Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-21
making purposes which is distinct
from its exchange or sales value.
Wide Difference i'm Figures. -


Wide Difference i'm Figures.
Congress having declared the per.
centage of earnings to which railroads
are entitled and having provided for
the recapture of surplus earnings
from the excessively prosperous for
the aid of the impoverished com
panies. the basis used by the COM
mission in rate-making became of
prime importance, crucial not only to
the railroads as the measure for their
earnings, but also to the shipper and
the travelling public as the measure
of rates.
Under the valuation act pa ssed by
Congress in 1918, the commission in
October. 1925. placed final valuation
of S45. 200. 900 as of June, 1914, upon
the Los Angeles and Salt Lake Rail-
road for rate-making purposes"
The company went into the Federal
District Court for Southern California
contending that ii was entitled to an
exchange or sale valuation; that is,
what the property would bring as the
result of fair negotiations between an
owner who is willing to sell and a
purchaser who desires to buy. 1t con-
tended that in June, 1914, it's value
was not less than $40, 900, 900, and
uation was made in 1923 it was not
less than $85 900 900. 1t asked that
the commission he permanently en-
Joined from using it's valuation figures
for any purpose whatever, and this
was done, the Government appealing
to the Supreme Court.
Pointing out that Congress had re-
Quired a valuation of the | 300 rail
roads throughout the country, oper.
ating 100000 miles of road, represent
ing property estimated considera bly,
over $50, 900, 900 900, the commission
declared that while only per cent of
its work had reached the final stage,
the effect of the decision of the Dis.
trict Court If sustained would be to
render practically valueless work
which, extending over a long period of
years, had cost the Government many
millions of dollars. Not only would ii
be necessary for the commission to
change it's rate-making fabric, should
the lower court be upheld the Gov
eminent asserted, but II would be
necessary for the commission, should
new basis for rate making be pro
mulgated by the court, to revise rate
schedules throughout the country.
Declared Values Overlooked.
The wide difference between the
commissions and the railroads valua
ton arose in part from the refusal OF
the commission to include some ele
ments which the railroad contendeC
entered into a legitimate valuation OF
It's property, and in part from material
differences III the valuation of items
both agreed should be included The
railroad insisted that earnings were
not properly reflected, nor the appre
citation of its roadbed, the develop
ment of its physical property. it's oper
ating organization, it's favorable con
tracts. its tablished and profitable
business, or going concern value, its
connections with other railroads, the
development of its territory, the in
creased demand for the use of its
property, its strategic location, and
other elements.
The final valuation was not only i'm
possible for rate-making purposes, il
insisted but was harmful in causing
the depreciation of the market value
of its property, was injurious upon the
sales price of its bonds and stock, anC
caused impairment of it's credit and
ability 10 borrow money for additions
and betterments.