Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1910-05-02
RAIL MANAGERS PROFESS re
BELIEVE LINES ARE NOT
OVER CAPITALIZED
SAY UNEARNED INcREMENTs
CAUSE HIGH VALUATIONS
Large Terminals Contribute to Appar-
emily High Capitalization Of Rail-
road Lines-RaIroad Men Declare
New Law Will Not Disclose Exten-
sive Stock Watering.
Especial correspondence.1

Washington, May 2.-That the pro-
for physical valuation of the railroad
properties of the country is not going
to disclose that the roads are over
| capitalized is the belief OF many rail-
road experts. 1t is the view shared
by some Of the ablest members of the
interstate commerce commission. 1t is
| also the view of some of the best in
formed members Of congress.
The Madden amendment to the rail-
road bill. which was adopted by the
house Friday, and which provides for
the ascertainment Of the actual value
OF the railroad properties. is looked on
IN many quarters as radical but as a
matter OF fact the question whether it
will disclose heavy watering of rail-
road securities is open to question
The reason why the valuation of the
properties, especially the physical va,u-
alton is not likely to show oyercapital-
lzation, say those who take this view
of the matter, is that the great ter
minal properties of the big railroads
and their rights Of way have increased
enormously in value in late years
some astounding figures are given as
TO the value of terminals The cost
OF obtaining terminal properties such,
Tor instance, as the New York Central
system or the Pennsylvania have in
New York City would be so great as to
make 1t probably impracticabIe for a
new railroad company to buy up ter
mlnals with the view of building new
line of road between New York and any
other great center. as Chicago.
As to Unearned Increment.
Much of the value in the railroad
properties arises from the unearned
increment. OF course, If this element
OF value were excluded. the railroads
would be found to be heavily watered
But as a practical proposition. 1t is
unlikely the interstate commerce COM
mission would leave out this element OF
value. Some of the great railroad svs-
TENS had their terminal properties Civ
en- them. These properties have now,
thru the growth in value of the cities
Oh which they are a part, become ex-
tremely valuable. The railroads will
insist that they be given the adyan-
tage Of this unearned increment and it
is likely they would carry their point
1t is recalled that when the interstate
commerce commission had before it the
Spokane rate case, the Great Northern
road put in a valuation of its properties
in which it sought to show that its
terminals at Seattle, ST. Paul and other
large cities We're worth many millions
of dollars. By reason Of the heavy val
uation the railroad put on its teuni-
nails, the interstate commerce commits
sion valuation was much below the
railroad cornpany's valuation.
What Railroad Men Fear.
The danger which it is expected that
some of the railroad managers will see
in the matter of valuation is that if a
valuation is once made, while it will
not affect, perhaps. past f1otations of
capital, will tend to hold down future |
issues. 1t might develop that the gov
eminent. once having the valuation of |
the roads. would consider the valua- |
lions increased only as actual additions |
and betterments were made. A strong |
demand might arise that in the future |
the element of unearned increment in |
the worth Of the properties be excluded /
from consideration.
1t is known that when former Presi- |
dent Roosevelt was discussing the
question of advocating a physical val
uation of the railroads. this phase of it |
was given much consideration. The |
question whether as to the future I'M
earned increment should not be left |
out of consideration in determining
valuation was given much thought and
some of Mr.. Rooseveits advisors were
of the opinion it should, not as
to the past, but as to the future, be ex-
Guided.
In some quarters. the opinion prevails
that the valuation feature will stir such
opposition to the bill among the rail-
roads as to kill it.