The Washington times., 1923-05-24
CHAOS CREATED
IN RAILROAD
VALUES
Progressives Upset by Court
Giving Them What They
Did Want, But Not Now.
by WILLIAM HARD.

Inc recent valuation decision OF
the United States Supreme Court,
If followed to its limit by the Inter
state Commerce Commission, might
increase the commissions valuation
Of the railroads Of the United States
by $7,OOO,0OO, 900. It might increase
tin other words-by 40 per cent.
Such Is one of the highly upset
ting discoveries made by Govern.
ment officials through a study of
the decision and through a compari-
son OF 1t with the dissenting deci-
sion rendered by Justices Brandeis
and Holmes.
The national conference of the
progressive group" of United
states Senators and Members Of the
House of Representatives and gov
errors OF States on railroad valua-
ton is scheduled to begin it's SEES
sions in Chicago tomorrow.
1t is calculated here that the STU
preme Courts decision will give this
national conference enough acid to
set its teeth on edge and to keep it
calling upon the country for relief
and rescue for several days.
1t is believed here that the valua-
ton question in the United States
mas now come to great judicial
ana administrative and political
crisis.
Decision Expected Soon.
Within a few days now the In
terstate Commerce Commission will
hand down its first formal final
valuation decision in a great dis
puted case. The value assigned to
the railroad which is involved in
this case will represent the Commits
10 20
uat1on. 1t Is believed on good au-
thority that the Commission will
speak with a divided voice. 1t is
known that certain conflicts on val.
uation theory have long existed
within the Commission.
Meanwhile the Supreme Court-in
a case growing out of the affairs
of telephone company in Missouri
has at this very moment adj
dressed itself to the whole subject
of valuation and in a majority
opinion has thrown the subject into
a chaos of uncertainty and darker
and darker doubt
The majority opinion holds in
effect that the Interstate Commerce
Commission, in fixing the rates to
be charged by a railroad company,
would have to include in the com.
pany's "va1ue" a consideration Of
the following:
How much money would the
company have to spend in order to
get its property now?"
The minority opinion holds on the
contrary that the central pertinent
question would be the following:
How much money, in order to
get its property, did the company
in fact spend?'
The difference between these two
questions is glaringly illustrated in
railroad terminals. Question mum.
Der one would often give to a rail-
road terminal in a great city a
value three times or ten times as
large as the value which would be
given to it by question number two.
The progressive group" was al
ready highly dissatisfied with the
tentative" valuation given to the
railroads by the Interstate Com
merce Commission.
That valuation was, and is, in the
nefghborhood Of SO, 900, 900 900. Now
the "Progressives" see the Supreme
Court ultimately handing to the
railroad companies a valuation of
$26, 900, 100000 or $4,000, OOO, 900.
Some of them even are liable to
see the railroads getting valued at
$50, 100000.
The difference thus made in
freight rates and passenger rates
would amount to more than. $780,
100000 a year
At that point two great practical
jokes begin to appear. One is on
the Progressives. The other is pos
sibly on the railroads.
by the majority opinion of the Su-
preme Court Is precisely the theory
originally advanced by the PRO.
gressives" themselves in the early
valuation cases.
They advanced it then because
the prices of land and labor and
OF materials were at that time low
n comparison with the prices of
railroad stocks and bonds. The
railroads then wanted to be valued
by their stocks and bonds. The
"Progressives'' said: mo! You
should be valued by the cost of re-
producing your property"
Went Into Courts.
They therefore went into the
courts and in large degree per-
suaded the courts to agree with
them. They now get exactly what
they started out to get but what
they no longer want.
Now Senator Brookhart wants to
value the railroads by the market
value of their stocks and bonds.
The stocks and bonds, relatively to
the prices of land and Of labor and
Of materials. are now low. Senator
Brookhart wants to make them the
basis of valuation today. But the
Supreme Court says: mo. Let us
stick to the original progressive
doctrine! Let us take the present
value Of the property!'
Few "Progressives" laugh heart.
lily at this joke; and few railroads
seem to be able to believe that the
second joke in the decision may
ever actually come to pass.
Mr.. Justice Brandeis however,
points it out plainly. 1t is this:
IF railroads are to be valued by
present prices, then If present
prices drop into a pit, the whole
valuation Of American railroads will
go into the pit. too.
The railroads might be worth
t25. 900 100000 in one decade and
only $4,000, 900. 900 in the next. -.
The ultimate effect Of this deci-
sion. by it's manifest meaning and
nv common consent about 1t, Ia that
he value of American railroads will
vary every decade and every year