Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-26
O'FALLON CASE DECISION
RAISES MANY QUESTIONS
Ultimate Results Considered Problem for
Speculation, With Immediate Effect
on Rates Held Unlikely.

placed far below the sum necessary for
reproduction. But Congress has dl-
rected that values shall be fixed upon
consideration of present costs along with
all other pertinent facts; and this man
date must be obeyed."
The view taken by the minority on
the courts opinion seems to be that
the court ruled that dominant" con-
Sideration must be given to reproduction
costs. Justice Stone in his dissenting
opinion, refutes the majority view that
the commission gave no consideration
to reproduction costs. and regards the
expression OF the majority as meaning
that the commission should have given
greater consideration to the reproduc-
ton costs than 1t actually did give. He
therefore concluded:
II should not have supposed that we
could rightly set aside the present order
without some consideration of the pro-
bative value Of the evidence of reproduce
ton costs, which the commission dis
cussed at length in its report"
II that is the effect of the majority
opinion, then 1t raises many difficulties
of administrative law, and, in addition,
greatly increases the task of the COM
mission.
Justice Brandleis, in his dissenting
opinion, took the position that while the
reproduction costs, it does not require
it Ito give evidence Of reconstruction
costs a mechanical effect or artificial
weight" In reviewing the statutes en-
towering commissions to find facts, he
stated:
Statutes have sometimes limited the
weight or effect of evidence. They have
often created REPUTABLE presumptions
and have shifted the burden of proof.
But no instance has been found where
under our law fact-finding body has
been required to give to evidence an
effect which it does not inherently pos
sess. Proof implies persuasion. To COM
pei the human mind to infer in any
respect that which observation and
logic tells us is not true interfereS with
the process Of reasoning Of the fact
finding body. 1t would be a departure
from the unbroken practice to require
an artificial legal conviction where no
real conviction exists"
And in reviewing the decisions of
the Supreme Court on that question, he
pointed out that while the court has
in the past set aside orders because
they were entered without evidence, or
because matters considered we're not in
the record. or because the commission
excluded facts which it should have
considered, there was no case in which
the court has set aside an order Of the
commission, because 1t failed to give
effect to evidence which to the court
seemed to be of probative force, or on
the ground that the commission had
drawn from the evidence an inference
or conclusion deemed by the court to
be erroneous; that, on the contrary,
findings of the commission involving
the appreciation or effect of evidence
have been treated with the Difference
due to a tribunal appointed by law
and informed by experience"
Delay in Effectiveness.
The ST. Louis & O'Fallon Railway
did not score complete victory in the
case. In its argument before the Su-
preme Court 1t maintained that the
recapture provisions were not applica-
BILE until there has been valuation of
all the railroads and until uniform
transportation rates have been estab-
lished throughout the country, or for
groups of carriers. The Supreme Court
held with the commission on this ques-
ton.
Had the recapture provisions in the
transportation act been held not ap-
plicable until uniform rates had been
instituted, that probably would have
delayed their effectiveness indefinitely.
And had the commission not adopted
its policy of awaiting the decision of
the Supreme Court in a test case be-
fore issuing further recapture orders,
much labor would have been lost, and
the revised recapture orders would have
been proportionately delayed. AS it Is,
the delay in the effectiveness Of the
recapture provision on account Of the
O'Fallon decision will not be serious
On the other hand, 1t is evident that
the amounts Of recapture will be con-
siderably diminished.
The commission will have to devise
practical means for making annual re-
production cost valuations of all the
railroads. In the arguments before the
Supreme Court the commission urged
that, unless 1t is permitted to adopt
synthetic method of valuation. the
task OF putting the policy of Congress
into effect would become too burden
some and doubtful of practical achieve
ment. This was also the view of Mr.
Justice Brandeis In his dissenting
opinion with reference to the task Of
making an annual valuation on the
basis Of reproduction costs, less de-
probation (both physical and func-
tionaD.
The OFallon decision requiring the
commission to give due consideration
to the reproduction costs of each re-
capture period will undoubtedly in
ton. To what extent cannot now be
foretold.
Effect Of Further Legislation.
What would be the effect of further
legislation approving the commissions
method of valuation used in the ORAL
Ion case? This question is suggested
by the holding in the decision that the
commission did not follow the mandates
of Congress.
When the O'Fallon argued that the
commissions order was confiscatory.
because the earnings allowed without
the reserve fund.- did not constitute a
fair return on its properties, the Dis
trict Court held that the O'Fallon had
no cause for complaint, because its
amounted to more than per cent on
the basis of the O'Fallon's own valua-
ton The Supreme Court rejected this
view Of the District Court. It held
In effect that this was not a question of
confiscation but a question whether the
commission exceeded It's authority and
thus attempted to deprive the O'Fallon
OF money which Congress permitted it
to keep.
oHoulo congress, by further 1egiSla-
tlon, ratify the method of valuation
used by the Interstate Commerce Com
mission, then the question of confisca-
ton would be proper one for the
courts, and In that case the view
adopted by the District Court might be
followed. Such ratification, however,
may be declared unconstitutional in
cases where the carriers earnings Gin
Guiding the reserve fund.- are not equal
to per cent on the basis of such a
valuation