The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-05-31


in contribution to national growth and
development.
Physical Valuation.
Ample provision should be made bI
| congress to enable the interstate COM
| merce commission, by the emnlovment
| OF a sufficient force of experts, to I'M
dertake the physical valuation of each
| and any road in the country, whenever
and so soon" as in the opinion of the
commission such a valuation of any
road would be of value to the com
mission in its work There are un-
| doubtedly some roads as to which it
would be an advantage, from the
standpoint of the business of the com
mission, to have such physical valu-
alton as soon as possible.
AT the outset let it be understood
that physical valuation is no panacea /;
it is no sufficient measurement of a
rate; but it will be ultimately needed
as an essential instrument in admins
trative supervision. It will be of use
to the commission in connection with
the duty of determining the reason
abieness of future capitalization, both
as one element to enable such a body
10 come to a right conclusion in the
matter, and also as an element to be
placed before the investing public, TO
enable this public in its turn to reach
a conclusion; though of course capt.
taliZation must be determined in large
measure by future need rather than
past investment. How important
of the factors to assist in fixing equit-
able rates 1 am not able to judge; but
that it will be of a certain Importance
can be safely assumed because of the
opinions of the interstate commerce
commission and of the courts, and be-
cause of the recent action of the
Northern Pacific railroad in advance
ing such a physical valuation as de-
cisive on its side in rate controversy.
Such a valuation would necessarily
help to protect the railroads against
the making of adequate and unjust
rates. and would therefore be as inn
portant from the standpoint of the
protection of the railroads as from the
standpoint of the protection of the
public; and of course it is necessary
to the enduring prosperity and de-
velopment of the country that the
railroads shall yield reasonable profits
to investors. 1t is from one stand
point quite as important to know the
original cost of the building of the
road as to know what 1t would now
cost to reproduce it; from another |
standpoint the human equation-thatl
is, the management of the roads
more important by far than the phys |
ical valuation; and the physical valua- |
ton of the road in one region may |
have an entirely different relation to |
the real value of the road than in an |
other region where the conditions are
utterly different. Therefore the phys |
ical valuation can never be more than
one of many elements to be consider
ed; but it is one element. and at times
may be a very important element,
when taken in connection with the
earning power franchises, original
cost. character of management, loca-
ton and business possibilities, in
reaching an estimate on the property
and rights of a corporation asa going
Not Retroactive.
The effect of such valuation and SUI
oervision of securities. can not be re-
roactive. Existing securities should
De tested by the laws in existence at
he time of their issue. This nation
would no more injure securities which
nave become an important part of the
,ational wealth than it would eonsld-
IT a proposition to repudiate the pub
ic debt. But the public, interest re-
luires guaranty against improper null
iplication of Securities in the future.
reasonable regulations for their is
uance should be provided, so as to
ecure as far as may be that the pro-
leeds thereof shall be devoted to le-
Ultimate business purposes. In pro-
-iding against overcapitalization we
hall harm no human being who is ;
lonest; and we shall benefit many, for
,verca pitalization often means an in
ation that invites business panic; 1t
lways conceals the true relation of
he profit earned to the capital in
ested creating a burden of interest ]
'ayments which may rebound to the
0ss alike of the wage-earner and the !
eneral public. which is concerned in
he rates paid by shippers; it dam !
ges the small investor, discourageS
hrift, and puts a premium on gam
ling and business trickery. {
There is an essential difference be-
ween private and quasi-public prop {
rty which justifies setting somewhere E
limit beyond which the accommodating '
alue in quasi-public properties. due I
, the necessity of growing COM I
NIT 1 iraI
One of the most important features I
f the Hepburn act is its having given {
ne commission absolute control over g
he accounts of railways. The com
Mission has just issued an order to the |
fleet that on July 1 next all the rail- '
-ays of the country subject to the
lrisdiction of the commission must '
their accounting methods, Z
nd the commission is now organiz- l
lg a bureau of special examiners, t
hose duty it will be. among other
lings to see that the books of the |
arriers are kept in conformity with :
lie rules laid down by the commission. !
hus the means are already at hand !
nd the machinery already created
hich, when perfected. Will put the !
ublic in position to know the facts. so !
lat the small investor can exercise
n intelligent Judgment when entrust-
lg his money to the promoters of =
reat railway enterprises. We hope as
ne of the chief means for betterment '.
{ conditions to secure as complete =
ublicity in the affairs of railroads as q
ow obtains with regard to national G
anks. u
There need be no fear on the part n
Z investors that this movement for 8
ational supervision and control over a
will be for their detriment. +,
they doubt this. let them study the +,
lstory of the railway-contro1 move f.
ent in such a state as Iowa. 1t would
= hard to find anywhere a more pros
arous or more intelligent community: !
community of thriving farmers and -
irving townspeople. Iowa did its y
I,ar the h11sira that de- 4