Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-21
Commission Confronts Task
of Revising Figures on
Billions in Property.
LARGE RATE INCREASE
PREDICTION SECUTED
Additional Legislation May Be
Sought to Clarity Questions Grow
ing From O'Fallon Case.
By the Associated Press.

By the Associated Press.
The Interstate Commerce Commits
sion today confronted the huge task of
revising and bringing down to date its
valuation of billions of dollars worth
of railroad properties, with the pros
pect that further litigation and new
legislation would be sought to clarity
the situation.
That prospect stood out clearly as
members Of Congress and the commits
sion and railroad experts pursued their
study of the Supreme Court decision
yesterday upholding the st. Louis &
O'Fallon Railroad in its test attack on
the methods used by the commission in
valuing its property.
Valuation Methods Disturbed.
Principles of railroad valuation as
developed by tn interstate Commerce
Commission for the purpose of recap
turing excess income are seriously dis
turbed by the decision, in the opinion
of members of that body.
They feel. however, that the value of
its engineering inventory of the property
investment in transportation Is not i'm
pairedss
Over many years, and at a cost Of
$34 100000, The commission has gath
cred the data on value of railroad prop
erty for the entire country, to use as
directed by law for rate making and
other purposes, and after study of the
O'Fallon decision, its members are con-
vinced that the validity of this basic
data has not been questioned by the
Supreme Court.
This does not junk all the valuation
work done under the act" Chairman
Lewis of the commission said today.
so far as l can see the decision en-
tails little disturbance to that body
of data. The inventories of railroad
property are being perpetuated and can
be used as foundation for finding
total figures by any method or theory
of law. The only thing that 1t does
disturb is the O'Fallon theory as set
up for the purpose of recapturing ex-
cess earnings of this particular railroad.
Basic Work Unaffected.
eve are just now beginning the work
of bringing valuation up to date, and
the basic work in that is not disturbed"
Lewis said. We have. been waiting for
the decision in this case before pro-
ceeding with other recapture cases"
It Is now the commissions purpose
to go forward Immediately with its work
of enforcing the recapture clause Of the
law. estimating railroad liability, how
ever, under the Supreme Courts ORAL
Ion ruling.
In presenting the test case, the COM
mission sought to make 1914 price levels
govern largely its total figures lor the
valuation of the individual railroad.
The court held that insufficient weight
had been attached under this principle
to the current cost of reproducing given
railroad property. and stated other con-
siderations likewise should be followed.
Modification to Be Made.
In renewing it's effort the commission
will consider price changes subsequent
to 1914 and modify the totals accord
ingly.
It was asserted repeatedly at the
commission that the valuation situation
has little, If any, bearing on railroad
freight levels as they now stand. So
many other factors are influencing rail-
road rate levels that the official view is
that carriers will not seriously challenge
the present rate structure as whole,
whatever is done about valuations.
1t was said that hardly more than
once or twice since 1920 has a commits
sion or court rate decision turned upon
the point of valuation even though the
theory that rates should yield reason
able return on valuation was a part of
the commerce law.
The valuations on which the recap
ture efforts are based, it was conceded,
do operate to some extent in the de-
termination Of rail rates, but the COM
miSsioners apparently were convinced
that the present rate level would be
recognized by the carriers as being at
a practicable level in general and that
no attempt to disturb it to any great
extent would be made, except possibly
to clarity legal questions involved.
In view of the courts indication that
the commissions valuation of the ORAL
lon property was improper because of
failure to take the present cost of con.
struction sufficiently into consideration
and the existence of other differences in
the general dispute over valuation, 1t
was thought that the next step might
be the presentation of another test case
to the courts.
New Principles Are Problem.
AS to the probable effects of the
O'Fallon decision on the clerical and
engineering work of the commission, II
was pointed out that the data it has
gathered were not in question and that
the administrative problem now was to
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