The Richmond Virginian. (Richmond, Va.) 1910-1920, 1912-03-25
PLACE VALUATION
ON ALL RAILROADS
Interstate Commerce Com
mission Asks Congress Tor
the Authority
EXAMINE BOOKS OF
HOLDING COMPANIES
House OF Morgan and Com
pany and Kuhn, Loeb and
Company May Be Made
to Show Books

WASHINGTON, March 24.-Pre-
SEEMING complete plan for the physi-
cal valuation OF all the railroads In
the United States and expressing hrm
conviction that overcapitaiization can
never be- prevented or equitable trans
portation rates fixed until such Naiua-
ton is made. Democratic and Repub-
Iican members Of the Interstate Com
merce Commission have Joined hands
in an appeal TO Congress for an ap-
preparation of 100000 to accom-
plish that great work. They ask Tor
an additional appropriation to inxes-
tigate the amount OF wafer in pres
ent railroad securities.
AZ one OF the essential steps to AIDE
auate physical valuation. the COM
mission announced that ii would in
sist upon authority to investigate the
books OF j. L. Morgan * Co. and
Kuhn. Loeb 4 Co.
This revolutionary step was advised
by Commissioner Clements. Demo
crat. and Meyer. Republican, at an
executive session Of the House Com
mittee on Interstate and Foreign
Commerce now considering a. bill,
drawn by Chairman Adamson, au-
thorizing the commission to make the
physical valuation and the bond and
stock investigation.
VIII Take Two Years.
Commissioners Clements and Mey-
er expressed belief that they can
make the special inquiry into stocks
and bonds In two years. but that it
will take at least three years to COM
plee the valuation OF the railroad
properties, which are said TO be worth
S1s.b0o. 100000.
The inquiry ought to be extend
ed" declared Judge Clements. TO en-
able the commission, or whoever
makes 1t, to make an inspection or
examination of the books OF these
banking institutions that conduct
these orga uA1At3cns, like Pterpont
Morgan's house In Louisville and
Nashville. and the Atlantic Coast Line
transactions and Kuhn. Loeb & Co,
that figured In the Alton case
The holding company that stands
between the operating company,
which serves the public and is kind
of screen for the people who actually
control the operating carrier. and yet
are not In direct contact technically
! with II, 10 matter that ought to be
investigated
Commission Can DO Work.
II do not believe q congressional
committee is the only body with au-
thority to do this work. Our COM
mission can do it IL the law gave 1t
direct authority.
AN imperfect valuation would be
worse than none: II would be misin-
formation" Judge Clements con-
tinued. III We make an inventory
valuation 1t will require engineers
with education and practical ex-
I perience sufficient to do their work
thoroughly, inteiligently and accurate
| ly, and who have character enough
that the country will feel that they
are cold blooded in being fair and
unapproachable from any standpoint
The government must pay the cost.
The contention OF the roads now
! is. explained Judge Clements that
they ara entitled to earn on the pres
ent value OF their property. no mat
| ter how that value came about. There
| has been no decision by the Supreme
Court that Is definite or makes plain
what will be the rule OF law about
! it."
Reasonable Rates.
The theory OF President Taft's
stock and bond commission. as shown
! by it's report, Is that the matter OF
capitalization Ia practically tmma-
terial upon the question OF the rea-
sonahl rates." said Judge Clements.
Theoretically THAT may BE st'. II may
I be also that the courts would hold
that all that n road Is emitted to
reasonable rate, whether 1t earns
| it's interest on its bonds or DAYS stock
dividends or not. But. what - rea-
sonable ratco Ii takes but a glance
to see that the value Of the stocks
and bonds depends upon the rates you
are going to let them earn. Their
value rests upon the rates and the
earnings"
! Embraced in the . tnyaatikation
woNld be thirty-one different Items
grouped under seven heads
First-valuation OF the properties.
Second-The cost to the present
| owners.
Third-The cost TO the original
owners.
Fourth-The profit or lo-- In their
organization to the original owners.
/ Fifth-The cost ~ to the bonds
outstanding and the amounts realiz-
I'd. etc.
Eixth-The facts a. to the original
outstanding securities.