ELEVENTH ANNUAL YEAR BOOK — PART IV. 171 



whatsoever on any controversy pending before the Interstate Commerce 

 Commission or any other tribunal; in fact, both were made before this 

 case was brought. As a result of these statistics, made by wholly disinter- 

 ested parties, we find that the average market prices of commodities at 

 wholesale during the past ten years has increased about 11 per cent, and 

 the average market prices of the five representative express, steamship and 

 telegraph companies increased about 64 per cent, while the average mar- 

 ket price of the forty transportation companies increased 106 per cent. 

 This is a remarkable demonstration that the railroad business has been 

 profitable in the eyes of the shrewdest, brainiest men of the country, those 

 men who are willing to back up their judgment with hard cash aggregat- 

 ing millions of dollars annually. These men have stated in the market 

 places of the country that in spite of the fact that commodities have ad- 

 vanced in price, yet railroad stocks have advanced even more rapidly than 

 the prices of commodities, and far more rapidly than the stocks of express 

 and telegraph companies. 



During the next few weeks you will see lengthy statements in 

 newspapers ahout the situation this month and that month, or in 

 this or that period of four or five months. That is not fair. Rail- 

 road business is like all other industries: there are the ups and 

 downs, the hard times and the good times. Here and there will 

 be times when the market prices are down. Speculators now and 

 then will be able to determine the price of any given commodity 

 at any time, or of any railroad stock or industrial stock. Do you 

 know what that speculator is trying to do? He is just trying his 

 level best to find out what the permanent investor is going to do, 

 and his success in the market places of the country depends on his 

 ability to determine that. A long series of prices over a long 

 period of time on a representative bunch of industrial and railroad 

 securities tells in unmistakable terms the judgment of the permanent 

 investor. 



I tried to account for the fact that the market prices of stocks 

 had gone up, while the market price of bonds had gone down. 

 In no periodical publication in the entire country did I find any 

 suggestion on that proposition, and so I wrote to a large number 

 of prominent authorities for their explanation ; and finally I learned 

 from the Massachusetts commission that made an investigation 

 into the cost of living and reported during the year 1910 that they 

 attributed the decline in value of bonds to the increase in the gold 

 output of the world. They said nothing whatever about the market 

 value of stocks, and at first blush it seemed to me that if there was 

 an overproduction of gold, it ought to have the same effect on 

 stocks as on bonds; and practically the same idea has occurred 



