The Morning Tulsa daily world. [volume] (Tulsa, Okla.) 1919-1927, 1922-05-13
MAII,RED CAPITAL.

WATERt;D CAPITAL
A score OF years ago excessive capitalization
of Industrial concerns was recognized Of
tho great difficulties Of tho country. There was
much Talk lltte in the way OF practlcal oc-
oompllshment and tho issue displaced by
others less dis1uetlns 10 politicians.
But there has been no hour when it was not
of terrific Importance TO tho country ma It is
today ono Of the greatest OF our problems.
watored capital works a greater Injustice on
the nation and gives rise. directly or indirectly.
TO moro distress and unrest, than any other ono
cause. We encounter the phenomenon directly
only IN tho OF public utilitics--thosc con-
Germs over which the courts nnd government
take Jurisdiction for the purpose OF fixing
rates; and we feel It here kecnly because tho
courts hold that such concerns must he accord
cd n rate sufficient to permit earning
their active capital. Yet tho doletcrIous effects
Of watcred capital are kceniy felt in all indus
trial and commercial organizations
when any Industrial enterprise is capitalized
IN excess Of tho actual cash necessary 20 ostab
Ilsh It and make of It n going concern. some-
thing In tho nature of imposition has been
practccd the public Because II Is the
public which Is required TO give valuo to this
excess capitalization ana pny dividends on ~
an unwilling tribute which makes rich mon
out OF promoters and does not add TO tho value
OF the thing the public In paying for.
II n gas company, or n railway company. or
a telephone company--all OF which public
utilities and subject 10 the paternnl protection
Of courts and corporation commissions-rur-
chase additional properties paying part cash
CASUALLY about tho fun actual value OF the
property Doughty and stock bonus consisting
of n largo block OF stock figured at from 80 20
so cents on the dollar. n deliberate conspiracy
has been worked on the public which patronizes
such public utility; because tho only possible
value this excess stock can have must como
through tho increased rates the public utility
is allowed to charge after an appeal TO either
tho corporation commission tho courts.
This pyramidIng OF capital stock has be-
come tho common practice OF both public utili-
ties and private enterprises. During tho war
tho doubling and trebng OF capital stock was
of almost daily occurrence among those con-
Germs engaged in the so-celled war industries.
why2 Simply because the inexcusablo profits
hnd become so terrifically great that the di-
rectors felt they dare not continue TO distribute
them on tho original capitalization, 81 doubled
or trohled tho capitalization for the purpose of
reducing tho size Of the dividends
In no case there a reduction OF the
price charged tho government. That would
have been uuorthodox. Yet the government
was fighting for its life and these various in
terests were plling high their holds with gold
and their stocks were In such demand that
through tho market changes from day to day
a crop OF new mlllionaires was created which
exceeded anything previously recorded ir
history.
And one of tho reasons why prices stll rule
high all along the line, is because these war In
flatlons ARE stll IN existence In tho case o.
public utilities. the various corporation com
missions. their equivalents or tho courts o
the land. arc permitting them to increase the
high prices that dividends may bo paid on thi
excess capitalization. and that their stocks ma,
be maintained at profitable figure on III,
curb or stock exchange. IN the case of privat,
cohccrns, the excess capitalization. which nove
had anything supporting It save tho opportu
nifty FOR collecting dividends on It. Is being main
talned by sort OF gentlemens agreement tha
prices will be maintained on n level which will
pay interest on said excess capitalization.
The great difficulty is found in the fact thai
I'm every ono OF these capital increases soyora
milllonaires have been made. tho stock which
made them such constituting mortgage on tn,
future earning power OF the people and hav,
ing been sold several times is tucked away IN
innocent hands sort OF fungus growth on the
productive powers OF tho people taking VI
nomishment ana giving back not thing in re.
turn.
Yet water capital must be removed from ex
listing indusrials and ITS creation IN the futur,
made impossible. before anything resembling
justice can bo done for the great mass OF cit
izenshiP 1t bears wages and bulls living costs
II eentralzes more ana more the power whcl
controls the finances of the nation. 1t tends t,
.A,
Y process which makes few men unjustitiabl
and dangerously wealthy and many men un
Justifihbly and dangerously poor; thus brlnEin
closer that inescapable conflict between the FEY
and the many which is certain to come whe
N the nations resources shall have fallen com
pietely under the control Of mere handful c
mon who can spend in idleness. ease and riotou