The Washington herald., 1913-12-16
VALUATION Plan
CAUSES INTEREST
Good to Be Derived by Rail
roads Doubted BY Many
Persons.
TO TAKE SEVERAL YEARS
Experts Say $1,000, ,0oe win Be Re-
quired-Rates May Be Based
nm ResuIts

Whether or not the physical valuation
OF railroads will be of value to the
United States, is question which has
swo sides, it is believed This enormous
undertaking has just been commenced
By the Interstate Commerce Commission
under the special direction of former
Commissioner Knapp. This work con-
sists in making an inventory of the
physical properties of all railroads of
the United States.
By physical properties is meant actual
railroad track. cars, locomotives, rolling
stock of all kinds rights of way, real
estate holdings, and also depots. station
houses, freight stations, baggage houses,
platforms, telegraph towers, wires, office
buildings, automobiles, horses, wagons,
trucks, in fact, everything but paper Sc
curities, such as stocks and bonds, and
intangible attributes such as good will,
possessed by the railroads.
This vast enterprise has attracted
worldwide attention. When the move
ment for this valuation started, few
officials connected with it realized the
magnitude Of the work. Upon discussion
of measures to provide money for the
taking of the inventory. it developed that
a physical valuation involved a tremen-
dous amount OF labor. but Congress saw
fit to authorize the work, nevertheless,
and it has been begun
Appropriation of S3,OOo.OOe.
Approximately $S,0oo0 900 has been ap-
propriated to start the work, but three
times that amount will have to be ex-
pended before the valuation is complete,
it is asserted by experts. Several years
will be required to do the work, accord
ing to present estimates. But whether
these estimates are accurate remains to
be seen.
After the report on the physical valua-
ton of railroads is made, will it be OF
any value? That is question which
is perplexing officials. 1t is believed by
some persons that a mistake has been
made in the basis taken for the valua-
tion. 1t is feared that the conclusions
expected to be drawn from the report
on the physical valuation will be falla-
cious. The matter is reasoned in this
way.
Take as an example any Northern road
in manufacturing region. The land over
which this road runs is worth a certain
amount an acre The physical valuation
board will base its report on the pre-
vailing acreage price. Thenpthe value of
the rails will be placed at a fair price;
the railroad ties will be assessed in the
same manner, and the buildings, such as
stations and freight houses will be ap-
praised by the same method.
IHSH ldhS lne or
West in an agricultural section. The land
which is used as right of way will be
assessed at the prevailing acreage price
in that region. This figure will be much
lower than the land owned by the
Northern system. Then take the value
of the rails. In making the valuation the |
market price will have to be used as a |
basis. But rails cost the railroad as |
much or more than the Northern system |
pays. The price for railroad ties will |
be approximately the same. In the in
Ventory buildings will be entered as of
the same comparative value, and rolling
stock will be appraised at almost exactly
the same figure. On the whole the actual
physical value of the possessions of the
TWO roads will appear about the same.
May Decide Rates.
On the result of this physical valua-
ton Congress and the Interstate Com
merce Commission expect to base the
of rates. Especially, Congress
expects to limit the issue of railroad
stocks TO conform with the physical
valuation of the roads making the
issues. That is, Congress believes
that wherS a certain railroad owns
s1O,0OO,O00 worth of physical property
real estate, cars, track, ties, rails
and office buildings--it is entitled to
issue stock in proportion, but that
where a railroad practically is desti- !
tute of real property, its stock issue
shall be restricted to its physical af-
fuence.
This is held TO be fallacious reason
ing by q number of investigators here.
It is contended that a railroad with
miles upon miles of track and many
cars has an earning capacity greatly
less than the earning capacity of
road running but a short distance.
1t is believed by some that the vast
of Congress and the In
terstate Commerce Commission will be
worthless, unless supple
mented by some method which will
make the report adaptable to diverse
conditions