Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-28
MEN AND MONEY
BY NJ. S. Rukeyser.
Downright. 1927
tCopyright. 1927

ny VI. -. HukeySer.
| tCopyright. 1927
| The latest Supreme Court utterance
! IN the matter of railroad valuation
may quicken the movement toward
| consultations and mergers.
Wall Street frequently goes wrong
| as ii did last week, in trying to come
| to snap judgment concerning the sig
nificance of complicated Supreme
Court decisions. The speculative com
| munity momentarily became panicky
when the Supreme Court upheld the
right of the Interstate Commerce
| Commission to value railroad property
The court dealt mainly with the
question of the procedure. In the Los
| Angeles Il Salt Lake Railroad case, the
highest court overruled the earlier de-
ciSion Of the Southern District Court
of California. which had the effect of
annulling the Interstate Commerc.
Commission's valuation of the railroad
property and forbade it's USE for any
purpose. The Supreme Court, in sus-
tanning the commissions right to fix a
valuation, pointed out that the rail
road could properly contest the ade-
quacy of the figure arrived at when
and If the commission makes practical
making or recapture purposes.
Related to Mergers.
This whole question is directly re-
lated to the question Of mergers.
Under the present scheme of rail-
reading. rates are to be fixed at a
level which will permit geographical
groups of railroads TO earn fair re-
turn on their property value Gas de-
termined by the |. &. c..
Under uniform rates, strong rail-
roads earn more than a fair" return
and weak roads less. The transpor.
cation act OF 1920 provides that one
half of the earnings by strong roads
In excess of per cent on property
value should be turned over to a
Government revolving fund. which
should be available as loans to weak
roads.
Here is the bearing on the question
of mergers:
The program of consultations con-
templates the linking up of strong
and weak roads.
The recapture situation gives the
strong roads a. motive for absorbing
the weak, because they can pool their
property values and thus DEFER the
time of recapture of earnings. For
example, the Chesapeake & Ohio Rail
road in 1926 earned between and 10
per cent on estimated property value
Earnings equaled about SEA share
on the common stock before recap
ture. and about $12 a share after re-
capture on the basis estimated. me
Erie, on the other hand, which the
Chesapeake & Ohio is seeking to get
control of. earned less than a fair re-
turn on it's estimated property value.
It's shares are selling on the open
market below the estimated property
value. One advantage to the Chesa-
peake of stock control of the Erie
would be to avoid recapture OF earn
ings.
Would Have Checked Movement.
IF as superficial Wall Street specu-
lators had assumed, the Supreme
Court had upset the whole theory OF
recapture, the merger movement
would have been seriously checked.
for the strong roads would nave Deen
denriyed of one of the. chief motives
for acquiring the weak.
A career of idleness is apparently
going out of fashion in the Uniteu
States One after another daughters
of the ultra wealthy are taking up use.
ful work. Following the example OF
an older sister. Natalie, VINO mas
worked for three years as panklIs
statistician, Miss Mary Belin du Font,
2O-year-old daughter OF Lammot gu
Pont, president of the great r: l.. du
pont de Nemours Co. of Winning
ron Del. has started her duties as
probationary nurse at. the Johns. HOP
kirs HOSPITAL at Baltimore. Ihese
tendencies indicate that there Is some
thing in work besides the direct none
tary reward.
This trend is interesting in connec'
tion with the recent observation AFTER
a trim to the United States by fro1'
Gilbert MURRAY of oxford University,
that the American workingmen 40
more credit to their country than the
wealthy who travel in Europe.
81 think we in England. SAID the
British savant, do the United states
a deep wrong when we say tnat Amer
leans are ill hammered and unclviiiIeo.
We never see the naro'wo, hii,S
masses by whom the Nation should
he Judged. but only the very rich
America Freeing Itself.
n IL Cheney, New York banker,
asserts that America is freeing itseii
from denendence on French styles.
In the field of blue sky promotions
we clearly set our own fashions.
II 7. Kenner, manager of the BET
ter Business Bureau of New YORK
l'City, in commenting on this subject
said: tic. ;,,s.
&C annare1 fashions change. Design
ers of devious and subtle ways to
beguile the unwary have found new
mode in the 'tipster' sheet. To the
professional stock swindler this de-
vice. besides being potent. holds the
hope of evading the penal law. al
Boston and at New York, in late
months. over a dozen 'tipster' publ
cations have sprung into existence
They purport to give disinterested
stock market information and invest,
ment advice, but actually they intend
to influence the purchase of particular
securities in which the publisher Is
interested and from which he hopes
to profit enormously. BY pretendins;
to expose abuses. to give impartial
ANALYSES of security offerings, to fore
GA st market movements and to defend
the general investing public from