The New York herald., 1921-10-03

had not the weather even caused sew.
eral Englishmen to go shamelessly
about without their 'weskets"? Then
what was the necessity for believing
what some foolish editor probably
had printed just to furnish differ
ent sort of sensation and put the
weather in the background Of con
versation for once at least?
But the English investor had seen
the joke too readily. The rub really
was on him, unbelievable as the fact
had seemed at first. The afternoon
Papers confirmed the disastrous news,
and by the end of luncheon the Eng
lishman was taking his port and the
Grand Trunk situation seriously.
The Office of the company in London
was deluged with inquiries, and the
jobbers on the floor of the Stock Elk.
change were kept busy with selling
orders.
1t proved true that no value was
given to the securities under the ar
Sitration award The majority mem
bers of the arbitration board, Sir
WALTER CAssELs and Sir THOMAS
WHITE, declared in favor Of "compas-
sionate allowance" in order not to
wipe out the entire investment of the
owners of these shares. Mr.. TAFT,
now Chief Justice of the United
States, was the third member of the
board. He submitted minority re-
port against adjudging valueless the
four classes of shares.
On the strength of this minority
report the shareholders are encour-
aged in the belief that an appeal to
the Privy Council may be successful
In some degree. But the whole mat
ter is one in which no hard or fast
legal principles can be followed. The
majority report says that il the road
had been let alone to drift for itself
the result would have been bank
ruptcy and the disappearance OF the
equity behind the shares.
But Mr.. TAFT dissents from this
view by saying that the bondholders
might have come to the roads as
sistance as they did i'll 1860, and
bankruptcy might have been avoided.
He further asserts that it is irnpos-
sible to set value, or lack Of
value, ON any railroad at a given
moment, as was done in this case,
because the railroads fortunes may
suddenly or gradually change and
the valuation then be wrong.
London views the decision with ap-
prehension because, according to
the Economist, it shows that the
Dominion is turning to the United
States for capital to develop rail
roads and other enterprises and feels
under no pressing obligation to go
out Of the way to preserve Canadian
credit in London. In Canada the
opposite view is taken and the fear
is expressed that If the Judgment is
allowed to stand great harm will be
done Canadas credit in London and
she will have no place else to apply.
According as one views with dis
pleasure or approval the policy Of
fixing on innocent stockholders tho
penalty for the mistake Of the board
OF directors in undertaking the ruin
GUS Grand Trunk Pacific project,
which the Government could have re-
strained but did not, in the same de-
gree the majority award of the arbi-
tration board will be either loath-
some or justifiable.
The British investors describe the
award as confiscatory. They might
have swallowed the pill with less
complaining il it had been one of
their Canadian cousins, instead of
the American member of the board
of arbitration, who dissented. In
this case blood was no thicker than
watered stock.