Evening star., 1929-01-03
RAIL VALUATION
BEFORE HIGH COURT
Nine Mile Line Challenges
|. C. C. Methods Before
Supreme Tribunal.
BY the Associated Press.

BY the Associated Press.
A nine-mile railroad threw before the
Supreme Court today challenge of
the Interstate Commerce CommiSSions S
valuation methods while the railroad
and shipping world looked upon the
impending battle as one of the most
important in the history of American
transportation.
The st. Louis & O'Fallon Railroad
came into court to argue its contention
that the commissions procedure in at
tempting to recapture Excess earnings
was invalid. Three men who served in
the cabinet of Chief Justice Taft while
Mr.. Taft was President are among the
counsel in the caSe-Walter L. Fisher
George w. WickerSham and Charles
Nagel. Fisher and Wickersham are on
the side of the Government, while Nagel
is member of the railroads counsel.
Wide Attention Drawn.
No controversy in recent years has
attracted wider attention in business
circles where the controlling influence
of valuation as the basis for Government
regulation of rates is of vital impor-
tance. Recognizing the magnitude of
the issue, the court set aside six and a
quarter hours for argument, and, in
compliance With a Senate resolution
permitted Donald Richberg, general
counsel for the National Conference on
Valuation of American Railroads, to file
brief and to participate in the oral
discussion.
Among lawyers in the case there is a
sharp difference of opinion as to wheth-
er the railroad, in view Of the lower
court decision in favor of the Govern
ment, can present case which will
bring a sweeping decision on the whole
valuation fabric of the commerce COM
mission.
Government and commission counsel
in their briefs asserted that should the
railroad succeed in its contention with
regard to the method to be followed
in the valuation of its property for rate
making and other regulatory purposes,
there would be marked increase in
railroad rates generally, but this was
fatty denied by the railroad, which de-
clared that rates were necessarily linn
tied by what the traffic could bear.
Injunction Is Refused.
The st. Louis e. O'Fallon, after
/ Il6dTluES Ill 1874 dilu 1870, was CCtCO
by the Interstate Commerce Commits
sion to pay over to the commission part
of its earnings during 10 months in
1920 and during the calendar years
1921. 1922 and 1923, found by the COM
mission to be excessive under the re-
capture clause of the transportation
act. The railroad promptly sought an
injunction, contending that the valua-
tion used by the commission was in
valid
A three judge, Statutory Court at
st. Louis refused to enjoin the COM
mission, holding that on the basis of
the valuation of $l,350,000 placed by
the railroad itself on its property the
earnings it was permitted to retain
exceed 8 per cent. adding that with
such earnings there could be no con-
tlScation.
The contention of the railroads as
advanced by the st. Louis and O'Fal-
Ion was that the commission failed to
give proper consideration to the cost
Of reproduction anew. at prices prevail
ing during the years when the valua-
ton was made.
The Government and the commission
both insisted that proper consideration
was given to the cost of reproduction
anew as an element in reaching the
valuation.