Evening star., 1920-02-21
Director Prouty Says That
| Time Will Be Required to
I Compile Work of Agents.
USED AS BASIS OF RATES
TO INSURE FIXED RETURN
Some Lines Already Covered.
4 Compilation as Fast as
/ Field Men Report.

mission VIII base its rates to insure
the carries a return equal to 5la
Per cent per annum will not be COM
pleted for two years from the pres
ent, according to Charles A. Prouty,
director of valuation.
Valuation of some few of the roads,
particularly those in the New Eng
land region, has been completed. Mr.
Prouty said today, but he estimated
the work of the field agents now out
and the compilation of final report
on valuation will not be completed for
at least two years.
In the meantime, it is presumed,
the Interstate Commerce Commission.
under the railroad reorganization bill
: reported recently by railroad COM
mittees of the Senate and House. will
SO equalize rates that the carriers
may be permitted to earn an amount
equivalent to 51s per cent of their
estimated valuation after the six
month period of guaranteed return
from March 1, 1929, has been passed.
The railroads have in their pos
session tables showing the present
replacement value of the properties
s they know how much it cost to build
their trackage, their equipment and
the value of the land on which their
tracks are laid. with all improve
ments. But these facts as ascertained
by held agents of the valuation COM
mission for final report to the Inter
state Commerce Commission Will not
be made known for two years.
Revenue Problem for Railways.
TENS of the country. confronted with
greatly increased wage budgets and
vastly augmented operating expenses.
will md themselves. financially speak
ing. "in a hole" unless they obtain
some means of increasing operating
he nj
guaranty period has been passed.
Interstate Commerce Commissioner
Robert w. Woolley is authority for
the statement that the roads are pre-.
pairing to submit to the commission
. proposition to increase freight rates
generally 25 per cent. Director Gen.
erai Hines says he cannot see how
they can cut down operating expenses
by Topping of large number of en-
ployes. Unnecessary employees were
removed from the pay rolls under
federal control. Mr.. Hines asserts,
and at the present time there is no
duplication of work.
work in Some Parts Completed.
In many parts of the country, Mr..
prouty says. the work of valuation is
compIeted. The Rock Island 10 COM
plete and the Santa Fe, the Great
Northern and the Illinois Central al
most complete. The work in New
within two or three months the COM
mission will have before IL the three
reports on all the railroads in that
section.
Using the reports as they come in.
the Interstate Commerce Commission
roads from which reports have been
received. it is believed, but will wait
for the entire report and base It's
conclusions on the report as whole.
The railroad bill agreed upon by
the conference committee requires
the Interstate Commerce Commission
TO establish rates which will allow
. certain return on the aggregate
value of railroad property" Mr..
prouty said today. The first thing.
therefore, which the commission must
Do is to determine what the value is
vaIuatioa Of Pnslie Concern.
Il assume that finally the rate
making value which the commission
&s determining in its valuation pro-
seedlings will be used and. therefore
the progress of that valuation is a
matter of public concern. This has
been stated from time to time in the
reports of the commission to Con-
ports would show substantially the
1o1iowing:
The valuation act requires the COM
mission to ascertain and report to
Congress certain facts, of which the
principal are the four following:
Il. The cost of reproducing new the
structures and equipment, and, in
deed, all property of the carrier. ex-
cepting it's lands
Depreciation which has occurred
in that property-that is. the differ
ence between the value of the prop
erty as it exists on the date of valua-
ton, and what its value would be on
the same date if new.
The present value of it's lands.
4. The original cost of this property
or the investment in the property"
fs Get Accurate Property List.
In order to show the cost of re-
production now and the depreciation,
II has been necessary to send forces
into the held for the purpose of MAX
ing an accurate list of this property
and of examining 1t to ascertain its
present condition as compared with
new. This field work has been sub.
stantially completed
Ito determine the present value OF
ahe lands on which the tracks of the
roads run IL Is also necessary to send
appraisers into the field to locate
these lands and appraise their value
This neld work Is well advanced and
will be completed in about one year.
The determination of the original
cost of the property, or the money In.
yestment in the property. involves AL
examination of the records, not only
of the present corporations which owl
fhe properties now, but of their pred
ecessors as well. This examination /.
also well advanced and will be finish.
ed in about one year.
Work Of Great DimcuIty.
after this field work has been com.
pleted II must be embodied in tn,
form of a report, and the putting to
gether OF these facts, the application
of proper prices. the making of propel
deductionS. is often work of grea
4 difficulty. OF course this work ha.
proceeded to an extent cotempo
raneously with our work in the field
but for various reasons it is fount
impossible to finally complete thes,
reports, and II has become necessar,
10 carry on at the same time this as
sembling and reporting upon a grea
mum ber Of properties.
More reports will be filed in tn
last year than in all the other year
| put together. Generally speaking.
may say that it is expected to com
/ pleta and have in Washington report
! from all the sections upon ali tn
| principal railroads in the Unite'
States in just about two years from
nov. This depends upon our abilit,
70 secure the necessary help which !
beeeming difficult, but ! am still ex
pecting that this will be done.
Points In Question.
These reports do not, however
ssontain anwhere a value of the prop
critics to which they refer, and tn
Interstate Commerce Commission IL
eetting rates Is not bound to TAX
into consideration the follow I'M
D0ints: The ratemaking value of
railroad. neither the cost of repro
ducing the property new. nor thei
cost less depreciation. nor yet the &C
~ Investment in the property. i