Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-09-20
Valuation Richness Makes
Railways Dividend Poor
70 the Editor Of The Star:

10 bnG EultVE Va 4he 0bhEs
It Is decidedly in the public interest
that attention be directed to the yalua-
ton which the street railway, now
petitioning for higher car fares before
the Public Utilities Commission of the
District Of Columbia, has repeatedly
relied upon as the sheet anchor of its
hopes.
This valuation for rate-making pur-
poses was procured under the stress of
wartime conditions. 1t was obtained
under q construction which, to a large
extent, set up the reproduction cost
theory as base, and under the opera
ton of that basis the aged and aging
property Of the railway, together with
all other of a more recent vintage,
seems to have been dipped into a
judicial fountain Of youth and to have
come forth rejuvenated to its original
value and at least n per cent more,
compared with its worth in normal
natures God, this railway property
was inescapably subject to deprecia-
ton, deterioration and decay, but by
the alchemy Of judicial pronouncement
1t will be seen that every invested
dollar Of the rail lines expanded to
SLIT, or more, at time when the
peoples buying dollar had Shriveled to
so cents, or less, and the measure OF
the exactions which the railway might
demand from the public became a $2:27
advantage over the dWindled dollar
which the people had left to spend.
Before becoming established these re-
production-cost valuations in the DIS
trict of Columbia went from court TO
co,irt. to court and back again. They
had been considered and reconsidereo
and predetermined because something
had been done that one court salo
should not have been done, or some
thing had not been done that announcer
court said should have been done. More
than Ave years had elapsed before
final conclusion was reached.
The cause then moved on to the par
of public opinion, and public scrutiny
developed some interesting lnIormatlo.,.
II was learned that still another theory
invests a public utility with quasi
n,blic relationship. a sort OF FANNY
Connection. more or less dtstantiy re-
moved And while this railway brancn
of the tribe was given, through aDno r.
nal conditions, a dollar measure OF ~
nsrts at a time when the real members
~ the public family could obtain LOT
their dollar a rating Of only SO Genus;
or less. the railway distant relation mao
heen abundantly compensated ior HhS
invitations due 10 War-Inhe -, ,,.e
This railway distant relaC.Vs voeo
actually using the highway lailo ~
oossions .of the public family to carry
on its business operations, witnout
wh,ch valuable privilege 1t could not
ecn,,ire a token or receive cash 1are;
Hcti,,ities Of our governments. national
and municipal. and Of private enCel
wise had added. between 1914 ano
ioos as a richer field for railway prof1t.
yerio,,s and numerous feeder streets
and tl,orouphfares and had populateo
the working or living places tneIeoH
With a greatly increased numoer "a
actual car riders-so large an lncrease,
indeed. that the number OF passeaseIs .
carried annually increased 1uily :" pea
cent and the revenues tnerelroni rGIe
nnrr,aI times. Profiting by the rlcnes
noured into its lap by generous ano
ioval public patronage. the petitloning
comnany is reported to have aomlCteo
in 1922 that It's rate OF return was
1914 per cent. .s 4h,t
the nublic shall reap compromising
advantage when the rail lines are per
nitted by Congress to use the PUBIC
highways of the National Capltal ioI
private profit. but 1t is plainly 70 De
seen that all the compensation aoVan-
tage flowed enrichingly into the money
bags Of the railway in steaoiiy aug
mcnted stream. .,,.
sizing up the situation, the public
proceeded to seek its own measure OF
relief. This was found by turning 10
the automobile, and thus 1t ADOPTED
most effective means OF deiiverance
from the constant menace OF ever
increasing fares. Instead OF Wasting
time in seeking a change Ill basis Oh
valuation. the purpose was accomplished
by a change Of mode OF locomotion;
Right here was injected into Vaiua-
ton a new element that had not neen
taken into account by the valuation
Sesirers. the valuation upholders or the
valuation prescribers. AS the patronage
Of rail lines became less and less. 1t
was clearly demonstrated that valua-
ton is Of no practical value unless 1t Is
capable Of producing something or
earning something. Where serious
losses of passengers have aggravated
an undesirable productive conol-
ton of rail lines. the roads affected
have gone into receiverships. have been
sold at auction or have become WORTH
less properties for ofit-produc1ng pur-
poses. thereby yielding supremacy IN
the human transportation neld 10 the
atltOnnODlle ana CIic HioCol Duo' -,
Through the wealth ungrudgngiy
bestowed by a liberal public patronage
for the poor service furnished during
war times, the railway petitioning for
higher car fares in the District OF co.
lumbia achieved an enviable nnanclal
status. But now comes this rail- line
before the bar of public opinion. alleg-
ing dividend poverty. and pleads Tor
more money-for pennies even-to keep
its stockholders from investment starva :
tion. So 1t appears quite evident that
the imitation Of the rail lines valuation
has made this company so wealthy in
nronerty rating that the holders of Its
stocks are represented to be slowly
tending toward emaciation for want OF
enough dividends to maintain healthy
financial existence
Thus the reproduction-cost theory OF
valuation has become the means Of
corporation undoing. The theory has
become unavoidable. unreasonable and
impractical. It is proving to be un-
profitable and non-dividend producing;
for no decree has gone forth to COM
pei the people to ride on street cars,
the rail line Is prone to admit that
fares are almost as high as they can
go, and each successive request for
higher fares serves but to reduce its
patronage, further to iniure its good
will and generally to squeeze smaller
the dividends 1t finds itself able to pay.
The worst thing that happened to
the rail lines in war time was the
acquisition Of a reproduction cost basis
Of valuation. The best thing that has
come to the people since that time is
the changing Yn0de Of tranSNaFta tion