Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-03-29
MEN AND MONEY
BY NJ. S. Rukeyser.
Copyright. 1877

In these days of open covenants
| openly arrived at" the race of silent
| men in Wall Street has been thinning
out.
And yet powerful figures, who re-
main in the background and eSchew
the opportunities of the limelight, are
in many instances individuals of great
influence in shaping financial events.
AS Clare Briggs would say, / wonder
what a silent financier thinks about
Here Is what one outstanding indus
tT1al1st, who never is formally inter
viewed, thinks about the passing show
in business:
IF corporations logically followed
the full implications of Prof. w. z.
Ripley and others in respect to public
lty as to cooperate affairs. they
would be unabla to sell stock when
unfavolable developments ocur, on the
one hand. and their securities would
DE subject to exaggerated upward
movements, on the other, when favor
able facts were disclosed. Our com
pany simply publishes an honest, un-
doctored balance sheet once a year,
and from it the discerning observer
can make up his mind whether the
corporation is progressing. Further
detail would be surperfluous and might
be entirely misleading, because at
present conditions in the business
world are changing with startling
rapidly.
Has Invested Capital.
Corporations, which give encyclo-
pedlc information in their reports to
stockholders. sometimes withhold es-
Sential information. For example, one
corporation, which is widely held up
as model, does not stress the most
significant fact concerning its affairs.
namely, that over q period of years it
mas invested an unduly large amount
In Xix capital per ton output.
There is too much talk about the
eHect of wages on business. Wages.
1t seems to me, are less important
than the proportion of capital invest
ed in plant and machinery. Wages
can be stopped when times are bad.
nut fixed investments cannot be dis
charged and remain a charge through
thick and thin.
Another corporation, which is
widely praised for the fullness of its
hnanclal reports, persistently reports
inadequate charges for depreciation
ana obsolesCence and thus pads it's
reported earnings.
This fiexibility in respect to depre-
citation charges gives wide SCOPE to
corporation presidents disposed to
financial jugglery. For example one
corporation makes it rule to report
no depreciation charges in wears of
recession when it's plants work only
% per cent of capacity AS q matter
OF fact, depreciation is likely to be
heavier In such years than in periods
Of full activity.
Plants Out of Date.
Moreover, corporations which wish
TO initiate their earnings overlook the
sWlttness with which plants and
equipment get out of date in this
miraculous period Of new inventions
and more efficient methods. For ex.
ample, corporation puts. up a build
ing, which its engineers estimate will
last 20 years. Accordingly, the com.
pany will charge off from 8 to 5 per
cent a year for depreciation, ignoring
the fact that in five years it NAV be
our or date. Some companies instead
or scrapping obsolete machinery and
plant equipment, continue to use
them on the theory that they cannot
afford to replace them with new and
more modern facilities. That policy
leads eventually to financial decay.
Real success depends on a Willingness
to keep abreast of the development
of the art.
The New York Stock Exchange
ought to set up rules to prevent listed
from juggling accounts.
1t ought in particular to set up stand.
ards for depreciation. Meantime, in
reading financial statements of a cor
poration, the investor should com
pare depreciation allowances over a
period of years with those of other
engaged in the same activity.
However, any kind of regulation
OF business is likely to be imperfect,