New-York tribune., 1908-07-29


if the sum exceeds this measure IL ought to be
reduced The difficulty in enforcing the prin-
ciple is in ascertaining what is the reasonaoie
value of the company's property and IN fxlns
what is a fair profit Ii is clear that the physt-
cal value of railroad and its plant is an ele-
ment to be given weight in determining its full
value; but as President Roosevelt in his Indian
epolis speech and the Supreme Court have in
effect pointed out. the value of the railroad as
going concern. including its goodwin, due TO
efficiency of service and many other clrcun-
stances may be much greater than the value of
its tangible property ana IL is the former tnat
measures the investment which fair profit
must be allowed. Then, too the question what
is fair profit is one involving not only the
rate OF interest usually earned on normally saIe
investments, but also a sufficient allowance to
make up for the risk of loss both of capital and
interest in the original outlay These considera-
tons will have justified the company in mpos-
/ ing charges high enough to secure fair income
the enterprise a whole The securities at
market prices will have passed into the hands
of subsequent purchasers from the original in
vestors. Such circumstances should properly
affect the decision Of the tribunal engaged IN
charged is reasonable or excessive. To ignore
them might so seriously and unjustly impair
settled values to destroy all hope Of restoring
confidence and forever to end the inducement
for investment in new railroad construction
which, in returning prosperous times. Is sure TO
be essential to material progress. AS Mr.
Roosevelt has said, in speaking Of this very
subject
The effect Of such valuation and snPHTen se6E Gf
ties should be tested by laws in existence at the
time of their issue. This nation would no more
part OF the national wealth than it would consider
d proposition to repudiate the national debt
The question of rates and the treatment of
railways is one that has two sides. The ship
pers certainly entitled to reasonable rates;
but less is an injustice to the carriers. Good
business for the railroads is essential 10 gen
eraI prosperity. Injustice to them is not alone
injustice to stockholders and capitalists. whose
further investments may he necessary for 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 en-
tfrely
From what has been said. the proper conclu-
sion would seem to be that in attempting to de-
termne whether the entire schedule of rates of
a railway is excessive, the physical valuation
of the road is relevant and important but not
necessarily a controlling factor
Physical Valuation Properly Used Will Not Cen
orally Impair Securities.
I am confident that the fixing of rates on the
principles suggested above would not materially
impair the present market values of railroad
securities in most cases. for L believe that the
normal increase in the value of railroad proper
ties especially in their terminals will more than
make up for the possible overcapitalizat1on IN
earlier years. In some cases. doubtless 1t will
be found that overcapitalization is made an eX-
cuse for excessive rates, and then they should
be reduced; but the consensus of opinion seems
to be that the railroad rates generally in this
country are reasonably low. This is why, doubt
less. the complaints filed with the Interstate
Commerce Commission against excessive rates
are few compared with those against un-
lawful discrimination rates between snip
pers and between places. OF course, in the de-
termination of the question whether discrfmina-
ton is unlawful or not. the physical valuation
Of the whole road is of little weight
Conclusion That There Should Be Physical
Valuation.
I have discussed this, with some degree Of de-
tall, merely to point out that the valuation by
the Interstate Commerce Commission Of the
tangible property of a railroad is proper and
may from time to time be necessary in settling
issues which before them,
that no evil or injustice from valuation
in such cases, if 1t be understood that the
suit is to be used for just purpose, and the
right a fair profit under all the circumstances
of the investment is recognized The Interstate
Commerce Commission has now the power to
ascertain the value of the physical railroad
property If necessary in determining the rea-
sonableness of rates. IF the machinery for doing
so is not adequate, as is probable. 1t should be
made so.
The Republican platform recommends legisla-
tion forbidding the issue in the future OF inter-
state railway stocks and bonds without federal
authority 1t may occur In such cases that the
full value of the railway, and, an element
thereof. the value of the tangible property of
the railway would be a relevant and important
factor in assisting the proper authority to deter
mine whether the stocks and bonds to be is
sued were to have proper security behind them.
and in such case. therefore, there should be the
right and machinery to make a valuation of the
physical property.
National Control of Interstate Commerce Cor
poration.
Another suggestion in respect to subordinate
and ancil1ary machinery necessary to carry out
Republican policies is that of the incorporation
under national law the licensing by national
license or enforced registry of companies en-
gagged in interstate trade. The fact is that
nearly all corporations doing a commercial busi-
ness are engaged in interstate commerce, and if
they all were required to take out a federal
license or a federal charter the burden upon the
interstate business of the country would become
intoerabe.
Should Be Limited TO Small Percentage by
It is necessary therefore. to devise some
means for classifying and insuring federal
perVision Of such corporations as have the power
and temptation to effect restraints Of interstate
trade and monopolies. Such corporations con-
stitute very small percentage of all engaged
in interstate business.
Mr. RooseveIt's Proposed Classification.
With such classification in view Mr.. Roosevelt
recommended amendment TO the antitrust
law. known as the Hepburn bill, which provided
for voluntary classification, and created a
strong motive therefor by granting immunity
from prosecution for reasona BILE restraints of
Interstate trade to all corporations which would
register and submit themselves TO the publicity
regulations of the Department of Commerce and
Labor.
The Democratic Proposed Classification.
The Democratic platform suggests a require
nent that corporations in interstate trade hav-
ing control of % per cent of the products in
which they deal shall take out federal license
This classification would probably include a
great many small corporations engaged in the
manufacture of special articles, or commodities
whose total value is so nconsiderable that they
not really within the purview or real evil
of the antitrust law.
It is not now necessary. however, to discuss
the relative merits of such propositions but fl is
enough merely TO affirm the necessity for some
method by which greater executive supervision
can be given to the federal government over
those businesses in which there is temptation
to violations of the antitrust law