserve should be provided
equal to the value received. For in
stance, if company borrows $780,
600, payable one year after date
with interest at 6 per cent, it will
have received at the end of the first
month the use Of 100000 for one
month. The value of that use is
one-twelfth of the value of the use
for one year or is equal to $500.
Therefore, at the end Of the month,
this company should debit expense
and credit accrued interest not due,
a reserve account, with $500, in or
der to insure or tend to insure the
retention Of that amount of assets
until the payment Is due and TO
state correctly the months expenses.
Amounts payable for value received
are usually the subject of some pre-
vious agreement or understanding,
and so the proportions chargeable to
certain periods prior to the due date
are capable Of more or less exact
determination.
Losses due TO direct dissipation or
impairment Of assets may be realized
gradually or suddenly. Factors
which result in a gradual loss of as
sets are wear and tear. decay, etc.
Factors which result in an imme-
date loss of assets are accident, in
adequacy, storm, public requirement,
etc. Obsolescence may act suddenly,
following some new invention which
necessitates the immediate discard
ing Of units Of plant, or il may act
gradually until the advantages de-
rived from the new invention are
sufficient to warrant the discarding
Of the obsolete units. So we may
say that losses,due TO wear and tear
do accrue; those due TO accident,
storm, inadcquacy and public re-
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11

military officer in command Of the
forces. The lines thus comman-
deered would naturally be supple
mented by such temporary railroads
as were demanded by military re-
ouirements. In other words, the
United States would follow the prac-
tice that was adopted by France and
some other European countries in
the present war. In view of the
slight probability of the possible in
vasion of the country by hostile
armies, the question of the govern
ment's Communicating and manag-
ing railroad lines is largely aca-
demic.
s. A railway map of the United
States, so prepared as to bring out
clearly the relation of the trans
portation lines to the Notifications,
munition plants, shipyards, naval
establishments, and other places of
military importance, should be in the
possession of the government before
the outbreak of a war. Other steps
should also be taken in advance Of
hostilities. The military and naval
authorities should confer with the
operating officials Of representative
railroads in different parts of the
United States with a view TO work
ing out as definitely as possible the
measures that should be promptly
adopted when war is declared. Co
operation between the government
and the railroads should not be post
poned until hostilities have begun.
The railroad system of the United
States is capable of meeting the
strain to which it would be subjected
by war, provided the necessary
measures are taken by the govern
ment to unity the different parts of
the system and to use efficiently the
entire transportation facilities of
the country for the performance Of
the services required. Should our
railroad system prove inadequate to
meet the demands created by war,
the main cause will be the admin
istrative limitations of the govern
ment rather than the insufiiciency
of transportation facilities. The
need of greatest present Importance
is that the government should plan
as definitely as possible the measures
to be adopted promptly upon the out
break Of war for the purpose of in
surfing the full use of the railroads.
Indeed, some preparatory steps
should be taken at once, in advance
of hostilities, in order that war,
should it unhappily come, may not
find the government unready to
make full use Of the country's
TRANSFORMATION system.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11
BY J. ID. COWAN

(From an article IN the Journal OF
AccO1tnt0ncy0
4" HERE are two kinds of fac
tors which are constantly
working TO injure or destroy
the invested capital Of a business.
The first kind operates directly
through liabilities incurred for ma
terial received, services rendered or
other value received. Such factors
are interest, rent, wages, etc. The
capital assets are jeopardized by
these factors, since in the ultimate
they are responsible for the payment
Of the liabilities incurred. The sec
ond kind operates directly by dissi-
pating the assets or destroying their
usefulness. Such factors are wear
and tear, decay, accidents, obsoles-
cence, etc.
The liability or loss resulting from
these factors must be met either at
once or in the future. II the loss
must be met at once, the liability
therefor is set up in the books with
out question. If the loss must be
met in the future a liability for the
present proportion of that loss, or,
in other words, reserve, should be
set up and gradually increased so
that at the time the loss must be met
the reserve will be sufficient to off
set II.
The purpose of creating the re-
serve is TO safeguard the capital
assets by insuring, as far as possible,
that sufficient surplus assets be re-
tanned to Offset, at the time incurred,
all damage to or loss Of capital as
sets. A secondary purpose is TO in,
clude in current expenses the pro-
portion Of future losses which Is
chargeable against current earnings.
The reserve tends 20 insure the re-
tention Of assets in that it reduces
the amount of surplus profits from
which dividends may be paid. Cur
rent exposes are made to include
the present proportion of estimated
future losses by the operation Of the
reserve, since 1t is created by charg-
ing current maintenance and credit
ing the reserve with the present pro-
portion Of such future losses.
The manner Of determining the
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11

necessary to establish, probably in
connection with the office of the Ad-
iutant General of the Army, trans
portation bureau or service, and
place that bureau or Office under the
direction of the most expert operat-
ing railroad official in the United
States. Moreover, his subordinates
should be selected strictly on the
basis of demonstrated fitness for the
positions they are to fill. The re-
ouirements of the Office would be
so great that only men of the high
est ability should be considered, and
the government should not hesitate
to pay the salaries required to com
mand the services of men of the
greatest ability. The salary ques-
ton, however, would hardly present
serious difficulties, because such men
as the government might desire
would, for patriotic reasons, be
eager to give the country the benefit
of their services. 1t is not assumed
that the government would be parsi-
monious, but salary would probably
be of secondary consideration with
such men as the government needed
a. The government would not be
obliged to construct any consider
able mileage of railroads, unless an
army of invasion brought actual
fighting within the borders of the
country. Some additional local
branches, spurs and sidings might
need to be constructed in order to
provide for the establishment and
expansion of munition industries and
for facilitating the getting Of ma
terial and men to and from the forti-
fications, military camps and naval
establishments made necessary by
the war. Should the country be in
vaded, the sections occupied by the
army of defence would need to have
numerous temporary railroads to be
used in supplying the forces in the
field and in moving troops from
point to point. Before campaign
or drive is undertaken on any con-
siderable scale in the present Euro
pean war, railroad and other trans
portation facilities are provided 70
an extent far larger than would have
been considered necessary even few
years since.
5. The government would probably
not need to take possession of any
railroad lines unless the country
were invaded by a hostile army. In
that case the government would pre-
sumably be obliged to commander
the railroads in the section of the
country comprised within the theatre
of active warfare and place the op-
Grafton of these roads under the
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11

second theory Of setting up deprecla-
ton reserves previously stated!
Reserves set up in this manner
should be carefully checked period
ically and. if wide discrepancies are
found to exist between the amounts
actually charged and the amounts
which in determining the set-up 1t
has been assumed would be charged
against the reserves, changes should
be made in the rate of set-up TO pre-
vent the error from being introduced
into the reserve. This is necessary,
since the rate of set-up is based on
rast experience as to length of life
and amount of salvage at the time OF
retirement, and the actual future
experience may differ considerably
therefrom. Each class of physical
assets should be separately consid-
cred over a period if possible equal
t. or in excess of the average life OF
that class of assets, and all factors
which might affect their life should
be taken into account whether or not
they had been operative during that
period. For the purpose of such a
check the books should be kept
so that the cost of each class Of
rhysical assets and the annual
charges against and the balance in
the reserve for each class could at
any time be readily ascertained.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11

greatly increased work to be per-
formed. A serious war will afford
a measure of both the executive
ability of the government and the
transportation possibilities of the
railroads.
1t is important that the steps which
the government must take as re-
CARDS the management of the rail-
roads in case of war should be clear
ly understood and carefully planned
in advance. No other phase of pre-
raredness is of greater Importance
than this. The humiliating expert
ence of the United States in the
Spanish-American war as regards
the transportation Of troops and sup
plies, and even the delays and bitches
that occurred in the recent mobili-
cation of American troops on the
Mexican border and their movement
into Mexican territory indicate that
there is too much tendency to mud
die along with the expectation of be-
ing able satisfactorily to solve prob
lens as they arise. Avoidable mis-
takes, when the success of a great
war is at stake, are too costly to be
tolerated
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11
Guatemala Solves
High Living Cost
For Poorer Classes

">HE President of Guatemala has, to
a considerable extent, solved the
problem Of the high cost OF liv-
ing. at least in so far as the poorer
classes of Guatemala City and Quezal-
tenango, the two principal cities OF the
republic, are concerned. BY his super
vision the price of bread is kept to a
minimum, and there are government
warehouses for the sale of rice, corn,
potatoes and bananas, all at fixed
prices. for the benefit Of the poor peo-
pie Of the two cities named, according
to a report from United States Consul
Samuel C. Reat The poems, or the
poorer class of the inhabitants Of the
republic, represent fully 70 per cent
of the total population.
For their benefit the Government of
Guatemala in September, 1914, shortly
following the outbreak Of the Euro
pean war, 'inaugurated a system of
government purchase and distribution
Of -four at and below cost, which has
been effective in checking the tendency
of increased prices.
Through the Minister of Fomento
Public Works. and tho American
firm of A. Schwartz e. Co., fiscal and
purchasing agents of the government,
-four is bought at the lowest market
prices in the United States. 1t is i'm
ported without customs duty, and the
International Railways of Central
America allows the government re-
bate of 80 per cent on the freight
charges for carrying the -four from
Puerto Bsrrios, the principal Gulf
port. or from San Jose, the chief Pa
cifc port, to Guatemala City. A rebate
on the unloading charges at the two
ports is also given the government by
the Agencia Maratina Nacional.
Under the arrangement for govern
mental sale and distribution of -four
imports from the United States began
in September, 1914, and up to this date
January 22), according to the Guate-
mala Minister of Fomento, $4,000
auintals of 100 pounds each have been
imported.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11

1875 pesos (ss12h United States cur
rency) per quintal. or 100 pounds: corn
is sold ut the rate Of 80 pesos tsl.2S
United States currency per quintal.
The designated official bakeries and
food supply stations are extensively
patroniscd. Guatemala raises some
wheat In the northern regions OF the
republic from which black or brown
ISL bread is made; but the quantity
30 produced is far from meeting the
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11
Reserve Affords
Investor Insurance

By using the average life of plant
units, determined from past expert
ence, as the basis for setting up the
reserve, the probability of losses due
to all factors which operated in he
past is taken into account and the
expenses are made to include the
proper proportion Of those probable
future losses. This method is the
insurance method. By means Of it
the investors capital is insured las
suming sufficient earnings) against
all losses which occur in accordance
with past experience. If insurance
were taken out against all of these
contingencies with independent in
surance companies, a certain sum
would be paid annually to the insur-
ance companies and included in the
expense accounts Of the operating
company and the insurance COM
panies would accumulate the reserve
from which TO meet the losses. In
case the operating company assumes
its own risks and provides reserves
to meet the losses, should not the
accounting procedure be the same?
That is, should not expenses be
charged annually with an amount
equal to the average annual loss
corresponding with the annual in
surance premium which would be
paid in the former case) and the re-
serve account be credited with the
same amount, in accordance with the
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11
South American Republics
finding Financial Legs
Investment Bankers in the United States Have
Been Slow to Replace Capital With
drawn by European Countries

connection with the same, it may 10
as well to point out that, taking the
bulk of return on capital, we hsy,
been able to show that this was b.
no means unsatisfactory. On a
calculation made in 1913 we proved
that the annual return on our monev
was equal to Al per cent, and even
in June, 1915, on a similar analysis
we brought out a product of 81 De,
cent, and it is probable that now.
amid the turmoil Of these terrible
times, it is not much below this
figure.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11

needs Of the people, and Gus'e@'. a,
dependent upon the United s's'''
its supply Of this staple, A
The annual report Of the N"n' "a,
Hacienda and Public Credi, show :
during 1915 Guatemala lmp''. .,,,a
total OF seas, 2ss kilOs Of four va i.
at $500 500 United States euT.e".' 4.
entire Importation coming ''s ~
United States. Flour is Oh Wv 81
list.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11
Aided Honestly but
Not Disinterestcdly

1t is generally expected that Ii,
severe financial displacement ana
dislocation resulting from the war
will appreciably-perhaps pro.
foundly-affect the future status Of
European investors in South
America, in which definition the
British representation holds largely
the premier place, though France has
it is said, placed about one-third Of
her capital invested abroad in Latin
America. 1t is well for us to realize
the value and importance Of our
stake in South America, apart from
our great commerce, and not TOO
easily relinquish our splendid trade
and financial acquisitions there,
gained by our push and energy and
with the good will, esteem and ad.
vantage of the peoples of the lberian
countries, whom we have aided, no;
disinterestedly, but honestly, to at
tain the firm foundation Of grest
future. They may learn many les
sons from the struggle between the
forces of those who have helped
them and the malign powers which
may threaten their integrity and
independence. There are great
issues involved in these considers
tions, and we believe that the re
publics are fully alive to future
possibilities arising out Of the con-
sequence of the war.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11

rFrom The South American Journal. LoHdoitl
"HE. times are not exceedingly
remote when the congeries
of republics in the southern
portion of the New World, known
as Latin America, were more or less
a geographical expression and little
familiar to the European capitalist
or investor. What repute belonged
to these countries was the evil one
of default or reputation of loans
made to the various governments
by certain financial firms and I'M
loaded by them upon the London
and Paris markets, and many OF
these are even now only placed on a
regular basis of service and &C
acknowledgement as the result of pro-
tracted negotiations and com
promise which have involved serious
loss of capital. AS regards these
old loan transactions, it may be
said, however, that they are now
practically compounded and the
countries concerned have for some
time been following a satisfactory
policy of meeting their obligations
under them, until these arrange
ments were disturbed by the abnor-
NAL conditions created by the out
break of the Great War.
Another and better era for South
America dawned some thirty years
ago, especially in regard to the
great considerations of Brazil and
Argentina and the Republic of Chile,
owing to the steady economic de-
velopment of these states, with their
vast natural resources, which began
to attract British capital IN ever
increasing volume. Commencing
with the capitalization of the rail
ways, this has been extended to many
branches of cooperative enterprise
until it attained vast proportions
and the Latin-American republics
became one Of the most important
departments of European invest
ment activity, whilst money was lent
to the governments of Brazil, Ar
gentina, Chile and Uruguay in gen.
erous measure on the credit of their
improved record of stable admins
tration and the realization of the
immense wealth available as guar
antee in the exploitation Of their
immense territories.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11
Flour Sold Below Cost.

The -four is sold by the government
to twenty designated bakeries or pan
aderias" in Guatemala City, and to
ten bakeries of Quezaltenango. 1t 10
sold to these bakeries at 1870 pesos,
Guatemalan currency, per quintaL
This is the equivalent Of 1926 United
States currency per quintal, or $3.50
United States currency per barrel, a
barrel containing approximately two
ountals. This is far below the cost
to the government, as imported -four
is worth go pesos, Guatemalan cur
rency, per quintal, or between sl2 and
SIS United States currency per barrel
in Guatemala City at this time.
The sale to the official bakeries is
in reality made at prices lower than
those named for the reason that when
exchange began to rise at the out
break of the European war n decree
was issued fixing the rate Of exchange
at % pesos for one United States dol
lar as the rate at which the govern
ment would sell -four to the official
and designated bakeries. This regu-
lation is still effective, although ex-
change is now fuctuating between 40
and Al pesos, Guatemalan currency,
for the United States dollar.
New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-02-11
Early Extravagances
Are Surmounted

The experience Of the capital thus
embarked has been fairly remuner-
ative and safe in the aggregate, as
we have often shown. There have
been vicissitudes and crises, of course
such naturally belong to the
economic history of new countries in
process of development-but the
troubles of phases of too rapid prog
ress, which induced extravagant
expenditure, have been satisfactorily
surmounted in most cases. That
they have required might reasonably
have been expected, and the fact
that such a crisis of economic and
financial embarrassment was in
evidence in the years just preceding
the cataclysm of 1914, which has by
it's consequences distorted all con-
clusions, did not imply anything
seriously amiss in the financial and
economic affairs of South America
or greatly disturb the confidence
of the European capitalist in its
eventual prosperous future and its
attractiveness as field for lucrative
investment.
At this juncture, up to 1914, TAX
ing British capital alone, really
impressive amount was reposed in
the security of Latin-American en-
terprise and national credit, reach
ing the vast sum of well over one
thousand millions sterling, computed
upon the valuation Of quotations on
the London Stock Exchange at that
date. This included, it is true,
Mexico. where, it must be admitted,
investors have had a most un-
fortunate experience since the fall
of the Diaz regime, and Cuba, which
is somewhat outside the sphere.
These two countries represented
some 9200,O00,000, but even elimin-
ating them the total is sufficiently
substantial to demonstrate the i'm
mense stake our capital has taken in
the destinies of the southern con-
tinent. To the various governments
about s279,0O0,O00 had been lent; to
railways, sS37,OOO,OOO; while in
miscellaneous enterprises some
sl61, 100000 had been embarked.
Since the outbreak of the war some
notifications have been made in
these figures, but we have no doubt
they substantially represent the ac-
tual position of British South
American investments. In consider
ing this consolidated aspect of our
investments, and also bearing in
mind some complaints Of loss In