The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1908-07-29
JUDGE TAFT ACCEPTS
IN LENGTHY SPEECH.
Continued From Page I.

would greatly promote business by en-
dpnng those anxious to obey the federal
Somnde of 20 ,n know Just what are the
ucal constructive and difficult work.
therefore, OF those who follow Mr.. Roose-
veit Is TO devise ways and means by
wnich the high level of business integ
rity and obedience to law which he has
established may be maintained and de-
partures from it restrained without undue
interference with legitimate business
Railway Traffic Agreements APP
proved by Commission Should Be
Valid.
1t is agreeable to note in this regard
that the Republican platform expressedly,
ana tne democratic platform implicitly.
approve an amendment to the Interstate
commerce law by which Interstate rail-
roads may make useful traffic agreements
II approved by the commission. This has
peel strongly recommended by President
roosevelt and will make for the benefit
or the business.
Physical Valuation Of Railroads.
Some Of the suggestions of the Demo-
cratic platform relate really to this sinh
ordinate and ancillary machinery TO which
nave referred. Take for instance the
so-called physical valuation of raiIwavs
IL Is clear that the sum of all rates or
receipts or railroad less proper ex-
penses. should be limited to a fair pro
III upon the reasonable value of its prop
cry and that IL the sum exceeds this
measure II ought to be reduced The diff
rculty in enforcing the principle is In as
certaining what Is the reasonable value
OF the company's property and in fixing
what Is fair profit 1t is clear that the
physicai value of a railroad and it's plant
IS an element to be given weight IN de
termining Its full value; but as President
Roosevelt In his Indianapolis speech and
tne supreme court have pointed out, the
value or the railroad as going concern,
including its good will due TO efficiency
or service and many other circumstances
may be much greater than the value of
IT'S tangible property and II Is the former
that measures the investment on which a
fair profit must be allowed Then too
the question what is q fair profit is one
involving not only the rate of interest
usually earned on normally safe invest
ments, but also sufficient allowance TO
make up for the risk of loss both of can
itai and interest in the original outlay.
These considerations will have justified
the company in imposing charges high
enough to secure a fair income on the en-
terprise as a whole The securities at
market prices will have passed into the
hands OF subsequent purchasers from the
original investor. Such circumstances
should properly affect the decision of the
tribunal engaged in determining whether
the total OF rates charged is reasonable or
excessive. To ignore them might so seri-
ously and unjustly impair settled values
as to destroy all hope of restoring conf
dence and forever end inducement for in
vestment in new railroad construction
which In returning prosperous times is
essential to our material progress AS
Mr. Roosevelt has said in speaking of
this very subject:
THE effect of such valuation and su-
pervison of securities cannot be retro
active. Existing securities should be test
ed Dy laws in existence at the time OF
their issue. This nation would no more
which
important part of the national wealth
than u would consider proposition 10
repudiate the national debt"
The question of rates and the treat
ment of railways is one that has two
sides. The shippers are certainly entitled
to reasonable rates; but less Is an in
Justice to the carriers. Good business
for the railroads is essential to general
prosperity. Injustice TO them is not alone
injustice to stockholders and capitalists
whose further investments may be neces-
sary Tor the good OF the whole country,
but it directly affects and reduces the
wages of railway employees. and indeed,
may deprive them of their places entirely
From what has been said the proper
conclusion would seem to be that in at
tempting to determine whether the entire
schedule of rates of a railway is exces-
sive, the physical valuation of the road
Is "A relevant and important but not nee
essarily controlling factor.
Physical valuation properly used will
not generally impair securities. j am con-
fident that the fixing of rates on the
principles suggested above would not ma
terially impair the present market values
Of railway securities in most cases, for
| believe that the normal increase in
value of railway properties. especially in
their terminals, will more Ghan make up
for the possible overcapitalization in ear
lier years. In some cases, doubtless II will
be found that disqualification is made
an excuse for excessive rates and that
they should be reduced: but the consensus
of opinion seems to be that the railroad
rates generally in this country are reason
ably low. This Is why. doubtless, the
complaint filed with the interstate COM
merce commission against excessive rates
are few as compared with those
against unlawful discrimination in rates
between shippers and between places OF
course, in The determination of the ques-
ton whether this discrimination is I'M
lawful or not the physical valuation of the
whole road is of little weight.
Conclusion That There Should Be