The Glasgow courier. [volume] (Glasgow, Mont.) 1913-current, 1920-03-05

fight in the republican convention for
a plank for physical valuation of the
roads. Nine years later, in 1918, an
act was eventually passed, and since
1914, a bureau of valuation has been
at work under the direction of C. A.
Prouty, who has been with the inter-
state comemrce commission a quar-
ter of a century. In six years the
work has reached the point where the
track work has been finished, the land
inquiry is about 80 per cent complete
and the accounting inquiry about 80
per cent finished.
Figures on about six lines are COM
pleted, including the Rock Island sys-
tenn, The Illinois Central, Great Nor
thern and Santa Fe are nearly COM
pleted. The entire job will require
at least two more years.
Cost of Reproducing.
The cost of reproducing new the
structures and equipment and, indeed,
all property of the carriers, except
ing it's lands; depreciation which has
occurred in the property; present val
ue of the lands; original cost of the
property or the investment in the
property.
After these items have been deter
mined, it will be the task of the in
state commerce commission to decide
what the valuation of the carriers for
rate making is. At the outset, the
general plan is to fix an arbitrary
valuation on the basis of such facts
as are known, and later on make re-
adjustments.
One complaint raised against the
bill is that under it the public through
higher transportation rates will be
paying at least five and a half per
cent on all the old watered stock.
Against this the experts shout that
all the water has evaporated.
The increased value of properties
has boiled it out. And the rates, any
way are to be based on real valuation
instead of on any inflated book val
ues. There are theories galore as to
how the valuations should be figured.
One says cost of reproducing the lines
should govern, another holds that &C
tual investment, the actual cash sac
rifice, is the real factor to consider.
Another adheres to the doctrine of
"original cost" while a fourth main
tains that market value of earning
capacity is the proper basis.
The state commissions have been
inclined to hold that original cost
should govern. But the supreme court
decisions are in the direction of pres
ent value of property instead of or
iginal cost, although the latter is an
item to be considered.
Lands have gone up, particularly
in the agricultural districts. Director
Prouty strongly holds that carriers
ought not to be allowed any incre-
ment of values in the cases of their
carrier lands.
War Skyrockets Values.
The war, too, with it's sky-rocket-
ing of values, has introduced another
element. The engineering prices in
the survey made by the valuation bu-
reau are determined as of June 30,
1914. Today it is figured the cost
of reproducing a railroad would be
at least rs per cent more than in
1914 and the cost of equipping it would
be twice and a half as much. So if
reproduction cost were to be the base
the value of the roads has doubled
without any expenditure on the part
of the owners.
eff the valuations were made upon
the basis of present prices" said Di-
rector Prouty, "and rates were estab-
lished to yield a fair return on that
valuation, most unfortunate results
must ensue. We should assume that
these prices are abnormal, as most
men believe, and should proceed &C,
cordingly.
at seems to me a value should be
determined as of the valuation date
on each property, applying prices OF
1914, or normal prices, and to that
value should be added the actual ex,
penditures made by the carrier for
additions and betterments. In that
way the carrier will be given the ben
eft of higher prices insofar as it has
been obliged to pay these prices II
the improvement of its property"
Estimates vary widely as to how
large a rate increase will be necessary
One recognized expert has said a ten
per cent raise will be sufficient. 9th
ers have figured that it will require
a boost of 25 and 80 per cent to put
net revenues of the roads where they
stood in the federal test period, 1914