Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-12-20
Nation Sees Vital Results
In Rail Valuation Decision

The vital Importance Of the decision
OF the United States Circuit Court of
Appeals in the valuation case of the
st. Louis & O'Fallon Railroad Is gen.
orally recognized, and the country
awaits with interest opinion by the
Su" RENE Court. Under the Circuit
Court ruling, which sustains the Inter-
state Commerce Commission, the Valu-
alton of railroad should be based
vi Il cost of production, less deprecia-
tin, plus additions to the property, in
stead of upon replacement cost.
Representatives of the railroads"
it Is pointed out by the St. Louis
Times, filed briefs showing that the
commission and the railroads were
$11 ,000, 900, 900 apart in the yalue of
the railroads. In 1920 the commission
gave the valuation as $4,000, 900, 900,
and has been making rates on that
basis. The railroads claim that the
roads are actually worth some $780,
90 100000. The Supreme Court must
finally decide the case. And the sooner
the matter Is definitely decided the
better for all concerned and the more
quickly may we expect the inevitable
economic program of consolidation to
be contaminated"
Calling the decision "a fortunate de-
velopment," the Kansas City Star
states: 'It is a reasonable assump-
ton that If the valuations placed upon
their property by the railroads of the
country were to be sustained, more
than $500 100000 would be added
to the country's transportation burden
annually. That immense sum, loaded
upon an expenditure account that al
ready is heavy. would prove serious
handicap to the transaction of bust
ness and would increase the cost of
| living. 1t would have q result amount
| ing to little ,>ss than disaster for this
section, one Of the greatest needs of
| which now is relief from transporta-
| ton costs that are both excessive and
out of line with those in other Sec
| tons"
\ X x x
The Topeka Daily Capital holds that
| ''this decision looks very hopeful for
final decision sustaining the COM
| missions rule in valuation. If such a
| decision Is made" continues the Capt.
tai, sit will greatly simplify future
| rate making and probably hasten con-
solidation OF railroads"
The New York Sun explains "why
| the affairs of tiny failroad can give
a CONFUSION to the stock Market" re-
calls that "a court specially consti-
| tuted to try the issues" made the deci-
sion, and offers the comment: "In the
OFallon case the commission was d.
vided, five to four. The language of
| the dissenters was more bitter than
| the protest of the railroads. Com.
missioner Thomas +. Woodlock of
New York declared that the law of the
| land was summarily set aside by the
majority. The Supreme Court is COM
/ 1xzkn IL Ia
| the case of -lcCardle VS.. Indianapolis
Water Co. The essence of tina. deci
| sion was that value should be found
as at the time of the inquiry"
ut would be far more difficult, APP
parently," says the Springfield Union
| ito determine a just valuation under
the wise investment principle than
under the replacement principle. This
| fact may have been recognized by the
Supreme Court, which in some of it's
decisions has favored the replacement
or reproduction principle in the case
of public utilities. 1t will be interest
ing to note how the decision in the
lower court in this railroad case fares
| under the principle already estab.
lisXed by the Supreme Court in other
cases seemingly analogous"
"The property of thousands of peo.
ple. the owners of the roads," observes
the Newark Evening News, lis here
| involved, and the issue runs widely
| into other fields in ultimate effect.
The high court doubtless will recog-
nize in the circumstances the impor-
lance of rendering speedily as is
compatible with elaboration the final
and binding decision, which will have,
ono way or anoth e. consequences be-
yond calculation, legally. economically
and socially"
| X X X X
The Youngstown indicator directs
attention to an incidental fact that
valuation on the basis of original
cost, as proposed by the Interstate
Commerce Commit sion, which is sus-
| tanned by the st. Louis decision, would
mean a heavy loss to taxing districts.
many of which have faced serious
financial problems for some years"
"The basic merits of the case" as
viewed by the Houston Chronicle,