New Britain herald., 1927-12-12
iSkud him "fio,y's business ?"

Rotten" he exploded.
 We thought this rather remark able, seeing that his establishment usually was well filled.
 How do you get that way" was our next innocent query.
 Easy I'm doing lots of business but my books show 1t only amounts 10 three per cent OH the value of the place"
 After scratching a meditativc cranimn We came to with another innocent question: What dya mean. value of the place. "
 What it's worth; what can sell it for,' he shot back
 Again a bit of thinking.
 But what percentage are you making on your inyestment?" we asked.
 Oh, around 12 per cent" he re- piled. "Bht that's got nothing to do with it."
 "Is zat so?" We said. surprised like. And then both of ns went into a little conversation and modern figuring.
 The merchant it Was disclosed, originally had invested s1o,ooo in the business. That was years ago. Today, it was disclosed, it was worth at least $5o,000. The owner could sell it at any time for that amount, he said. Consequently, the returns should be considered adequate only if based on the worth--the repro duction costs-of the business as il stood, not its production cost of $10,0oo years ago.
 'If l sell it for $50, 900 and put the money in bank I will be mak- ing more than l am now" he said, "hecause I am getting ahead only three per cent on S50.000, while if | placed that much money in securi- ties or in a bank l would get at least five per cent.'
 We vainly asked him to explain the annual income since he had owned the place and what the hand l some total might be. He simply said 1 his system of figuring was accord | ing to the most modern method that reproduction costs should be | the basis Of returns, not the original | investment and cost Of improve ments, If any.
 That is exactly tho position which has been taken by the railroads of the country in th@tr tilt with the h. Commerce Commission over the basis for railroad valuations. The railroads W wnt the basis Of re- turns allowed figut,.l on the renro- duction costs of the lines; theI.C.C. insists that the actual investment, including cost Of improvements, be the foundation of rate making pur. poses.
 That is why the biggest lawsuit in history" hinging around the St. Louis & O'Fallen railroad of Mis- souri, is a test case of such vast proportions Ii is a small railroad. but how it finally is decided by the United States Supreme Court will mean a difference in railroad yalu- alton of II billions of dollars.
 The decision given in St. Louis by l special court of three federal judges. which was unanimous in fa. 'or of the l. C. c. contention and against the railroads, is llnportant. But the final result will be known only when the highest court in the and has had a chance to give it's 'erdict.
 So far the battle in the lower courts is even, similar case in Indianapolis, where a water supply wished to charge rates based on production costs, won it's before the federal court.
 In view of what the Supreme Court has already decided in this Indianapolis case, the railroads nat lrally think the high court will ap- ply the same principle in favor of he railroads. The fact that the spe- elal court in St. Louis had the h. llanapoljs water case before it as ! precedent would indicate ii saw l difference in the principles.