The producers news. [volume] (Plentywood, Mont.) 1918-1937, 1927-09-23
WASHINGTON GOSSIP
By HARVEY o'CoNNOR, Federated Press

Westinghouse Before spring
comes again, the great financial in
Ierests OF America, centering in New
York, Boston, PHILADELPHIA and Chi
cago, hope to have won crucial hat
Tie which will fasten tight the yoke
OF oppression on the necks of Aneri-
can producers. The battle will be
fought in the supreme court over a
tiny st. Louis railroad of which few
have ever heard.
That railroad is the O'Fallon line.
10 miles long, owned by brewery in
terests. The issue is that of valua-
ton OF American railroads and the
decision will set an iron clad proceed
ent which the people of the United
state will hardly be able to set aside
The Interstate Commerce Commits
sion placed a valuation on the little
road based on its own peculiar meth
Oh reproduction value before the war
minus depreciation and plus subse-
quent investments. This method of
valuation, which would prove most
Ilatterlng to- the railroad and public
utilities interests, is nevertheless he
ing fought most bitterly. II Is NOT
enough. lndustrialists and financiers
are demanding nothing less than val
uatlon based on cost of reproduction
new. 0N'''0' ioii
thus railroad into which S1OO
oUU'UUO had been invested prudentlv
IS entitled to a "fair return NOT ~,
that prudent investment, but on tba
present cost of building the comnlete
line, the interests argue. Due 70
soaring land values and to hiober
costs of materials and labor fbo+
value might well be $500, 900, 900 Al
Ter Ter, the supreme court passes on the
y Fallon test case, the railroads and
other public utilities will be entitled
70 so.called fair return. ranoino
from D "a to 8 per cent, On a tremen7
oously inflated valuation. ActnaII,,
such fair return" would he in Of
1ect from 20 to 80 per cent annnaIIy
on the actual investment.
1t is foregone conclusion +bo+ A.
supreme court will set aside +ba T.
terstate Commerce Commissions val
ualon methods and give official an
provaI to the bold robbery proposed
py the fnanciers. That was -.
Pierce Butler, Secretary KelIooo,s W." 10y
actlonary railroad attorney nal Voc
put on the supreme court. RutIer =
Sald 70 be the dominating force ON +Lo
pencil In railroad decisions d,,e ~ ~ I ~
tn;ll1l knowledge of the roads. Ger
U LII MS views on railroad valuation
WIN De paramount. Justice Brandeis
leader of the forlorn minority Of 49,
or three, has been striving IN Loor,
Ihe court divided to preyent Ell
of the corporations own - uaI
latlon formula. O"ii val
/, but 1t is the public utilities oroud
that hopes to cash in most Z, eioMu
,out IDEA of valuing properties at
,oSt OF reproduction new. The hattie
? pellg fought now on the Massacbu~
80 front where the state nnhI;o
.'ilities commission has Just held tbat
money actually and prudentlv invest scat
. IS the true basis for valuation for
:, purposes. This cuts ont
~ u, tne water, initiation, alleged GOOD
iar anu wnaC not on which the utili-
ie T1 wish to boost their rates.
ne TEST case was presented bv the
lt a;,.e5 Electric Light Co., which
1ecIn ooo "a valuation, at going costs. of
Io'OOU,OOO. The company was soak
az power and light consumer 7 cents
kllowatt hour. But the commission I
as Just held that the company's ac- l
"a oo aan noo prudent investment is only /
4,OOO'OOO and has ordered lower {
aCes. The Worcester company !
romptly served an injunction from
= boston federal court forbidding
-, - commission from putting the re- |
The public utilities are preparing v
1r the greatest legalized swindIe Of i
L times. They expect to wiring lit d
'aliy billions from industrial and do b
lestlc consumers through their fancy o
lergers and financial manipulations. h
Ut all their hopes are based on the f
lpreme court and its approval of a