The Advocate and news., 1898-03-16
CURRENT DISCUSSION.
By EX-SENATOR PEFFER.

reasonable returns on the Investment,
Is equivalent to taking property for pub
hc use without just compensation and
without due process Of law, in violation
Of the constitutional provisions on those
points.
Courts have always held that what
was reasonable compensation, when the
question is disputed is matter for judi
Cial determination, and there has not
been any strong criticisms Of the hold
| ing.
But there Is, there has been, and there
will be objection to the courts including
bonds in their estimate of the invest
ment upon which to determine whether
the compensation is or is not reason
| able. Put Chauncey M. Depew, or George
Could or any experienced railroad man
on the witness stand and ask him what
would be a fair valuation Of all the rail
road property Of the United States, by
the mile of roadbed, and he would prob
| ably put 1t at just about what the stock
of the various companies represents, and
that would not be unfair to the stock
holders, because they, themselves, have
| determined that they thought the stock
was worth all they paid for 1t or they
would not have bought it,
The latest reports sent out by the In
terstate Commerce Commission giving
| railway statistics, cover the fiscal year
ending June 30, 1897, and they show the
amount OF railroad stock held by the
shareholders who own the railroads OF
! the United States Is estimated by the
railroad people themselves to be worth
$5,226, ,527 ,269, which is about $50, 900 to
the mile of line.
Taking this as a fair valuation per
line of road, the court would be justified
in holding the Legislative jurisdiction
within that limit in fixing compensation
to the carrier, and the people would not
complain. Railroads are listed for taxa
tlon at much lower valuation. In Kan
sas the assessed valuation of railroad
property is about $500 per mile.
But the courts do not stop at the value
Of the shareholders stock. They allow
the companies to include their debts in
their capitalization, and permit them to
charge their patrons enough to pay
profit on not only the value Of the own
ers' interest in the property, but also
enough to pay interest on what they
owe, The Indebtedness Of roads amounts
to more than the stock is worth. The
| funded debt at latest reports was $780,
1893 ,502, consisting Of bonds, $4,517, ,S72,-
063; income bonds, $314, 1877, and
equipment trust obligations, 5O,3O4, ,931.
This does not include $6130OO,OOO cur
rent liabilities, an item which has al
ways heretofore been included in the
/ capitalization, and there is but little
doubt but that the courts will allow it
| to be included in the future whenever
they have opportunity to do So
Adding the funded debt to the stock
account, we have the entire amount of
capital which the court includes in the
estimated value Of the companies in
vestent. This, then, is the statement:
Capital stock. k.............S 5,226, ,527, 1863
Funded debt .......... 5,34O, 1888, ,5O2
Total ...............$10 SIC, ,566, ,S65, I'll
That is equal to $59,61O per mile of
line, which Is twice as much as the
| stock alone represents.
Briefly, then, the case is this: The
railroad property Of the United States is
worth (according to the stockholders
estimate) $4,000, 900, 900, in round fig
ures, and this valuation is fair and
just basis on which to calculate the
compensation Of the carriers; but In
stead Of taking bhis as the basis, the
courts allow as much more In order to
raise interest on funded debt. And
In this connection it is to be remem-
bered that the bondholders do not want
present payment Of the money theyhave
invested in the railroad bonds. What
they do want Is the semi-annual inter
est promptly paid, and the courts are
keeping the way open for that to be
done.
The injustice of this proceeding Is
seen at a glance, but the remedy lies