The Washington herald., 1914-03-15
Charles A Prouty at Head Of Governments investigation
Explains Plans for Tremendous Task Upon Which
Future Of transportation Largely Depends

Z their property and I have no reason to
doubt their sincerity"
Who started the movement to sscer-
tain the physical value OF railroads.
4 inquired.
You are asking q question that is
hard to answer." Mr.. Prouty replied.
| The belief that the actual value OF
was, one might say, OF spontaneous
origin. There was a feeling that the
prices Of hauling freight should be based
on the real cost Of the service.
IF. for example. a road worth 500. Co., :
900 were bonded and capitalized for $780,
ooo.ooo. and II It should put its rates for
carrying freights and passengers high
| enough to return a profit on the fictitious
| value given II. the people felt that they
| should know all the facts in the case.
So a demand for an accurate valuation
of railroad property found voice in prac-
tcaliy every part Of the country.
Billions of watered shares.
The subject was discussed in Con-
gress by Senator La Toilette, OF Wis
consin, principally, with great intelligence
and perseverance. He often spoke on the
question elsewhere. During the debate
carried on In newspapers and magazines,
as well as In Congress, the statement
the railroads were very greatly over
capitalized and that the people were pay
ing dividends on billions OF watered
!, stocks. Reply was just as positively made
that the railroads were. In the main.
worth a good deal more than the aggre-
gate Of their shares and mortgages.
las everybody seemed desirous or
willing to have the facts uncovered.
law was passed during the closing hours
Iof a lo CnnDra~a harfTfnr the VAL
uation of all railroads, steamships and
telegraph, telephone and pipe lines en-
gagged in interstate commerce. President
Taft signed the law on March 1, 1913.
The Interstate Commerce Commission
was directed to do the work"
"And you resigned from the commits
sion." I said, 'purposely to give all of
your time to the task?''
Yes I am now an employe Of the
commission, instead of a member The
law" Mr.. Prouty went on to say. "re-
quires that we obtain the original cost
to date of transportation agencies en-
gagged in interstate commerce. the cost
Of reproduction new and the cost of re-
production less depreciation
I'VE are also-to ascertain the original
cost of all lands, rights of way and ter
minals owned or used for the purposes
Of a common carrier and the present
include agricultural lands given to rail-
roads by the National and State gov
ernments and still owned by them and.
likewise, coal and other lands.
1T will be necessary for us to write
a financial history of each interstate
railroad. pipe line and so on. We shall
have to obtain the earliest facts con-
cerning their construction and a de-
tailed account of all their later financial
transactions In many instances, in most
cases. in fact money obtained by the
sale Of bonds built the railroads. The
shares were given as a reward to the
projectors.
How the Pioneers Were Paid.
1T has been said, and truly. no doubt,
that capitalists would not have yentured
into railroad construction unless their
possible profits had been large enough
to make the undertaking attractive.
They were the pioneers IN an untried en-