The sun. [volume] (New York [N.Y.]) 1833-1916, 1910-04-11
The Physical Valuation Of Our
Railroads.


The Congress has not vet made an
appropriation for ascertaining the
physical valuation IT the railroads, nor
h such a measure included IN any OF
the bills that have been reported by the
committees. Il seems 90 be the desire
Of Congress. however. to meet such
legislation a. may be recommended by
the Interstate Commerce Commission.
and IA the commission il strong for a
physical valuation IL - more than likely
that some Of these DAYS a bill will he
reported in its favor.
Many reasons have been advanced for
making such a valuation. but that which
primarily possesses the popular mind is
that the number 81 dollars that a rail-
road has cost has some connection with
the rates that ought TO be charged for
transportation This has been dis
proved 30 many times and by so many
persons. even by Chairman KNAPP. and
In 40 many different WAYS, that IL would
seem useless 20 attempt tn disprove II
again.
Yet there are one ar two aspects 81
the question that are frequently over
looked The head - a manufacturing
company was OnCe asked nv a banker
what was the value of his cold assets
The manufacturer repli@d thar the cold
assets were the smaller part ~ his cap
itai. that II was the hot as--ts- upon
which he placed he greater value He
said that ANYBODY with the money could
buy rea! estate and erect plant, hut
that the formation ~ an effective organ
ization took time and pains. The seIec-
ton Of managers. the training Of work
ingmen. the organization Of the sales
department. the acquaintance with Gus
TONERS and with the market adequate
knowledge of The sources Of material
and prices were all deaiderata ~ sur
passing Importance and more 4 iffirIlt
tO obtain than the cold assets ne
efficiency Of the working organization
IN n manufacturing or mercantile en-
terpri-A often makes the difference be-
tween a debut and credit balance at
the close ~ the wear
if'he rates ~ a railroad COMPANY with
a highly developed and efficient working
organization thar secures traffic and
moves trafic economically ara to be 80
adjusted thar the total revenue will pro-
vide only fair return upon he physical
valuation of the property, what will be-
the al iusfmsni Of rates accorded anO' her
Company with an organization less
efficient IN securing trAffic and moving
IL economically SuPpOsing that the.
physical value 81 the two properties he
equal. IL will be necessary II each IL to be
allowed a fair return upon it, physical
value that the company with the less
efficient organization bs allowed 10
charge higher rates than the company
moro efficient. II the lines 81 the two
companies compete this would mean
that the morc efficient a, lower rates,
would take all 81 the traffic. and the
problem NJ allowing fair return 20 the
les efficient company would still be- I'M
solved. THIS - the reductiO al abSur-
dun. OF course. bu' - this basing ~ rail-
Ensd rates upon the physical valuation Of
a railroad anything bul an absurdltv'
To- ~ approach tho sub ieo' from,
another angle In a given town SUD-
pose there ~ ~" teamsters. each with
hOrSa wagon and = total outfit worth
exactly three hundr'd dollars sun.
pose ieAmster No I hauls ten loads a
day and teanSier No . only five load
a day l. the c0rrensa'i"n " team,
ster w I 3" he considered entirely a.
return upon the vslu" " hr- OUTFIT W D.
Il 90 he considered ~ compensation
for the amount " work tha, he doc
Il he not entitled 20 greater profit foi
~