The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1919-11-05
RAILROADS AND
WATEAE Cd STOCK
by HOLLAND

bS tsOLIARO
New York .Li-r l.-fSpec.aN-One
of the arguments upon which reliance
Is placed by those who, like Mr.. Plumb
and others, seek radical changes in the
relation of the railroads to the people.
to the stockholders and the government
IS based upon a statement that many If
not all of the railroads of the United
States are over capitalized Some years
ago an article was published which APP
Feared to have been carefully prepared
in which a plausible denonst4 alton was
made that the Southern tactic railroad
at the time {. p. Huntington was con-
structlns it was so heavily capitalized
that at least % per cent of it repre-
scented water. Therefore, it was argued
that those who bought transportation
or paid passenger fares upon this rail
road were charged excessive rates in
order to prov de funds with which to
sustain the credit and pay dividends.
Whether or not Mr.. Huntington did at
the beginning over capitalize that prop
erty is question to which a satisfac-
tory answer has never been given. Re-
cent developments, however indicate
that in comparison with the actual value
and the lurking or estimated value of
the property incluging its oil holdings
the capital of this great corpoi alton does
not begin to represent its value. Ii there
was water at the beginning in it this APP
parentiy has been squee ed out. The late
Abraham S. Hewt tt, who was profound
student of all economic conditions in the
United States and master mind in the
iron and steel industry, was accustomed
to say that unless there were fraud in the
issue of stock then not much attention
need be paid to the infusion of water
into it, since that ultimately would be
drained out or else the increased value
of the property would much more than
make good the infusion OF water.
AT the present time the government Is
undertaking a difficult laborious and
necessarily prolonged investigation for
the purpose of learning what real value
or in other words the true valuation of
the railroads of the United States is.
The Investigation must continue per-
haps for thre or four years. But already
! it has gone far enough to Justify the in
ference that ultimately it will be dis
over-capitaliTed hut in fact under-capi-
States as a whole are not over pital-
lied, a few may be found to he capi-
talized, is furnished by the testimony
these are unimportant roads.
! One of the best evidences OF the fact
that the railroads of tire United States
are in all probability not as whole
over-capitalized but in fact under-capi-
tailized is furnished by the testimony
recently given by Martin S. Decker. Ne
! is regarded as a man of very high
authority He served for a time as a
member of the interstate commerce com
mission, and later was a member of the
public sevice commission of New York
state. Mr. Decker at one of the hearings
that the House committee on interstate
and foreign comerce that in his opinion
very few railroads in the United States
! will be found to be today over capital
| lied.
/ In the course of Mr., Decker's testi-
mony he is quoted as having said that
the Ere railroad was formerly spoken of
as furnishing one of the best example 4
| OF the injection OF water into capita
stock. That may have been true at the
thine when James Fisk was using the
! printing press In order TO increase the
capital stock of Ahe Erie or Its securi
Ties. but Mr.. Decker thinks 1t Is not
true now,