The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1923-03-10
SENATOR BROOK HART AS AN
AID TO WALL STREET

That the bill recently introduced
in Congress by Senator Brookhart Of
Iowa would, on the Senator's own.
theory. "transfcr from the Inter
state Commerce Commission to Wall
Street the power to make valuation.
Of the railway" is the view express
ed by the Railway Age in an cdi-
torial in its current issue. For IA
man who avows that he is attacking
Wall Street the Railway Age adds,
"thc Senator is the kindestman to
Wall Street that re ever heard Of
The Railway Age reaches its some
what surprising conclusion by tn.
following reasoning:
an introducing mis- bill Senate,
Erookhart said: Ny bill is designed
to break the hold Of Wall Street on
the railroads. Wall street could
have II hold on the railways only
through their securities.
Senator Brook hart had frequently
asserted that the total market value
Of railway securities in 100. when
the original tentative valuation was
made by the Interstate Commerce
commission. was only twelve billion
dollars, or about seven billion dollars
less than the tentative valuation.
We had assumed, therefore, that
when he introduced his bill it would
specifically require that the vaIua-
ton should be reduced by exactly
seven billion dollars.
"Instcad, it merely provides that
the valuation shall be continuously
based upon the value Of the sccuri-
ties. The best available measure
of the market value of railway Sc
curities is the prices. for which they
are bought and sold on the New
York Stock Exchange. On the Sena
tors own theory, the securities are
controlled by Wall Street Natural
ly, Wall Street wants high valua-
tors own theory Wall Street could
boost the prices, and obviously if it
could do so it would do SO. Tn.
higher the prices were advanced, the
more the valuation would have to
be increased. The sky would be the
only limit.
This method of evaluating the
railways has the merit of simplicity.
Under the law as it now stands, the
Interstate Commerce Commission
has been laboring for about nine
years to make an inventory of all
the physical properties of the rail
ways-land, ties, rails, track bolts,
ballast. yards stations. shops, cars
and locomotives and to estimate
their probable cost of reproduction,
less depreciation. Under Mr.. Brook
harris bill, the Commission would
be relieved of all tins oncrous labor.
First, it would have to make an cs-
innate of the vai;.e of all the out
standing securities based upon their
market prices at the time the law
went into effect or soon thereafter.
After having done that all it would
have to do to keep the valuation up
to date would be to put a stock
ticker in its office. A clerk would
sit at desk by the ticker with Il
lead pencil, and note every change
in market price that the ticker re-
corded. Every time the clerk re-
ported a change in market quota
tons, an entirely new saluatt,n
would lie made.
while this method of keeping the
valuation up to date would be simple
1t would not be without its difficult
ties and embarrassmcnts. 1t is pro-
bable that even il: spite of Wall
Street control the prices of sccuri-
ties would undergo from month to
month and year to year wide huctua-
tons. The consequent large changes
in the valuation would make necc5-
sary corresponding changes in rail
way rates. Every time there was Il
bull market on the stock exchange
railway rates would have to be add
vanced and every time there was Il
bear market they would have to be
reduced. But, Of course. if, as Sena-
tor Brookhart in effect proposes,
the power to make valuation or !
the railways is to be transferred !
from the Interstate Commerce Com
mission to Wall Street, the public
will have to bear such inconvcni-
rnces as will result. z.,,..
"Whcn the senatcss - sspen intro
duces bill which wotld have the |
effect, as we have shown it would |
have, of transferring from the In
Eerstatc Commerce Commission tv
Wall Street the power to put Il val.
iation upon the railroads, we deem
t only fair to warn his constituents
% keep an eye on him. The Railway
Age believes, however. he is sincere
y anxious to secure the adoption Of /
lcgi Station which would confscatc
large part of the value of the rail
roads, and throw most of them in.
% bankruptcy. These are, of course,
'e;y worthy objects but if Mr..
Brookhart is to accomplish them he
must change his bill. He cannot
'casonably hope to accomplish them
~ transferring from the Interstate
Commerce Commission to Wal!
Street the power to make the val
Iation of railways. Railway Age
ST, PAUL AT SIXTY-NINE