Evening journal., 1919-05-24
SATURDAY, MAY 24. 1919.
INCREASED WAGES, PRICES AND RAILWAY
VALUATION

7 Is being urged a some quarters-by senator Cum
4 Minis the new chairman OF the Senate Committee on
Interstate Commerce, among ohcrs-that legislation Tor
The future regulation OF the railways under private oper-
alton should provide for general recapalizaon OF the
railways on the basis OF valuation. That Is something
OF prime interest Delawareans. Tho Railway Age In an
editorial in rs current calls attention 10 the fact
that apparently the valuation Of the railways now be-
ing made by the Interstate Commerce Commission Is TO
be based almost entirely The cost Of physically re-
producing The railways and that because OF the great in
creases OF wages and prices the valuation OF the railways
on this basis probably would be sSOo0ooO0oo greater
than It would have been Ave years earlier.
"rhe Division Of Valuation expects to complete its
inventory OF the railroads time late in 1920 says
ne Railway Age "and, Judging by the preliminary re-
ports on few OF the smaller roads which the division
has made public It's final report 20 The Interstate Com
Commission VIII consist essentially OF figures re-
gardng Tie cost Of reproduction less depreciation
o each OF the properties The results presented thus
FAR have been based on prices purpored to be repre-
sentative Of conditions June 30 1914 and obtained in
The main from average Of unit costs of work done
during the ave years i9iOii Inclusive Presumably these
1911 prices selected because they afforded The latest
information available at the inception Of The valuation
Just what significance Is to be placed in 1920 on cost
~ reproduction based unit costs applicable in 1911
has not been made clear II valuation is 10 serve any
useful purpose must be based evidence admissible
a, the Time that the valuation to be used Any esti-
mate OF lhe cost Of reproducing property on given
aif must be obtained by applying TO the inventory
quantities unit prices that typical the date the
valuation Is used Unit prices in 1914 viii have more
real relationship 10 the OF reproduction in 1920 than
The prices OF 1901 1891 any earlier year that might
be arbitrarily selected.
Had there been radical change in price levels in
the years subsequent to 1911 this question would be OF
no particular Importance but four years Of the Euro
pean war have produced such imitation Of currency
and other changes that The OF labor and prices
Of mony commodities probably average close to 100 per
higher than 1894 and economists hold out scant
hope for any apprecabe reductions from the present
University ITO talk reyerenty Of 1914 prices is to
speak dead language
notwithstanding these considerations, there
references to valuation Of railway properties in the
neghboSAood Of si7OOO0vOOO-a figure obviously based
past costswhereas tho OF present unit costs Of
labor and materials probably would produce valuation
90 per cent higher than would those Of i9ii valuation
based present unit costs certainly would amount
than s22 2OoOO00OO0 while the book cost OF road
and equipment OF the only about sis0OOO0oooO
and their net capitalization about si7OO0OOOO0. II the
public insists basng rates valuation and bssing
valuation mainly The OF reproduction the railway
owners viii hardly object Spokesman OF the railways
are modesy suggesting that the book cost OF and
equipment used the basis of regulating future rates
and earnings The public probably would better accept
this basis than 90 With It's yaution for II tho vsua
tion used the money spent in making II will be
enormous that its basis for regulating rates and
earnings will cost the public FAR than any basis that
could be employed"