Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-31

Far-reaching principles and possibly
many millions of dollars involved in the
decision of the st. Louis and O'Fallon
Railroad valuation case caused the sub
ject to attract the attention OF the
entire business world. The initial in
depreciation of the United States Su-
preme Courts opinion was that it re-
quired valuation of railroad properties
to be based on cost of reproduction, and
this caused widespread fear of general
increases in freight rates. Later. when
it was found that cost of reproduction
was to be only one factor in valuation,
different views were expressed. with
many analysts taking the position that
the question of the DECISIONS possible
effect on rate-making is still very much
in doubt.
One section of the press suggests the
possibility of congressional action. The
Pittsburgh Post-Gazette says: With
the Interstate Commerce Commission
now reversed by the court, on the
declaration that in its valuation it erred
in not taking present costs into con-
sideration along with other pertinent
facts, there is CONSERVATION among
some. They fear that the railroads
have been given a free hand for max
ing their own valuation, with the effect
of putting up rates. But there are two
common-sepse views that must prevail.
Regrettable as it would be if the large
volume of work done by the commits
sion in valuing railroad properties
should be lost, it obviously is para
mount that right principles be followed.
If an error was committed, there is
nothing left to be done but to correct
it. The second consideration is that If
the situation demands it, Congress has
a simple remedy for dealing with it
through amendment or revision of the
transportation act"
* X X X
The prospect of Intervention by Con-
gress is suggested also by the Chicago
Daily News, the Buffalo Evening News
and the Rock Island Argus. The Little
Rock Arkansas Democrat maintains
that rates already are at the very top
of what the traffic will bear" and the
feeling that there will be no change
in rates on account of the decision Is
voiced by the Seattle Daily Times, the
Indianapolis Star and Columbus Ohio
State Journal.
Rates never can be based on more
than the traffic will bear" declares the
st. Louis Times, while the Brooklyn
Daily Eagle argues that IAN effort at
this time to bring about general in
crease in railroad rates would work to
the detriment of the railroads" The
Flint Daily Journal points out that 1.-The
commissions work in making the valu-
alton must be brought up to date, and
this, 1t is estimated. will require at
least three years" What is more. the
Louisville Courier journal feels that lit
is not probable that the Supreme Court
intends that there shall be a severe
upward revision of the rate structure"
mo formula with physical valuation
as its dominating factor, whether it be
of original cost or of reproduction
cost" says the Philadelphia Evening
has ever produced satisfac-
tory result. The Supreme Court has at
no time said that either is to be recog-
ni2ed as a controlling and positive fac
tor. 1t IS automatic that other factors
must be taken into consideration. In
the final analysis, the determination is
AS to a reasonable return on investment
and that basic factor can most properly
be determined by the records of original
paid-in capital, of bond issues. and of
earnings plowed back into the enter
prise instead of being distributed as
1t is assumed that there must be
further appeals to the court in the val
uation problem, by many papers, among
them being the Madison Wisconsin |
State Journal, the Fort Wayne News |
Sentinel the Kansas City Journal-Post. |
the Richmond News Leader and the
News.
4 X r X
at is not expected" in the opinion OF
the Fort Worth acknowledgement,
that any serious economic disturbance
will follow the verdict, because of the
latitude covered. The Interstate Com
merce Commission will merely be COM
pelled to broaden it's scope of investi- |
cations to permit of the points laid
down, after which the right Of appeal |
Will prsXail, as usual"