The Washington herald., 1921-07-31

in the wrong direction and toward speculation
instability and confusion OF the public mind
declared Joseph B. Eastman, member OF the Interstate
Commerce Commission. in dissenting opinion last
week in the case in which the commission recently
authorized the FL Paso and Southwestern Company to
issue 10000 shares of capital stock without par value
.The reasons advanced for the issue OF stock with
no par value may briefly and fairly be summarized as
fear that the outstanding value stock may operate
as a restraint upon in fixing the value OF the prop
ery plus desire be able to increase dividend pay
ments in aIiess conspicuous way than is now possoie
No reasons of more substance than these are offered
and no claim is made that the existing par value STOCK
has in any way hindered the development OF the COM
pany or checked its prosperity.
"The petition might well be dismissed for failure
to make case. but there are positive reasons tor
denial OF late a strong movement has developed IN
favor of the issue Of stock without par value by rail-
roads and public utilities II is think. significant
that this movement has conceded with the rapid
growth OF public regulation of security issues Whether
or not stock with no par value desirable in the case
Of ordinary industrial enterprises do not undertake
to say but entertain little doubt that far as public
service corporations concerned. is the manifesta
ton Of unseund tendency subversive OF the public
interest '~',g = r. D..
sThose who favor par value are wont to say
that stock with par value is misleading because par
value of the property. But is misled, for it has
been well and commonly known for many years that
par value and actual value not the same thing,
The theory Of par value is only that represents cash
or its equivalent that has been invested in the property
The trouble in the past has been that loose and
perncious corporation laws have made this true merely
in theory and hot in practice Now that these laws
are being corrected have the movement in favor OF
stock with no par value.
"My conviction is that the doctrine of so-caled
value full of pitfalls and that the path to soundness
and stability in public service corporation finance
under private management lies instead in the recogni
tion and protection of investment honestly and pru
IDENTIFY made The Distinguishing feature of public
service corporation is that it is monopoliste in nature
and entitled to make only just and reasonable charges
for its services Those charges just and reason
able which in the aggregate meet the reasonable cost
of the services, including in that cost sufficient
return fuctuating need be with changing conditions
upon legitimate investment to induce continuing in
flux of necessary capital If such charges per-
mitted, no claim Of conhscaton possibly be
sustained ...
"Undcr public regulation investment is thing
definite, certain and easily ascertained. So-called
value, the word is now used in railroad and
public utility circles is thing of uncertainties
tradctions arihciaties metaphysical subtes absurdi
tics and opportunities for public plumber. l fully
persuaded that is desirable and in the public interest
that outstanding capitalization should represent
nearly as practicable legitimate investment and that
the return upon the investment should clearly appear
without disguise OF any sort We are long distance
from that now, but at least move in the right
direction. Stock without par value in my Opinion is
step in the wrong direction and toward speculation
instability and confusion of the public mind"