The Bemidji daily pioneer. [volume] (Bemidji, Minn.) 1904-1971, 1908-07-29
JUDGE W. n. TAFT.

tanned, By which the lawbreakeFs may
be promptly restrained and punished,
but which shall operate with sufficient
accuracy and dispatch to interfere with
legitimate business as little as possible.
Such machinery is not now adequate.
Physical Valuation Of Railways.
Some Of the suggestions of the Demo.
cratic platform relate really to this
subordinate and ancillary machinery
to which have referred. Take for in
stance the so-called physical valuation
Of railways" It is clear that the sum
Of all rates or receipts of a railway,
less proper expenses, should be limited
to fair profit upon the reasonable
value Of its property, and that if the
sum exceeds this measure, it ought to
be reduced. The difficulty in enforcing
the principle Is In ascertaining what is
the reasonable value Of the company's
property, and in fixing what Is a fair
profit. It is clear that the physical
value Of railroad and it's plant Is an
element to be given weight in deter
mining its full value; but as President
Roosevelt in his indianapolis speech
and the Supreme Court have in effect
pointed out, the value of the railroad
hs a going concern, including it's good
will, due to efficiency Of service and
many other circumstances, may be
much greater than the value Of its tan
gible property, and it is the former that
measures the investment on which q
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 safe invest.
'ments, but also sufficient allowance
to make up for the risk Of loss both
of capital and interest in the original
outlay. These considerations will have
justified the company in imposing
charges high enough to secure fail
income on the enterprise as a whole.
The securities at market prices will
have passed into the hands of subse.
quent purchasers from the original in.
vestors. Such circumstances should
properly affect the decision of the tri.
bunal engaged in determining whether
the totality of rates charged is reason
able or excessive. To ignore them
might SO seriously and unjustly i'm
pair settled values It's to destroy all
hope Of restoring confidence and for.
ever end the inducement for invest
ment in new railroad construction
which, in returning prosperous times,
fN h1 81 -
progress. .'e ::T.. =
From what has been said, the proper
conclusions would seem to be that in
attempting to determine whether the
entire schedule of rates of railway is
excessive, the physical valuation of the
road Is relevant and important but
not necessarily controlling factor.
I am confident that the fixing OF
rates on the principles suggested above
would not materially impair the pres.
ent market values Of railroad securi.
ties in most cases, for believe that
the normal increase in the value OF
railroad properties, especially In thei1
terminals, will more than make up fol
the possible overcapitalization in ear
Her years. In some cases, doubtless
it will be found that overcapitalization
is made an excuse 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.
Conclusion That There Should Be
Physical Valuation.
have discussed this, with some de
gree OF detail, merely to point out that
the valuation by the Interstate Com.
merce Commission Of the tangible
property Of railroad is proper and
may from time to time be necessary In
settling certain issues which may come
before them, and that no evil or injus.
tice can come from valuation In such
cases, If 1t be understood that the re.
suit Is to be used for a just purpose,
and the right to a fair profit under all /
the circumstances Of the investment Is
recognized